CONCURRENT TECHNOLOGIES PLC
Preliminary results for the year ended 31 December 2005
Marked Increase in Turnover and Profit
Concurrent Technologies Plc, which manufactures high-end embedded computer
products for critical applications in the defence, transportation,
communications and industrial markets, announces preliminary results for the
year to 31 December 2005.
Financial Highlights
* Continued improvement in market conditions with 2005 turnover up 51% on
2004
* Pre-tax profit up more than 550% at �1,453,087 (2004: �214,580)
* Year end net cash �4.0m
* Gross margin improvement from 43% to 46%
* Final dividend doubled to 0.50p making a total of 0.75p for the year (2004:
0.50p)
Operating Highlights
* New robotic assembly line installed for increased capacity
* New product range launched
* Business Development Manager installed in Beijing, China
* Focus on defence and communications sectors, particularly USA
Michael Collins, Chairman, commented:
"The high level of production and despatch activity we experienced towards the
end of 2005 has continued into 2006, so the year has started well. The level of
new customer enquiries remains high and the investment in our new production
line has enabled us to meet the increased demand for our products.
As noted above we will continue to invest in staff, and associated equipment,
involved with product development, manufacturing, sales and support so as to
increase our product range, customer base and manufacturing capability.
Inevitably the cost of such investment precedes the return but it is important
if we are to continue to thrive in the longer term. I look forward to reporting
further progress over the coming year."
6 March 2006
Enquiries:
Concurrent Technologies Plc 01206 752626
Glen Fawcett, Managing Director
Nexus Financial Ltd 020 7451 7050
Nicholas Nelson / Nora de la Quintana Mob: 07921 522 920
CHAIRMAN'S STATEMENT
Financial Overview
Market conditions are much improved compared with two years ago and our level
of activity has increased markedly in the last year. We achieved a Group
turnover for the year to December 2005 of �10,678,675 (2004: �7,086,044), an
increase of 51%. The consolidated pre-tax profit in the same period was �
1,453,087 (2004: �214,580), an increase of 577%. In the second half of 2005 we
made a consolidated pre-tax profit of �950,547 following a pre-tax profit of �
502,540 in the first half.
Gross margin showed a satisfactory increase to 46% from 43% year on year,
helped in part by the product mix which included greater numbers of ruggedised
and extended temperature range boards and in part by a contribution from the
strengthened US dollar. These factors, together with a substantial increase in
sales, produced the very substantial increase in profit.
In arriving at the profits in the 2005 accounts, we have written off �132,361
being the balance of the goodwill created on the purchase of Omnibyte
Corporation.
We ended the year with cash of �3,978,139 and no borrowings.
Earnings per share increased to 1.59p (2004: 0.29p).
Business Summary
Concurrent Technologies designs, builds and supplies high end embedded computer
products to the defence, communication, transportation and industrial markets.
These computer products are integrated into a variety of applications which
require very high levels of processing power and superior levels of
reliability; applications include military systems, communications, networking,
medical imaging, industrial automation and scientific research.
The main product range includes single and dual processor computer boards using
Intel� and Freescale(tm) (formerly Motorola�) Central Processing Units (CPUs) for
the CompactPCI�, VME and Multibus II architectures. These boards are produced
in several grades for use in either standard operating conditions or in more
rugged conditions where the environmental stresses are harsher. In addition to
hardware design capability, our engineering teams undertake a significant
amount of software and firmware development to provide interoperability between
products, generate test software both on-board and for production test
purposes, and also provide support for leading embedded and real-time operating
systems.
The largest markets for our products are now defence and communications.
Together these markets in 2005 accounted for just over 80% of our sales by
value.
Review of 2005 Operations
In 2005 we introduced to the market some exciting new products designed to meet
our customers' high-end computing requirements. Many of these new products were
based on the latest single-processor technology from Intel�; additionally a
high performance dual-processor board was developed.
We have introduced a new range of 3U CompactPCI� computers which are the
half-height version of our more traditional 6U CompactPCI� single board
computers. They are particularly suited to the defence, industrial and
transportation markets because their compact dimensions and rugged structure
give them extra resistance to vibration, shock and temperature variations.
Our Chicago design facility introduced the VP754/20x VME single board computer,
designed around the high speed Freescale(tm) PowerPC� processor giving real time
responsiveness, especially for the defence, aerospace and scientific markets.
