CONCURRENT TECHNOLOGIES PLC

Earnings Release • Mar 26, 2015

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RNS Number : 4918I

Concurrent Technologies PLC

26 March 2015

26 March 2015

Concurrent Technologies Plc

Results for the year ended 31 December 2014

Concurrent Technologies Plc (the "Company"), a world leading specialist in the design and manufacture of high-end embedded computer products, for critical applications in the defence, aerospace, transportation, telecommunications, scientific and industrial markets, announces results for the year to 31 December 2014.

Financial Highlights

·     Turnover increased to £12.8m (2013: £11.9m)

·     EBITDA increased to £3.0m (2013: £1.9m)

·     Profit before Tax increased to £1.7m (2013: £0.5m)

·     Cash in business plus deposits increased to £5.6m (2013: £4.9m)

·     EPS increased to 2.28 pence (2013: 1.02 pence)

·     Dividend increased by 2.86% to 1.80 pence per share for the year (2013: 1.75 pence)

Operational Highlights

·     Success with sales associated with telecommunications base station test equipment using AMC architecture.

·     Further growth in sales of products associated with scientific applications.

·     Continued improvement in VPX™ architecture product sales mainly for defence applications.

·     4 new high performance processor boards, featuring the latest technology including 4th generation Intel®Core™ processors and new low power Intel® Atom™ processors.

·     Relaxation of export regulations for most products containing encryption.

·     Significant investment in new equipment for R&D and Manufacturing.

Michael Collins, Chairman, commented:

"Our products are used in a wide range of ever more sophisticated, high-reliability computer systems. Continual investment in R&D is critical to ensure a constant expansion of our range of advanced technology products and thereby enhance our competitive position. Our objective remains to design more innovative products for complex, high technology, low to medium volume and high margin applications, including versions for use in harsh environments. We will continue to develop the capabilities of these products with new and complementary software and firmware packages to provide high-speed data transfer, ease of integration and security. We will also continue to strengthen our engineering capabilities."

"The Group started 2015 with a strong order book and the improvement in the situation regarding export licence restrictions is also expected to benefit the Group's prospects throughout the year. We will continue to look for new opportunities and our diverse product range, coupled with investment in applying new technology, will enable us to take advantage of these opportunities in a variety of markets."

Annual General Meeting

The annual general meeting of Concurrent Technologies Plc will be held at the Company's offices at 4 Gilberd Court, Newcomen Way, Colchester, Essex, CO4 9WN, on 26 May 2015 at 2:30pm.

Enquiries:

Concurrent Technologies Plc Glen Fawcett, CEO	+44 (0)1206 752 626
Newgate (Financial PR) Tim Thompson Robyn McConnachie	+44 (0)207 653 9850
Cenkos Securities plc (NOMAD) Neil McDonald	+44 (0)131 220 9771

Extracts from the Strategic Report

Review of Operations

Group revenue for 2014 was in line with expectations at £12.81m (2013: £11.86m). The overall growth of 8% was achieved despite performance continuing to be affected by the problem of having to apply for export licences for advanced technology products to emerging markets where we were anticipating sales growth. The exporting of products containing encryption, which encompassed many of the Company's products, was to a large extent, de-controlled in July 2014.This considerably simplified the exporting of the Company's products to its key markets outside of the EU and USA, and helped to improve our overall exports from 54% reported at the half year, to 60% over the full year (2013: 73%). Despite these difficulties, overall growth in exports to countries other than Europe and USA was 25%.

Another major success this year has been with sales associated with telecommunications test equipment, which has helped sales of our AMC architecture boards grow by 247%, and overall sales for telecommunications applications, by 71%.

Sales associated with scientific applications, especially for particle physics research projects, have also continued to grow, with a 42% increase during the year.

Investment in R&D increased from £2.35m in 2013 to £2.76m in 2014, of which £2.09m was capitalised (2013: £1.70m). The results for this year include a write down of our R&D design assets by £0.45m (2013: £0.84m), due in part to the continuing effects on possible future orders caused by the prior UK export licensing issues.  

The Group EBITDA (measured as Operating Profit plus Depreciation and Amortisation) for 2014 was £3.00m (2013: £1.92m). The Group achieved a profit before tax for 2014 of £1.72m (2013: £0.45m). Earnings per share for the year were 2.28 pence (2013: 1.02 pence). The gross margin for the year was 51.2% compared with 50.6% for 2013.

Notwithstanding that the Company has again increased the dividend for 2014 and R&D spending, our cash balances at the year-end have improved to £5.62m (2013: £4.94m) and we have no borrowings.

