REG - Concurrent Tech. - Final results for the year ended 31 December 2023
01/05/2024 07:15
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RNS Number : 7090M Concurrent Technologies PLC 01 May 2024
1 May 2024
Concurrent Technologies Plc
(the "Company" or the "Group")
Full year results for the year ended 31 December 2023
Solid year of growth providing confidence in updated strategy
Concurrent Technologies Plc (AIM: CNC), a designer and manufacturer of
leading-edge computer products, systems and mission critical solutions used in
high-performance markets by some of the world's major OEMs, is pleased to
announce its results for the year ended 31 December 2023.
Financial highlights
2023 2022 % change
Revenue £31.7m £18.3m 73%
Gross profit £15.6m £8.9m 49%
Profit before tax & exceptionals £3.7m £0.4m 959%
Earnings per share 4.98p 1.35p -
Dividend per share 1.0p 0p -
EBITDA £6.0m £2.1m -
Order intake £28.2m £31.5m
Closing Cash £11.12m £4.51m 146%
Investment in R&D £3.80m £3.69m 3%
Total assets £47.8m £32.6m 48%
· Strong financial performance in FY23, achieving revenues of £31.7m and profit
before tax of £3.7m (excluding exceptional costs), notwithstanding a
significant investment in the cost base throughout the year to accelerate
future growth.
· Gross profit margin increased to 49.4% (FY22 48.5%) reflecting easing
components challenges and operational efficiency gains.
· EBITDA more than doubled to £6.0m (FY22 £2.1m).
· Cash generative with closing net cash balance at £11.12m.
· Increasingly optimised R&D investment in line with stated strategy to
improve the cadence and time to market of products that offer the very latest
technology.
Dividend
· The Board will propose, at the Annual General Meeting to be held on 20 June
2024, a final dividend of 1 pence per Ordinary Share in the Company. Subject
to the approval of shareholders, the final dividend will be paid on 12 July
2024 to shareholders on the register on 28 June 2024.
· Further details of the Annual General Meeting will be announced in due course.
Operational highlights
· Worked closely with suppliers and customers to successfully manage the supply
chain issues that previously impacted performance and the Board is pleased to
report that these factors eased as the year progressed.
· Continued to transition the business towards a culture and go-to-market
strategy that is positioned to scale.
· Increased headcount by c.18%, with key hires in product strategy, engineering,
commercial, and finance.
Systems division
· Secured first substantial systems contract at £1.27m in June 2023 with a UK
FTSE 250 company in the defence sector.
· Successful acquisition of Phillips Aerospace in the US enabling the Company to
move further into the development of systems, providing a platform for future
growth.
Boards division
· Secured eight major design wins, representing an expected lifetime value to
the business of at least £100m, to be realised from 2026 onwards, in the UK
and a significant majority in the US, the world's largest market.
· £5m of orders from the UK, a five-fold increase on typical prior volumes.
· Introduction of numerous new processes, practices, and state-of-the-art tools
to enhance design efficiency and quality in FY24 across the Group's key
markets.
Outlook
· Strategic focus remains on developing and designing boards and systems at pace
for a range of applications to deliver on the Group's short-term financial
targets and the longer-term lifetime value.
· Demand for the Group's product remain high, and the Company is developing a
pipeline of opportunities which include, COTs (commercial off the shelf), MOTs
(Modified off the shelf) and Systems.
· The Group entered FY24 with good momentum evidenced by the $1.57m contract win
with a major global US Prime Contractor and new VME board launched, Rhea.
· Trading in the first four months of the year is in line with market
expectations, providing confidence in delivering another year of profitable
growth.
Miles Adcock, CEO of Concurrent Technologies, commented: "We achieved
remarkable success in FY23, putting in place the building blocks that will
enable us to deliver long-term, sustainable growth. This is driven by
significant design-in wins and strategic investment in the Systems division,
including the acquisition of Phillips Aerospace.
"During the year, there was a step change in how the Group invests in
marketing, sales, and partnerships to expand our market opportunities. Looking
ahead, we will remain focused on leveraging the knowledge and the
long-standing relationships the leadership team has developed to invest in a
measured way to design boards and systems for a range of applications. As a
Board we are confident in the Group's ability to continue building momentum
and deliver results for FY24 in line with market expectations."
Enquiries:
Concurrent Technologies Plc
Miles Adcock - CEO
+44 (0)1206 752626
Kim Garrod - CFO
Alma Strategic Communications +44 (0)20 3405 0205
Josh Royston
Hannah Campbell
Cavendish Capital Markets Limited (NOMAD) +44 (0)131 220 9771
Neil McDonald
+44 (0)131 220 9772
Peter Lynch
About Concurrent Technologies Plc
Concurrent Technologies Plc develops and manufactures high-end embedded Plug
In Cards and Systems for use in a wide range of high performance, long life
cycle applications within the telecommunications, defence, security,
telemetry, scientific and aerospace markets, including applications within
extremely harsh environments. The processor products feature
Intel® processors, including the latest generation embedded Intel® Core™
processors, Intel® Xeon® and Intel Atom™ processors. The products are
designed to be compliant with industry specifications and support many of
today's leading embedded Operating Systems. The products are sold
world-wide.
For more information on Concurrent Technologies Plc and its products please
visit www.gocct.com (http://www.gocct.com) .
All trademarks, registered trademarks and trade names used in this
announcement are the property of their respective owners.
Chairman's statement
Overview
FY23 was another step in the transformation of Concurrent Technologies into a
high-growth business by leveraging our design heritage and market leadership
position through the continued investment in our culture, people, sales and
marketing and, more broadly, driving a step change in our go-to-market
strategy.
In the year, we delivered both record revenues and profit, underpinned by the
successful execution of the Group's refreshed strategy. We are focused on
developing a broader range of products and systems, in addition to our boards
business, both organically and through acquisition. This positions the
business for long-term growth, and this year has solidified our view that we
now have the right strategic focus and people in place to achieve our
ambitions.
The year in review
The first half of the year saw a recovery in trading thanks to the increased
customer demand for the Group's products and the team's incredible effort in
navigating the previous component shortage issues. This momentum continued
into the second half of the year and, for FY23, the Company delivered record
revenues and profitability.
Cash balances remain strong, buoyed by the raising of £6.8m through the
placing of new ordinary shares to new and existing shareholders in August to
partly fund the acquisition of Phillips Aerospace, leaving us in a strong
position to invest in the systems business further. On behalf of the Board, I
would like to thank all investors who participated in the oversubscribed
placing.
Execution against strategy
Throughout the year, Concurrent Technologies achieved significant milestones
in line with its strategic objectives. We secured eight substantial design
wins, underscoring the excellence of our products and engineering
capabilities. These wins will ramp up in the coming years in line with our
customers' programmes, but they provide long-term, multi-year revenue
visibility, which supports the investment plans in our R&D roadmap.
Additionally, we released several new cutting-edge products in the year that
have enriched our portfolio. We remain committed to investing in our product
portfolio and capabilities and we are optimistic about the opportunities in
FY24 to expand into new markets and deepen our presence within our home
markets.
Our end markets remain robust, and we have not only deepened several key
relationships with existing customers and partners in the year but,
importantly, we are now seeing the opportunity to engage with new customers,
servicing a range of projects and geographies, and expect to have the
opportunity to bid on larger programmes we were not historically considered
for.
The acquisition of Phillips Aerospace in September 2023 marked a significant
milestone for the business and has supported our strategic goal of adding both
systems capability and US-based manufacturing. We welcome our new Phillips
Aerospace colleagues to the Group and recognise the additional talent and
skills they bring to our ever-more expert team. The early impact of the
acquisition has been positive, and we believe it will significantly improve
the Company's capability to design and manufacture rugged systems utilising
its existing plug-in cards.
Board
Post-period end, we further strengthened our Board with the appointment of
Issy Urquhart as an independent Non-Executive Director to the Company. Issy is
an experienced commercial human resources (HR) director with over 30 years'
experience working with global technology and financial services businesses in
both the public and private sectors. She has joined the Group at a
particularly exciting time, and we are already benefiting from her guidance in
driving people and change management strategies across our transatlantic
operations.
Dividend
With the return to profitability, a 1.0p dividend has been proposed for
shareholder approval at the annual general meeting (AGM) which, if passed,
will amount to £862,000 paid in early July 2024. Going forward, the Board
anticipates dividends will increase in line with profits, with an appropriate
level of cover maintained to enable investment for future growth.
Outlook for FY24
In FY24 our strategic focus will remain on developing and designing boards and
systems at pace for a range of applications. The year will also see us
continue our investment in systems and onboarding new programmes to deliver on
our short-term financial targets. Alongside this, a combination of our product
leadership and a drive to expand our presence in our focus sectors should
deliver a significant increase in multi-year contracts in the medium term.
Mark Cubitt
Chairman
CEO's statement
Overview
FY23 was an outstanding year both financially and operationally. As the
headwinds of the global components shortages subsided during the year, the
underlying progress in order intake and execution has been reflected in the
Group's results, particularly in the second half. Solid progress was also made
on our strategic priorities, including the acquisition of Phillips Aerospace
in the US, and a material increase in our 'major design wins' that underpin a
real step up in revenues in future years as our customers ramp up production
and reach their own planned delivery volumes. With a significant investment in
additional managerial, technical and sales professionals, we now have an
excellent team in place to take the business forward for a period of growth.
It is clear the revised strategy and associated transformation are coming
together and, as a Board, we are extremely excited about the Group's future.
Financial performance
FY23 was a record year for the Group, achieving revenues of £31.7m (FY22:
£18.3m) and profit before tax (excluding exceptional costs of £0.2m, related
to the acquisition of Phillips Aerospace) of £3.7m, notwithstanding a
significant investment in the cost base throughout the year to accelerate
future growth. The strength of our order intake over the preceding 24 months
enabled this significant investment in product development to facilitate new
customers and design wins. We also worked closely with suppliers and customers
to successfully manage the supply chain issues that previously impacted
performance and we are pleased to report that these factors eased as the year
progressed. Our gross margin has now stabilised, with a slight improvement on
FY22. We do believe FY24 should be predominantly unhindered by the issues of
the last two years regarding component availability and resulting price
pressures.
On 6 September 2023, the Company completed the acquisition of Phillips
Aerospace for $3.3m (£2.8m) through a combination of $1.1m (£0.8m) cash, the
issue of equity of $1.5m (£1.3m) to the owners of Phillips Aerospace and a
further $0.8m (£0.7m) cash in repayment of outstanding loans balances within
Phillips Aerospace. Simultaneously, the Company raised £6.8m through the
issue of fresh equity to broaden our product offering and strengthen the
balance sheet to drive further growth.
Investing for growth amid supply chain shortages inevitably impacted cash.
Having started the year at £4.5m, the first half of FY23 experienced a net
outflow of £1.5m to a cash balance low of £3m in June. As shipments, and
hence invoicing, strengthened, the business reverted to being cash generative,
with a year-end cash balance of £11.12m. Q4 was our most productive period,
for which only some of the associated customer invoices were paid in 2023,
with £5.4m of FY23 revenue to be collected as cash in Q1 FY24, as per our
payment terms with customers.
In-year order intake of £28.2m remains strong, despite c.£8m of a small
number of large orders slipping into FY24. In all cases, these are
opportunities we are down-selected for (i.e. we already secured the design
win), but the customers' programme of work experienced delays vs expectations.
Positively, this had little detrimental impact on in-year revenue. While we
expect order intake to continue to build in FY24 and FY25, it is in subsequent
years that we will experience the material benefit of the design wins secured
in FY23. This focus on design wins is a large investment in time and activity,
since they are typically larger and more strategic business-winning campaigns.
While they yield little immediate business benefit, the impact on the
medium-to-long-term business is transformative in terms of scale. We intend to
ever-increase the number of design wins secured each year. We expect the
design wins secured in FY23 to yield a significant lifetime value of at least
£100m to be realised from FY26 onwards.
Having already doubled the capacity of our Colchester, UK-based factory, we
are planning to enhance both internal and external capacity to accommodate
this growth, and indeed any major binary upside opportunities that will
require a further capacity increase.
Delivery against strategy
With a year-on-year increase in revenue of over 70%, it is clear our revised
strategy and focus on creating a sustainable, high-growth business is
delivering the intended results. The Company now comprises two divisions: a
Boards division and a nascent Systems division, which we expect to represent
an increasing percentage of Group sales in the coming years. The refreshed
sales team is core to delivering the Company's strategy, and the level of
order intake and revenue delivery in FY23 are evidence of their capability.
