Final Results

RNS Number : 0558V
Concurrent Technologies PLC
12 April 2021
 

This announcement contains inside information

12 April 2021

Concurrent Technologies Plc

 

Results for the year ended 31 December 2020

 

Concurrent Technologies Plc (AIM: CNC), a world leading specialist in the design and manufacture of high-end embedded computer boards for critical applications , announces r esults for the year to 31 December 2020.

 

Financial Highlights

· Revenue for the year increased 9% to £21.1m (2019: £19.4m)

· Gross profit increased 12% to £11.4m (2019: £10.2m)

· Gross margin increased to 53.7% (2019: 52.7%)

· EBITDA steady at £5.0m (2019: £5.1m)

· Adjusted Profit before tax of £2.8m (2019: 3.1m after adjusting for other, non-recurring income of £1.0m)

· Profit before Tax of £2.8m (2019: £4.1m - including other, non-recurring income of £1.0m)

· Profit after Tax of £2.7m (2019: £4.0m)

· Adjusted EPS for 2020 was 3.75 (2019: 4.38 after removing the non-recurring income of £1m and the associated tax impact)

· Dividend increased to 2.55 pence per share for the year (2019: 2.50 pence)

· Cash in the business increased to £11.8m (2019: £10.5m)

 

Operational Highlights

 

· Production and the design and development functions have remained open and, for the most part, fully operational throughout the COVID-19 pandemic. The Group has not participated in any government aid scheme such as the Coronavirus Business Interruption Loan Scheme (CBILS) or VAT payment deferral and no employees have been furloughed during the pandemic.

· Exports remain strong and contribute 91% of Group revenue

· Cessation of R&D facility in India almost completed and functions transferred to UK. Costs of cessation were £0.7m which have been recognised in the 2020 accounts.

· Spending on R&D increased to £3.89m in 2020 (2019: £3.51m), of which £1.88m was capitalised (2019: £2.26m).

 

The Group's previous Chairman, Michael Collins, retired from the Board in September 2020 after 31 years' service to the Group. Mike's knowledge and experience helped to guide the Group from start-up to PLC. Mark Cubitt was appointed as the Group's new Chairman at the AGM, having previously joined the Board as a Non-Executive Director in March 2020. Mark is a Chartered Accountant and is a member of the Association of Corporate Treasurers. He has extensive multinational experience gained over the last 33 years, including 23 years in the listed PLC environment. 

 

Mark Cubitt, Chairman of Concurrent Technologies Plc, commented:

 

" During 2020, the Group introduced several new high-performance embedded computer boards and accessory modules. These included products based on the 9th generation embedded Intel® Xeon® processor for use in  AMC, CompactPCI® and OpenVPX™ architectures.

As part of the Group's long-term continuous improvement strategy, and to mitigate an identified risk to the business during 2020, a further investment of £155,000 was made within manufacturing to introduce a new circuit board processing line.

The Board is taking a cautious approach to revenue growth in the coming year because of the continuing uncertainty caused by the COVID-19 outbreak and the delays seen to some programmes potentially moving revenue from 2021 to 2022. However, the Group's proven ability to adapt to the challenges brought about by the pandemic, the overhead savings from closure of the Indian design office, its ability to provide a well-supported, UK designed and manufactured product, and the current record order book, which has seen a substantial increase during the first quarter of 2021, gives the Board confidence in the Group's continuing solid performance."

 

Annual General Meeting

 

Due to the COVID-19 crisis and social distancing requirements the date and arrangements for the AGM will be announced separately.

 

Enquiries:

Concurrent Technologies Plc
Jane Annear, Managing Director/CEO

 

+44 (0)1206 752626



Newgate (Financial PR)
Bob Huxford

Isabelle Smurfit

 

+44 (0)20 7653 9848
+44 (0)20 7653 3411



Cenkos Securities Plc (NOMAD)
Neil McDonald

Peter Lynch


+44 (0)131 220 9771

+44 (0)131 220 9772

 



Extracts from the Strategic Report

Review of Operations

The Group generated record Revenue for the year of £21.14m (2019: £19.38m). This converted into Gross Profit of £11.36m (2020: £10.21m) while the gross margin improved to 53.7% (2019: 52.7%).

