REG - Concurrent Tech. - Final Results

Concurrent TechnologiesAnnouncement

12/04/2021 07:05

RNS Number : 0558V
  
Concurrent Technologies PLC
  
12 April 2021
  
 

This announcement contains inside information
12 April 2021
Concurrent Technologies Plc
 
Results for the year ended 31 December 2020
 
Concurrent Technologies Plc (AIM: CNC), a world leading specialist in the design and manufacture of high-end embedded computer boards for critical applications, announces results for the year to 31 December 2020.
 
Financial Highlights



·     Revenue for the year increased 9% to £21.1m (2019: £19.4m)
·     Gross profit increased 12% to £11.4m (2019: £10.2m)
·     Gross margin increased to 53.7% (2019: 52.7%)
·     EBITDA steady at £5.0m (2019: £5.1m)
·     Adjusted Profit before tax of £2.8m (2019: 3.1m after adjusting for other, non-recurring income of £1.0m)
·     Profit before Tax of £2.8m (2019: £4.1m - including other, non-recurring income of £1.0m)
·     Profit after Tax of £2.7m (2019: £4.0m)
·     Adjusted EPS for 2020 was 3.75 (2019: 4.38 after removing the non-recurring income of £1m and the associated tax impact)
·     Dividend increased to 2.55 pence per share for the year (2019: 2.50 pence)
·     Cash in the business increased to £11.8m (2019: £10.5m)
 
Operational Highlights
 
·      Production and the design and development functions have remained open and, for the most part, fully operational throughout the COVID-19 pandemic. The Group has not participated in any government aid scheme such as the Coronavirus Business Interruption Loan Scheme (CBILS) or VAT payment deferral and no employees have been furloughed during the pandemic.
·      Exports remain strong and contribute 91% of Group revenue
·      Cessation of R&D facility in India almost completed and functions transferred to UK. Costs of cessation were £0.7m which have been recognised in the 2020 accounts.
·      Spending on R&D increased to £3.89m in 2020 (2019: £3.51m), of which £1.88m was capitalised (2019: £2.26m).
 
The Group's previous Chairman, Michael Collins, retired from the Board in September 2020 after 31 years' service to the Group. Mike's knowledge and experience helped to guide the Group from start-up to PLC. Mark Cubitt was appointed as the Group's new Chairman at the AGM, having previously joined the Board as a Non-Executive Director in March 2020. Mark is a Chartered Accountant and is a member of the Association of Corporate Treasurers. He has extensive multinational experience gained over the last 33 years, including 23 years in the listed PLC environment. 
 
Mark Cubitt, Chairman of Concurrent Technologies Plc, commented:
 
"During 2020, the Group introduced several new high-performance embedded computer boards and accessory modules. These included products based on the 9th generation embedded Intel® Xeon® processor for use in  AMC, CompactPCI® and OpenVPX™ architectures. 
As part of the Group's long-term continuous improvement strategy, and to mitigate an identified risk to the business during 2020, a further investment of £155,000 was made within manufacturing to introduce a new circuit board processing line.
The Board is taking a cautious approach to revenue growth in the coming year because of the continuing uncertainty caused by the COVID-19 outbreak and the delays seen to some programmes potentially moving revenue from 2021 to 2022. However, the Group's proven ability to adapt to the challenges brought about by the pandemic, the overhead savings from closure of the Indian design office, its ability to provide a well-supported, UK designed and manufactured product, and the current record order book, which has seen a substantial increase during the first quarter of 2021, gives the Board confidence in the Group's continuing solid performance."
 
Annual General Meeting
 
Due to the COVID-19 crisis and social distancing requirements the date and arrangements for the AGM will be announced separately.
 