Boards division
This is our long-standing business that designs and manufactures computer
boards, where we have substantial expertise and a reputation for quality and
collaboration. During FY23, we continued to transition the business towards
having a culture and go-to-market strategy that is positioned to scale. The
strategy here is simple: to provide the right product to market as quickly as
possible, with a refreshed focus on customer engagement utilising talented
engineers and sales professionals. We have now created a team, cost base and
sales strategy capable of delivering c.£40m per annum, before any other
material investment is required.
As demonstrated by the revenue performance during FY23 H2, the business has
already made material progress and is now positioned to deliver much higher
volumes thanks to the investment we have made in expanding the capacity in our
Colchester factory. Much of our business in boards is secured via 'design
wins', whereby a customer designs us into their own programme, and we can then
plan for purchase orders in future years as they reach their own production
volumes, typically two to three years after the initial design win. A 'major
design win' is one with the potential to achieve peak volumes of >£1m per
annum for several consecutive years. Historically, the Company may have
secured one or two major design wins per annum. In FY23, we secured eight
major design wins, which is an extremely positive leading indicator for future
growth, representing a lifetime value to the business of at least £100m.
Every region is important to us, but the UK and US are our home markets in
which we have a material presence operationally. I am pleased to confirm that
we won over £5m of orders from the UK in FY23, a five-fold increase on
typical prior volumes.
The boards division has been through significant transformation in all aspects
during the year and is now fit to focus on execution in FY24 across our key
markets. We are exploring options for additional internal and external
capacity in line with our anticipated continued order intake growth in the
medium term.
Concurrent Technologies is a Titanium member of the Intel® Partner Alliance,
meaning we get direct support from Intel® with allocated resources. In
addition, our applications for early access to future silicon are given
priority over Gold members and we've been successful in all our recent
applications. We also have access to Intel®'s 'Market Development Funds'
programme, which allows us to claim a percentage of our marketing costs back
if we explicitly promote that we're using Intel® devices. Having our products
on the Intel® Partner Showcase enables Intel® salespeople globally to search
for our products easily.
Systems division
Since I joined the Company in 2021, we have explored ways to enter the systems
market and move up the value chain by supplying whole systems rather than
single boards, enabling us to generate substantially higher revenues and open
up new market opportunities. We have made excellent progress this year; the
systems line of business now includes the acquired Phillips Aerospace in the
US in addition to the capability in the UK business, which will be moved out
of the boards line of business going forward. This means that from FY24 we
will report the top-level financials of both boards and systems individually.
This is to give increased transparency and also recognises that each will have
different characteristics financially. For example, average sell prices for
systems are typically higher, but gross margins are less than for boards
because there is more third-party content. Systems will also often include
upfront funding from customers for the design of their customer solution.
While we do not currently have a business unit structure (with the exception
of the acquired business), this will likely be implemented as revenue from
systems grows, in order to provide the necessary, dedicated focus and
resources on this business.
In the first half of FY23, we won a £1.27m contract for a UK-based system,
providing validation of our proposition and capability. The addition of
Phillips Aerospace provides a further platform for the Systems division to be
a core part of our future growth. Previously, Phillips Aerospace had designed
and manufactured our initial standard products for systems, meaning both teams
had a successful history of working together and integration post-acquisition
was seamless. We have welcomed a highly capable team into the Group, who
provide the credibility needed to win and deliver systems solutions that
complement our existing boards business. The Board has been encouraged by the
level of motivation and integration that the Phillips Aerospace senior
management team has shown, contributing significantly to the technical and
managerial community within the Group. Revenue contribution by the Phillips
Aerospace business since the completion of the acquisition is approximately
£0.8m, slightly stronger than we had expected based on the prior annual
performance. The Board expects this to increase significantly as systems
contracts are secured in the future.
Acquisitive growth
In the medium term, we believe there are a range of opportunities to expand
our capability, customer list and market penetration through acquisition. The
acquisition of Phillips Aerospace is a good example of our acquisition
criteria: a business we knew well; a business that had long-standing customer
relationships; and an opportunity for us to add new product expertise,
additional major customers, appropriate necessary accreditations and
strengthening of our position in our chosen home markets. We are excited by
our opportunity to significantly scale Concurrent Technologies organically
over the next few years, but we have a clear target to participate in industry
consolidation and add to our growth and offering by acquiring leading
businesses where possible.
R&D
We continue to focus on investing in R&D in line with our strategy to
improve the cadence and time to market of our products that offer the very
latest technology.
At the same time that Intel® launched its Raptor Lake-P processor for the
embedded market, we announced Hermes, our latest flagship board based on the
VPX standard for critical defence applications at the edge. This was our first
card based on Intel®'s hybrid architecture consisting of six performance and
eight efficient cores, allowing our customers to scale their performance to
fit their power and thermal envelope.
In Q3, to meet a key customer need, we shipped a new variant of one of our
popular boards with double the amount of memory. We were able to react
extremely quickly to secure a critical long-term design win with this variant
against strong competition, demonstrating that our robust processes and
revitalised culture are succeeding.
We also announced a rugged board to the CompactPCI standard that is still
widely used for industrial and defence applications. This was deliberately
backwards compatible with legacy cards to secure design wins where programs
are undergoing a technology transition extending the life span.
In Q4, we announced our highest-performance processor board, using 'Air Flow
Through' technology. This and our first Air Flow Through card, a novel
technology for a cooling board that was announced in FY22, are being
integrated by the end customers and, having learned a lot by designing boards,
we are looking to offer integrated Air Flow Through systems in the future.
To interconnect our processor boards with systems, we introduced a
high-performance dual enclave switch. This supports separate 100Gb Ethernet
data and 10Gb Ethernet control connections to each board. Having physical data
and control separation is critical in many defence applications to ensure
security between the two enclaves.
Post-period end, we announced the launch of the Rhea VME single-board
computer, which coincided with the launch of Intel®'s latest Atom processor,
to harness this very latest technology for customers looking for a simple,
cost-effective upgrade.
The product portfolio strengthens with continued investment in R&D and
sales, enabling a strong pipeline of opportunities, and conversion of these,
to underpin future revenue growth.
Partnerships
As part of our strategy to develop a broader range of products and services,
securing and maintaining partnerships is critical for expanding the size and
markets available to us.
In H1 FY23, we signed a distribution agreement with SoC-e, an internationally
recognised provider of advanced equipment for real-time and deterministic
Ethernet networking for critical sectors, to enhance our product offering. The
collaboration enables us to enhance our leading range of solutions and systems
to our home and global markets with the addition of time-sensitive networking
capability, which we are starting to see as a requirement for future combat
platforms. We also secured a key partnership agreement with Alpha Data to act
as a reseller of its field programmable gate array- (FPGA) based boards and
modules.
In H2 FY23, we showcased our defence-related products at the DSEI Exhibition,
Europe's largest defence and aerospace show. We worked with partners like
Alpha Data and SoC-e to demonstrate our integration capability by showing
products like Helios, our new rugged vision computer.
Markets
Defence is the dominant target market for the Group, now accounting for 85% of
our board revenue. Industrial (6%), medical (5%) and scientific (4%) are our
other important domains.
People and ESG
In recent years, we have assembled a Board and Leadership Team with experience
in transforming businesses and growing sales globally, and our success in FY23
is due to the efforts of this driven, refreshed team. During the year, we
increased headcount by 17.8%. Attracting and retaining talent is core to our
strategy, and I am delighted that in November 2023 we were awarded Gold status
by the 5% Club, recognising that more than 5% of our workforce is engaged in
'earn & learn' learning programmes.
Culture change
We believe that culture is what you do and how you behave and that it drives
business performance, so we have taken deliberate and active action partnering
with Coode Associates to create the company culture that is right for us. Our
target culture includes a renewed focus on output, collaboration, empowerment
and growth, which in turn has positively impacted our productivity and output.
We will continue to instil this through the business, led by our Leadership
Team who, on a daily basis, demonstrate and represent our culture. We have
invested heavily in our leadership capability to lead our culture and will
continue to do so at all levels.
ESG
We are continuing with our significant transformation to deliver more products
faster to market through operational excellence and refined governance. Our
key focus for ESG is our people and therefore we have largely invested our
time and energy in making sure that we have an attractive reward and benefits
offering and providing a developmental place to work.
Outlook
We have achieved remarkable success in FY23, marked by a record financial
performance, and have put in place the building blocks that will enable us to
deliver long-term, sustainable growth. This is driven by significant design-in
wins and strategic investment in the Systems divisions, including the
acquisition of Phillips Aerospace.
During the year, there was a step change in how the Group invests in
marketing, sales and partnerships to expand our market opportunities. Looking
ahead, we will remain focused on leveraging the knowledge and the
long-standing relationships the Leadership Team has developed to invest in a
measured way to design boards and systems for a range of applications. FY24
will be about balancing our investment and mobilising to win and deliver
systems to achieve our short-term financial targets.
Miles Adcock
Chief Executive Officer
CFO's Statement
The Group delivered a strong financial performance in the FY23, with a
significant growth in revenue and profit before tax (adjusted for exceptional
items), resulting in a solid cash position.
Financial KPIs
2023 2022 2021
Revenue £31.7m £18.3m £20.5m
% change vs previous year 73% -10% -3%
Gross profit £15.6m £8.88m £11.4m
% gross margin 49% 49% 56%
Profit before tax & exceptionals £3.7m £0.4m £3.5m
% change vs previous year 959% -89% 25%
Earnings per share 4.98p 1.35p 3.84p
Proposed dividend per share 1p 0p 2.55p
EBITDA* £6.0m £2.1m £4.9m
Closing cash £11.12m £4.51m £11.84m
% change vs previous year 146% -62% 5%
Investment in R&D £3.8m £3.69m £1.82m
% change vs previous year 3% 103% 50%
Total assets £47.8m £32.6m £29.8m
Shareholders' funds £35.0m £23.2m £22.7m
*EBITDA is defined as operating profit excluding finance costs, taxation,
depreciation and amortisation.
Revenue
The Company generates sales through products and associated services. A
minimal amount of revenue (c.£1.1m) is included in FY23 for system sales
(including sales for the acquisition of Phillips Aerospace from 6 September
2023). FY23 saw a record year for revenue, despite being constrained in the
first half of the year due to component shortages.
Geographical split of revenue
Revenue Year to Year to
31 December 31 December
2023 2022
£ £
United States 13,060,691 6,564,816
Malaysia 392,850 3,047,798
Germany 6,450,372
United Kingdom 2,148,568 1,167,266
Other Europe 4,178,401 4,003,849
Rest of the World 5,425,434 3,491,042
31,656,316 18,274,771
The geographical split of revenue is quite different in FY23 versus the prior
year. FY22 was driven by component availability and, therefore, what we were
able to ship to customers. FY23 still had an element of this but it was less
extreme, with H2 being relatively unconstrained by component availability. We
have one customer in Malaysia, and the profile is simply reflective of its
schedule. Germany has represented a significant growth area due to timing of
programs (orders in FY22 and FY23), with higher production and development
volume creating revenue in FY23. A key point to note is the growth in the UK
and US, both our home markets, where we have been concentrating our business
development activities. An important element of our strategy has been to
reduce our reliance on one customer, which was a feature of the past business,
and this strategy is clearly working, as evidenced by the table below.
% Revenue by top customers
Revenue by market
Defence £26,758,184 85%
Industrial and scientific £3,169,680 10%
Medical, communications and other £1,728,452 5%
Total £31,656,316
Gross profit
Gross profit increased by 76% to £15.64m (FY22: £8.88m), reflecting the
significant increase in revenue. Our gross profit margin of 49.4% (FY22:
48.6%) is reflective of the improving components situation and more efficient
delivery.
Profit
Profit before tax (excluding exceptionals) increased by 959% to £3.7m (FY22:
£0.4m). This is a result of the record revenues achieved in FY23. EBITDA
(measured as operating profit plus depreciation and amortisation) increased by
184% to £6.0m (FY22: £2.1m). Amortisation of our products was up by 23% to
£1.35m, reflecting the new product portfolio starting to be released into the
profit-and-loss account. Depreciation is also significantly up by 91%, of
which 17% reflects the investment in new machinery and the improved offices of
Theale, Reading and the remainder is the effect of bringing in the acquisition
balances. The new products and the new facility are both key elements in the
growth strategy of the Group and will enable the realisation of exceptional
further growth.
Earnings per share (EPS) was 4.98p (FY22: 1.35p). This reflects the increased
weighted average number of ordinary shares in FY23 generated by the equity
raise completed in August 2023. On the previous basis, the EPS would have been
5.0p.