Profit before tax was £2.85m (2019: £4.06m: 2019 included other, non-recurring income of £1.0m). Earnings per share was 3.75 pence (2019: 5.51 pence) while earnings per share on normal activities, adjusted to remove the impact of Other Income, was 3.75 pence (2019: 4.38 pence). EBITDA (measured as Operating Profit plus Depreciation and Amortisation) for the Group in 2020 was £4.99m (2019: £5.07m).

The Group continued its long-term commitment to R&D by spending £3.89m in 2020 (2019: £3.51m), of which £1.88m was capitalised (2019: £2.26m) and £0.69m related to closure costs of the Indian R&D centre. In light of the slowdown in the sales of some projects, an unusually large impairment charge of £888,579 (2019: £483,630) was included during the year to reflect relatively pessimistic cash generating expectations of itemised projects.

The Group continues to have no borrowings and again paid increased dividends during the year. Its cash balances plus short to medium term cash deposits at the year-end were £11.8m (2019: £10.5m).

 

Operational Highlights  

During 2020, the Group introduced several new high-performance embedded computer boards and accessory modules. These included products based on the 9th generation embedded Intel® Xeon® processor for use in AMC, CompactPCI® and OpenVPX™ architectures. These products were introduced as part of the Group's policy to provide existing customers with products that can be used as upgrade paths from previous generations where additional processing power or enhanced features are required. New customers benefit from choosing products based on the latest technologies. As required by many applications, these new products offer support for enhanced security features and most are suitable for both commercial and harsh environments. In addition, support for additional partner software and hardware products was announced to broaden the Group's product range. The Group's AI technology product is currently being developed for use on a prototype third-party end product that may come to market this year.

As part of the Group's long-term continuous improvement strategy, and to mitigate an identified risk to the business during 2020, a further investment of £155,000 was made within manufacturing to introduce a new circuit board processing line. This line will significantly help to reduce lead times for particular product variants.

 

Outlook

The new financial year of 2021 started with a healthy order book which has seen a significant increase during the first quarter of the year. The Group's telecoms business is now recovering and growing after last year's second half slow down, and several customers in the defence and telecoms sectors have placed orders for previous generation products that have been offered under extended manufacturing to protect and extend the lifecycle of their projects. These orders are due for delivery in 2021 and beyond. Several of the Group's customers have made the decision to upgrade to its newer generation products.

The Group plans to maintain its policy of investing in R&D to expand its current range of advanced technology products with a particular focus on the OpenVPX™ bus architecture, featuring the latest Intel processors suitable for the long lifecycle embedded markets in which the Group operates. Support for third party software and hardware products will be continued in order to enhance the Group's capability to provide development systems. These ready-to-use development systems enable customers to reduce their product development times by focussing on their own areas of expertise to develop specialised applications.

The Board sees opportunities to grow the business organically by broadening the range of both hardware and software products within its existing core markets of defence and telecommunications. Savings made from ceasing operations in the Indian office will largely be reinvested to increase and broaden the skills and technical expertise within the UK team. In addition, the Board continues to look to recruit key individuals and skill for both succession and organic growth as well as for worldwide acquisition opportunities which would assist the Group in introducing new skills and technologies complementary and adjacent to its current product ranges. This is with the aim of increasing the Group's potential share of the total available market.

 

Dividend

The Board has declared a second interim dividend of 1.45 pence per share (2019: 1.45 pence) which, when added to the first interim dividend of 1.10 pence per share (2019: 1.05 pence), will make a total of 2.55 pence per share for the year (2019: 2.50 pence). This is an increase of 2.0% on dividends paid for 2019. The total cost of this second interim dividend amounts to £1,063,771. As in previous years, the Directors do not intend to recommend a final dividend.

 

Annual General Meeting

Due to the COVID-19 crisis and social distancing requirements the date and arrangements for the AGM will be announced separately.