Enquiries:



Concurrent Technologies Plc
Jane Annear, Managing Director/CEO


 
+44 (0)1206 752626














Newgate (Financial PR)
Bob Huxford
Isabelle Smurfit


 
+44 (0)20 7653 9848

+44 (0)20 7653 3411














Cenkos Securities Plc (NOMAD)
Neil McDonald
Peter Lynch




+44 (0)131 220 9771
+44 (0)131 220 9772



 




Extracts from the Strategic Report
Review of Operations 
The Group generated record Revenue for the year of £21.14m (2019: £19.38m). This converted into Gross Profit of £11.36m (2020: £10.21m) while the gross margin improved to 53.7% (2019: 52.7%).
Profit before tax was £2.85m (2019: £4.06m: 2019 included other, non-recurring income of £1.0m). Earnings per share was 3.75 pence (2019: 5.51 pence) while earnings per share on normal activities, adjusted to remove the impact of Other Income, was 3.75 pence (2019: 4.38 pence). EBITDA (measured as Operating Profit plus Depreciation and Amortisation) for the Group in 2020 was £4.99m (2019: £5.07m).
The Group continued its long-term commitment to R&D by spending £3.89m in 2020 (2019: £3.51m), of which £1.88m was capitalised (2019: £2.26m) and £0.69m related to closure costs of the Indian R&D centre. In light of the slowdown in the sales of some projects, an unusually large impairment charge of £888,579 (2019: £483,630) was included during the year to reflect relatively pessimistic cash generating expectations of itemised projects.
The Group continues to have no borrowings and again paid increased dividends during the year. Its cash balances plus short to medium term cash deposits at the year-end were £11.8m (2019: £10.5m).
 
Operational Highlights 
During 2020, the Group introduced several new high-performance embedded computer boards and accessory modules. These included products based on the 9th generation embedded Intel® Xeon® processor for use in AMC, CompactPCI® and OpenVPX™ architectures. These products were introduced as part of the Group's policy to provide existing customers with products that can be used as upgrade paths from previous generations where additional processing power or enhanced features are required. New customers benefit from choosing products based on the latest technologies. As required by many applications, these new products offer support for enhanced security features and most are suitable for both commercial and harsh environments. In addition, support for additional partner software and hardware products was announced to broaden the Group's product range. The Group's AI technology product is currently being developed for use on a prototype third-party end product that may come to market this year. 
As part of the Group's long-term continuous improvement strategy, and to mitigate an identified risk to the business during 2020, a further investment of £155,000 was made within manufacturing to introduce a new circuit board processing line. This line will significantly help to reduce lead times for particular product variants.
 
Outlook
The new financial year of 2021 started with a healthy order book which has seen a significant increase during the first quarter of the year. The Group's telecoms business is now recovering and growing after last year's second half slow down, and several customers in the defence and telecoms sectors have placed orders for previous generation products that have been offered under extended manufacturing to protect and extend the lifecycle of their projects. These orders are due for delivery in 2021 and beyond. Several of the Group's customers have made the decision to upgrade to its newer generation products.
The Group plans to maintain its policy of investing in R&D to expand its current range of advanced technology products with a particular focus on the OpenVPX™ bus architecture, featuring the latest Intel processors suitable for the long lifecycle embedded markets in which the Group operates. Support for third party software and hardware products will be continued in order to enhance the Group's capability to provide development systems. These ready-to-use development systems enable customers to reduce their product development times by focussing on their own areas of expertise to develop specialised applications.
The Board sees opportunities to grow the business organically by broadening the range of both hardware and software products within its existing core markets of defence and telecommunications. Savings made from ceasing operations in the Indian office will largely be reinvested to increase and broaden the skills and technical expertise within the UK team. In addition, the Board continues to look to recruit key individuals and skill for both succession and organic growth as well as for worldwide acquisition opportunities which would assist the Group in introducing new skills and technologies complementary and adjacent to its current product ranges. This is with the aim of increasing the Group's potential share of the total available market.
 
Dividend
The Board has declared a second interim dividend of 1.45 pence per share (2019: 1.45 pence) which, when added to the first interim dividend of 1.10 pence per share (2019: 1.05 pence), will make a total of 2.55 pence per share for the year (2019: 2.50 pence). This is an increase of 2.0% on dividends paid for 2019. The total cost of this second interim dividend amounts to £1,063,771. As in previous years, the Directors do not intend to recommend a final dividend.
 
Annual General Meeting
Due to the COVID-19 crisis and social distancing requirements the date and arrangements for the AGM will be announced separately.
All trademarks, registered trademarks and trade names used in this announcement are the property of their respective owners.




