Results for the year ended 31 December 2022 and Announcement of Annual General Meeting
Concurrent Technologies Plc (AIM: CNC), a world leading specialist in high-end embedded computer products for critical applications, is pleased to announce its results for the year to 31 December 2022 ("FY22").
The global components shortage continued to constrain financial performance, with management focused on supply chain management to deliver:
· Revenue for the year slightly ahead of market expectations at £18.3m (2021: £20.5m)
· Gross profit at £8.9m (2021: £11.4m)
· Gross margin at 48.6% (2021: 55.9%)
· EBITDA at £2.1m (2021 restated: £4.9m)
· Profit before Tax at £0.4m (2021 restated: Profit £3.5m)
· Profit after Tax at £1m (2021 restated: £2.8m)
· EPS decreased to 1.35p (2021 restated: 3.84p)
· Cash in the business at year end £4.5m (2021: £11.8m)
· Deliberate use of cash for (i) increased component inventory to mitigate supply chain issues, and (ii) increased cost base to create more products and grow the business.
· Reverting to cash generative as revenues improve in line with component availability and associated unwinding of inventory holdings.
· Prior Period Adjustment to 2020 closing reserves (opening 2021) reduced by £1m (closing 2021 by £1.1m)
· 80% of order intake was for "new" and "current" products, whereas in the year to 31 December 2021 ("FY21") 80% was for "last time buy" or "end of life" products. This is a profound and necessary transformation, validating the need to focus on enhanced product development and sales improvement.
· Eight new products launched.
· Achieved record order intake of £31.5m, surpassing the prior year of £25.2m by 25%, providing excellent revenue visibility for the future as the availability of components continues to improve.
· Received initial purchase orders for Systems.
Prior Period Adjustments
· Having thoroughly reviewed the application of accounting policies with the FY22 audit team it has been identified that historically the Company has over-capitalised development costs. The effect of this has resulted in adjustments to capitalisation, amortisation and impairment, ultimately affecting the Net Book Value of the development assets on the balance sheet. This has also affected tax and retained earnings, which has resulted in a 2020 restatement of £1.1m.
· The effect of the revised capitalisation has had a minimal effect on 2021 (+£10k to retained earnings), and 2020 had a positive impact of £0.2m.
· Other Prior Period Adjustments are: leases (understated by an extension) £0.1m; Dilapidations which have been missed previously £0.1m; EPS restated due to incorrect share options previously included; Financial Instruments note due to erroneous information previously.
Post Period Highlights
· Performance in the period to 30 June 2023 ("H1 FY23") is commensurate with current market expectations and continues to be limited by key component shortages, which are easing as the year progresses.
· Supply chain improvement is evident as the business transitions into H2 FY23, strengthening confidence in reducing lead times to customers, and correspondingly improved shipping volumes, albeit supply chain constraints remain the largest risk to performance for the remainder of the year.
· Significant achievements delivered in line with the business strategy in H1 FY23:
· Execution of a reseller agreement with Alpha Data Parallel Systems Ltd, enabling the inclusion of their FPGA (Field Programable Gate Array) cards alongside Concurrent Technologies SBS (Single Board Computer). Together with the provision of GPGPU (General Purpose Graphical Processing Until) enabled by the prior reseller agreement with Eizo Rugged, the Company can now offer a full range of processing solutions within custom and COTS systems, enabling access to larger markets and opportunity to more completely fulfil customer requirements;
· Launch of the Hermes high-performance processor Plug In Card, enabling the Company to continue to deliver leading-edge products to the market, demonstrating the focus on releasing new products;
· Execution of a new distribution agreement with CoC-e, who have deep TSN (Time Sensitive Networking) capability. TSN will now be a differentiating technical capability in the Company's portfolio; and
· Successfully winning the first Systems win in excess of £1 million in value since the launch of the revised business strategy.
· Order intake expected to be at least in line with prior year, and therefore the Company will transition into growth as component supply further improves.
The Company further confirms that its Annual General Meeting (AGM) will be held on Thursday 24th August 2023 at the Company's offices at Building 1230 (Second Floor), Waterside Drive, Arlington Business Park, Theale, Berkshire, RG7 4SA at 2:00 p.m. The Notice of General Meeting will be posted in due course. Shareholders are encouraged to send in their votes using proxy cards in advance of the AGM.
Miles Adcock, CEO of Concurrent Technologies Plc, commented:
"2022 was a tough year for the global electronics sector due to severe constraints on components availability. We entered the year with a confident strategy for medium to long term growth, and maintained our focus on targeted investment, partnership, and transformation. I am proud that we did what we said we would do, whether launching eight new products, initiating a systems business, or partnering to enable us to manufacture in the USA. As a result, we are anticipating a third record year for order intake in 2023.
The initial progress of our strategy can be seen in the quanta of order intake, but also that it now contains products and systems hitherto not part of our portfolio. Additionally, a healthy portion of our order intake is 'design wins', whereby we benefit from main production revenue in future years. Our approach to, and appetite for, securing much larger design wins is building us a solid base for year-on-year growth. The audit has been a long process this year, and we have demonstrably resolved unfortunate historic issues that have existed for some time. Our CFO, Kim Garrod, has done a great deal to position us for transparent and well-governed execution in her first year, and we look forward with confidence."