Concurrent Tech. - Final Results

Concurrent Technologies

12/04/2021 07:00

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 PlcJane 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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