Cost base
It has been necessary to improve the cost base of the business; it has
significantly increased with FY23 at £12.2m (FY22: £8.3m). This reflects the
investment needed in the business to prepare and be ready for growth. This
will be achieved through our new ways of working (e.g. business development,
systems, design wins, product development).
The Group continues to pursue the strategy, investing in R&D, developing
new products and securing talented people to deliver and drive the business.
Through FY23, the business has started to see the results of that investment.
As per the table above, a major part of the cost increase has been the investment in people, with salaries increasing by £2.1m. Headcount has increased by 23, from 129 to 152 (including 12 from the acquisition of Phillips) from 31 December 2022, and has increased from 109 at the beginning of FY22.
Bonuses and commission have also risen in FY23, due to excellent performance
and a change to the commission scheme (to simplify and pay on order
performance), which generated a one-off catch-up in FY23 of c.£0.3m.
Foreign exchange rates also had a significant impact on the FY23 accounts,
with a swing in rates causing a negative effect against FY22. All other costs
were relatively flat.
Tax
The Group has undertaken a full tax review and computation, in accordance with
UK tax regulations. Due to having significant R&D investment, we remain in
a tax credit position for FY23.
Cash flow
The business has a healthy cash balance of £11.1m, with £5.6m generated from
normal operations (a strong increase from FY22 at -£0.9m). Revenue was strong
in Q4, meaning trade debtors going out of FY23 were high at £5.4m. The
business was cash generative in FY23; this is a reversal of the difficult
position in FY22 (due to components availability), which saw a decrease of
£7.3m.
Statement of financial position
Inventory at the close of FY23 was £11.96m (FY22: £10.09m). This was driven
by the management of parts throughout the challenging period due to the
components crisis, where the business chose to invest cash in increasing
inventory based on market availability to enable the delivery of products.
This is now followed by a period of growth and, therefore, inventory holding
will revert to 'normal' levels based on a higher-revenue business. These two
drivers will continue to play out throughout FY24. The business reviews
inventory regularly and provides for obsolescence and slow-moving inventory
accordingly, which totalled £1.26m in FY23 (FY22: £0.7m).
Inventory is a key factor in enabling the business to deliver most efficiently
and effectively, with careful management contributing to the reduction in lead
times in getting products to customers.
Trade payables have increased to £5.7m (FY22: £2.98m). This is predominantly
due to the purchase of an end-of-life component that is used across many of
the products. This component was delivered in FY23; however, payment terms
were agreed that enable payment in April FY24.
Acquisition
On 5 September 2023, Concurrent Technologies Group completed the acquisition
of Phillips Aerospace in California, USA.
The acquisition aims to underpin and execute the systems strategy of the
business. It provides a footprint, capability, accreditations and credibility
that will support the drive for systems revenue going forward.
Phillips Aerospace was purchased for $3.3m (£2.8m), split between cash at
$1.1m (£0.8m), equity of $1.5m (£1.3m), and repayment of outstanding loan
balances within Phillips Aerospace of $0.8m (£0.7m). A detailed summary of
the transaction is set out in Note 27 to the financial statements.
Two of the owners (the third was a silent partner) remain with the business
and are fully committed to driving the systems strategy forward with the
business.
The fair value of the assets acquired has been considered under IFRS 3 and a
purchase price allocation exercise has been undertaken and reflected in Note
27 of the accounts.
In the period since the business has been owned by Concurrent Technologies, it
delivered £0.8m revenue and contributed £0.2m profit to the Group.
Kim Garrod
Chief Financial Officer
Consolidated statement of comprehensive income for the year ended 31 December 2023
Note
For the year ended 31 December 2023
Year to Year to
31 December 31 December
2023 2022
£ £
Revenue 3 31,656,316 18,274,771
Cost of sales (16,018,368) (9,397,449)
Gross profit 15,637,948 8,877,322
Administrative expenses (11,951,314) (8,390,682)
Group operating profit 4 3,686,634 486,640
Finance expense (86,010) (104,505)
Finance income 5 68,145 546
Exceptional acquisition expenses 27 (195,881) -
Profit before tax 3,472,888 382,681
Tax credit 6 400,248 604,344
Profit for the year 3,873,136 987,025
Other comprehensive income
Exchange (losses)/gains) on translating foreign operations (101,340) 69,463
Other comprehensive income for the year, net of tax (101,340) 69,463
Total comprehensive income for the year 3,771,796 1,056,488
Profit for the period attributable to:
Equity holders of the Parent 3,873,136 987,025
Total comprehensive income attributable to:
Equity holders of the Parent 3,771,796 1,056,488
Earnings per share
Basic earnings per share 8 4.98p 1.35p
Diluted earnings per share 8 4.85p 1.35p
All operations were continuing within the year.
This statement should be read in conjunction with accompanying notes
Consolidated Statement of Financial Position for the year ended 31 December 2023
For the year ended 31 December 2023 31 December 31 December
2023 2022
£ £
ASSETS
Non-current assets
Property, plant and equipment 11 2,465,883 2,685,107
Intangible assets 12 13,914,398 8,807,290
Deferred tax assets 13 432,642 350,753
16,812,923 11,843,150
Current assets
Inventories 15 11,958,500 10,090,437
Trade and other receivables 16 6,442,827 5,439,912
Current tax assets 6 1,492,621 762,545
Cash and cash equivalents 11,118,728 4,512,720
31,012,676 20,805,614
Total assets 47,825,599 32,648,764
LIABILITIES
Non-current liabilities
Deferred tax liabilities 13 2,094,095 2,126,588
Trade and other payables 17 695,273 1,257,820
Provisions 19 315,135 304,336
3,104,503 3,688,744
Current liabilities
Trade and other payables 17 9,666,412 5,765,262
Provisions 19 18,256 18,256
9,684,668 5,783,518
Total liabilities 12,789,171 9,472,262
Net assets 35,036,428 23,176,502
EQUITY
Capital and reserves
Share capital 21 861,692 739,000
Share premium account 21 9,950,231 3,699,105
Merger reserve 21 1,283,457 -
Capital redemption reserve 21 256,976 256,976
Cumulative translation reserve 21 (129,276) (27,936)
Profit-and-loss account 22,813,348 18,509,357
Equity attributable to equity holders of the Parent 35,036,428 23,176,502
Total equity 35,036,428 23,176,502
This statement should be read in conjunction with accompanying notes.
Company Statement of Financial Position for the year ended 31 December 2023
31 December 31 December
2023 2022
£ £
ASSETS
Non-current assets
Property, plant and equipment 11 2,374,209 2,628,501
Intangible assets 12 11,217,904 8,807,290
Deferred tax assets 13 432,642 350,753
Investments 14 1,572,640 1,446,952
15,597,395 13,233,496
Current assets
Inventories 15 11,754,564 10,090,437
Trade and other receivables 16 8,534,995 5,870,077
Current tax assets 6 1,434,921 703,087
Cash and cash equivalents 9,111,243 1,704,517
30,835,723 18,368,118
Total assets 46,433,118 31,601,614
LIABILITIES
Non-current liabilities
Deferred tax liabilities 13 1,834,823 2,178,634
Trade and other payables 17 677,607 1,211,405
Provisions 19 315,135 304,336
2,827,565 3,694,375
Current liabilities
Trade and other payables 17 8,890,046 5,171,306
Provisions 19 18,256 18,256
8,908,302 5,189,562
Total liabilities 11,735,867 8,883,937
Net assets 34,697,251 22,717,677
EQUITY
Capital and reserves
Share capital 21 861,692 739,000
Share premium account 21 9,950,231 3,699,105
Merger reserve 21 1,283,457 -
Capital redemption reserve 21 256,976 256,976
Profit-and-loss account 21 22,344,895 18,022,596
Equity attributable to equity holders of the Parent 34,697,251 22,717,677
Total equity 34,697,251 22,717,677
This statement should be read in conjunction with accompanying notes.
Consolidated Cash Flow Statement for the year ended 31 December 2023
For the year ended 31 December 2023 Year to Year to
31 December 31 December
2023 2022
£ £
Cash flows from operating activities
Profit before tax for the period 3,472,888 382,681
Adjustments for:
Finance income (68,145) (546)
Finance expense 86,010 104,505
Depreciation 806,236 422,047
Amortisation 1,509,167 1,197,972
Impairment loss 31,557 327,526
Share-based payment 430,854 219,363
Exchange differences (145,706) 82,384
Increase in inventories (1,868,063) (3,665,001)
Increase in trade and other receivables (1,029,033) (2,451,279)
Increase in trade and other payables 2,853,322 2,222,123
Cash generated/(used in) from operations 6,079,087 (1,158,225)
Tax received/(paid) (444,210) 267,884
Net cash generated/(used in) from operating activities 5,634,877 (890,341)
Cash flows from investing activities
Interest received 68,145 546
Purchases of property, plant and equipment (PPE) (495,973) (1,480,394)
Payment of acquisition of subsidiary net of cash acquired (685,767) -
Capitalisation of development costs and purchases of intangible assets (3,977,839) (3,711,617)
Net cash used in investing activities (5,091,434) (5,191,465)
Cash flows from financing activities
Equity dividends paid - (1,027,088)
Repayment of leasing liabilities (215,209) (94,842)
Interest paid (86,010) (104,505)
Issue of ordinary shares net of issue costs 6,355,741 -
Sale of treasury shares - 2,425
Net cash generated/(used) in financing activities 6,054,522 (1,224,010)
Effects of exchange-rate changes on cash and cash equivalents 8,043 (21,222)
Net increase/(decrease) in cash 6,606,008 (7,327,038)
Cash at beginning of period 4,512,720 11,839,758
Cash at the end of the period 11,118,728 4,512,720
This statement should be read in conjunction with accompanying notes.
Consolidated Statement of Changes in Equity for the year ended 31 December 2023
Capital Cumulative Profit-
Share Share Merger redemption translation and-loss Total
capital premium reserve reserve reserve account equity
£ £ £ £ £ £ £
Balance at 1 January 2022 739,000 3,699,105 - 256,976 (97,399) 18,082,077 22,679,759
Profit for the period - - - - - 987,025 987,025
Exchange differences on translating foreign operations - - - - 69,463 - 69,463
Total comprehensive income for the period (restated) - - - - 69,463 987,025 1,056,488
Share-based payment - - - - - 219,363 219,363
Deferred tax on share-based payment - - - - - 245,555 245,555
Dividends paid - - - - - (1,027,088) (1,027,088)
Sale/purchase of treasury shares - - - - - 2,425 2,425
Issue of ordinary shares - - - - - - -
Balance at 31 December 2022 739,000 3,699,105 - 256,976 (27,936) 18,509,357 23,176,502
Profit for the period - - - - - 3,873,136 3,873,136
Exchange differences on translating foreign operations - - - - (101,340) - (101,340)
Total comprehensive income for the period - - - - (101,340) 3,873,136 3,771,796
Share-based payment - - - - - 430,854 430,854
Deferred tax on share-based payment - - - - - - -
Dividends paid - - - - - 0 0
Sale/purchase of treasury shares - - - - - -
Merger reserve 18,077 1,283,457 - - - 1,301,534
Shares issued during the year 104,615 6,251,126 - - - - 6,355,741
Balance at 31 December 2023 861,692 9,950,231 1,283,457 256,976 (129,276) 22,813,347 35,036,427
This statement should be read in conjunction with accompanying notes.
Company Statement of Changes in Equity for the year ended 31 December 2023
Capital Profit-
Share Share Merger redemption and-loss Total
capital premium reserve reserve account equity
£ £ £ £ £ £
Balance at 1 January 2022 739,000 3,699,105 - 256,976 17,493,403 22,188,484
Total profit and comprehensive income for the period - - - - 1,086,851 1,086,851
Share-based payment - - - - 221,450 221,450
Deferred tax on share-based payment - - - - 245,555 245,555
Dividends paid - - - - (1,027,088) (1,027,088)
Sale/purchase of treasury shares - - - - 2,425 2,425
Issue of ordinary shares - - - - - -
Balance at 31 December 2022 739,000 3,699,105 - 256,976 18,022,596 22,717,677
Total profit and comprehensive income for the period - - - - 3,632,774 3,632,774
Share-based payment - - - - 430,854 430,854
Deferred tax on share-based payment - - - - - -
Dividends received - - - - 258,670 258,670
Sale/purchase of treasury shares - - - - - -
Merger reserve 18,077 1,283,457 - - 1,301,534
Shares issued during the year 104,615 6,251,126 - - - 6,355,741
Balance at 31 December 2023 861,692 9,950,231 1,283,457 256,976 22,344,894 34,697,250
This statement should be read in conjunction with accompanying notes.