Operational Highlights

Four new high performance embedded computers were released during the year, featuring the latest technology including 4th generation Intel® Core™ processors and new low power Intel®Atom™ processors. We have continued our investment in AMC architecture products, which has been rewarded in sales this year, and have also released further low power products in VME and CompactPCI® architectures. There has also been continuing growth in sales for our VPX™ architecture boards, which are mainly used in defence and surveillance related applications, including unmanned vehicles.

Additionally, together with our primary computer boards, we have released further accessory boards and storage modules to complement and give additional functionality to our main products. Another new important project is the development of a GPU accelerator board to augment the processing capability of our Intel® processor based AMC boards. GPU accelerated computing is a method of achieving very fast processing of "big data" applications and is particularly well suited to compute-intensive applications in areas such as scientific, engineering, financial, research, geographic and intelligence.

To assist with the design of environmentally superior products that can operate at extreme temperatures, elevated altitudes and at high shock and vibration levels, we have invested in our own shock and vibration test machine. On the manufacturing side, we have also invested in a powerful X-ray machine which can perform 3D scanning and sectional imaging to enable faster detection of faults inside components and PCBs. In addition, in order to alleviate capacity issues and speed up production throughput, in January 2015, we acquired an additional pick-and-place module for the very fast placement of components on boards.

Future Plans

Our products are used in a wide range of ever more sophisticated, high-reliability computer systems. Continual investment in R&D is critical to ensure a constant expansion of our range of advanced technology products and thereby enhance our competitive position. Our objective remains to design more innovative products for complex, high technology, low to medium volume and high margin applications, including versions for use in harsh environments. We will continue to develop the capabilities of these products with new and complementary software and firmware packages to provide high-speed data transfer, ease of integration and security. We will also continue to strengthen our engineering capabilities.

The Group started 2015 with a strong order book and the improvement in the situation regarding export licence restrictions is also expected to benefit the Group's prospects throughout the year. We will continue to look for new opportunities and our diverse product range, coupled with investment in applying new technology, will enable us to take advantage of these opportunities in a variety of markets.

Dividend

The Board has declared a second interim dividend of 1.15 pence per share (2013: 1.10 pence second interim dividend) which when added to the first interim dividend of 0.65 pence per share will make a total of 1.80 pence per share for the year (2013: 1.75 pence). This is an increase of 2.86% on dividends paid for 2013. The total cost of this second interim dividend will amount to £834,906. As in previous years, the Directors do not intend to recommend a final dividend.

Annual General Meeting

The annual general meeting of Concurrent Technologies Plc will be held at the Company's offices at 4 Gilberd Court, Newcomen Way, Colchester, Essex, CO4 9WN, on 26 May 2015 at 2:30pm.

All companies and product names are trademarks of their respective organisations.

Consolidated Statement of Comprehensive Income

		Year to		Year to
		31 December		31 December
		2014		2013
CONTINUING OPERATIONS		£		£
Revenue		12,806,315		11,859,180
Cost of sales		6,247,748		5,857,094
Gross profit		6,558,567		6,002,086
Operating expenses		4,892,800		5,614,290
Group operating profit		1,665,767		387,796
Finance income		58,079		66,133
Profit before tax		1,723,846		453,929
Tax		76,148		(275,688)
Profit for the year		1,647,698		729,617
Other Comprehensive Income
Items that will be reclassified subsequently to profit or loss:
Exchange differences on translating foreign operations		90,539		(124,637)
Tax relating to components of other comprehensive income		-		-
Other Comprehensive Income for the year, net of tax		90,539		(124,637)
Total Comprehensive Income for the year		1,738,237		604,980
Profit for the period attributable to:
Equity holders of the parent		1,647,698		729,617
Total Comprehensive Income attributable to:
Equity holders of the parent		1,738,237		604,980
Earnings per share
Basic earnings per share		2.28p		1.02p
Diluted earnings per share		2.28p		1.01p

Consolidated Balance Sheet

		As at		As at
		31 December		31 December
		2014		2013
		£		£
ASSETS
Non-current assets
Property, plant and equipment		608,044		478,131
Intangible assets		6,018,931		5,467,503
Deferred tax assets		73,440		108,396
		6,700,415		6,054,030
Current assets
Inventories		2,699,658		2,550,556
Trade and other receivables		2,790,426		2,874,354
Current tax assets		307,912		247,240
Other financial assets		-		2,602,689
Cash and cash equivalents		5,624,505		2,340,859
		11,422,501		10,615,698
Total assets		18,122,916		16,669,728
LIABILITIES
Non-current liabilities
Deferred tax liabilities		1,279,852		1,164,267
Long term provisions		7,314		10,009
		1,287,166		1,174,276
Current liabilities
Trade and other payables		2,500,524		1,931,110
Short term provisions		33,922		36,813
Current tax liabilities		665		-
		2,535,111		1,967,923
Total liabilities		3,822,277		3,142,199
Net assets		14,300,639		13,527,529
EQUITY
Capital and reserves
Share capital		739,000		727,000
Share premium account		3,693,818		3,405,817
Capital redemption reserve		256,976		256,976
Cumulative translation reserve		15,723		(74,816)
Profit and loss account		9,595,122		9,212,552
Equity attributable to equity holders of the parent		14,300,639		13,527,529
Total equity		14,300,639		13,527,529

