REG - Concurrent Tech. - Interim Results
19/09/2023 07:00
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RNS Number : 8393M Concurrent Technologies PLC 19 September 2023
19 September 2023
Concurrent Technologies PLC
(the "Company")
Interim Results for the six months ended 30 June 2023
Concurrent Technologies PLC (AIM: CNC), a world leading specialist in high-end
embedded computer products for critical applications, announces its interim
results for the six months to 30 June 2023 ("H1 2023").
Financial Performance
Strengthened order intake has translated into record H1 2023 revenue at
£12.1M (representing a 63% increase on H1 2022, and a 22% increase on H1
2020, which was the best revenue year to date). Demand for the Company's
products remains strong with a H1 order intake of £14.5M (H1 2022: £14.2M)
and record backlog of £29M (31 December 2022: £26.7M). Despite ongoing
challenges with component supply, it is reducing in both difficulty of supply
and lead times, beginning to unlock what had otherwise been a major constraint
to revenue for the previous 2 years, and will ease further throughout the
remainder of this year.
· Revenue of £12.1M (H1 2022: £7.4M) - remained constrained by
components, however, represents a record half year, with an increase of 63% on
prior year.
· Gross profit of £6.0M (H1 2022: £3.7M); an increase of 62% on prior
year.
· Gross margin of 49.7% (H1 2022: 50.4%) - reduced as the result of
price increases of some components due to high demand and limited supply, and
increased manpower costs.
· Operating profit of £1.0M (H1 2022: £0.0M) - predominantly driven
by increase revenue, and hence gross profit (+£2.3M); net costs increased by
c£1.3M, in line with investment strategy (Enabling Functions e.g. People,
Commercial, Procurement; Operations e.g. talent, 2 shifts; Engineering talent;
Facilities e.g. Theale office; Leadership team).
· Profit before tax of £1.0M (H1 2022: £0.0M).
· EPS of 1.54 pence (H1 2022: 0.75 pence); increase of 105% on prior
year.
· Cash Balance (including cash deposits) as at 30 June 2023 of £3M (31
Dec 2022: £4.5M).
o Increased cash from Operations of £0.5M (due to a stronger H1), including
increased inventory of £1M.
o Decrease of £2M from investment activity, predominantly driven by R&D
(£1.7M).
Operational Summary
· Strong order intake of £14.5M as at 30 June 2023, with significant
backlog of £29M compared to £20.3M backlog as at 30 June 2022, up 42%.
· Revenue defined by components availability in H1.
· Defence remains the largest market sector at 73% revenue.
· Global customer base is solid with exports generating +90% of
revenue.
· Investment in R&D costs (talent, improved process & analysis,
materials) have continued (+£0.4M), in line with stated strategy to improve
the cadence and time to market of products that offer the very latest
technology.
· Launched new product Hermes, the latest processer plug-in card.
· Key Partnership agreement announced with Alpha Data to act as a
reseller of their FPGA (Field Programmable Gate Array) based plug in card.
· New distributor agreement with SoC-e to enable the company to offer
the portfolio of Relyum Advanced Networking Solutions.
· Component shortages have remained challenging, limiting the company's
ability to ship product. This is expected to ease in H2 2023.
· Major new systems order with FTSE 250 customer for £1.25M.
Miles Adcock, CEO of Concurrent Technologies, commented: "We are delivering on
our commitment to transition our core Single Board Computer business into
growth. We maintained focus and investment throughout a difficult period of
component constraints; and are now seeing the customer demand for our new
products reflected as increased revenues. In parallel we have been
underpinning capability in relation to a wider systems offering, utilising our
own products, but also partners' products for use in higher value products and
services. This progress on multiple fronts creates the right conditions for
our recently announced equity raise and associated acquisition of Phillips
Aerospace to accelerate our Systems strategy. Together these developments
provide us with confidence for the future."