All trademarks, registered trademarks and trade names used in this announcement are the property of their respective owners.



Consolidated Statement of Comprehensive Income



Year to


Year to



31 December


31 December



2020


2019

CONTINUING OPERATIONS


£


£

Revenue


  21,141,294


  19,384,724

Cost of sales


9,780,750


9,174,588

Gross profit


11,360,544


10,210,136

Operating expenses


8,444,962


7,204,073

Group operating profit


2,915,582


3,006,063

Finance costs


(83,985)


(41,808)

Finance income


16,480


96,601

Other Income


-


1,000,000

Profit before tax


2,848,077


4,060,856

Tax


98,167


52,857

Profit for the year


2,749,910


4,007,999






Other Comprehensive Income





Items that will be reclassified subsequently to profit or loss:





Exchange differences on translating foreign operations


(283,681)


(186,972)

Tax relating to components of other comprehensive income


-


-

Other Comprehensive Income for the year, net of tax


(283,681)


(186,972)

Total Comprehensive Income for the year


2,466,229


3,821,026






Profit for the period attributable to:





Equity holders of the parent


2,749,910


4,007,999






Total Comprehensive Income attributable to:





Equity holders of the parent


2,466,229


3,821,026






Earnings per share





Basic earnings per share


3.75p


5.51p






Diluted earnings per share


3.74p


5.47p

 



Consolidated Balance Sheet



As at


As at



31 December


31 December



2020


2019





(as restated)



£


£

ASSETS





Non-current assets





Property, plant and equipment


1,734,965


1,638,429

Intangible assets


7,205,581


7,991,119

Deferred tax assets


134,775


142,894



9,075,321


9,772,442

Current assets





Inventories


5,533,574


5,097,907

Trade and other receivables


2,356,157


2,703,960

Current tax assets


305,113


274,221

Other financial assets



Cash and cash equivalents


11,765,974


10,487,902



19,960,818


18,563,990






Total assets


29,036,139


28,336,432






LIABILITIES





Non-current liabilities





Deferred tax liabilities


1,571,830


1,453,331

Trade and other payables


704,800


838,001

Long term provisions


16,162


16,731



2,292,792


2,308,063

Current liabilities





Trade and other payables


4,143,522


4,126,823

Short term provisions


16,354


16,832

Current Tax Liabilities


26,504


-



4,186,380


4,142,655






Total liabilities


6,479,172


6,451,718






Net assets


22,556,967


21,884,714






EQUITY





Capital and reserves





Share capital


739,000


739,000

Share premium account


3,699,105


3,699,105

Capital redemption reserve


256,976


256,976

Cumulative translation reserve


(121,293)


162,388

Profit and loss account


17,983,179


17,027,245

Equity attributable to equity holders of the parent


22,556,967


21,884,714






Total equity


22,556,967


21,884,714

 



Consolidated Cash Flow Statement



Year to


Year to



31 December


31 December



2020


2019



£


£

Cash flows from operating activities





Profit before tax for the period


2,848,077


4,060,856

Adjustments for:





Finance income 


(16,480)


(96,601)

Finance costs


83,985


41,808

Depreciation 


282,563


315,687

Amortisation 


1,793,628


1,788,003

Impairment loss 


888,579


483,630

Share-based payment 


6,991


82,421

Exchange differences 


(300,569)


(205,790)

Decrease/(increase) in inventories 


(435,667)


(1,001,331)

(Increase)/decrease in trade and other receivables 


347,803


648,621

Increase/(decrease) in trade and other payables 


(9,354)


1,232,237

Cash generated from operations


5,489,557


7,349,541

Tax received


40,536


(21,173)

Net cash generated from operating activities


5,530,092


7,328,368






Cash flows from investing activities





Interest received


16,480


96,601

Purchases of property, plant and equipment (PPE)


(385,964)


(476,376)

Capitalisation of development costs and purchases of intangible assets


(1,896,659)


(2,272,054)

Net cash used in investing activities


(2,266,143)


