CONCURRENT TECHNOLOGIES PLC

Earnings Release • Apr 9, 2013

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RNS Number : 8432B

Concurrent Technologies PLC

09 April 2013

09 April 2013

Concurrent Technologies Plc

Preliminary Results for the year ended 31 December 2012

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 preliminary results for the year to 31 December 2012.

Financial Highlights

·     Turnover £12.8m (2011: £13.8m)

·     EBITDA £3.5m (2011: £3.9m)

·     Profit Before Tax £2.0m (2011: £2.7m)

·     Cash in business plus deposits £4.3m (2011: £5.6m)

·     EPS 2.75 pence (2011: 3.63 pence)

·     Dividend increased by 6.25% to 1.70 pence per share for the year (2011: 1.60 pence)

Operational Highlights

·     14 new products launched including 11 high performance boards incorporating the latest Intel® processors

·     Growth in telecommunications and transport sales

·     Further diversification of customer base into scientific applications

·     Sales in the second half are sequentially stronger

·     New configurable security packages

·     Continued significant investment in R&D, new design facility in Reading, UK

Outlook

·     Enhancement of our products with new software packages exploiting data transfer technologies

·     Continued focus on innovative, high technology, higher margin products

Michael Collins, Chairman, commented:

"Our core business remains strong and while the global economic conditions are difficult to predict and the effects on our markets of fiscal management events such as budget sequestration in the USA are unknown, we remain positive. We also believe that our wide product range and the investment that we have made and continue to make in a diversity of new products puts us in an excellent position to take advantage of the significant opportunities appearing in various markets."

Annual General Meeting

The annual general meeting of Concurrent Technologies Plc will be held in The Quality® Hotel (was Ramada Hotel), A12/A120 junction, Old Ipswich Road, Colchester, Essex, CO7 7QY, on 28 May 2013 at 2.00 p.m.

Enquiries:

Concurrent Technologies Plc Glen Fawcett, Managing Director	+44 (0)1206 752 626
Newgate Threadneedle (Financial PR) Caroline Evans-Jones Robyn McConnachie	+44 (0)207 653 9850
Cenkos Securities plc (NOMAD) Ken Fleming Neil McDonald	+44 (0)131 220 6939 +44 (0)131 220 9771

Chairman's Statement

I am pleased to report another profitable year despite difficult global market conditions. Sales in the second half of 2012 improved on the first half and we have been able to grow sales in the telecommunications and transport markets. Our investment in new product development has allowed us to provide existing customers with an excellent upgrade path and to create new opportunities in some interesting areas including scientific applications.

We have maintained our investment in R&D and have again increased our dividend while maintaining a strong balance sheet. We remain positive about sales into our core markets and look forward to realising new opportunities and long-term revenue growth.

Financial Summary

The Group EBITDA for 2012 was £3,479,094 (2011: £3,860,831). The reduction was due to the lower level of sales caused by the rescheduling of some orders and extended timescales of customer projects. The Group achieved a profit before tax for 2012 of £2,001,404 (2011: £2,710,332), which includes the increased amortisation of capitalised R&D. Earnings per share for the year were 2.75 pence (2011: 3.63 pence). Gross turnover for the year was £12,794,380 (2011: £13,807,669). The gross margin for the year was 51.7% compared with 52.1% for 2011.

Our balance sheet remains strong with cash of £2.32m (2011: £3.59m) plus short to medium term cash deposits of £2m (2011: £2m) at the year end, with no borrowings. The reduction in the cash balance at the end of the year was due to increased dividend payments, and expenditure on components required for a large order shipped in the final month of the year.

Business Summary

The Group is a leading specialist in the design, manufacture and supply of innovative high-end embedded computer products aimed at a wide base of customer types in the telecommunication, defence, aerospace, transportation, scientific and industrial markets. Our products have a long lifecycle which typically provides the Group with high quality sales over many years.

