REG - Concurrent Tech. - Results for the year ended 31 December 2021
12/05/2022 07:00
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RNS Number : 1776L Concurrent Technologies PLC 12 May 2022
This announcement contains inside information
12th May 2022
Concurrent Technologies Plc
("Concurrent" or the "Company" or the "Group")
Results for the year ended 31 December 2021
Concurrent Technologies Plc (AIM: CNC), a world leading specialist in high-end
embedded computer products for critical applications, announces results for
the year to 31 December 2021.
Financial Highlights
· Revenue for the year slightly ahead of market expectations at £20.5m
(2020: £21.1m)
· Gross profit steady at £11.4m (2020: £11.4m)
· Gross margin increased to 55.9% (2020: 53.7%)
· EBITDA increased to £5.1m (2020: £5.0m)
· Profit before Tax increased 22% to £3.5m (2020: £2.8m)
· Profit after Tax increased to £2.8m (2020: £2.7m)
· Non-cash deferred tax charge of £0.5m reflecting increase in UK tax
to 25%
· EPS increased to 3.88p (2020: 3.75p)
· Dividend maintained at 2.55 pence per share for the year (2020: 2.55
pence)
· Cash in the business steady at £11.8m (2020: £11.8m)
· Prior year restatement in 2019 to increase net assets by £0.3m
Operational Highlights
· New CEO and refreshed Leadership Team.
· Mitigated the impact of restricted supply of components through
longstanding beneficial relationships with suppliers, well managed use of
stock levels and flexible actions in response to shortage of specific
components.
· Upgraded ability to launch new products, at broadly double the
frequency and half the lead time, ensuring products are ready concurrently
with market need.
Outlook
· The Group is targeting eight new product releases in 2022. Delivery
on this objective has begun, with a Position, Navigation and Timing plug in
card announced in January 2022 and a 100 Gigabit Ethernet Processor Plug in
Card announced in February 2022, simultaneously with the new Intel chip on
which it is based.
· Strong bookings with order book increased to £16.2m as 31 March 2022
from £13.2m at 31 December 2021.
· Component shortage represents challenge to ship product in 2022,
particularly in H1 with order delivery expected to be delayed and revenues
recognised over a longer period than during normal market conditions.
Miles Adcock, CEO of Concurrent Technologies Plc, commented: "Having joined
Concurrent in June 2021, I have been delighted to find that the potential for
growth is very real. Despite the ongoing headwinds from components
shortages, the financial performance of 2021 was excellent, with record profit
delivered. The past year was a period of keen focus on new product
development and investing in strategies for growth, an approach that will
continue through 2022. We have also significantly augmented the already
excellent team with domain specific expertise, and top talent in broader
disciplines.
"Despite growing demand for our products and an increased order book, we do
expect short-term supply challenges will result in delivery of it being more
protracted than is normal for the Group. However, we are robustly managing
this issue and have a very strong balance sheet and so, rather than damage the
business through cost cutting exercises, we will focus on continuing to grow
the order book and on creating an even stronger business capable of taking
advantage of a number of identified, exciting prospects. We are already seeing
increased market interest in our renewed product portfolio, and I am confident
in our mid-to-long term profitable growth."
Enquiries:
Concurrent Technologies Plc
Miles Adcock, CEO
+44 (0)1206 752626
SEC Newgate (Financial PR)
Bob Huxford
+44 (0)20 3757 6880
Isabelle Smurfit
+44 (0)20 3757 6880
Group
email
concurrent@secnewgate.co.uk (mailto:concurrent@secnewgate.co.uk)
Cenkos Securities Plc (NOMAD)
Neil McDonald
+44 (0)131 220 9771
Peter Lynch
+44 (0)131 220 9772
Extracts from the Strategic Report
Financial Highlights 2021 2020
Revenue £20.5m £21.1m
EBITDA £5.1m £5.0m
Profit before tax £3.5m £2.8m
Earnings per share 3.88p 3.75p
Dividend per share 2.55p 2.55p
Cash (including Deposits) £11.8m £11.8m
Total Assets £30.7m £29.0m
Shareholders' Funds £23.7m £22.8m
The Group generated Revenue for the year of £20.45m (2020: £21.14m). This
converted into Gross Profit of £11.43m (2020: £11.36m) while the gross
margin improved to 55.9% (2020: 53.7%) reflecting the change in product mix,
regarding architecture and geography.
