CNC Concurrent Technologies Plc

2 September 2024

Concurrent Technologies Plc

(the "Company" or the "Group")

Half year results for the six months to 30 June 2024

Record H1 financial performance, delivering good contract momentum

Concurrent Technologies Plc (AIM: CNC), a designer and manufacturer of leading-edge computer products, systems and mission critical solutions used in high-performance markets by some of the world's major OEMs, is pleased to announce its results for the six months to 30 June 2024 ("H1 2024").

Financial highlights

Operational highlights

Products

Systems

Outlook

Miles Adcock, CEO of Concurrent Technologies, commented: "Demonstrated by the record financial performance in the period, we are successfully delivering on the Group's growth strategy that everyone at Concurrent Technologies has worked hard to implement. The Group has been transformed over the last three years and the eight major design wins in the period, from across the globe, reflect the progress that we have made.

"We have entered the second half of the year with good momentum and remain focused on managing cost and investment to drive substantial growth in the coming years across our Products and Systems divisions."

 Enquiries:

About Concurrent Technologies Plc

Concurrent Technologies Plc develops and manufactures high-end embedded Plug In Cards (PICs) and Systems for use in a wide range of high-performance, long-life cycle applications within the telecommunications, defence, security, telemetry, scientific and aerospace markets, including applications within extremely harsh environments. The processor products feature Intel® processors, including the latest generation embedded Intel® Core™ processors, Intel® Xeon® and Intel Atom™ processors.  The products are designed to be compliant with industry specifications and support many of today's leading embedded Operating Systems.  The products are sold world-wide.

For more information on Concurrent Technologies Plc and its products please visit www.gocct.com.

All trademarks, registered trademarks and trade names used in this announcement are the property of their respective owners.

CEO's statement

Overview

During the first half, we sustained significant momentum, delivering a record financial performance. This success aligns with our revised growth strategy which is aimed at becoming a materially larger business in the coming years. We achieved revenues of £16.8m, up 39% on H1 2023 (£12.1m), driven by an increasing number of major design wins and the expansion of our presence in the Systems market, where we benefitted from a full H1 revenue contribution from the acquisition of Phillips Aerospace. We received a record order intake of £17.8m in the half, positioning the Group well to continue executing on its ambitions and providing the Board with confidence in delivering 2024 results in-line with market expectations.

Strategy update

As announced at the 2023 results, the Group now moves towards having two divisions - Products and Systems - to align with our growth strategy and ambition to be the first to market with the latest technology. During the period, we further formalised our business structure, incorporating the acquired Phillips Aerospace into Systems and adjusting our leadership teams to reflect this progress and focus. 

Products

Just as significant as a record financial performance, is the continued success in securing major design wins, which are the foundations for our future growth. We classify a major design win as any instance where we know the customer has selected our product to be part of their long-term production programme and where that programme can achieve more than £1m per annum of revenue for the Group in future years. These opportunities will typically take two to three years to ramp up in volume. Historically, such large design wins were rare for Concurrent Technologies, but we are proud to report that eight major design wins were secured in H1 2024, the same level secured throughout the whole of FY23, helping to underpin a roadmap for material revenue growth in future years. Whilst dominated by customers in the USA, it is encouraging to note that, within these eight recent wins, there includes one for the UK, one for Italy, and one for South Korea, and we can expect typical order sizes for these contracts to increase over time. Importantly, we secured our single largest contract win to date, worth an initial $4.5m (growing to $6m with the extension announced in August 24), to supply a major US Defence & Aerospace prime contractor with multiple standard PICs. This win is a reflection of Concurrent Technologies now competing for large scale opportunities, often displacing much larger incumbent competitors from that customer.

Systems

It has been nearly a year since acquiring Phillips Aerospace, which has now been merged with our non-US Systems business and where we are already seeing significant progress. Thanks to the hard work of the Phillips team, alongside the Sales team, the Group is securing new Systems work in LA and has a growing pipeline of opportunities.

The Systems business is strategically benefitting from careful investment in key hires, and tools, and the planning for a relocation into a new facility in the Brea region of Los Angeles is well underway. Of note, post-period end, we were pleased to welcome Michael Harden to the Group, joining our Executive Committee as Vice President of the Systems business in LA. Michael brings a wealth of experience in the aerospace and defence industries, across sales and marketing and manufacturing operations, and so is well-equipped to lead the growth of our Systems business.  