The Group's high performance products are based on Intel® long lifecycle components, and cover a range of central processing unit ("CPU") boards and complementary products compatible with the CompactPCI®, VPX™, VME, AMC and XMC/PMC open architecture standards. Many of the CPUs feature the latest processor platforms from Intel® such as the 3rd generation Intel® Core™ processors, six-core Intel® Xeon® processors and the low power Intel® Atom™ processors. A common feature of our newer products is the low level of electrical power required for their very high performance capabilities.

Our products deliver extremely high levels of reliability with substantial processing power, making them ideal for use in projects ranging from high-performance military communications systems to commercial industrial control units. In addition to our commercial range of boards, we develop ruggedized versions of many products in our range to operate at temperatures ranging from -40oC to +85oC, for use in harsh and wide temperature environments, making them very appealing for a variety of demanding applications. Our products also support many of today's leading operating systems including Windows®, Linux®, Solaris™, QNX®, VxWorks®, LynxOS® and more recently INTEGRITY®.

In addition to hardware design capability, our engineering teams undertake a significant amount of software and firmware development to provide interoperability between products, allowing customers to transition smoothly when new updates or designs are available. In this way we continue to see strong customer loyalty and long term relationships, as well as new sales following product launches featuring performance upgrades. We also generate software for both on-board and production test purposes.

Review of Operations

During the year we have launched 11 new high performance embedded computers which feature the latest 3rd generation Intel® Core™ i7 processors that are particularly suited for use within the defence, telecommunications and homeland security markets where fast data processing and reliability are critical.

Several of these new boards use the AMC architecture supporting MicroTCA® and AdvancedTCA® applications in telecommunications markets, and extend the architecture to processing intensive applications related to physics research. Demonstrated at recent technology events, our latest AMC boards operate with support for our Fabric Interconnect Networking Software (FIN-S) across the Serial RapidIO® networked backplane. These boards are particularly well suited for MicroTCA® based telecommunications and other applications where a large number of computing nodes are required to intercommunicate at high data rates. We have had a significant increase in sales of products to customers using AMC architecture across several markets, particularly scientific and telecoms, albeit from a relatively low but growing share of total sales. We also launched 2 new systems designed to support fast track development of MicroTCA® and VPX applications.

Continuing our focus on providing integrated software support, we also announced the release of our Board Level Security Package designed to help customers to deliver secure solutions into applications where protecting critical technologies and data is mandatory, using a combination of deeply embedded proprietary hardware, firmware and software countermeasures to prevent or frustrate attempts to gain access to sensitive data on a secure system. Our Board Level Security Package provides a set of customer configurable security options that can be tailored to provide a unique security solution for each specific application and a means to enhance the security of customers' equipment, thus preventing access to their highly sensitive data and technology.

We continue to have a close relationship with Intel and we are committed to long term support of our customers by being an early adopter of the latest products from the world leader in silicon innovation and computer processing technology. Our products give increasingly higher performance, better reliability and lower power consumption, providing our customers with a long term upgrade path and maintaining our competitiveness within our end markets.

The Group's design and engineering team is divided between the UK and India, but all manufacturing and testing takes place in our factory in Colchester, UK. Our sales, marketing and customer support teams operate from the UK and overseas offices including the USA and China. The proportion of our products being exported was 76% (2011: 77%).

The Group's customer base continues to be well diversified with large, high quality, international businesses in multiple sectors and in many countries.

Future Plans

While the current economic climate is uncertain, our core business is relatively buoyant and we see several opportunities to continue expanding our range of products and to introduce highly innovative technology to significant customers in defence and telecommunications where high-reliability and fast, high volume processing is required. While sales for defence applications have reduced slightly, we have seen promising growth in sales for telecommunications and transport applications.

We are a key supplier of Intel® based technology to many major international companies and our products are found in a wide range of ever more sophisticated high-reliability computer systems. We will continue our investment in R&D to ensure a constant expansion of our range of products, with a particular focus on the VPX™, VME, AMC and CompactPCI® bus architectures. Work has already begun on the next generation of Intel® Core™ i7 processors and we will maintain our strategy of designing more innovative products for complex, high technology, low to medium volume and high margin applications. We are further enhancing the capabilities of these products with new and complementary software packages to provide high-speed data transfer, ease of integration and security.