Profit before tax was £3.48m (2020: £2.85m). Earnings per share was 3.88
pence (2020: 3.75 pence) while earnings per share on normal activities, EBITDA
(measured as Operating Profit plus Depreciation and Amortisation) for the
Group in 2021 was £5.1m (2020: £5.0m).
The Group continued its long-term commitment to R&D by spending £3.60m in
2021 (2020: £3.89m including £0.69m relating to the closure of the
development site in India), of which £2.1m was capitalised (2020: £1.9m) One
project was judged by the Directors to be at serious risk of not being able to
make a positive return to the Group and so has been fully impaired with a
resulting charge of £0.5m, with a further charge of £0.1m to partially
provide against underperforming projects, a total impairment charge of £0.6m
(2020: £0.9m).
The tax charge of £0.6m is largely the impact on Deferred tax of the increase
in the UK tax rate to 25% in 2023 of £0.5m, which is a non cash item. The
Group continues to benefit from R&D tax credits in the UK and does not
anticipate being in a UK cash tax paying position whilst this incentive
continues.
The Group continues to have no borrowings and its cash balances plus short to
medium term cash deposits at the year-end were £11.8m (2020: £11.8m).
The Board has proposed a final dividend of 1.40 pence per share (second
interim dividend in 2020: 1.45 pence) which, when added to the first interim
dividend of 1.15 pence per share (2020: 1.10 pence), will make a total of 2.55
pence per share for the year (2020: 2.55 pence). Keeping a flat dividend
reflects the ongoing concerns on the component shortage and the Group plans to
engage with shareholders on the future dividend strategy. The total cost of
the final dividend amounts to £1,034,600.
Dividend
Operational Highlights During 2021, the Group introduced several new high-performance embedded
computer boards and accessory modules. These included products based on the
11th 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.
The Group were announced as an Intel Titanium Partner during the year,
providing the highest level of insight and development opportunity to the
Group.
As part of the Group's long-term continuous improvement strategy a further
investment was made within manufacturing to introduce a new optical inspection
machine.
The new financial year of 2022 started with a healthy order book reflecting in
part the long-term sales pipeline the Group enjoys but also in part the
willingness of our customers to order further in advance to provide the
Future Plans maximum opportunity to manage the supply chain to meet delivery times.
and The Group expects to announce several new products during 2022, a Position,
Navigation and Timing plug in card was announced in January 2022 and a 100
Outlook Gigabit Ethernet Processor Plug in Card was announced simultaneous with the
new Intel chip it is based around. This accelerated time to market provides
additional and incremental sales opportunities in both the US and Europe.
The Group will maintain its policy of investing in R&D to expand its
current range of advanced technology products broadening out to include
deployable systems and integration of third-party products to complement the
hardware and software already developed internally.
The Board sees opportunities to grow the business organically by broadening
the range of both hardware, software and systems products within its existing
core markets of defence and telecommunications. In addition, the Board
continues to look to recruit key individuals and skills 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.
The Board is taking a cautious approach to revenue and profit in 2022 due to
the uncertainty around the speed of a return to normal trading conditions
after COVID, but especially in light of the difficulties within the global
supply chain impacting when we can ship produce and recognise revenue. To-date
there has been no direct impact from the Ukraine crisis, however indirect
impacts may arise in time. However, the improved R&D performance alongside
the introduction of production capability in the USA and development of system
capability leads the Board believe the Group is well positioned to deliver
additional growth in its main markets over the coming years.
Prior Year Restatement A prior year adjustment of £0.3m has been made to the closing 2019 balance
sheet to correct for an error on consolidation outside our underlying records
dating back before 2019, which has under reported profit, net assets and total
equity by this amount. As a result of not being able to definitively trace the
cause of the issue, and with investigations ongoing, the auditors are required
to qualify their opinion in regard to there being a limitation of scope on
other creditors and opening reserves.