(2,651,829)






Cash flows from financing activities





Equity dividends paid


(1,864,968)


(1,745,345)

Repayment of leasing liabilities


(108,195)


(108,426)

Interest paid


(83,985)


(41,808)

Sale of treasury shares


47,529


4,950

Net cash used in financing activities


(2,009,619)


(1,890,629)






Effects of exchange rate changes on cash and cash equivalents


23,742


22,640






Net increase/(decrease) in cash


1,278,072


2,808,550

Cash at beginning of period


10,487,902


7,679,352

Cash at the end of the period


11,765,974


10,487,902

 

 

Consolidated Statement of Changes in Equity







Capital


Cumulative


Profit





Share


Share


redemption


translation


and loss


Total



capital


premium


reserve


reserve


account


Equity



£


£


£


£


£


£

Balance at 1 January 2019


  739,000


 3,699,105


  256,976


349,360


14,670,553


19,714,994














Profit for the period


  - 


  - 


  - 


  - 


4,007,999


4,007,999

Exchange differences on translating foreign operations


  - 


  - 


  - 


(186,972)


  - 


(186,972)

Total comprehensive income for the period


  - 


  - 


  - 


(186,972)


4,007,999


3,821,027

Transactions with owners:













Share-based payment


  - 


  - 


  - 


  - 


82,421


82,421

Deferred tax on share based payment


  - 


  - 


  - 


  - 


6,667


6,667

Dividends paid


  - 


  - 


  - 


  - 


(1,745,345)


(1,745,345)

Purchase of treasury shares


  - 


  - 


  - 


  - 


4,950 


4,950 

Balance at 31 December 2019


  739,000


3,699,105


  256,976


162,388


17,027,245


21,884,714

Profit for the period


  - 


  - 


  - 


  - 


2,749,910


2,749,910

Exchange differences on translating foreign operations


  - 


  - 


  - 


(283,681)


  - 


(283,681)

Total comprehensive income for the period


  - 


  - 


  - 


(283,681)


2,749,910


2,466,229

Transactions with owners:













Share-based payment


  - 


  - 


  - 


  - 


6,991


6,991

Deferred tax on share based payment


  - 


  - 


  - 


  - 


16,472


16,472

Dividends paid


  - 


  - 


  - 


  - 


(1,864,968)


(1,864,968)

Sale of treasury shares


  - 


  - 


  - 


  - 


47,529 


47,529 

Balance at 31 December 2020


  739,000


3,699,105


  256,976


(121,293)


17,983,179


22,556,967



























NOTES

 

1.  The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the 'Group'). The financial information set out in these preliminary results has been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The accounting policies adopted in this results announcement have been consistently applied to all the years presented. The restatement of balance sheet items refers to lease liabilities which have been reclassified from current to non-current liabilities. The adjustment does not impact shareholder funds or profit previously stated.

 

2.  The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 December 2020 or 2019, but is derived from those accounts. Statutory accounts for 2019 have been delivered to the Registrar of Companies and those for 2020 will be delivered following the Annual General Meeting. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not contain statements under section 498(2) or (3) of the Companies Act 2006 in respect of 2019 or 2020 and (iii) did not draw attention to any matters by way of emphasis.

 

3.  The calculation of basic earnings per share is based on the weighted average number of Ordinary Shares in issue during 2020 of 73,253,120 (2019: 72,724,271) after adjustment for treasury shares on the profit after tax for 2020 of £ 2,749,910 (2019: £4,007,999). The calculation of diluted earnings per share incorporates 311,651 Ordinary Shares (2019: 574,542) in respect of performance related employee share options. The profit after tax is the same as for basic earnings per share.

 

4.  Due to the COVID-19 crisis and social distancing requirements the date and arrangements for the AGM will be announced separately.

 

Copies of the Annual Report will be sent to Shareholders and will also be available from the Company's Registered Office: 4, Gilberd Court, Newcomen Way, Colchester, Essex, CO4 9WN, UK, and on the Company's website: www.gocct.com.

 

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