The Company will continue to use its authority to buy back its own shares when the Directors consider it appropriate.

Dividend

The Board has declared a second interim dividend of 1.05 pence per share (2011: 1.00 pence second interim dividend) which when added to the first interim dividend of 0.65 pence per share will make a total of 1.70 pence per share for the year (2011: 1.60 pence). This will be an increase of 6.25% over dividends paid in 2012. The total cost of this second interim dividend will amount to £750,125. The Directors do not intend to recommend a final dividend.

Outlook

Our core business remains strong and while the global economic conditions are difficult to predict and the effects on our markets of fiscal management events such as budget sequestration in the USA are unknown, we remain positive. We also believe that our wide product range and the investment that we have made and continue to make in a diversity of new products puts us in an excellent position to take advantage of the significant opportunities appearing in various markets.

Corporate Governance

As an AIM listed company Concurrent Technologies Plc is not obliged to comply with the UK Corporate Governance Code. We do however acknowledge the overall importance of the guidelines and apply as many of the principles therein as are appropriate to a company of our size and nature.

Annual General Meeting

The Annual General Meeting this year will be held on 28 May 2013.

Michael Collins

Chairman

08 April 2013

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

Consolidated Statement of Comprehensive Income

		Year to		Year to
		31 December		31 December
		2012		2011
CONTINUING OPERATIONS		£		£
Revenue		12,794,380		13,807,669
Cost of sales		6,183,357		6,615,546
Gross profit		6,611,023		7,192,123
Operating expenses		4,666,346		4,534,006
Group operating profit		1,944,677		2,658,117
Finance income		56,727		52,215
Profit before tax		2,001,404		2,710,332
Tax		34,749		119,113
Profit for the year		1,966,655		2,591,219
Other Comprehensive Income
Exchange differences on translating foreign operations		(131,051)		(49,416)
Tax relating to components of other comprehensive income		-		-
Other Comprehensive Income for the year, net of tax		(131,051)		(49,416)
Total Comprehensive Income for the year		1,835,604		2,541,803
Profit for the period attributable to:
Equity holders of the parent		1,966,655		2,591,219
Total Comprehensive Income attributable to:
Equity holders of the parent		1,835,604		2,541,803
Earnings per share
Basic earnings per share		2.75p		3.63p
Diluted earnings per share		2.73p		3.59p

Consolidated Balance Sheet

		As at		As at
		31 December		31 December
		2012		2011
		£		£
ASSETS
Non-current assets
Property, plant and equipment		437,851		479,867
Intangible assets		5,948,660		5,378,992
Deferred tax assets		188,323		207,081
Other financial assets		1,000,000		1,000,000
		7,574,834		7,065,940
Current assets
Inventories		2,967,690		2,626,660
Trade and other receivables		3,274,665		2,390,377
Current tax assets		123,696		115,841
Other financial assets		1,000,000		1,000,000
Cash and cash equivalents		2,316,928		3,594,131
		9,682,979		9,727,009
Total assets		17,257,813		16,792,949
LIABILITIES
Non-current liabilities
Deferred tax liabilities		1,404,686		1,387,772
Long term provisions		-		36,880
		1,404,686		1,424,652
Current liabilities
Trade and other payables		1,511,755		1,698,571
Short term provisions		39,746		46,110
		1,551,501		1,744,681
Total liabilities		2,956,187		3,169,333
Net assets		14,301,626		13,623,616
EQUITY
Capital and reserves
Share capital		727,000		727,000
Share premium account		3,405,817		3,405,817
Capital redemption reserve		256,976		256,976
Cumulative translation reserve		49,821		180,872
Profit and loss account		9,862,012		9,052,951
Equity attributable to equity holders of the parent		14,301,626		13,623,616
Total equity		14,301,626		13,623,616