The Group will work to resolve the issue fully for the 2022 accounts, thereby
allowing the auditors to remove their qualification. Consideration was given
to delaying the accounts until the issue was fully resolved, but, on balance,
the Board believed that, as it was a historic under reporting of profit of
£0.3m against an overall net assets position of £23.4m, it was appropriate
to accept the qualification and not delay release of the accounts.
Investigations will continue to determine the cause and periods it relates,
and the closing reserves for 2019 have been increased by the £0.3m.
The Group generated Revenue for the year of £20.45m (2020: £21.14m). This
converted into Gross Profit of £11.43m (2020: £11.36m) while the gross
margin improved to 55.9% (2020: 53.7%) reflecting the change in product mix,
regarding architecture and geography.
Profit before tax was £3.48m (2020: £2.85m). Earnings per share was 3.88
pence (2020: 3.75 pence) while earnings per share on normal activities, EBITDA
(measured as Operating Profit plus Depreciation and Amortisation) for the
Group in 2021 was £5.1m (2020: £5.0m).
The Group continued its long-term commitment to R&D by spending £3.60m in
2021 (2020: £3.89m including £0.69m relating to the closure of the
development site in India), of which £2.1m was capitalised (2020: £1.9m) One
project was judged by the Directors to be at serious risk of not being able to
make a positive return to the Group and so has been fully impaired with a
resulting charge of £0.5m, with a further charge of £0.1m to partially
provide against underperforming projects, a total impairment charge of £0.6m
(2020: £0.9m).
The tax charge of £0.6m is largely the impact on Deferred tax of the increase
in the UK tax rate to 25% in 2023 of £0.5m, which is a non cash item. The
Group continues to benefit from R&D tax credits in the UK and does not
anticipate being in a UK cash tax paying position whilst this incentive
continues.
The Group continues to have no borrowings and its cash balances plus short to
medium term cash deposits at the year-end were £11.8m (2020: £11.8m).
The Board has proposed a final dividend of 1.40 pence per share (second
interim dividend in 2020: 1.45 pence) which, when added to the first interim
dividend of 1.15 pence per share (2020: 1.10 pence), will make a total of 2.55
pence per share for the year (2020: 2.55 pence). Keeping a flat dividend
reflects the ongoing concerns on the component shortage and the Group plans to
engage with shareholders on the future dividend strategy. The total cost of
the final dividend amounts to £1,034,600.
Operational Highlights
Future Plans
and
Outlook
During 2021, the Group introduced several new high-performance embedded
computer boards and accessory modules. These included products based on the
11th 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.
The Group were announced as an Intel Titanium Partner during the year,
providing the highest level of insight and development opportunity to the
Group.
As part of the Group's long-term continuous improvement strategy a further
investment was made within manufacturing to introduce a new optical inspection
machine.
The new financial year of 2022 started with a healthy order book reflecting in
part the long-term sales pipeline the Group enjoys but also in part the
willingness of our customers to order further in advance to provide the
maximum opportunity to manage the supply chain to meet delivery times.
The Group expects to announce several new products during 2022, a Position,
Navigation and Timing plug in card was announced in January 2022 and a 100
Gigabit Ethernet Processor Plug in Card was announced simultaneous with the
new Intel chip it is based around. This accelerated time to market provides
additional and incremental sales opportunities in both the US and Europe.
The Group will maintain its policy of investing in R&D to expand its
current range of advanced technology products broadening out to include
deployable systems and integration of third-party products to complement the
hardware and software already developed internally.
The Board sees opportunities to grow the business organically by broadening
the range of both hardware, software and systems products within its existing
core markets of defence and telecommunications. In addition, the Board
continues to look to recruit key individuals and skills 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.