Notes to the Financial Statements
Note 1 GENERAL INFORMATION
The principal activity of Concurrent Technologies plc ('the Company') and its
subsidiaries (together 'the Group') is the design, development, manufacture
and marketing of single-board computers for system integrators and original
equipment manufacturers.
On 6 September 2023, the Group acquired 100% of the voting shares of Phillips
Aerospace Limited. Please refer to Note 27 for further details.
Concurrent Technologies plc is the Group's ultimate Parent Company. It is
incorporated and domiciled in the United Kingdom. Concurrent Technologies
plc's shares are listed on the Alternative Investment Market of the London
Stock Exchange.
The Group's financial statements are presented in pounds sterling (£), which
is also the functional currency of the Parent Company. They have been approved
for issue by the Board of Directors on 30 April 2024.
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation These financial statements are for the year ended 31 December 2023. They have
been prepared in accordance with UK-adopted international accounting standards
and with the requirements of the Companies Act 2006. These financial
statements have been prepared under the historical cost convention.
New and amended IFRS accounting standards that are effective for the current
year
In the current year, the Company has applied a number of amendments to IFRS
accounting standards issued by the International Accounting Standards Board
(IASB) that are mandatorily effective for an accounting period that begins on
or after 1 January 2023. Their adoption has not had any material impact on the
disclosures or on the amounts reported in these financial statements.
· IAS 1: Classifications of Liabilities as Current or Non-Current
(effective for periods commencing on or after 1 January 2023)
· IAS 1 and IFRS Practice Statement 2: Disclosure of Accounting
Policies (effective for periods commencing on or after 1 January 2023)
· IAS 8: Definition of Accounting Estimates (effective for periods
commencing on or after 1 January 2023)
· IAS 12: Deferred Tax Related to Assets and Liabilities Arising
from a Single Transaction (effective for periods commencing on or after 1
January 2023)
New and revised IFRS accounting standards in issue but not yet effective
Certain standards, amendments to and interpretations of published standards
have been published that are mandatory for the Group's accounting years
beginning on or after 1 January 2024, or later years, and which the Group has
decided not to adopt early:
· IFRS 7 and IAS 7: Supplier Finance Arrangements (effective for
periods commencing on or after 1 January 2024)
· IAS 1: Non-Current Liabilities with Covenants (effective for
periods commencing on or after 1 January 2024)
None of the above listed changes are anticipated to have a material impact on
the Group's financial statements.
Changes in significant accounting policies
There have been no changes in the year to significant accounting policies in
the period.
The Parent Company has relied on the exemption conferred by Section 408 of the
Companies Act 2006 in not publishing its own profit-and-loss account. The
Parent Company retained profit for the year was £3,632,774 (2022:
£1,086,850).
The policies set out below have been consistently applied to all the years
presented, except where stated.
Basis of presentation The consolidated financial statements are presented in accordance with IAS 1:
Presentation of Financial Statements. The Group has elected to present the
'Income Statement' and 'Statement of Other Comprehensive Income' in one
statement.
The basis of presentation is the UK-adopted international accounting standards
to FRS 101 for the Parent Company information. This has been prepared using
the adapted format of the balance sheet. Disclosure exemptions taken include
no cash flow statement for the Company, reduced disclosures for financial
instruments, financial risk management, related party transactions,
share-based payment, key management personnel and other relevant exemptions.
Note 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Going concern The Directors have reviewed the approved budget and projections sensitised for
different scenarios through to December 2025, considering general and specific
market conditions, status of suppliers, liquidity and funding requirements and
the needs of subsidiary companies.
The Directors have assessed the viability of the Group using extreme
assumptions to reverse stress test the cash forecast. Assumptions include
extreme reduction in sales, decrease in gross margin and a reduction in stock
levels (as anticipated in 2024 to reduce working capital). Additionally,
within these scenarios we have excluded any potential beneficial impacts such
as tighter management of working capital and cost reduction measures. These
have been excluded to retain headroom in the forecast and to provide a worst
expected case scenario. The forecast cash balances within the Group show that
there is no borrowing requirement or going concern issues, enabling the
Directors to be confident the Group will be able to meet its obligations.
Basis of consolidation The consolidated financial statements incorporate the financial statements of
the Company and its subsidiary undertakings. A subsidiary is a company
controlled directly by the Group. Control is achieved where the Group has the
power over the investee, rights to variable returns and the ability to use the
power to affect the investee's returns.
The acquisition method views a business combination from the perspective of
the combining entity that is identified as the acquirer. The acquirer
recognises the assets acquired and liabilities and contingent liabilities
assumed, including those not previously recognised by the acquiree, where
recognition criteria are met. Measurement of these items is generally at fair
value at acquisition date. The measurement of the acquirer's assets and
liabilities is not affected by the transaction, nor are any additional assets
or liabilities of the acquirer recognised as a result of the transaction,
because they are not the subjects of the transaction. All subsidiaries are
100% wholly owned and are fully controlled by the Group. All intra-Group
transactions, balances, income and expenses are eliminated on consolidation.
Revenue recognition Revenue is recognised by the Group using the five-step process outlined in
IFRS 15:
· Identification of a contract with a customer
· Identification of the performance obligations
· Determination of the transaction price
· Allocation of the transaction price to the performance
obligations
· Recognise revenue when the performance obligations are satisfied
The Group's principal source of revenue is from the sale of single-board
computers and associated products (which could include software products that
are required by the customer to be added to the boards sold - for example,
security software). Revenue from the sale of products, including any added
software (this is so interlinked with the single-board computer that they are
considered one performance obligation under IFRS 15) is recognised when the
Group satisfies its performance obligations by transferring the promised goods
to its customers. Control is considered to transfer, at the point in time when
the customer takes undisputed responsibility for the goods. This depends on
the terms and conditions of sale with the customer. There are three main terms
for delivery: 1) The Group are responsible for the goods until delivered at
the stated delivery address under the contract; 2) Free on board contract
terms means the goods remain the Group's responsibility until they are placed
onboard the vehicle for shipping, with export duty being the Group's
responsibility as well. The customer is responsible post this point; 3)
Ex-works contract terms, where the customer is responsible from the point the
goods leave the factory or appropriate site, often under control of the
customer's defined shipping arrangement.
The Group provides a basic warranty on its products but does offer customers
the opportunity to purchase an extended warranty of one, two or three years
for their boards. As the customer has the option of purchasing the additional
warranty separately, this is accounted for as a separate performance
obligation under IFRS 15 where the Group will repair or replace faulty boards
at no additional charge to the customer. Contract liabilities on these
extended warranties are recognised and released to income over the warranty
period until the performance obligation is satisfied. During the 12 months to
31 December 2023, £28,235 was released to profit and loss.
Revenue recognised for systems contracts, under IFRS 15, was £1.1m (including
Phillips Aerospace) for 2023 financial statements. Systems revenue will
continue into 2024 and beyond. Revenue will normally be recognised over time,
in accordance with IFRS 15, based on the stage of completion of the relevant
performance obligations, and will be dependent on the conditions of each
specific contract.
Revenue recognition (continued) For our single-board business, invoices are raised on despatch and payment
terms are usually 30 days from date of invoice. For the systems business,
payment terms will be based on negotiations and could include pro-forma and
30-day payment terms, but will be subject to negotiated positions.
Cost of sales Cost of sales consists of external purchases and stock used on delivering
specific contracts, plus the direct workforce (predominantly manufacturing)
related to the fulfilment of the specific contracts and direct ancillary costs
such as shipping.
Administrative expenses This includes all non-direct costs (e.g. general overheads such as rent,
rates, sales and indirect functions.) This also includes non-direct
engineering expenses.
Exceptional items
This is made up of costs incurred as a result of the acquisition of Phillips
Aerospace. The Company considers these to be outside of the normal course of
business so have treated these as exceptional expenses.
Foreign currencies The functional and presentational currency of the Company is pounds sterling
(GBP). Transactions in currencies other than the functional currency of the
individual entities within the Group are recorded at the rates of exchange
prevailing on the dates of the transactions. Foreign exchange gains and losses
resulting from the settlement of such transactions and from the re-measurement
of monetary items at year-end exchange rates are recognised in profit or loss.
In the Group's financial statements, all assets, liabilities and transactions
of Group entities with a functional currency other than GBP are translated
into pounds sterling upon consolidation. The functional currencies of the
entities in the Group have remained unchanged during the reporting period.
On consolidation, assets and liabilities have been translated into GBP at the
closing rate at the reporting date. Foreign exchange differences arising for
intercompany transactions are charged within profit and loss. Income and
expenses have been translated into GBP at the rates of exchange prevailing on
the dates of the transactions over the reporting period. In line with IAS 21,
an average rate is used for the period unless exchange rates fluctuate
significantly and then the weighted average rate is used. Exchange differences
are charged/credited to other comprehensive income and recognised in the
cumulative translation reserve in equity. On disposal of a foreign operation,
the cumulative translation differences recognised in equity are reclassified
to profit or loss and recognised as part of the gain or loss on disposal.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated into GBP at the closing rate.
Inventories Inventories are stated at the lower of cost and net realisable value on a
first-in first-out basis. Cost includes materials, direct labour and an
attributable proportion of manufacturing overheads based on normal levels of
activity. Net realisable value represents the estimated selling price after
allowing for the costs of realisation and, where appropriate, the cost of
conversion from their existing state into a finished condition. Provision is
made where necessary for obsolete, slow-moving or defective inventories.
Leases A lease is defined as a contract, or part of a contract, that conveys the
right to use an asset (the underlying asset) for a period of time in exchange
for consideration. To apply this definition, the Group assesses whether the
contract meets three key evaluations, which are whether the contract contains
an identified asset, which is either explicitly identified in the contract or
implicitly specified by being identified at the time the asset is made
available to the Group; the Group has the right to obtain substantially all of
the economic benefits from use of the identified asset throughout the period
of use, considering its rights within the defined scope of the contract; and
the Group has the right to direct the use of the identified asset throughout
the period of use.
At lease commencement, the Group recognises a right of use asset and a lease
liability on the balance sheet. The right of use asset is measured at cost and
initial direct costs incurred by the Group. The right of use asset is then
depreciated on a straight-line basis over the term of the lease or the
estimated useful life of the asset if shorter. At commencement date, the Group
measures the lease liability at the present value of the future lease
payments, discounted using the Group's incremental borrowing rate.
The Group has elected to account for short-term leases and leases of low-value
assets using the recognition exemptions of IFRS 16, and payments in relation
to these are recognised as an expense in the appropriate period.
Right of use assets have been included in property, plant and equipment and
the corresponding lease liability included in trade and other payables.
Detailed lease liability information is included in Notes 17 and 20.
Property, plant and equipment Property, plant, and equipment is stated at original historical cost, net of
depreciation and any provision for impairment. Depreciation is charged so as
to write off the cost of assets together with any cost directly attributable
with bringing the asset into use, less estimated residual value, on a
straight-line basis over their estimated useful lives in accordance with the
table below:
Plant and
machinery
5-15 years on a straight-line basis
Fixtures, fittings and
equipment 3-7 years on a
straight-line basis
Computer
equipment
3-5 years on a straight-line basis
Improvements to short leasehold property 5-10 years on a
straight-line basis
The gain or loss arising on the disposal or retirement of an asset is
determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in the statement of comprehensive
income.
The residual values and useful economic lives of property, plant and equipment
are reviewed annually.
Intangible assets All intangible assets are stated at cost less accumulated amortisation and any
accumulated impairment losses.
Goodwill
Goodwill has arisen upon the acquisition of Phillips Aerospace made on 6
September 2023, which is defined as a single cash-generating unit (CGU). The
assets acquired are not capable of individually generating revenue on their
own, so they are deemed combined within the business as a whole to generate
revenue, and therefore the business (Phillips Aerospace) is defined as a
single CGU.
The goodwill is the amount attributable to the excess of consideration over
the fair value of the net assets acquired, including expected synergies,
future growth, critical accreditations and technical knowledge of the
employee, and is recorded in accordance with IFRS 3 'Business Combinations'.
Goodwill is reviewed and tested annually for impairment.
Research costs
Research costs are charged directly to administrative expense in the statement
of comprehensive income as incurred.
Development costs
Development costs are capitalised as intangible assets if the asset can be
separately identified; it is in the control of the Group; future economic
benefits will accrue to Group; it is technically feasible, the Group has
adequate resources to complete the development of the asset and the costs can
be reliably determined.
Capitalised development costs comprise all directly attributable costs
necessary to create, produce and prepare the asset to be capable of operating
in the manner intended by management, including development-related overheads.