Consolidated Statement of Comprehensive Income











Year to






Year to












31 December






31 December












2020






2019




CONTINUING OPERATIONS






£






£




Revenue






   21,141,294 






   19,384,724 




Cost of sales






9,780,750






9,174,588




Gross profit






11,360,544






10,210,136




Operating expenses






8,444,962






7,204,073




Group operating profit






2,915,582






3,006,063




Finance costs






(83,985)






(41,808)




Finance income






16,480






96,601




Other Income






-






1,000,000




Profit before tax






2,848,077






4,060,856




Tax






98,167






52,857




Profit for the year






2,749,910






4,007,999


























Other Comprehensive Income




















Items that will be reclassified subsequently to profit or loss:




















Exchange differences on translating foreign operations






(283,681)






(186,972)




Tax relating to components of other comprehensive income






-






-




Other Comprehensive Income for the year, net of tax






(283,681)






(186,972)




Total Comprehensive Income for the year






2,466,229






3,821,026


























Profit for the period attributable to:




















Equity holders of the parent






2,749,910






4,007,999


























Total Comprehensive Income attributable to:




















Equity holders of the parent






2,466,229






3,821,026


























Earnings per share




















Basic earnings per share






3.75p






5.51p


























Diluted earnings per share






3.74p






5.47p



 




Consolidated Balance Sheet











As at






As at












31 December






31 December












2020






2019




















(as restated)












£ 






£ 




ASSETS




















Non-current assets




















Property, plant and equipment






1,734,965






1,638,429




Intangible assets






7,205,581






7,991,119




Deferred tax assets






134,775






142,894












9,075,321






9,772,442




Current assets




















Inventories






5,533,574






5,097,907




Trade and other receivables






2,356,157






2,703,960




Current tax assets






305,113






274,221




Other financial assets






-   






-   




Cash and cash equivalents






11,765,974






10,487,902












19,960,818






18,563,990


























Total assets






29,036,139






28,336,432


























LIABILITIES




















Non-current liabilities




















Deferred tax liabilities






1,571,830






1,453,331




Trade and other payables






704,800






838,001




Long term provisions






16,162






16,731












2,292,792






2,308,063




Current liabilities




















Trade and other payables






4,143,522






4,126,823




Short term provisions






16,354






16,832




Current Tax Liabilities






26,504






-












4,186,380






4,142,655


























Total liabilities






6,479,172






6,451,718


























Net assets






22,556,967






21,884,714


























EQUITY




















Capital and reserves




















Share capital






739,000






739,000




Share premium account






3,699,105 






3,699,105 




Capital redemption reserve






256,976 






256,976 




Cumulative translation reserve






(121,293)






162,388




Profit and loss account






17,983,179






17,027,245




Equity attributable to equity holders of the parent






22,556,967






21,884,714


























Total equity






22,556,967






21,884,714



 




Consolidated Cash Flow Statement











Year to






Year to












31 December






31 December












2020






2019












£ 






£ 




Cash flows from operating activities




















Profit before tax for the period






2,848,077






4,060,856




Adjustments for:




















Finance income        






(16,480)






(96,601)




Finance costs






83,985






41,808




Depreciation        






282,563






315,687




Amortisation        






1,793,628






1,788,003




Impairment loss        






888,579






483,630




Share-based payment        






6,991






82,421




Exchange differences        






(300,569)






(205,790)




Decrease/(increase) in inventories        






(435,667)






(1,001,331)




(Increase)/decrease in trade and other receivables        






347,803






648,621




Increase/(decrease) in trade and other payables        






(9,354)






1,232,237




Cash generated from operations






5,489,557






7,349,541




Tax received






40,536






(21,173)




Net cash generated from operating activities






5,530,092






7,328,368


























Cash flows from investing activities




















Interest received






16,480






96,601




Purchases of property, plant and equipment (PPE)






(385,964)






(476,376)




Capitalisation of development costs and purchases of intangible assets






(1,896,659)






(2,272,054)




Net cash used in investing activities






(2,266,143)






(2,651,829)


























Cash flows from financing activities




















Equity dividends paid






(1,864,968)






(1,745,345)