The Board is taking a cautious approach to revenue and profit in 2022 due to
the uncertainty around the speed of a return to normal trading conditions
after COVID, but especially in light of the difficulties within the global
supply chain impacting when we can ship produce and recognise revenue. To-date
there has been no direct impact from the Ukraine crisis, however indirect
impacts may arise in time. However, the improved R&D performance alongside
the introduction of production capability in the USA and development of system
capability leads the Board believe the Group is well positioned to deliver
additional growth in its main markets over the coming years.
Prior Year Restatement
A prior year adjustment of £0.3m has been made to the closing 2019 balance
sheet to correct for an error on consolidation outside our underlying records
dating back before 2019, which has under reported profit, net assets and total
equity by this amount. As a result of not being able to definitively trace the
cause of the issue, and with investigations ongoing, the auditors are required
to qualify their opinion in regard to there being a limitation of scope on
other creditors and opening reserves.
The Group will work to resolve the issue fully for the 2022 accounts, thereby
allowing the auditors to remove their qualification. Consideration was given
to delaying the accounts until the issue was fully resolved, but, on balance,
the Board believed that, as it was a historic under reporting of profit of
£0.3m against an overall net assets position of £23.4m, it was appropriate
to accept the qualification and not delay release of the accounts.
Investigations will continue to determine the cause and periods it relates,
and the closing reserves for 2019 have been increased by the £0.3m.
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2021
Year to Year to
31 December 31 December
2021 2020
CONTINUING OPERATIONS £ £
Revenue 20,450,453 21,141,294
Cost of sales 9,016,878 9,780,750
Gross profit 11,433,575 11,360,544
Operating expenses 7,889,921 8,444,962
Group operating profit 3,543,654 2,915,582
Finance costs 61,679 83,985
Finance income 1,880 16,480
Profit before tax 3,483,855 2,848,077
Tax 638,421 98,167
Profit for the year 2,845,434 2,749,910
Other Comprehensive Income
Items that will be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations 23,894 (283,681)
Other Comprehensive Income for the year, net of tax 23,894 (283,681)
Total Comprehensive Income for the year 2,869,328 2,466,229
Earnings per share
Basic earnings per share 3.88p 3.75p
Diluted earnings per share 3.84p 3.74p
Consolidated Balance Sheet
At 31 December 2021
As at As at As at
31 December 31 December 31 December
2021 2020 2019
Restated Restated
£ £ £
ASSETS
Non-current assets
Property, plant and equipment 1,436,009 1,734,965 1,638,429
Intangible assets 7,692,528 7,205,581 7,991,119
Deferred tax assets 31,042 134,775 142,894
Other financial assets - - -
9,159,579 9,075,321 9,772,442
Current assets
Inventories 6,425,436 5,533,574 5,097,907
Trade and other receivables 2,988,633 2,356,157 2,703,960
Current tax assets 330,748 305,113 274,221
Other financial assets - - -
Cash and cash equivalents 11,839,758 11,765,974 10,487,902
21,584,575 19,960,818 18,563,990
Total assets 30,744,154 29,036,139 28,336,432
LIABILITIES
Non-current liabilities
Deferred tax liabilities 2,193,418 1,571,830 1,453,331
Trade and other payables 570,576 704,800 838,001
Long term provisions 19,172 16,162 16,731
2,783,166 2,292,792 2,308,063
Current liabilities
Trade and other payables 4,196,272 3,854,882 3,838,183
Short term provisions 19,300 16,354 16,832
Current Tax Liabilities 4,817 26,504 -
4,220,389 3,897,740 3,855,015
Total liabilities 7,003,555 6,190,532 6,163,078
Net assets 23,740,599 22,845,607 22,173,354
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 (97,399) (121,293) 162,388
Profit and loss account 19,142,917 18,271,819 17,315,885
Equity attributable to equity holders of the parent 23,740,599 22,845,607 22,173,354
Total equity 23,740,599 22,845,607 22,173,354
Consolidated Cash Flow Statement
Note Year to Year to