This board features low power usage characteristics and offers support for
multiple fast disk drives and high resolution graphics. We have since decided
to de-emphasise our work on Freescale(tm) processors at this facility and instead
use our skills to develop other board products which are targeted at the same
markets. A few of these new products have already been released.
We have also released, in conjunction with our co-development partner Thales
Computers, the VP 315-RC, a ruggedised conduction cooled VME board utilising
the Intel� Pentium� M processor complemented by a highly integrated low power
chipset from Intel�.
We are looking further to expand our sales and marketing capability,
particularly in the USA and the Far East. In March 2005 we announced that we
had appointed a Business Development Manager in Beijing in cooperation with the
China Britain Business Council. This appointment is supporting our existing
distribution channels and increasing our profile in China.
Our products are becoming increasingly complex and, with improving sales, our
production and test facilities came under increased pressure during the year.
We responded by installing a new, and much faster, assembly line suitable for
building larger production batches. At the heart of this is a high performance
"pick-and-place" robotic machine for selecting and mounting electronic
components onto printed circuit boards. At the end of the production line we
are now increasing our usage of automated optical inspection machines which
electro-optically examine the quality of the many thousands of miniature
connections on our boards. These machines have increased both our production
capacity and quality. During 2005 we made good progress towards the removal of
lead in many of our soldering processes, thus making our products more
environmentally friendly.
Sales and marketing activity continues at a high level. The focus of our
marketing is now particularly aimed at the defence and communications sectors,
and the USA has become our largest market.
Future Plans
We believe that world demand for single board computers, particularly those
powered by Intel� CPUs, continues to grow. One recent study forecast that the
world market for CompactPCI� boards will grow by 35% between 2004 and 2009 and
that for VME boards will grow by 30% in the same period. We believe we have the
right range of products for these and the other niches in the single board
computer market which we decided some years ago to pursue. We plan to maintain
our focus on specialised customer requirements where the competition is less
fierce than in low tech/high volume applications. We will also continue to
focus on making complex boards suitable for difficult operating environments.
In this way we expect to be able to maintain our high gross margins and thus
increase profitability. We are increasingly selected by our target customers as
the supplier of their choice, and are being given the opportunity to quote for
an increasing number of opportunities, many of which are also of a larger scale
than in the past.
We also believe that our substantial investment in design and development
continues to benefit us as we broaden our range of products. By progressing
with new board designs that leverage advanced CPU technologies, we intend to
make our range of hardware products appeal to a larger part of the increasing
market. Simultaneously we intend to keep increasing our investment in software
and firmware engineering so as to make our hardware operate with more software
products and so make our products even more attractive, and simpler to use, for
our customers. In many of our new products we will be using low power devices
containing two processing cores.
Our strategy is to support and expand all three of our existing embedded
computer technology architectures as well as introducing products for new
architectures. The Multibus II architecture continues to be accepted by our
customers, and we will continue to support it while demand remains
satisfactory. Defence and industrial applications still require VME boards and
we believe these will be important markets for us in the long term. The
CompactPCI� architecture, including the newer smaller sized 3U version, with
its excellent performance and networking capability, offers the extended
bandwidth particularly necessary for communications applications. The new
architecture we have decided to support is called Advanced Mezzanine Card
("AMC"). We have recently released our first such product, the PR AMC/33x. This
is an AMC processor module driven by a 2.0 GHz Intel� Pentium� M processor
which will be targeted at many applications including those that will be based
on ATCA (Advanced Telecommunications Computing Architecture) and MicroTCA - a
new high speed bus system. We will also continue to look to enhance our
capabilities to produce complete embedded computer systems, and to take
advantage of opportunities which come from customers who wish to downsize
in-house engineering staff and reduce fixed costs by outsourcing.
In 2005 we increased our investment in design and development. We intend to
continue this trend with a further expansion of our engineering staff and of
the range of products we design, market, build, sell and support.
Dividend
We have had a very good year and are confident of the continued health of our
business going forward. We have therefore decided to recommend the payment of a
final dividend of 0.50 pence per share (making a total for the year including
the interim dividend of 0.75 pence per share). The total cost of this final
dividend will amount to �363,500. The ex-dividend date for the final dividend
is 3 May 2006, the record date is 5 May 2006 and, subject to the shareholders'
approval, payment will be made on 19 May 2006.
Outlook
The high level of production and despatch activity we experienced towards the
end of 2005 has continued into 2006, so the year has started well. The level of
new customer enquiries remains high and the investment in our new production
line has enabled us to meet the increased demand for our products.