Consolidated Cash Flow Statement

		Year to		Year to
		31 December		31 December
		2014		2013
		£		£
Cash flows from operating activities
Profit before tax for the period		1,723,846		453,929
Adjustments for:
Finance income		(58,079)		(66,133)
Depreciation		178,059		169,259
Amortisation		1,160,940		1,363,530
Impairment loss		450,000		842,783
Share-based payment		6,279		(94,726)
Exchange differences		29,060		(74,551)
(Increase)/decrease in inventories		(149,102)		417,134
(Increase)/decrease in trade and other receivables		83,928		400,311
Increase/(decrease) in trade and other payables		563,828		426,431
Cash generated from operations		3,988,759		3,837,967
Tax (paid)/received		284		(61,654)
Net cash generated from operating activities		3,989,043		3,776,313
Cash flows from investing activities
Interest received		58,079		66,133
Cash released from/(placed) on Deposit		2,602,689		(602,689)
Purchases of property, plant and equipment (PPE)		(303,816)		(225,505)
Capitalisation of development costs and purchases of intangible assets		(2,161,809)		(1,726,312)
Net cash used in investing activities		195,143		(2,488,373)
Cash flows from financing activities
Equity dividends paid		(1,257,305)		(1,214,420)
Issue of Ordinary shares		300,001		-
Purchase of treasury shares		-		(16,625)
Net cash used in financing activities		(957,304)		(1,231,045)
Effects of exchange rate changes on cash and cash equivalents		56,764		(32,964)
Net increase/(decrease) in cash		3,283,646		23,931
Cash at beginning of period		2,340,859		2,316,928
Cash at the end of the period		5,624,505		2,340,859

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 2013		727,000		3,405,817		256,976		49,821		9,862,012		14,301,626
Profit for the period		-		-		-		-		729,617		729,617
Exchange differences on translating foreign operations		-		-		-		(124,637)		-		(124,637)
Total comprehensive income for the period		-		-		-		(124,637)		729,617		604,980
Transactions with owners:
Share-based payment		-		-		-		-		(94,726)		(94,726)
Deferred tax on share based payment		-		-		-		-		(53,306)		(53,306)
Dividends paid		-		-		-		-		(1,214,420)		(1,214,420)
Purchase of treasury shares		-		-		-		-		(16,625)		(16,625)
Balance at 31 December 2013		727,000		3,405,817		256,976		(74,816)		9,212,552		13,527,529
Profit for the period		-		-		-		-		1,647,698		1,647,698
Exchange differences on translating foreign operations		-		-		-		90,539		-		90,539
Total comprehensive income for the period		-		-		-		90,539		1,647,698		1,738,237
Transactions with owners:
Share-based payment		-		-		-		-		6,279		6,279
Deferred tax on share based payment		-		-		-		-		(14,102)		(14,102)
Dividends paid		-		-		-		-		(1257,305)		(1257,305)
Issue of Ordinary shares		12,000		288,001		-		-		-		300,001
Balance at 31 December 2014		739,000		3,693,818		256,976		15,723		9,595,122		14,300,639

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 Financial Reporting Standards ('IFRSs') as adopted by European Union. The accounting policies adopted in this results announcement have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the statutory accounts for the period ended 31 December 2013. The consolidated financial information is presented in sterling (£), which is the company's functional and the Group's presentation currency.

2.  The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 December 2014 or 2013, but is derived from those accounts. Statutory accounts for 2013 have been delivered to the Registrar of Companies and those for 2014 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 2013 or 2014 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 2014 of 72,278,298 (2013: 71,430,298) allowing for an adjustment made as a consequence of the Company having issued 1,200,000  Ordinary Shares on 08 April 2014 (2013: nil) and on the profit after tax for 2014 of £1,647,698 (2013: £729,617). The calculation of diluted earnings per share incorporates 11,992 Ordinary Shares (2013: 593,207) in respect of performance related employee share options. The profit after tax is the same as for basic earnings per share.

4.  The annual general meeting of Concurrent Technologies Plc will be held at the Company's offices at 4 Gilberd Court, Newcomen Way, Colchester, Essex, CO4 9WN, on 26 May 2015 at 2:30pm.

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.cct.co.uk.

This information is provided by RNS

The company news service from the London Stock Exchange

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