31 December 31 December
2021 2020
£ £
Cash flows from operating activities
Profit before tax for the period 3,483,855 2,848,077
Adjustments for:
Finance income (1,880) (16,480)
Finance costs 61,679 83,985
Depreciation 288,560 282,563
Amortisation 1,234,655 1,793,628
Impairment loss 570,812 888,579
Loss on disposal of property, plant and equipment (PPE) 27,401 -
Share-based payment 12,963 6,991
Exchange differences 46,623 (300,569)
Decrease/(increase) in inventories (891,862) (435,667)
(Increase)/decrease in trade and other receivables (632,476) 347,803
Increase/(decrease) in trade and other payables 330,735 (9,354)
Cash generated from operations 4,531,065 5,489,556
Tax (paid) / received (40,274) 40,536
Net cash generated from operating activities 4,490,791 5,530,092
Cash flows from investing activities
Interest received 1,880 16,480
Purchases of property, plant and equipment (PPE) (185,878) (385,964)
Sale of property, plant and equipment (PPE) 1,500 -
Capitalisation of development costs and purchases of intangible assets (2,124,529) (1,896,659)
Net cash used in investing activities (2,307,027) (2,266,143)
Cash flows from financing activities
Equity dividends paid (1,907,448) (1,864,968)
Repayment of leasing liabilities (117,613) (108,195)
Interest paid (61,679) (83,985)
Sale of treasury shares - 47,529
Net cash used in financing activities (2,086,740) (2,009,619)
Effects of exchange rate changes on cash and cash equivalents (23,240) 23,742
Net increase/(decrease) in cash 73,784 1,278,072
Cash at beginning of period 11,765,974 10,487,902
Cash at the end of the period 11,839,758 11,765,974
Consolidated Statement of Changes in Equity
For the year ended 31 December 2021
Capital Cumulative Profit
Share Share redemption translation and loss Total
capital premium reserve reserve account Equity
£ £ £ £ £ £
As at 31 December 2019 (reported) 739,000 3,699,105 256,976 162,388 17,027,245 21,884,714
Prior Year adjustment (note 2) 288,640 288,640
Balance at 1 January 2020 (restated) 739,000 3,699,105 256,976 162,388 17,315,885 22,173,354
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)
Transfer of treasury shares - - - - 47,529 47,529
Balance at 31 December 2020 (restated) 739,000 3,699,105 256,976 (121,293) 18,271,819 22,845,607
As at 31 December 2020 (reported) 739,000 3,699,105 256,976 (121,293) 17,983,179 22,556,967
Prior Year adjustment (note 2) 288,640 288,640
Balance at 1 January 2021 (restated) 739,000 3,699,105 256,976 (121,293) 18,271,819 22,845,607
Profit for the period - - - - 2,845,434 2,845,434
Exchange differences on translating foreign operations - - - 23,894 - 23,894
Total comprehensive income for the period - - - 23,894 2,845,434 2,869,328
Transactions with owners:
Share-based payment - - - - 12,963 12,963
Deferred tax on share-based payment - - - - (79,852) (79,852)
Dividends paid - - - - (1,907,447) (1,907,447)
Sale of treasury shares - - - - - - -
Balance at 31 December 2021 739,000 3,699,105 256,976 (97,399) 19,142,917 23,740,599
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 2021 or 2020, but is
derived from those accounts. Statutory accounts for 2020 have been delivered
to the Registrar of Companies and those for 2021 will be delivered following
the Annual General Meeting. The auditors have reported on 2021 accounts; their
report includes a disclaimer of opinion; and did not contain statements under
section 498(2) or (3) of the Companies Act 2006.
3. The calculation of basic earnings per share is based on the weighted
average number of Ordinary Shares in issue during 2021 of 73,253,120 (2020:
73,253,120) after adjustment for treasury shares on the profit after tax for
2021 of £2,845,434 (2020: £2,749,910). The calculation of diluted earnings
per share incorporates 749,826 Ordinary Shares (20: 574,542) in respect of
performance related employee share options. The profit after tax is the same
as for basic earnings per share.
4. The AGM will be held on Wednesday 29(th) June 2022, exact location to be
confirmed..
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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