TIDMCNC
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 GBP12.1M (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 GBP14.5M (H1 2022: GBP14.2M) and record backlog of GBP29M
(31 December 2022: GBP26.7M). 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 GBP12.1M (H1 2022: GBP7.4M) - remained constrained
by components, however, represents a record half year, with an
increase of 63% on prior year.
-- Gross profit of GBP6.0M (H1 2022: GBP3.7M); 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 GBP1.0M (H1 2022: GBP0.0M) -
predominantly driven by increase revenue, and hence gross profit
(+GBP2.3M); net costs increased by cGBP1.3M, 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 GBP1.0M (H1 2022: GBP0.0M).
-- 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 GBP3M (31 Dec 2022: GBP4.5M).
o Increased cash from Operations of GBP0.5M (due to a stronger
H1), including increased inventory of GBP1M.
o Decrease of GBP2M from investment activity, predominantly
driven by R&D (GBP1.7M).
Operational Summary
-- Strong order intake of GBP14.5M as at 30 June 2023, with
significant backlog of GBP29M compared to GBP20.3M 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 (+GBP0.4M), 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 GBP1.25M.
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 GBP12.1M (H1 2022 GBP7.4M),
a significant increase of 63% on prior year. The company continues
to have strong backlog (contracted work) at GBP29M at H1 2023 (H1
2022: GBP20.3M), 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
GBP1M (H1 2022; GBP0.0M). This is a GBP1M increase on 2022,
represented by the increase revenue (+GBP4.7M on H1 2022) and
corresponding gross profit (+GBP2.3M), however net operating
expenses were up on prior year, in line with the investment
strategy at GBP5.0M (H1 2022: GBP3.7M). This is driven
predominantly by additional investment in talent in R&D
(+GBP0.4M), enabling functions and the Leadership team (+GBP0.7M).
The Company also benefitted from a GBP0.4M foreign exchange rate
gain in H1 2022, not repeated in H1 2023.
The balance sheet remains strong with no debt and GBP3M of cash
balances (including cash deposits) as at 30 June 2023 (31 December
2022: GBP4.5M). 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 GBP11M
by the end of H1 2023 (H1 2022: GBP9.5M), an increase of a further
GBP1M 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 GBP5.3M (H1 2022: GBP3.5M) due to the
timing and level of revenue, which was GBP4.7M higher than H1
2022.
With a record order intake in 2022, and further order intake in
H1 2023 of GBP14.5M, and therefore a significant contracted backlog
of GBP29M, 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 GBP6.8m 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 GBP29M 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
Kim Garrod, CFO +44 (0)1206 752626
Newgate (Financial PR) concurrent@secnewgate.co.uk
Bob Huxford +44 (0)20 3757 6880
Alice Cho
Matthew Elliott
Cavendish Securities plc (NOMAD)
Neil McDonald +44 (0)131 220 9771
Peter Lynch +44 (0)131 220 9772
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 GBP GBP GBP
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 GBP GBP GBP
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
GBP GBP GBP
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
GBP GBP GBP GBP GBP GBP
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 (GBP), 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
GBP GBP GBP
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
Ndeg Ndeg Ndeg
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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END
IR NKFBBDBKBCCD
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