CHAIRMAN'S STATEMENT
The first half of 2023 has seen a significant recovery in the trading
performance of the Company, with record revenues as the component shortages
ease, although key shortages are still an issue impacting our ability to
convert backlog into revenue. Order intake remains strong and our improved
time to market with new innovative products will further grow and broaden our
customer base.
The acquisition of Phillips Aerospace in September 2023 is an important step
in growing our Systems business, transforming the Company beyond our historic
Single Board focus, with the potential for a step change in the available
market opportunity for the Company.
Although an interim dividend is not being declared, we are confident we will
continue the recovery in the second half of 2023 which will allow us to
consider the re-introduction of a full year dividend.
CHIEF EXECUTIVE'S REVIEW
Financial Summary
The performance of the Company has remained challenged through limitations of
component supply in H1 2023, resulting in a restricted, although record,
revenue of £12.1M (H1 2022 £7.4M), a significant increase of 63% on prior
year. The company continues to have strong backlog (contracted work) at
£29M at H1 2023 (H1 2022: £20.3M), and the Company expects H2 2023 component
supply to be improved over that of H1 2023, following a critical delivery in
July 2023.
Gross margin is 49.7% (H1 2022; 50.4) which is driven primarily by cost of
components. The company has seen a rise in prices during the period of
shortage and high demand.
The Company has delivered an unaudited profit before tax of £1M (H1 2022;
£0.0M). This is a £1M increase on 2022, represented by the increase
revenue (+£4.7M on H1 2022) and corresponding gross profit (+£2.3M), however
net operating expenses were up on prior year, in line with the investment
strategy at £5.0M (H1 2022: £3.7M). This is driven predominantly by
additional investment in talent in R&D (+£0.4M), enabling functions and
the Leadership team (+£0.7M). The Company also benefitted from a £0.4M
foreign exchange rate gain in H1 2022, not repeated in H1 2023.
The balance sheet remains strong with no debt and £3M of cash balances
(including cash deposits) as at 30 June 2023 (31 December 2022: £4.5M).
Component supply issues have continued to dominate H1 2023, and this has
meant a further investment in inventory and a restricted level of revenue,
resulting in a lower cash profile. The Company expects to see this start to
reverse in H2 2023, as component supply eases. Inventory holdings have
increased to £11M by the end of H1 2023 (H1 2022: £9.5M), an increase of a
further £1M since 31 December 2022. The Company is confident in the quality
of the inventory held and that it will see a reduction in the levels during H2
2023. Trade receivables were relatively high at the end of H1 2023 at £5.3M
(H1 2022: £3.5M) due to the timing and level of revenue, which was £4.7M
higher than H1 2022.
With a record order intake in 2022, and further order intake in H1 2023 of
£14.5M, and therefore a significant contracted backlog of £29M, plus easing
component supply issues, the Company is confident in its H1 2023 outlook.
Post Interim Close Events
On 6 September 2023 the Company completed the acquisition of Phillips
Aerospace for US$3.4m through a combination of US$1.9m cash and the issue of
equity of $1.5m to the owners of Phillips Aerospace. Simultaneously the
Company raised £6.8m through the issue of fresh equity approved by
shareholders at a General Meeting held on 4 September 2023. These events
broaden our product offering and strengthen the balance sheet to drive further
growth.
Current Trading & Outlook
With a record H1 backlog of £29M and the component supply chain issues
easing, the Company is in a good position to begin to revert to strong trading
(largely no longer defined by component availability). The Company continues
on its growth journey, with the underpinning of its systems strategy through
the acquisition of Phillips Aerospace (post H1), and the continued drive in
maximising capacity (additional shifts, maximising space, use of third-party
manufacturer) allowing for further growth into 2024 and beyond. The product
portfolio continues to strengthen with continued investment in R&D and
sales, enabling a strong pipeline of opportunities, and conversion of these,
to underpin future revenue growth.