Amortisation commences upon completion of the development or when the asset
becomes available for commercial production. Capitalised development costs are
amortised on a straight-line basis, over the estimated product life, which is
generally five to seven years. The asset will be reviewed annually for
indicators of impairment, and whenever indicators suggest that the carrying
amount may not be recovered throughout the period in which it is being used,
the asset will be subject to a full impairment review. All intangible assets,
including those not yet available for use, will be reviewed for indicators of
impairment.
All other development costs are recorded under administrative expense in the
statement of comprehensive income in the period they are incurred. The table
below shows products with an NBV of £500,000 or more:
Product NBV Remaining amortisation period
Board A 2,128,699 84 months
Board B 1,393,825 84 months
Board C 1,085,150 70 months
Board D 806,608 84 months
Board E 576,782 84 months
Customer relationships
Customer relationships were acquired as part of the acquisition of Phillips
Aerospace on 6 September 2023 and have applied an income approach valuation
using the multi-period excess earning method with a useful economic life of
ten years.
Other intangible assets
Intangible assets purchased separately, such as software licences that do not
form an integral part of hardware, are capitalised at cost and amortised over
their useful lives of three to seven years.
The carrying values of intangible assets with finite lives are reviewed for
impairment when events or changes in circumstance indicate the carrying value
may be impaired. If any such indication exists, the recoverable amount of the
asset is estimated in order to determine the extent of impairment loss.
The recoverable amount of the asset will be used as for all other intangible
assets (e.g. backlog and pipeline opportunities), except where the asset does
not generate independent cash flows, i.e. additional software packages sold as
an add-on to a board.
This also contains the AS9110C licence obtained as part of the acquisition of
Phillips Aerospace. This has been valued using an income approach based upon
the 'relief from royalty' method with a useful economic life of ten years.
Impairment of property, plant and equipment, and intangible assets At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows (using both
backlog and weighted pipeline) are discounted (8.1% rate used) to their
present value. If the recoverable amount of an asset is estimated to be less
than its carrying amount, the carrying amount of the asset is reduced to its
recoverable amount. An impairment loss is immediately recognised as an expense
in the statement of comprehensive income.
Where an impairment loss subsequently reverses, the carrying amount of the
asset is increased to the revised estimate of its recoverable amount, but so
that the increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised for the
asset in prior years. A reversal of an impairment loss is recognised as a
credit to expenses immediately.
Taxation Current tax is the tax currently payable based on taxable profit for the year.
Current tax for current and prior periods shall, to the extent unpaid, be
recognised as a liability. If the amount already paid in respect of current
and prior periods exceeds the amount due for those periods, the excess shall
be recognised as an asset.
The tax expense for the period comprises current and deferred tax. Tax is
recognised in the income statement, except to the extent that it relates to
items recognised in other comprehensive income, or directly in equity. In this
case, the tax is also recognised in other comprehensive income or directly in
equity, respectively.
The Group takes advantage of the small and medium enterprise tax scheme in
respect of R&D tax credits. These are included in the taxation line and
are accounted for on a receivable basis. This means the Group applies certain
assumptions based on previous R&D claims and any changes to the business
and applicable legislation to record a credit through profit or loss and an
associated receivable on the balance sheet in the accounting period in
question.
Deferred income taxes are calculated using the liability method on temporary
differences. Deferred tax is generally provided on the difference between the
carrying amounts of assets and liabilities and their tax bases. However,
deferred tax is not provided on the initial recognition of goodwill, nor on
the initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting profit.
Deferred tax on temporary differences associated with shares in subsidiaries
is not provided if reversal of these temporary differences can be controlled
by the Group and it is probable that reversal will not occur in the
foreseeable future. In addition, tax losses available to be carried forward as
well as other income tax credits to the Group are assessed for recognition as
deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred
tax assets are recognised to the extent that it is probable that the
underlying deductible temporary differences will be able to be offset against
future taxable income. Current and deferred tax assets and liabilities are
calculated at tax rates that are expected to apply to their respective period
of realisation, provided they are enacted or substantively enacted at the
year-end date.
Financial instruments Financial assets and financial liabilities are recognised in the balance sheet
when the Group becomes a party to the contractual provisions of the
instrument.
(i) Financial assets
Financial assets are held at amortised cost if the assets are held with the
objective to collect contractual cash flows and where the contractual terms of
the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding. After initial
recognition at transaction price being the amount of consideration that is
unconditional, receivable balances are measured at amortised cost using the
effective interest method, less loss allowance for expected credit losses. The
Group's cash and cash equivalents, other financial assets (fixed-term
deposits), trade and most other receivables fall into this category of
financial instruments.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses, which uses a lifetime expected loss allowance for all trade
receivables.
Financial instruments (continued) (i) Financial liabilities
Trade and other payables are not interest bearing and are initially recognised
at fair value plus transaction costs directly attributable to their
acquisition and then subsequently measured at amortised cost.
(ii) Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. Financial liabilities
are obligations to pay cash or other financial assets and are recognised when
the Group becomes a party to the contractual provisions of the instrument.
They are initially recognised at fair value plus transaction costs directly
attributable to their acquisition and subsequently measured at amortised cost
using the effective interest method. An equity instrument is any contract that
evidences a residual interest in the assets of the Group after deducting all
of its liabilities.
Investments in subsidiaries Investments in subsidiaries, as reported in the Parent Company financial
statements, are included at cost less provision for impairment.
Finance income Finance income comprises interest income accrued on a time basis, by reference
to the principal outstanding at the effective interest rate applicable.
Dividends Dividends to the Company's shareholders are recognised as a liability and
deducted from shareholders' equity in the period in which the shareholders'
right to receive payment is established.
Employee benefits Retirement benefits
The Company operates a defined contribution retirement benefit plan. The cost
of the defined contribution plan is charged to administrative expenses in the
statement of comprehensive income on the basis of contributions payable by the
Company during the year.
Share-based payments
The Group issues equity-settled share-based payments to certain employees.
Equity-settled share-based payments are measured at fair value at the date of
grant. In the consolidated financial statements, the fair value determined at
the grant date of equity-settled share-based payments is expensed on a
straight-line basis over the vesting period based on the Group's estimate of
shares, which will eventually vest, together with a corresponding increase in
equity. In the financial statements of the Company, equity-settled share-based
payments issued to employees of the Company are treated in the same manner as
in the consolidated financial statements. Equity-settled share-based payments
issued to employees of subsidiary undertakings are treated in the financial
statements of the Company as an increase in investment in subsidiary
companies, together with a corresponding increase in equity, over the vesting
period based on the Group's estimate of shares, which will eventually vest.
Fair value is measured by use of a binomial option pricing model and has been
adjusted for the estimated effect of non-transferability, exercise
restrictions and behavioural considerations.
For options that have non-market vesting conditions, such as EPS growth, the
award has been valued using the Black-Scholes model. This type of model is
typically used where no market conditions are associated with the awards.
Options granted from November 2021 have been valued using the Black-Scholes
model. Option pre-November 2021 used the binomial option pricing model.
Treasury shares The Company's shares that have been purchased and not cancelled are held as
treasury shares and deducted from shareholders' equity. No gain or loss is
recognised in profit or loss on the purchase, sale, issue or cancellation of
the shares.
Reserves Share premium account represents the difference between the price received on
the sale of shares and their par value.
Capital redemption reserve arose from the purchase of shares and represents
their nominal value.
Cumulative translation reserve arises from the consolidation of foreign
subsidiaries.
Share capital represents the nominal value of shares that have been issued.
Merger reserve represents the difference between the price of the shares
issued on acquisition of Phillips Aerospace and their par value.
Profit-and-loss account includes all current and prior period retained profits
and share-based payments less treasury shares held at the balance sheet date.
Provisions Provisions are recognised when present obligations resulting from a past event
will probably lead to an outflow of economic resources from the Group and
amounts can be estimated reliably. Provisions reported are for non-purchased
warranties (all additional purchased warranties are accounted for under
contract liabilities). The obligation under IFRS 15 is for the Group to repair
or replace faulty boards at no additional charge to the customer.
EPS Basic earnings per share is calculated by dividing the profit attributable to
the owners of Concurrent Technologies plc, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary
shares outstanding during the financial year.
Diluted earnings per share is calculated by dividing the profit attributable
DEPS to the owners of Concurrent Technologies plc, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number of ordinary
shares and share options outstanding during the financial year.
Key judgements and estimates In applying the Group's accounting policies, the Directors are required to
make judgements (other than those involving estimations) that have a
significant impact on the amounts recognised and to make estimates and
assumptions about the carrying amounts of assets and liabilities that are not
readily apparent from other sources. The estimates and associated assumptions
are based on historical experience and other factors that are considered to be
relevant. Actual results may differ from these estimates.
Estimates and judgements are continually evaluated.
Estimates
The resulting accounting estimates will, by definition, seldom equal the
related actual results. The estimates and assumptions that have a significant
risk of creating a material adjustment to the carrying amounts of assets and
liabilities are discussed below.
Development costs
To substantiate the carrying value of the capitalised development costs,
management have applied the criteria of IAS 36 'Impairment of Assets' and have
projected the future economic benefits. They are reviewed against current
backlog and estimated weighted (based on probability factors, predominantly
driven by stage of the opportunity), future pipeline opportunities, which will
be achieved from this investment, using an estimated useful life of seven
years and a value in use calculation. Management considers the review to be
sufficiently robust regarding reasonable movements in discount rates (current
rate used: 8.1%).
A 1% increase in the discount rate would not lead to a material increase in
impairment so, therefore, the discount rate is not considered to be the key
source of estimation uncertainty, but it is the assumptions made around
conversion of future sales that is key to the estimate. Where indicators
exist, management then records judgement-based impairment charges that
consider project-specific technical issues, customer feedback, opportunity for
product substitution and other market factors. Estimation uncertainty relates
to assumptions about future results.
The Group has reviewed revenue sensitivity against our top five boards in
terms of NBV. Revenue forecast would need to reduce by between 75% and 90% for
the discounted cash flow to reach a breakeven position. This provides the
Directors with comfort in respect of headroom in the impairment calculations.
Inventory
A slow-moving stock provision has been made, where necessary, where inventory
has had no movement in three years or more as per our accounting policy. Items
that are provided for, should they start being used again, will have the
provision removed/reversed.
R&D tax credits
The Group takes advantage of the small and medium enterprise tax scheme in
respect of R&D tax credits. These are included in the taxation line and
are accounted for on a receivable basis. This means that the Group applies
certain assumptions based on previous R&D claims and any changes to the
business and applicable legislation to record a credit through profit or loss
and an associated receivable on the balance sheet in the accounting period in
question.
Goodwill and intangible assets on acquisition
Application of IFRS 3
During the year, the Group acquired Phillips Aerospace and accordingly
reviewed the acquisition of the entity in accordance with IFRS 3 'Business
Combinations'. Any assets that were identified as being separately
identifiable assets have been valued using appropriate valuation techniques in
order to determine the fair value of intangible assets acquired as part of the
business combination aside from any goodwill arising as a result of the
transaction.
These are accordingly recorded as separate intangible assets in Note 12 and
have been reviewed for impairment as noted in Note 12.
CGU
The classification of Phillips Aerospace as a single CGU is a key judgement
based on the understanding of the elements that have been purchased. The
assets purchased (e.g. accreditation, customer relationships, working capital
etc.) are not capable of generating revenue in their own right, individually,
and, therefore, they are judged to be intrinsically linked as one to define
the business of Phillips Aerospace to be one single CGU. Accordingly, any
goodwill arising as a result of this acquisition has been allocated to the CGU
identified.
The subsequent impairment and amortisation of the goodwill and assets are
based on key estimates and judgements, reviewing the capability of the
business from key forecasts of revenue and orders. These are tested for
impairment in the same way as development costs (i.e. the use of a discounted
cash flow forecast to determine the value in use of the CGU, which has been
prepared in accordance with IAS 36).
Key judgements and estimates (continued) Capitalisation of development costs IAS 38 - Intangible Assets
Judgement is required when distinguishing the research and development phases
of new projects and determining whether the recognition requirements for
capitalisation of the development costs are met under IAS 38. Research covers
pre-solution options often through feasibility studies of various
technologies. Development is the application of research findings or other
knowledge to plan or design for the production of new or substantially
improved products before the start of commercial production. Development costs
are capitalised as an intangible asset if all the following criteria are met:
there is technical feasibility of completing the asset so that it will be
available for use or sale; the intention is to complete the asset and use or
sell it; there is an ability to use or sell the asset; the asset will generate
future economic benefits and demonstrate the existence of a market or the
usefulness of the asset if it is to be used internally; the availability of
adequate technical, financial and other resources to complete the development
and to use or sell it; and the ability to measure reliably the expenditure
attributable to the intangible asset.