As noted above we will continue to invest in staff, and associated equipment,
involved with product development, manufacturing, sales and support so as to
increase our product range, customer base and manufacturing capability.
Inevitably the cost of such investment precedes the return but it is important
if we are to continue to thrive in the longer term. I look forward to reporting
further progress over the coming year.
Corporate Governance
As an AIM listed company Concurrent Technologies Plc is not obliged to comply
with the Combined Code on Corporate Governance. 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 April 2006.
All companies and product names are trademarks of their respective
organisations.
Consolidated Profit and Loss Account
Year to Year to
Note 31 31
December December
2005 2004
� �
Turnover 10,678,675 7,086,044
Cost of sales 5,781,965 4,052,759
Gross profit 4,896,710 3,033,285
Net operating expenses 3,545,120 2,904,198
Group operating profit 1,351,590 129,087
Interest receivable 101,497 85,493
Profit on ordinary activities before taxation 1,453,087 214,580
Taxation on profit on ordinary activities 294,390 1,177
Profit for the financial year 1,158,697 213,403
Basic earnings per share 3 1.59p 0.29p
Diluted earnings per share 3 1.59p 0.29p
Statement of Total Recognised Gains and Losses
Year to Year to
31 December 31 December
2005 2004
� �
Profit for the financial year 1,158,697 213,403
Currency translation differences on foreign 128,907 (81,641)
currency net investments
Total recognised gains relating to the year 1,287,604 131,762
Consolidated Balance Sheet
31 December Restated 31
December
2005 2004
� �
FIXED ASSETS
Goodwill - 120,035
Tangible assets 543,678 474,382
543,678 594,417
CURRENT ASSETS
Stocks and work in progress 1,501,554 1,147,782
Debtors 1,832,303 2,190,865
Cash at bank and in hand 3,978,139 2,224,527
7,311,996 5,563,174
CREDITORS:
amounts falling due within one year 1,852,977 1,117,178
NET CURRENT ASSETS 5,459,019 4,445,996
TOTAL ASSETS LESS
CURRENT LIABILITIES 6,002,697 5,040,413
Provision for liabilities and charges 38,180 -
NET ASSETS 5,964,517 5,040,413
CAPITAL AND RESERVES
Called up share capital 727,000 727,000
Share premium account 3,405,817 3,405,817
Capital redemption reserve 256,976 256,976
Profit and loss account 1,574,724 650,620
EQUITY SHAREHOLDERS' FUNDS 5,964,517 5,040,413
The Financial Statements were approved by the Board of Directors on 3 March
2006 and signed on its behalf by:
M Collins G A Fawcett
Chairman Managing Director
Consolidated Cash Flow Statement
2005 2004
� �
Net cash inflow/(outflow) from operating 2,125,605 (567,333)
activities
Returns on investments and servicing of
finance:
Interest received 101,497 85,493
Taxation 81,458 (20,112)
Capital expenditure and financial
investment:
Payments to acquire tangible fixed assets (288,048) (115,937)
Equity dividends paid (363,500) (363,500)
Increase/(decrease) in cash 1,657,012 (981,389)
NOTES
1. The financial information set out above does not constitute the Company's
statutory accounts for the years ended 31 December 2005 or 2004, but is
derived from those accounts. Statutory accounts for 2004 have been
delivered to the Registrar of Companies and those for 2005 will be
delivered following the Company's annual general meeting. The auditors have
reported on those accounts; their reports were unqualified and did not
contain a statement under s237(2) or (3) Companies Act 1985.
2. The Consolidated Financial Statements have been prepared on a basis
consistent with the Consolidated Financial Statements for the year ended 31
December 2004. The restatement of the 2004 Balance Sheet is as a
consequence of the adoption of FRS 21 and specifically relates to proposed
dividends not being included within the balance sheet as a liability.
3. The calculation of basic earnings per share is based on the weighted
average number of Ordinary Shares in issue of 72,700,012 (2004:
72,700,012), and on the profit after tax of �1,158,697 (2004: �213,403).
The calculation of diluted earnings per share incorporates 8,503 Ordinary
Shares (2004: nil) in respect of performance related employee share
options. The profit after tax is the same as for basic earnings per share.
Copies of the Annual Report will be sent to Shareholders and will also be
available from the Company's Registered Office: C/O MSP Secretaries, 90
Gloucester Place, London W1U 6EH.
END
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