The Group's mobilisation effort, combined with the continuing maturation of our opportunity pipeline, builds confidence in the growth potential of the business.

R&D

We continued to innovate and expand our product portfolio in the period, responding to the needs of our customers by launching two new products. Rhea is a further addition to our VME range of embedded processor boards and has been launched to harness this very latest technology for customers looking for a simple, cost-effective upgrade. We have a long track record for delivering excellent VME boards based on Intel® processors. We estimate the VME board market is approaching $300m and part of our board strategy is a commitment to offer VME processor boards to support existing and new VME customers, and Rhea is a timely proof point. We also launched Magni, a SOSA (open-standard) aligned, high-performance PIC based on an Intel® processor. Magni complements our product portfolio and will be useful to ourselves and other systems integrators with improved scope for flexible design solutions that optimise for size, weight, and power. This extends the user applications that we can serve whether as a standalone card or as an integrated system.

Post-period end, we launched a new compute intensive PIC, TR MDx/6sd-RCR, to meet growing customer demand. The PIC has enhanced features, including a wider operating temperature range, reduced weight, advanced networking capability, and secure on-board storage which addresses a crucial demand in the industry, allowing us to offer a product that is both innovative and highly efficient. We have a strong pipeline of orders for this product, including from our largest ever contract win, and we anticipate shipping fully qualified products within the year to meet growing customer demand.

Board update

In February 2024, we were delighted to welcome Issy Urquhart to the Board as an Independent Non-Executive Director. Issy brings over 30 years' experience working with global technology and financial services businesses in both the public and private sectors, where she's been responsible for implementing successful people programs and leading extensive business change and culture initiatives. The Group is already benefitting from her expertise in driving people and change management strategies across trans-Atlantic operations and, as a Board, we are confident Issy will be an invaluable guide to the business as we deliver on our growth strategy and create the right environment for our people to succeed.

Outlook

We are pleased with the Group's performance in H1 2024, delivering the results as anticipated. With the game-changing step up in major design wins during the period, this transformed business is now starting to deliver on the growth for which the strategy of the last three years was created. That strategy will be valid for some years yet, and we will continue to hold steady and execute as planned.

We have entered the second half with good momentum, with a healthy pipeline of opportunities across both Products and Systems, providing confidence in achieving results for FY24 in line with market expectations and beyond.

Miles Adcock

Chief Executive Officer

CFO's Statement

We are pleased to report a strong H1 2024 performance on all metrices.

Revenue at a 39% increase on the prior year is an exceptional performance and in line with our ambitions of growth, and the investment we have made in the business. Defence remains our strongest market at 82%, with Communications showing some growth, due to scheduled deliveries to our long-term customer. Backlog remains strong at c.£24.4m, following a solid order performance in H1 2024.

Gross profit is strong at £8.5m and gross margin continues to improve, with an additional 1.4 points (to 50.8%) from the 2023 results. We continue to drive hard on strengthening gross margin through our design teams and procurement.

PBT has more than doubled against the prior year position. Despite costs increasing, the record revenue and gross margin is coming through strongly (the output of the growing investment made in costs), resulting in a 13.6% PBT margin, moving us towards historical levels of margin performance, in line with our strategy of profitable growth.

We continue to invest in product development, the heart of our business, to drive greater design wins and revenue going forward. We continue to drive efficiency in all that we do to get our products to market early, within costs and to be significant future revenue generators. Product development costs were c£2m in period, in line with our planning. EBITDA in period was £3.3m, with amortisation at c£0.7m.

Cash has increased by c£6m from the end of H1 FY23 but has dropped c£2.2m from year end. This is due to a significant payment (c£3.5m) for a Last-Time-Buy purchase we made in FY23. H2 is expected to increase in cash generation due to normalisation of component purchase (i.e. no one-off large payment).

We remain on track for a strong year and delivery in line with market expectations, plus further consolidation of opportunities for our future years, with strong design wins in both systems and products.

Kim Garrod

Chief Financial Officer

NOTES TO THE INTERIM REPORT

1.    General information

The principal activity of the Group is the 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 (£), 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 30 August 2024.

The information relating to the six months ended 30 June 2024 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 2023, 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.

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 2024.  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 2023, which have 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 2023, 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 2024 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, they 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:

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.