Note 3 SEGMENT REPORTING
The Directors consider that there is only one operating segment: design,
manufacture and supply of high-end embedded computer products. The disclosures
for this operating segment have already been provided in these financial
statements. The Company's products can be supplied to more than one business
sector and are sold on a global basis. All manufacturing is undertaken in the
UK.
While looking at sales by business sectors, the Executive Board members of the
Company, as the Chief Operating Decision Maker, does not make decisions
regarding allocation of Group resources on such a basis.
The Board in its entirety, i.e. including Non-Executive members, is not
involved in making operational decisions. Further, Group profits are not
categorised for internal reporting purposes by sectors or geography. The
historical and anticipated performance of the Group is therefore reported to
the Board of Concurrent Technologies plc as a single entity. Thus, the
Directors consider that there are no additional segments required to be
disclosed under IFRS 8 'Operating Segments' but have provided the following
geographic sales analysis. No geographical analysis of non-current assets is
provided as non-current assets outside of the UK are immaterial.
During 2023, £3.49m or 11.0% of Group revenue depended on a single customer.
In 2022, £3.17m or 17.3% of Group revenue depended on a single customer.
All board revenue is recognised at a point in time in relation to the terms
and conditions of each contract, with systems and warranty (immaterial)
revenue recognised over time.
Revenue Year to Year to
31 December 31 December
2023 2022
£ £
United States 13,060,691 6,564,816
Malaysia 392,850 3,047,798
Germany 6,450,372 -
United Kingdom 2,148,568 1,167,266
Other Europe 4,178,401 4,003,849
Rest of the World 5,425,434 3,491,042
31,656,316 18,274,771
Note 4 GROUP OPERATING PROFIT
Year to Year to
31 December 2023 31 December 2022
£ £
Group operating profit is stated after charging to cost of sales:
Cost of inventories recognised as expense 14,884,586 8,229,285
Staff costs (see Note 10) 1,133,781 815,915
Group operating profit is stated after charging/(crediting) to operating
expenses:
Net foreign exchange losses/(gains) 279,491 (462,900)
Total expensed research and development costs 1,930,389 1,096,657
Amortisation of intangible assets 1,509,167 1,197,972
Impairment of intangible assets 31,557 327,526
Depreciation of owned property, plant and equipment 686,403 244,648
Depreciation of ROU Asset 203,870 177,399
Staff costs (see Note 10) 9,002,640 6,712,098
Group principal auditor's remuneration:
Audit of Group financial statements pursuant to legislation 150,000 232,443
Other non-auditor remuneration relating to taxation compliance 25,000 6,026
Note 5 FINANCE INCOME
Year to Year to
31 December 2023 31 December 2022
£ £
Interest earned on bank deposits 68,145 546
Note 6 TAX
Year to Year to
31 December 31 December
2023 2022
£ £
Current tax expense - (723,737)
Current deferred tax 401,271 393,695
Prior year tax expense (4,970) (41,142)
Prior year deferred tax (826,969) (111,835)
Current overseas tax charge 30,420 (121,325)
(400,248) (604,344)
The tax assessed on the Group's profit before tax for the year is less than
the standard rate of corporation tax in the UK. The applicable rate of
corporation tax for the year to 31 December 2023 was 23.52% (2022: 19.00%).
Within the deferred tax charge for the year is an amount of £23,747 to
reflect the effect of change in the UK tax rate. The differences are explained
below:
Note 6 TAX (CONTINUED)
Year to Year to
31 December 31 December
2023 2022
£ £
Profit before tax 3,472,888 382,681
Corporation tax on profit before tax at standard rate 816,823 72,710
Expenses not deductible for tax purposes 282,141 22,632
UK tax credits (486,705) (502,248)
Effect of change in UK tax rate 23,747 87,757
Share options - (5,746)
Effects of other reliefs - (25,062)
Difference in overseas effective tax rates (24,150) (38,264)
Adjustment in respect of previous years (1,012,104) (216,123)
Tax (credit)/charge (400,248) (604,344)
Factors that may affect future tax charges are as follows:
UK tax rates and any changes to R&D tax credits would have an impact on
the tax position of the Group and Parent Company.
The current tax asset balance on the statement of financial position is made
up of £708,057 current year and £784,564 historic repayment due.
Note 7 DIVIDEND
2023 2022 2023 2022
pence per pence per
£ £ share share
Second interim (for the previous year) - 1,027,088 - 1.40
Interim - - - -
- 1,027,088 - 1.40
Interim dividends are recognised in the financial statements in the period
they are paid. The Directors have proposed a 1p dividend for the year ended 31
December 2023 as a resolution for the AGM. (Total dividend for 2022 was nil.)
Note 8 EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the profit attributable to
ordinary equity holders for the period by the weighted average number of
ordinary shares outstanding during the period. Diluted earnings per share is
calculated by adjusting the weighted average number of ordinary shares
outstanding to assume conversion of all contracted dilutive potential ordinary
shares. The Company only has one category of dilutive potential ordinary
shares, namely the share options.
The inputs to the earnings per share calculation are shown below:
2023 2022
Earnings Weighted average number of shares Per share amount Earnings Weighted average number of shares Per share amount
Earnings attributable to ordinary shareholders on continuing operations after 3,873,136 77,833,759 4.98 987,025 73,363,490 1.35
tax
Dilutive effect of share options - 2,069,974 - - - -
Diluted earnings per share 3,873,136 79,903,733 4.85 987,025 73,363,490 1.35
The diluted EPS figure reflects the impact of historic grants of share options
and is calculated by reference to the number of options granted for which the
average share price for the year was in excess of the option exercise price.
Note 9 DIRECTORS' EMOLUMENTS
Year to Year to
31 December 31 December
2023 2022
£ £
Fees and emoluments 1,182,172 769,650
Pension contributions 18,632 20,697
1,200,804 790,347
The emoluments of Directors disclosed above include in respect of the highest
paid Director:
Fees and emoluments 571,029 334,961
Pension contributions 9,847 13,812
The number of Directors to whom retirement benefits are accruing under a 2 2
defined contribution scheme is:
Detailed information concerning Directors' emoluments, shareholdings and
options is provided in the Report of the Remuneration Committee.
Note 10 STAFF COSTS
STAFF COSTS Group Company Group Company
Year to Year to Year to Year to
31 December 31 December 31 December 31 December
2023 2023 2022 2022
£ £ £ £
Wages and salaries 8,501,442 7,055,210 6,218,053 5,190,752
Social security costs 958,837 867,527 704,416 637,174
Defined contribution pension costs 438,431 418,231 386,181 370,846
Share-based payment 430,854 283,761 219,363 169,859
10,329,564 8,624,729 7,528,013 6,368,631
Average number of employees: N(o) N(o) No No
Production 39 38 34 34
Other 103 88 87 78
142 126 121 112
Direct employment costs capitalised for the year to 31 December 2023:
£2,389,672 (2022: £1,959,447).
Note 11 PROPERTY, PLANT AND EQUIPMENT
GROUP Improvements to short leasehold property Plant, fixtures and computer equipment
Right of use asset Total
£ £ £ £
COST
At 1 January 2022 293,556 850,707 4,034,955 5,179,218
Foreign exchange movement 11,202 16,102 27,304
Additions 490,613 635,248 354,533 1,480,394
At 31 December 2022 784,169 1,497,157 4,405,590 6,686,916
Foreign exchange movement (6,251) (8,624) (14,875)
Additions 227,733 523,184 750,917
Modification and amendment (234,905) (234,905)
Transfer from intangibles 75,045 75,045
At 31 December 2023 1,005,651 1,262,252 4,995,195 7,263,098
ACCUMULATED DEPRECIATION
At 1 January 2022 210,371 269,834 3,080,550 3,560,755
Foreign exchange movement 4,595 14,412 19,007
Charge for the year 49,657 177,399 194,991 422,047
At 31 December 2022 260,028 451,828 3,289,953 4,001,809
Foreign exchange movement (5,193) 1,651 (7,288) (10,830)
Charge for the year 252,370 203,870 434,033 890,273
Modification and amendment (84,037) (84,037)
At 31 December 2023 507,205 573,312 3,716,698 4,797,215
NET BOOK VALUE
At 31 December 2022 524,141 1,045,329 1,115,637 2,685,107
At 31 December 2023 498,446 688,940 1,278,497 2,465,883
Note 11 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
COMPANY Improvements to short leasehold property Plant, fixtures and computer equipment
Right of use
asset Total
£ £ £ £
COST
At 1 January 2022 289,738 764,917 3,907,981 4,962,636
Transfer to intangibles -
Additions 490,613 635,248 347,607 1,473,468
At 31 December 2022 780,351 1,400,165 4,255,588 6,436,104
Additions 60,672 - 303,337 364,009
Modification and amendment (234,905) (234,905)
Transfer from intangibles 75,045 75,045
At 31 December 2023 841,023 1,165,260 4,633,970 6,640,253
ACCUMULATED DEPRECIATION
At 1 January 2022 206,552 241,554 2,969,017 3,417,123
Charge for the year 49,657 159,924 180,900 390,481
At 31 December 2022 256,209 401,478 3,149,917 3,807,604
Charge for the year 94,546 186,393 261,538 542,477
Modification and amendment (84,037) (84,037)
At 31 December 2023 350,755 503,834 3,411,455 4,266,044
NET BOOK VALUE
At 31 December 2022 524,142 998,687 1,105,671 2,628,500
At 31 December 2023 490,268 661,426 1,222,515 2,374,209
Note 12 INTANGIBLE ASSETS INCLUDING GOODWILL
GROUP
Development Customer
costs Goodwill relationships Other Total
£ £ £ £ £
COST
At 1 January 2022 27,374,092 1,079,817 28,453,909
Foreign exchange movement - 5,378 5,378
Additions 3,687,351 24,266 3,711,617
At 31 December 2022 31,061,443 - - 1,109,461 32,170,904
Foreign exchange movement (1,106) (1,106)
Additions 3,939,539 38,300 3,977,839
Additions on acquisition 1,230,594 1,130,851 383,593 2,745,038
Transfer between classes (64,413) 64,413 -
Transfer to tangibles (75,046) (75,046)
At 31 December 2023 34,861,523 1,230,594 1,130,851 1,594,661 38,817,629
AMORTISATION
At 1 January 2022 21,056,492 776,251 21,832,743
Foreign exchange movement - 5,373 5,373
Charge for the year 1,093,820 104,152 1,197,972
Impairment loss 327,526 327,526
At 31 December 2022 22,477,838 - - 885,776 23,363,614
Foreign exchange movement (1,106) (1,106)
Charge for the year 1,349,203 36,248 123,716 1,509,167
Impairment loss 31,557 31,557
At 31 December 2023 23,858,598 - 36,248 1,008,386 24,903,232
31st December 2022 8,583,605 - - 223,685 8,807,290
At 31 December 2023 11,002,925 1,230,594 1,094,603 586,275 13,914,397
COMPANY
Development
costs Other Total
£ £ £
COST
At 1 January 2022 27,374,092 1,079,817 28,453,909
Foreign exchange movement - 5,378 5,378
Additions 3,687,351 24,266 3,711,617
Disposals -
At 31 December 2022 31,061,443 1,109,461 32,170,904
Additions 3,939,539 38,300 3,977,839
Transfer between classes (64,413) 64,413 -
Transfer to tangibles (75,046) - (75,046)
At 31 December 2023 34,861,523 1,212,174 36,073,697
AMORTISATION
At 1 January 2022 21,056,492 776,251 21,832,743
Foreign exchange movement - 5,373 5,373
Charge for the year 1,093,820 104,152 1,197,972
Disposals -
Impairment loss 327,526 327,526
At 31 December 2022 22,477,838 885,776 23,363,614
Charge for the year 1,349,203 111,420 1,460,623
Disposals -
Impairment loss 31,557 31,557
At 31 December 2023 23,858,598 997,196 24,855,794
31 December 2022 8,583,605 223,685 8,807,290
At 31 December 2023 11,002,925 214,978 11,217,903
Development costs can be broken down as assets under development (based on
original cost): £7,428,960 (2022: £4,652,822) and assets available for use
(based on original cost): £27,432,563 (2022: £26,343,643). The cost of
assets transferred from assets under development to available for use in the
year was £1,088,920 (2022: £2,609,098).
Other intangible assets comprise purchased software used within the business
and software licences.