Together, these strategic developments continue to provide confidence for the
future performance of the Company.
Enquiries:
Concurrent Technologies Plc
Miles Adcock, CEO
+44 (0)1206 752626
Kim Garrod, CFO
Newgate (Financial PR) concurrent@secnewgate.co.uk
Bob Huxford
+44 (0)20 3757 6880
Alice Cho
Matthew Elliott
Cavendish Securities plc (NOMAD) +44 (0)131 220 9771
Neil McDonald
+44 (0)131 220 9772
Peter Lynch
Condensed Consolidated Statement of Comprehensive Income
Unaudited interim results to 30th June 2023
Six months Six months Year
ended ended ended
Note 30/06/23 30/06/22 31/12/22
CONTINUING OPERATIONS £ £ £
Revenue 12,139,625 7,421,285 18,274,771
Cost of sales (6,100,879) (3,680,258) (9,397,449)
Gross profit 6,038,746 3,741,027 8,877,322
Net operating expenses (5,028,784) (3,688,676) (8,390,682)
Group operating profit 1,009,962 52,351 486,640
Interest Costs (52,871) (26,930) (104,505)
Finance income 16,405 6,992 546
Other Income - - -
Profit before tax 973,496 32,413 382,681
Tax 154,441 518,890 604,344
Profit for the period 1,127,937 551,303 987,025
Other Comprehensive Income
Exchange differences on translating foreign operations (41,338) 100,789 69,463
Tax relating to components of other comprehensive income - - -
Other Comprehensive Income for the period, net of tax (41,338) 100,789 69,463
Total Comprehensive Income for the period 1,086,599 652,092 1,056,488
Profit for the period attributable to:
Equity holders of the parent 1,127,937 551,303 987,025
Total Comprehensive Income attributable to:
Equity holders of the parent 1,086,599 652,092 1,056,488
Earnings per share
Basic earnings per share 4 1.54p 0.75p 1.35p
Diluted earnings per share 4 1.54p 0.75p 1.35p
Adjusted earnings per share 1.54p 0.75p 1.35p
Condensed Consolidated Balance Sheet
Unaudited interim results to 30th June 2023
As at As at As at
30/06/23 30/06/22 31/12/22
ASSETS £ £ £
Non-current assets
Property, plant and equipment 2,528,605 2,445,996 2,685,107
Intangible assets 9,843,724 9,058,713 8,807,290
Deferred tax assets 321,577 7,243 350,753
Other Financial Assets - - -
12,693,906 11,511,952 11,843,150
Current assets
Inventories 11,048,329 9,460,432 10,090,437
Trade and other receivables 5,337,017 3,460,344 5,439,912
Current tax assets 1,126,010 597,086 762,545
Other Financial Assets - - -
Cash and cash equivalents 2,976,823 9,265,663 4,512,720
20,488,179 22,783,525 20,805,614
Total assets 33,182,086 34,295,477 32,648,764
LIABILITIES
Non-current liabilities
Deferred tax liabilities 2,311,767 2,176,884 2,126,588
Trade and other payables 1,118,819 505,767 1,257,820
Long term provisions 309,735 18,256 304,336
3,740,321 2,700,907 3,688,744
Current liabilities
Trade and other payables 5,165,320 7,119,058 5,765,262
Short term provisions 18,256 18,256 18,256
Current tax liabilities 51,864 15,779 -
5,235,440 7,153,093 5,783,518
Total liabilities 8,975,761 9,854,000 9,472,262
Net assets 24,206,325 24,441,477 23,176,502
EQUITY
Capital and reserves
Share capital 739,000 739,000 739,000
Share premium account 3,699,105 3,699,105 3,699,105
Capital redemption reserve 256,976 256,976 256,976
Cumulative translation reserve (69,274) 3,390 (27,936)
Profit and loss account 19,580,518 19,743,006 18,509,357
Equity attributable to equity holders of the parent 24,206,325 24,441,477 23,176,502
Total equity 24,206,325 24,441,477 23,176,502
Condensed Consolidated Cash Flow Statement
Unaudited interim results to 30th June 2023
Six months Six months Year
ended ended ended
30/06/2023 30/06/2022 31/12/2022
£ £ £
Cash flows from operating activities
Profit before tax for the period 973,496 32,413 382,681
Adjustments for:
Finance income (16,405) (6,992) (546)
Finance costs 52,871 26,930 104,505