Repayment of leasing liabilities






(108,195)






(108,426)




Interest paid






(83,985)






(41,808)




Sale of treasury shares






47,529






4,950




Net cash used in financing activities






(2,009,619)






(1,890,629)


























Effects of exchange rate changes on cash and cash equivalents






23,742






22,640


























Net increase/(decrease) in cash






1,278,072






2,808,550




Cash at beginning of period






10,487,902






7,679,352




Cash at the end of the period






11,765,974






10,487,902



 
 
Consolidated Statement of Changes in Equity



























Capital 






Cumulative






Profit 




















Share 






Share 






redemption 






translation






and loss 






Total 












capital 






premium 






reserve 






reserve






account 






Equity 












£ 






£ 






£ 






£ 






£ 






£ 




Balance at 1 January 2019






     739,000 






 3,699,105 






     256,976 






349,360






14,670,553






19,714,994


























































Profit for the period






                -   






                -   






                -   






                -   






4,007,999






4,007,999




Exchange differences on translating foreign operations






                -   






                -   






                -   






(186,972)






                  -   






(186,972)




Total comprehensive income for the period






                -   






                -   






                -   






(186,972)






4,007,999






3,821,027




Transactions with owners:




















































Share-based payment






                -   






                -   






                -   






                -   






82,421






82,421




Deferred tax on share based payment






                -   






                -   






                -   






                -   






6,667






6,667




Dividends paid






                -   






                -   






                -   






                -   






(1,745,345)






(1,745,345)




Purchase of treasury shares






                -   






                -   






                -   






                -   






4,950   






4,950   




Balance at 31 December 2019






     739,000 






3,699,105






     256,976 






162,388






17,027,245






21,884,714




Profit for the period






                -   






                -   






                -   






                -   






2,749,910






2,749,910




Exchange differences on translating foreign operations






                -   






                -   






                -   






(283,681)






                  -   






(283,681)




Total comprehensive income for the period






                -   






                -   






                -   






(283,681)






2,749,910






2,466,229




Transactions with owners:




















































Share-based payment






                -   






                -   






                -   






                -   






6,991






6,991




Deferred tax on share based payment






                -   






                -   






                -   






                -   






16,472






16,472




Dividends paid






                -   






                -   






                -   






                -   






(1,864,968)






(1,864,968)




Sale of treasury shares






                -   






                -   






                -   






                -   






47,529   






47,529   




Balance at 31 December 2020






     739,000 






3,699,105






     256,976 






(121,293)






17,983,179






22,556,967















































































































NOTES
 
1.  The Group financial statements consolidate those of the Company and its subsidiaries (together referred to as the 'Group'). The financial information set out in these preliminary results has been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The accounting policies adopted in this results announcement have been consistently applied to all the years presented. The restatement of balance sheet items refers to lease liabilities which have been reclassified from current to non-current liabilities. The adjustment does not impact shareholder funds or profit previously stated. 
 
2.  The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 December 2020 or 2019, but is derived from those accounts. Statutory accounts for 2019 have been delivered to the Registrar of Companies and those for 2020 will be delivered following the Annual General Meeting. The auditors have reported on those accounts; their reports were (i) unqualified, (ii) did not contain statements under section 498(2) or (3) of the Companies Act 2006 in respect of 2019 or 2020 and (iii) did not draw attention to any matters by way of emphasis.
 
3.  The calculation of basic earnings per share is based on the weighted average number of Ordinary Shares in issue during 2020 of 73,253,120 (2019: 72,724,271) after adjustment for treasury shares on the profit after tax for 2020 of £2,749,910 (2019: £4,007,999). The calculation of diluted earnings per share incorporates 311,651 Ordinary Shares (2019: 574,542) in respect of performance related employee share options. The profit after tax is the same as for basic earnings per share.
 
4.  Due to the COVID-19 crisis and social distancing requirements the date and arrangements for the AGM will be announced separately.
 
Copies of the Annual Report will be sent to Shareholders and will also be available from the Company's Registered Office: 4, Gilberd Court, Newcomen Way, Colchester, Essex, CO4 9WN, UK, and on the Company's website: www.gocct.com.
 

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