All amortisation and impairment charges (or reversals if any) are included
within 'Administrative Expenses'.
Note 12 INTANGIBLE ASSETS (CONTINUED)
Impairment Loss
At the end of the year, the Directors reviewed the development projects. Each
project is treated as a separate CGU. Expected future cash flows ('value in
use' calculation, the discount rate and cash flows were calculated on a
pre-tax basis) attributable to these projects are calculated over the lower of
seven years or the remaining life of the project, discounted at the applied
rate of 8.1%. Where indicators for impairment exist, management considers
pipeline sales volume and the relevant margin of the product along with
project-specific technical issues, customer feedback, opportunity for product
substitution and other market factors.
Following full review of all projects, the Company impaired a number of
projects totalling £112,028. These products are all older products and all
costs now impaired refer to historical costs. One previously impaired project
had an impairment reversal upon further review in 2023; future revenue streams
have become apparent and the impairment of £80,471 was reversed.
Goodwill has arisen in FY23 due to the acquisition of Phillips Aerospace on 6
September 2023, which is a single CGU. The Group has undertaken an impairment
review of the carrying value of the goodwill, using detailed forecasts of
revenue (based on forecast orders and contracted backlog), costs of delivery
and resulting profitability. The Group has reviewed using a discounted cash
flow, with a discount rate of 8.1%. A number of sensitivities have been
performed against the performance, especially against revenue (which drives
the profitability) and the Directors are comfortable that there is sufficient
headroom to strongly support the goodwill carried on the balance and,
therefore, no impairment is necessary. Revenue would need to reduce by 67% for
the headroom to be nil.
Note 13 DEFERRED TAX LIABILITY
Share- Accelerated
based capital Tax
payments allowances losses Other Total
£ £ £ £ £
GROUP
At 1 January 2022 24,139 (1,826,126) (54,026) 6,903 (1,849,110)
Credited/(charged) to statement of comprehensive income 81,059 (345,221) 91,825 57 (172,280)
Credited to equity 245,555 - - - 245,555
At 31 December 2022 350,753 (2,171,347) 37,799 6,960 (1,775,835)
Credited/(charged) to statement of comprehensive income -81,889 529,429 (185,619) - 425,699
Deferred tax acquired and arising from acquisition (311,317) (311,317)
At 31 December 2023 432,642 (1,641,918) 147,820 (304,357) (1,661,453)
COMPANY
At 1 January 2022 24,139 (1,815,715) - - (1,791,576)
Credited/(charged) to statement of comprehensive income 81,059 (362,918) - - (281,859)
(Charged) to equity 245,555 - - - 245,555
At 31 December 2022 350,753 (2,178,633) - - (1,827,880)
Credited/(charged) to statement of comprehensive income 81,889 529,429 (185,619) - - 425,699
At 31 December 2023 432,642 (1,649,204) (185,619) - - (1,402,181)
Note 14 INVESTMENTS
COMPANY 31 December 31 December
2023 2022
£ £
Investment in subsidiary companies
Shares at cost 19,705 19,705
Capital contribution 1,361,656 1,361,656
Equity-settled share-based payment 191,278 65,591
Total investment in subsidiary companies 1,572,639 1,446,952
The Group has closed the R&D facility located in India. The investment in
the subsidiary company has not been impaired during 2023. This will be
impaired in 2024 upon formal dissolution. The investment carried in the
financial statements is £12,994.
Subsidiary undertakings included in these financial statements, which are all
wholly owned, at 31 December 2023 are:
Place of Class of Percentage Nature
Name incorporation share held of business
By Company:
Concurrent Tech Bangalore, Ordinary 100% Non-trading
India Private Ltd India Company
Concurrent California, Ordinary 100% Sale and service of Company products
Technologies, Inc. USA and R&D services for the Company
By Concurrent Technologies, Inc.:
Omnibyte Illinois, Ordinary 100% Dormant
Corporation USA
Phillips Machine & Welding Co., Inc. California, Ordinary 100% Developer and manufacturer of industrial
USA products and associated services
Note 15 INVENTORIES
Group Company Group Company
31 Dec 31 Dec 31 Dec 31 Dec
2023 2023 2022 2022
£ £ £ £
Raw materials 8,357,855 8,153,919 6,637,883 6,637,883
Work in progress 3,407,901 3,407,901 3,193,400 3,193,400
Finished goods 192,744 192,744 259,154 259,154
11,958,500 11,754,564 10,090,437 10,090,437
During 2023, the provision for obsolete and slow-moving inventories has been
increased by £543,686 (2022: decreased by £241,310). In accordance with IAS
2, inventories are measured at the lower of cost and net realisable value.
The inventory balance movement includes an obsolescence provision, which has
decreased by £80,509 in the period. £236,767 has been reversed due to these
items of inventory not being considered obsolete any longer and £156,257
added to the provision. This comprises obsolete stock following an in-depth
analysis of the Group's inventory.
In 2023, a total of £14.8m (2022: £7.4m) of inventories was included in the
Consolidated Statement of Comprehensive Income as an expense.
Note 16 TRADE AND OTHER RECEIVABLES
Group Company Group Company
2023 2023 2022 2022
£ £ £ £
Trade receivables 5,430,181 2,667,667 4,755,594 3,056,417
Prepayments and accrued income 687,535 577,182 684,318 606,061
Other debtors 325,111 325,111 - -
Loan to subsidiary - 2,786,644 - -
Amounts due from subsidiary undertakings - 2,178,391 - 2,207,599
6,442,827 8,534,995 5,439,912 5,870,077
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses, which uses a lifetime expected loss allowance for all trade
receivables. Trade receivables have been grouped based on shared credit risk
characteristics. The expected loss rates are based on historic performance, as
well as current macroeconomic conditions. The Company has assessed the
recoverability of intercompany balances and deem no issues in terms of credit
losses, with all amounts being repayable on demand. There have been no
previous write-offs of intercompany balances and there are sufficient cash and
other current assets to cover the amount.
ECL provision matrix
31 December 2023 Current More than More than More than Total
30 days 60 days 90 days
past due past due past due
Expected loss rate - - - 0.001%
Gross carrying amount 5,282,708 18,712 128,551 210 5,430,181
Lifetime expected credit loss - - - 210 210
As a Group, we don't have a significant amount of bad debt, and historically
bad debts have been very close to nil; due to the recurring nature of orders,
our customers pay what is owed so it is not necessary for us to provide for
any balances as bad debt, and when considering current and future
macroeconomic conditions, the anticipated loss rate is expected to remain
close to nil.
Group Group
2023 2022
£ £
At 1 January 210 1,188
Charged/(credited) to statement of comprehensive income - (978)
At 31 December 210 210
Group Company Group Company
2023 2023 2022 2022
£ £ £ £
More than 30 days 18,712 17,998 76,881 76,881
More than 60 days 128,551 128,448 73,086 49,336
More than 90 days 125,876 125,096 8,150 5,934
273,139 271,542 158,117 132,151
Notes to the Financial Statements (continued)
Note 17 TRADE AND OTHER PAYABLES
Current Group Company Group Company
2023 2023 2022 2022
£ £ £ £
Trade payables 5,707,674 5,608,259 2,977,750 2,880,305
Contract liabilities 1,030,449 1,030,449 681,044 681,044
Other payables 355,549 46,329 233,990 55,159
Current right of use lease liability 294,662 268,472 202,287 180,044
Other taxes and social security costs 207,385 202,605 188,986 185,557
Accruals 2,070,693 1,733,933 1,500,205 1,189,197
9,666,412 8,890,047 5,784,262 5,171,306
Non-Current Group Company Group Company
2023 2023 2022 2022
£ £ £ £
Right of use lease liability 695,272 677,607 1,257,820 1,211,405
695,272 677,607 1,257,820 1,211,405
Contract liabilities have been disaggregated from other payables in the
current and prior years to provide more detailed information to the reader of
the accounts as to the nature of other payables.
Contract liabilities Warranty End of End of Non- Total
(Group and Company) life life recurring
service engineering
charge
B/fwd as 1 January 2022 94,556 445,592 6,941 133,955 681,044
Addition 42,174 266,676 - 389,685 698,535
Release (87,486) (121,332 ) (6,357) (133,955) (349,130)
Closing at 31 December 2023 49,244 590,936 584 389,685 1,030,449
Note 18 FINANCIAL INSTRUMENTS
Financial Instruments by category
Financial assets measured at amortised cost
£
GROUP
2022 Non-current:
2022 Current:
Trade and other receivables 4,755,594
Cash and cash equivalents 4,512,720
Total for category 9,268,314
2023 Non-current:
2023 Current:
Trade and other receivables 5,430,181
Cash and cash equivalents 11,118,728
Total for category 16,548,909
Financial liabilities measured at amortised cost
£
GROUP
2022 Current:
Trade and other payables 4,895,232
2023 Current:
Trade and other payables 8,428,578
Included in the above are trade payables, other payables, accruals and lease
liabilities. All non-current liabilities, as displayed in Note 17, relate to
lease liabilities, which are financial liabilities measured at amortised cost.
Note 19 PROVISIONS
GROUP AND COMPANY Dilapidation Product
£ warranty
£
Carrying amount at 1 January 2023 286,080 36,512
Increase in provisions 10,799 -
Amount utilised - -
Carrying amount at 31 December 2023 296,879 36,512
Provisions have been analysed between current and non-current as follows:
Current 18,256
Non-current 315,135
Warranties are provided for on the basis of management's best estimate of the
Group's liability under 24-month warranties granted on its hardware products,
based on past experience.
Dilapidations are provided for on the basis of management's best estimate for
both the Colchester and Theale office. This is recognised over the life of
each lease.
Note 20 LEASES AND COMMITMENTS
The Group leases properties for its operations in the UK and US, and the
information is presented below; all leases relate to property.
Reconciliation of lease Group Company Group Company
liabilities 2023 2023 2022 2022
£ £ £ £
Opening 1,460,107 1,391,449 910,210 834,274
Additions - - 635,248 635,248
Modification and amendment (265,325) (265,325) - -
Payments (301,219) (269,641) (199,347) (165,927)
Interest 103,008 89,596 104,469 87,854
FX (6,636) - 9,527 -
Closing 989,935 946,079 1,460,107 1,391,449
Non-current (Note 17) (695,273) (677,607) (1,257,820) (1,211,405)
Current (Note 17) (294,662) (268,472) (202,287) (180,044)
(989,935) (946,079) (1,460,107) (1,391,449)
Group Company
2023 2023
£ £
Opening balance 1,045,328 998,687
Modification & amendment (150,868) (150,868)
Depreciation (203,870) (186,393)
Foreign exchange (1,651) -
Closing balance 688,939 661,426
The right of use in relation to leasehold property are disclosed as PPE (Note
11).
Leases are made up of three properties, with the terms as follows: UK office
(Colchester) has no remaining break clauses; UK office (Theale) has a break
clause of 1 April 2028; US office has an annual automatic one-year extension
unless notice is given.
Amounts payable under lease arrangements Group Company Group Company
2023 2023 2022 2022
£ £ £ £
Within one year (357,040) (325,462) (303,061) (269,641)
Within two to six years (757,806) (739,386) (1,433,763) (1,380,848)
Add unearned interest 124,911 118,769 276,717 259,040
(989,935) (946,079) (1,460,107) (1,391,449)
Group Company
2023 2023
£ £
Opening balance 1,045,328 998,687
Modification & amendment (150,868) (150,868)
Depreciation (203,870) (186,393)
Foreign exchange (1,651) -
Closing balance 688,939 661,426
The right of use in relation to leasehold property are disclosed as PPE (Note
11).
Leases are made up of three properties, with the terms as follows: UK office
(Colchester) has no remaining break clauses; UK office (Theale) has a break
clause of 1 April 2028; US office has an annual automatic one-year extension
unless notice is given.
Amounts payable under lease arrangements
Group
Company
Group
Company
2023
2023
2022
2022
£
£
£
£
Within one year
(357,040)
(325,462)
(303,061)
(269,641)
Within two to six years
(757,806)
(739,386)
(1,433,763)
(1,380,848)
Add unearned interest
124,911
118,769
276,717
259,040
(989,935)
(946,079)
(1,460,107)
(1,391,449)
At 31 December 2023, the Group was committed to a short-term lease for the
Phillips Aerospace office lease (2022: None).
The Group has elected not to recognise a lease liability for short-term leases
or for leases of low-value assets. Payments made on these leases are expensed
on a straight-line basis and the value of these expenses in the year was
£49,606.
Amounts recognised in the Consolidated Statement of Comprehensive Income.