Depreciation 447,858 121,589 422,047
Amortisation 650,862 627,395 1,197,972
Impairment loss - - 327,526
Loss on disposal of property, plant and equipment (PPE) - - -
Share-based payment 155,603 48,785 219,363
Exchange differences (44,219) 111,153 82,384
(Increase)/decrease in inventories (957,892) (3,034,996) (3,665,001)
(Increase)/decrease in trade and other receivables 102,895 (471,711) (2,451,279)
Increase/(decrease) in trade and other payables (663,334) 2,920,826 2,222,123
Cash generated from operations 701,735 375,392 (1,158,225)
Tax (paid)/received (155,183) 270,780 267,884
Net cash generated from operating activities 546,552 646,172 (890,341)
Cash flows from investing activities
Interest received 16,405 6,992 546
Cash placed on deposit - - -
Purchases of property, plant and equipment (PPE) (235,971) (1,124,354) (1,480,394)
Proceeds from sale of PPE - - -
Purchases of intangible assets (1,744,508) (1,993,577) (3,711,617)
Net cash used in investing activities (1,964,074) (3,110,939) (5,191,465)
Cash flows from financing activities
Equity dividends paid - - (1,027,088)
Repayment of leasing liabilities (70,210) (64,809) (94,842)
Interest paid (52,871) (26,930) (104,505)
Cash received from share issue - - -
Purchase of treasury shares - - 2,425
Net cash used in financing activities (123,081) (91,739) (1,224,010)
Effects of exchange rate changes on cash and cash equivalents 4,707 (17,589) (21,222)
Net increase/(decrease) in cash (1,535,896) (2,574,095) (7,327,038)
Cash at beginning of period 4,512,720 11,839,758 11,839,758
Cash at the end of the period 2,976,824 9,265,663 4,512,720
Condensed Consolidated Statement of Changes in Equity
Unaudited interim results to 30th June 2023
Capital Cumulative Profit
Share Share redemption translation and loss Total
capital premium 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 - - - - 551,303 551,303
Exchange differences on translating foreign operations - - - 100,789 - 100,789
Total recognised comprehensive income for the period - - - 100,789 551,303 652,092
Share-based payment - - - - 48,785 48,785
Deferred tax on share based payment - - - - -
Dividends paid - - - - -
Sale of treasury shares - - - - - -
Issue of Ordinary shares - - - - - -
Balance at 30 June 2022 739,000 3,699,105 256,976 3,390 18,682,165 23,380,636
Total recognised comprehensive income for the period - - - - 435,722 435,722
Exchange differences on translating foreign operations - - - (31,326) - (31,326)
Total recognised comprehensive income for the period - - - (31,326) 435,722 404,396
Share-based payment - - - - 170,578 170,578
Deferred tax on share based payment - - - - 245,555 245,555
Dividends paid - - - - (1,027,088) (1,027,088)
Sale of treasury shares - - - - 2,425 2,425
Balance at 31 December 2022 739,000 3,699,105 256,976 (27,936) 18,509,357 23,176,502
Total recognised comprehensive income for the period - - - - 1,127,937 1,127,937
Exchange differences on translating foreign operations - - - (41,338) - (41,338)
Total recognised comprehensive income for the period - - - (41,338) 1,127,937 1,086,599
Share-based payment - - - - 155,603 155,603
Deferred tax on share based payment - - - - (212,379) (212,379)
Dividends paid - - - - - -
Issue of ordinary shares - - - - - -
Sale of treasury shares - - - - - -
Balance at 30 June 2023 739,000 3,699,105 256,976 (69,274) 19,580,518 24,206,325
NOTES TO THE INTERIM REPORT
1. General information
The principal activity of the Group is design, manufacture and supply of
innovative high-end embedded single board computers and complementary
accessories aimed at a wide base of customers within the defence &
aerospace, telecommunications, medical and other markets.