Consolidated Cash Flow Statement

		Year to		Year to
		31 December		31 December
		2012		2011
		£		£
Cash flows from operating activities
Profit before tax for the period		2,001,404		2,710,332
Adjustments for:
Finance income		(56,727)		(52,215)
Depreciation		206,286		213,742
Amortisation		1,328,131		988,972
Impairment loss		236,733		256,098
Loss on disposal of property, plant and equipment (PPE)		5,714		1,438
Share-based payment		11,941		16,156
Exchange differences		(45,511)		(22,949)
(Increase) in inventories		(341,030)		(137,294)
(Increase)/decrease in trade and other receivables		(884,288)		745,958
Increase/(decrease) in trade and other payables		(230,060)		(374,216)
Cash generated from operations		2,232,593		4,346,022
Tax (paid)/received		19,622		(18,394)
Net cash generated from operating activities		2,252,215		4,327,628
Cash flows from investing activities
Interest received		56,727		52,215
Purchases of property, plant and equipment (PPE)		(181,263)		(160,615)
Purchases of intangible assets		(2,136,090)		(2,134,233)
Net cash used in investing activities		(2,260,626)		(2,242,633)
Cash flows from financing activities
Equity dividends paid		(1,179,051)		(1,107,380)
(Purchase)/ Sale of treasury shares		(17,038)		16,935
Net cash used in financing activities		(1,196,089)		(1,090,445)
Effects of exchange rate changes on cash and cash equivalents		(72,703)		6,710
Net increase/(decrease) in cash		(1,277,203)		1,001,260
Cash at beginning of period		3,594,131		2,592,871
Cash at the end of the period		2,316,928		3,594,131

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 2011		727,000		3,405,817		256,976		230,288		7,507,817		12,127,898
Profit for the period		-		-		-		-		2,591,219		2,591,219
Exchange differences on translating foreign operations		-		-		-		(49,416)		-		(49,416)
Total comprehensive income for the period		-		-		-		(49,416)		2,591,219		2,541,803
Transactions with owners:
Share-based payment		-		-		-		-		16,156		16,156
Deferred tax on share based payment		-		-		-		-		28,204		28,204
Dividends paid		-		-		-		-		(1,107,380)		(1,107,380)
Sale of treasury shares		-		-		-		-		16,935		16,935
Balance at 31 December 2011		727,000		3,405,817		256,976		180,872		9,052,951		13,623,616
Profit for the period		-		-		-		-		1,966,655		1,966,655
Exchange differences on translating foreign operations		-		-		-		(131,051)		-		(131,051)
Total comprehensive income for the period		-		-		-		(131,051)		1,966,655		1,835,604
Transactions with owners:
Share-based payment		-		-		-		-		11,941		11,941
Deferred tax on share based payment		-		-		-		-		26,554		26,554
Dividends paid		-		-		-		-		(1,179,051)		(1,179,051)
Net purchase of treasury shares		-		-		-		-		(17,038)		(17,038)
Balance at 31 December 2012		727,000		3,405,817		256,976		49,821		9,862,012		14,301,626

NOTES

1.  The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 December 2012 or 2011, but is derived from those accounts. Statutory accounts for 2011 have been delivered to the Registrar of Companies and those for 2012 will be delivered following the Annual General Meeting. The auditors have reported on those accounts; their reports were (i) unqualified and (ii) did not contain statements under section 498(2) or (3) of the Companies Act 2006 in respect of 2011 or 2012.

2.  The calculation of basic earnings per share is based on the weighted average number of Ordinary Shares in issue during 2012 of 71,451,883 (2011: 71,456,525) allowing for an adjustment made as a consequence of the Company having purchased at various times during the year 45,000 (2011: nil) Ordinary Shares and on the profit after tax for 2012 of £1,966,655 (2011: £2,591,219). The calculation of diluted earnings per share incorporates 534,454 Ordinary Shares (2011: 622,231) in respect of performance related employee share options. The profit after tax is the same as for basic earnings per share.

3. The annual general meeting of Concurrent Technologies Plc will be held in in The Quality® Hotel (was Ramada Hotel), A12/A120 junction, Old Ipswich Road, Colchester, Essex, CO7 7QY, on 28 May 2013 at 2.00 p.m.

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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