Note 20 LEASES AND COMMITMENTS (CONTINUED)
Group Group
2023 2022
£ £
Short-term and low-value lease expense 49,606 -
Depreciation charge 203,870 195,254
Interest expense 103,008 111,941
Amounts recognised in the Consolidated Statement of Cash Flows.
Group Group
2023 2022
£ £
Short-term and low-value lease expense - -
Payment of lease liabilities 301,219 94,842
Capital commitments
At the end of the year, the capital expenditure commitment (for a machine for
the factory) was £142,008 (2022: £nil).
Note 21 SHARE CAPITAL, SHARE PREMIUM, MERGER RESERVE AND CAPITAL REDEMPTION RESERVE
31 Dec 2023 31 Dec 2022
£ £
Allotted, issued and fully paid share capital:
Ordinary shares (86,169,236 of 1p each) 861,692 739,000
Share capital
Balance as at 1 January 2023 739,000
Shares issued for equity raise 104,615
Shares issued for acquisition 18,077
Balance as at 31 December 2023 861,692
Share premium
Balance as at 1 January 2023 3,699,105
Shares issued for equity raise less issue costs 6,251,126
Balance as at 31 December 2023 9,950,231
Merger reserve
Balance as at 1 January 2023 -
Shares issued for acquisition 1,283,457
Balance as at 31 December 2023 1,283,457
Capital redemption reserve
Balance as at 1 January 2023 256976
-
Balance as at 31 December 2023 256,976
During the year, 10,461,538 shares were issued as part of an equity raise for
the Company. A further 1,807,686 were issued as part of the acquisition of
Phillips Aerospace.
At 31 December 2023, the Company held 531,522 ordinary shares (2022: 531,522)
with an aggregate nominal value of £5,315 (2022: £5,315) in treasury.
Treasury shares
Balance as at 1 January 2023 531,522
Shares sold -
Balance as at 31 December 2023 531,522
Note 22 PENSION SCHEME
The Company operates a group personal pension scheme, which all permanent
employees may join. The scheme, which is a defined contribution scheme, is
independent of the Company's finances. The Company's contributions are based
on between 5.5% and 13.5% of members' gross salaries, dependent upon the
length of service of the individual. The Company has also chosen NEST
(National Employment Savings Trust) as its workplace pension scheme to meet
its employer duties under the auto-enrolment rules. Contributions to the NEST
scheme are at the minimum rates. The total charge to administrative expenses
in the statement of comprehensive income is disclosed in Note 10 'Staff
Costs'. Pension contributions payable to the schemes at the end of the year
were £63,681 (2022: £55,160).
Note 23 FINANCIAL RISK MANAGEMENT
The Group is exposed to various risks in relation to financial instruments.
The Group's financial assets and liabilities by category are summarised in
Note 18. The main types of risks are market risk, credit risk and liquidity
risk. The Group's policy in respect of financial risk management is referred
to in the report on corporate governance.
The Group does not actively engage in the trading or holding of financial
assets for speculative purposes. The most significant financial risks to which
the Group is exposed are described below.
Market risk analysis
The Group is exposed to market risk through its use of financial instruments
and specifically to currency risk that results from its operating activities.
Foreign currency sensitivity
A number of transactions are conducted by companies in the Group in currencies
other than their functional currency, which give rise to monetary assets and
liabilities denominated in other currencies. The Group's exposure to foreign
currency exchange risk is mitigated to a large extent by natural hedging, as
assets in currency are matched by liabilities in the same currency. The value
of monetary assets and liabilities of the Group and Company not held in
functional currencies at the balance sheet date were as follows:
Net foreign currency monetary assets/(liabilities)
2023 2022
US dollar US dollar
£ £
Group (447,522) (175,103)
2023 2022
US dollar US dollar
£ £
If sterling had strengthened by 5% against US dollar:
Impact on net Group result and equity for the year 21,312 8,338
If sterling had weakened by 5% against US dollar:
Impact on net Group result and equity for the year (23,555) (9,216)
Exposures to foreign exchange rates vary during the year depending on the
volume of overseas transactions. Nonetheless, the analysis above is considered
to be representative of the exposure to currency risk.
Credit risk analysis
Credit risk is the risk that a counterparty fails to discharge an obligation
to the Group. The Group is exposed to this risk from cash and cash equivalents
and outstanding receivables.
The Group applies the IFRS 9 simplified approach to measuring expected credit
losses, which uses a lifetime expected loss allowance for all trade
receivables.
To measure the expected credit losses, trade receivables and contract assets
have been grouped based on shared credit risk characteristics and the days
past due.
On that basis, the loss allowance as at 31 December 2023 and 31 December 2022
was determined as follows:
Note 23 FINANCIAL RISK MANAGEMENT (CONTINUED)
Group
31 December 2023 Current More than 30 days past due More than 60 days past due More than 90 days past due Total
Expected loss rate - - - 100%
Gross carrying amount 5,282,708 18,712 128,551 210 5,430,181
Lifetime expected credit loss - - - 210 210
31 December 2022 Current More than 30 days past due More than 60 days past due More than 90 days past due Total
Expected loss rate - - - 100%
Gross carrying amount 4,605,417 76,881 73,086 210 4,755,594
Lifetime expected credit loss - - - 210 210
The Group loss allowances for trade receivables as at 31 December reconcile to
the opening loss allowances as follows:
2023 2022
£ £
Opening loss allowance at 1 January 210 1,188
Loss allowance recognised during the year - (978)
Closing loss allowance at 31 December 210 210
The credit risk for cash and cash equivalents and fixed-term cash deposits is
considered negligible since the counterparties are reputable banks with
high-quality external credit ratings.
Liquidity risk analysis
2023 Current More than 30 days past due More than 60 days past due More than 90 days past due Total
Trade payables 4,747,497 673,864 154,861 131,452 5,707,674
Accruals 2,070,693 2,070,693
2022 Current More than 30 days past due More than 60 days past due More than 90 days past due Total
Trade payables 1,446,455 1,331,839 120,802 78,654 2,977,750
Accruals 1,500,205 1,500,205
Liquidity risk is that the Group might be unable to meet its obligations. The
Group manages its liquidity needs by monitoring forecast cash inflows and
outflows due in day-to-day business. Liquidity needs are monitored in various
time bands, on a week-to-week basis and by monthly forecasting.
The Group's objective is to maintain cash to meet its liquidity requirements
for the foreseeable future. This objective was met for the reporting periods.
Funding for long-term liquidity needs is assessed by the Board on a regular
basis.
The Group considers expected cash flows from financial assets in assessing and
managing liquidity risk, in particular its cash resources and trade
receivables. The Group's existing cash resources and trade receivables (see
Note 16) exceed the current cash outflow requirements. Cash flows from trade
and other receivables are all contractually due within three months.
Note 24 CAPITAL MANAGEMENT
The Group's objectives when managing capital are:
(i) to ensure the Group's ability to continue as a going concern, and
(ii) to provide an adequate return to shareholders
by pricing products and services commensurately with the level of risk.
The Group monitors capital on the basis of the carrying amount of equity less
cash and cash equivalents as presented on the face of the Consolidated Balance
Sheet.
The Group manages the capital structure and makes adjustments to it in the
light of changes in economic conditions and the risk characteristics of the
underlying assets. In order to maintain or adjust the capital structure, the
Group may adjust the number of dividends paid to shareholders, return capital
to shareholders, purchase its own shares to hold in treasury, issue new shares
or sell assets. There were no changes in the Group's approach to capital
management during the year. Neither the Company nor any of its subsidiaries
are subject to externally imposed capital requirements.
Capital for the reporting periods under review is summarised as follows:
Group Group
2023 2022
£ £
Total equity 35,036,427 23,176,502
Cash and cash equivalents (11,118,728) (4,512,720)
Capital 23,917,699 18,663,782
Total equity and overall financing 35,036,427 23,176,502
Capital to overall financing ratio 0.68 0.81
Note 25 RELATED PARTY TRANSACTIONS
The Company has taken the FRS 101 exemption given that transactions are only
with other wholly owned Group companies. The are no transactions for the Group
to report on under IAS 24. All intra-Group transactions are removed on
consolidation.
Dividends paid to Directors during the year amounted
to:
- 280
Transactions with key management personnel during the period:
Key management personnel are the Company's Board. Key management personnel
remuneration includes the following expenses:
Group Group
2023 2022
£ £
Short-term employee benefits 1,305,205 869,717
Post-employment benefits 18,632 20,697
Share-based payment (IFRS 2) 287,773 161,114
1,611,610 1,051,528
Note 26 SHARE-BASED PAYMENT
At the beginning of 2021, the Company operated an enterprise management
incentive share option scheme. During 2021, an LTIP was introduced.
The LTIP scheme provides for a grant price equal to the nominal value of the
Company's shares on the date of grant. Options cannot be vested until three
years after grant date and vesting is conditional upon the Group achieving a
compound percentage growth of the Group average basic earnings per ordinary
share, for the complete years commencing 1 January of the year of grant and
ending with the year most immediately prior to the vesting of the option. The
latest date for exercising options is ten years after grant date and vesting
of options is subject to continued employment with the Group.
2023 2023 2022 2022
Options Weighted Options Weighted
average average
price price
N(o) pence N(o) pence
Outstanding at 1 January 2,289,797 31.14 1,467,205 47.29
Granted 2,300,209 1.00 991,357 1.00
Exercised - - (5,000) 48.50
Forfeited/Lapsed (35,804) 1.00 (163,765) 70.20
Outstanding at 31 December 4,554,202 16.15 2,289,797 31.14
Weighted average share price at date of exercise - - 5,000 48.50
Exercisable at 31 December 2023 Nil - Nil -
Options outstanding at 31 December 2023 had exercise prices ranging from 1.0
pence to 101.50 pence and a weighted average remaining contractual life of
2.49 years (2022: 3.97 years).
The inputs to the Black-Scholes model for options granted over the period were
as follows:
Grant date 23 Oct 2023 20 Nov 2023
Share price at grant date £0.67 £0.71
Exercise price £0.01 £0.01
Dividend yield 2.85% 2.85%
Risk-free interest rate 4.50% 4.17%
Volatility 36.00% 36.10%
The
share-based payment charge for 2023 was £430,854 (2022: £219,363).
Note 27 BUSINESS COMBINATIONS
Acquisition in 2023
Acquisition of Phillips Aerospace
During the year, on 6 September 2023, the Group acquired 100% of the voting
shares of Phillips Aerospace Limited, a non-listed company based in the US and
specialising in the development and manufacture of industrial products and
associated services, in exchange for the Company's shares and cash. The Group
acquired Phillips Aerospace Limited because its strategy was to use the
Phillips business and diversify it into actual systems, offering it
additionally to the Group's customer base, as well as gaining Phillips'
customer relationships. These expansion, growth and export opportunities
provide an established presence in North America.
Assets acquired and liabilities assumed
The fair values of the identifiable assets and liabilities of Phillips
Aerospace Limited as at the date of acquisition were:
At acquisition
£
Tangible fixed assets 20,039
Trade and other receivables 251,984
Cash acquired 146,660
Current liabilities (111,377)
Long-term liabilities (1,007,336)
Net assets on acquisition (700,030)
Separately identifiable intangible assets on acquisition 1,538,429
Goodwill on acquisition 1,269,443
Total investment in subsidiary 2,107,843
Initial consideration - cash 832,427
Share consideration 1,301,534
Escrow (26,118)
Total investment in subsidiary 2,107,843
The deferred tax liability comprises the tax effect of the accelerated
depreciation for tax purposes of tangible and intangible assets.
There was additional cash transferred as part of the acquisition of £667,347
to pay off outstanding loan balances within Phillips Aerospace.
Separately identifiable intangible assets comprise customer relationships
£1,148,761 and licences £389,668.
The goodwill of £1,294,255 comprises the value of expected synergies arising
from the acquisition, the assembled workforce and technological know-how,
which is not separately recognised.
From the date of acquisition, Phillips Aerospace Limited contributed £819,500
of revenue and £201,000 to profit before tax from continuing operations of
the Group.
Phillips Aerospace revenue for the year was £1,584,587 and £36,680 profit
before tax.
£195,881 of exceptional acquisition expenses were incurred as a direct result
of the Group acquiring Phillips Aerospace.
The creation of a merger reserve of £1,283,457 is a result of acquiring
Phillips Aerospace in accordance with s612 CA06. In total 1,807,686 shares
were issued in relation to the acquisition.
Note 28 ULTIMATE CONTROLLING PARTY
The Directors have assessed that there is no ultimate controlling party.
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. END FR FBLLXZZLFBBLRecent news on Concurrent Technologies
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