Concurrent Technologies PLC ("the Company") is the Group's ultimate parent
company. It is incorporated and domiciled in Great Britain. Concurrent
Technologies PLC shares are listed on the Alternative Investment Market of the
London Stock Exchange.
The Group's condensed consolidated interim financial statements are presented
in pounds sterling (£), which is also the functional currency of the parent
company.
These condensed consolidated interim financial statements, which are
unaudited, have been approved for issue by the Board of Directors on 18
September 2023.
The information relating to the six months ended 30 June 2023 is unaudited and
does not constitute statutory accounts within the meaning of section 434 of
the Companies Act 2006. The statutory accounts for the year ended 31 December
2022, prepared in accordance with IFRSs (International Financial Reporting
Standards) as adopted by the European Union, have been reported on by the
Group's auditors and delivered to the Registrar of Companies. The auditor's
report was qualified, and this qualification will be addressed in the
statutory accounts for 31 December 2023.
2. Summary of significant accounting policies
2.1 Basis of preparation
These condensed consolidated interim financial statements are for the six
months period ended 30 June 2023. They have been prepared in accordance with
IAS 34 "Interim Financial Reporting". They do not include all the
information required for full annual financial statements and should be read
in conjunction with the consolidated financial statements of the Group for the
year ended 31 December 2022, which have been been prepared in accordance with
adopted IFRSs.
The accounting policies applied, and methods of computation are consistent
with those of the annual financial statements for the year end 31 December
2022, as described in those financial statements. The accounting policies
have been consistently applied to all the periods presented.
There are no new IFRSs or IFRIC interpretations that are effective for the
first time for the financial period beginning on or after 1 January 2023 that
would be expected to have a material impact on the results or financial
position of the Group.
2.2 Going Concern
The Directors are satisfied that the Group has sufficient resources to
continue in operation for the foreseeable future, a period of not less than 12
months from the date of this report. Accordingly, the continue to adopt the
going concern basis in preparing these condensed financial statements.
2.3 Taxation
Current tax expense is recognised in these condensed consolidated interim
financial statements based on the estimated effective tax rates for the full
year.
3. Segmental reporting
The Directors consider that the Group is engaged in a single segment of
business, being design, manufacture of high-end embedded computer products and
that therefore, the Company has only a single operating segment. The key
measure of performance used by the Board to assess the Group's performance is
the Group's profit before tax, as calculated under IFRS, and therefore no
reconciliation is required between the measure of profit or loss used by the
Board and that contained in the condensed consolidated interim financial
statements.
4. 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 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 share options.
The inputs to earnings per share calculation
are shown below:
The inputs to the earnings per share calculation are shown below:
Six months Six months Year
ended ended ended
30/06/23 30/06/22 31/12/22
£ £ £
Profit attributable to ordinary equity holders 1,127,937 551,303 987,025
Six months Six months Year
ended ended ended
30/06/23 30/06/22 31/12/22
N° N° N°
Weighted average number of ordinary shares for basic earnings per share 73,363,490 73,673,490 73,363,490
Adjustment for share options -
Weighted average number of ordinary shares for diluted earnings per share 73,363,490 73,673,490 73,363,490
5. Shareholder Communication
A copy of these condensed interim financial statements is available from the
Company's Registered office at:
4 Gilberd Court,
Newcomen Way,
Colchester,
Essex, UK
CO4 9WN
They are also available from the Company's website at www.gocct.com.
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