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 £12.1M (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 £14.5M (H1 2022: £14.2M) and record backlog of £29M (31 December 2022: £26.7M).  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 £12.1M (H1 2022: £7.4M) - remained constrained by components, however, represents a record half year, with an increase of 63% on prior year.

·    Gross profit of £6.0M (H1 2022: £3.7M); 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 £1.0M (H1 2022: £0.0M) - predominantly driven by increase revenue, and hence gross profit (+£2.3M); net costs increased by c£1.3M, 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 £1.0M (H1 2022: £0.0M).

·    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 £3M (31 Dec 2022: £4.5M).

Increased cash from Operations of £0.5M (due to a stronger H1), including increased inventory of £1M.

Decrease of £2M from investment activity, predominantly driven by R&D (£1.7M).

 

Operational Summary

·    Strong order intake of £14.5M as at 30 June 2023, with significant backlog of £29M compared to £20.3M 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 (+£0.4M), 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 £1.25M.

 

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 £12.1M (H1 2022 £7.4M), a significant increase of 63% on prior year.  The company continues to have strong backlog (contracted work) at £29M at H1 2023 (H1 2022: £20.3M), 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 £1M (H1 2022; £0.0M).  This is a £1M increase on 2022, represented by the increase revenue (+£4.7M on H1 2022) and corresponding gross profit (+£2.3M), however net operating expenses were up on prior year, in line with the investment strategy at £5.0M (H1 2022: £3.7M).  This is driven predominantly by additional investment in talent in R&D (+£0.4M), enabling functions and the Leadership team (+£0.7M).  The Company also benefitted from a £0.4M foreign exchange rate gain in H1 2022, not repeated in H1 2023.

The balance sheet remains strong with no debt and £3M of cash balances (including cash deposits) as at 30 June 2023 (31 December 2022: £4.5M).  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 £11M by the end of H1 2023 (H1 2022: £9.5M), an increase of a further £1M 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 £5.3M (H1 2022: £3.5M) due to the timing and level of revenue, which was £4.7M higher than H1 2022.  

With a record order intake in 2022, and further order intake in H1 2023 of £14.5M, and therefore a significant contracted backlog of £29M, 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 £6.8m 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 £29M 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)
Bob Huxford

Alice Cho

Matthew Elliott

concurrent@secnewgate.co.uk

+44 (0)20 3757 6880



Cavendish Securities plc (NOMAD)
Neil McDonald

Peter Lynch


+44 (0)131 220 9771

+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

 

£

 

£

 

£

 

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

 

£

 

£

 

£

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

 


£

 

£

 

£

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

 

£

 

£

 

£

 

£

 

£

 

£

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 (£), 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

 







£

 

£

 

£

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

 







 

 

 












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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