1 May 2024
Concurrent Technologies Plc
(the "Company" or the
"Group")
Full year results for the year ended 31
December 2023
Solid year of growth providing confidence in
updated strategy
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 year ended 31 December 2023.
Financial
highlights
|
|
2023
|
2022
|
% change
|
|
Revenue
|
£31.7m
|
£18.3m
|
73%
|
|
Gross profit
|
£15.6m
|
£8.9m
|
49%
|
|
Profit before tax & exceptionals
|
£3.7m
|
£0.4m
|
959%
|
|
Earnings per share
|
4.98p
|
1.35p
|
-
|
|
Dividend per share
|
1.0p
|
0p
|
-
|
|
EBITDA
|
£6.0m
|
£2.1m
|
-
|
|
Order intake
|
£28.2m
|
£31.5m
|
|
|
Closing Cash
|
£11.12m
|
£4.51m
|
146%
|
|
Investment in R&D
|
£3.80m
|
£3.69m
|
3%
|
|
Total assets
|
£47.8m
|
£32.6m
|
48%
|
|
·
|
Strong financial performance in FY23, achieving
revenues of £31.7m and profit before tax of £3.7m (excluding
exceptional costs), notwithstanding a significant investment in the
cost base throughout the year to accelerate future growth.
|
|
·
|
Gross profit margin increased to 49.4% (FY22 48.5%)
reflecting easing components challenges and operational efficiency
gains.
|
|
·
|
EBITDA more than doubled to £6.0m (FY22 £2.1m).
|
|
·
|
Cash generative with closing net cash balance at
£11.12m.
|
|
·
|
Increasingly optimised R&D investment in line
with stated strategy to improve the cadence and time to market of
products that offer the very latest technology.
|
Dividend
|
·
|
The Board will propose, at the Annual General Meeting
to be held on 20 June 2024, a final dividend of 1 pence per
Ordinary Share in the Company. Subject to the approval of
shareholders, the final dividend will be paid on 12 July 2024 to
shareholders on the register on 28 June 2024.
|
|
·
|
Further details of the Annual General Meeting will be
announced in due course.
|
Operational
highlights
|
·
|
Worked closely with suppliers and customers to
successfully manage the supply chain issues that previously
impacted performance and the Board is pleased to report that these
factors eased as the year progressed.
|
|
·
|
Continued to transition the business towards a culture
and go-to-market strategy that is positioned to scale.
|
|
·
|
Increased headcount by c.18%, with key hires in
product strategy, engineering, commercial, and finance.
|
Systems
division
|
·
|
Secured first substantial systems contract at £1.27m
in June 2023 with a UK FTSE 250 company in the defence sector.
|
|
·
|
Successful acquisition of Phillips Aerospace in the US
enabling the Company to move further into the development of
systems, providing a platform for future growth.
|
Boards
division
|
·
|
Secured eight major design wins, representing an
expected lifetime value to the business of at least £100m, to be
realised from 2026 onwards, in the UK and a significant majority in
the US, the world's largest market.
|
|
·
|
£5m of orders from the UK, a five-fold increase on
typical prior volumes.
|
|
·
|
Introduction of numerous new processes, practices,
and state-of-the-art tools to enhance design efficiency and quality
in FY24 across the Group's key markets.
|
Outlook
|
·
|
Strategic focus remains on developing and designing
boards and systems at pace for a range of applications to deliver
on the Group's short-term financial targets and the longer-term
lifetime value.
|
|
·
|
Demand for the Group's product remain high, and the
Company is developing a pipeline of opportunities which include,
COTs (commercial off the shelf), MOTs (Modified off the shelf) and
Systems.
|
|
·
|
The Group entered FY24 with good momentum evidenced
by the $1.57m contract win with a major global US Prime Contractor
and new VME board launched, Rhea.
|
|
·
|
Trading in the first four months of the year is in
line with market expectations, providing confidence in delivering
another year of profitable growth.
|
Miles Adcock, CEO of
Concurrent Technologies, commented:
"We achieved
remarkable success in FY23, putting in place the building blocks
that will enable us to deliver long-term, sustainable growth. This
is driven by significant design-in wins and strategic investment in
the Systems division, including the acquisition of Phillips
Aerospace.
"During
the year, there was a step change in how the Group invests in
marketing, sales, and partnerships to expand our market
opportunities. Looking ahead, we will remain focused on leveraging
the knowledge and the long-standing relationships the leadership
team has developed to invest in a measured way to design boards and
systems for a range of applications. As a Board we are confident in
the Group's ability to continue building momentum and deliver
results for FY24 in line with market expectations."
Enquiries:
|
Concurrent
Technologies Plc
Miles Adcock - CEO
Kim Garrod - CFO
|
+44 (0)1206 752626
|
|
Alma Strategic
Communications
Josh Royston
Hannah Campbell
|
+44 (0)20 3405 0205
|
|
Cavendish Capital Markets Limited (NOMAD)
Neil McDonald
Peter Lynch
|
+44 (0)131 220 9771
+44 (0)131 220 9772
|
About Concurrent
Technologies Plc
Concurrent Technologies Plc
develops and manufactures high-end embedded Plug In Cards 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.
Chairman's statement
Overview
FY23 was another step in the transformation of
Concurrent Technologies into a high-growth business by leveraging
our design heritage and market leadership position through the
continued investment in our culture, people, sales and marketing
and, more broadly, driving a step change in our go-to-market
strategy.
In the year, we delivered both record revenues and
profit, underpinned by the successful execution of the Group's
refreshed strategy. We are focused on developing a broader range of
products and systems, in addition to our boards business, both
organically and through acquisition. This positions the business
for long-term growth, and this year has solidified our view that we
now have the right strategic focus and people in place to achieve
our ambitions.
The year in
review
The first half of the year saw a recovery in trading
thanks to the increased customer demand for the Group's products
and the team's incredible effort in navigating the previous
component shortage issues. This momentum continued into the second
half of the year and, for FY23, the Company delivered record
revenues and profitability.
Cash balances remain strong, buoyed by the raising
of £6.8m through the placing of new ordinary shares to new and
existing shareholders in August to partly fund the acquisition of
Phillips Aerospace, leaving us in a strong position to invest in
the systems business further. On behalf of the Board, I would like
to thank all investors who participated in the oversubscribed
placing.
Execution against
strategy
Throughout the year, Concurrent Technologies
achieved significant milestones in line with its strategic
objectives. We secured eight substantial design wins, underscoring
the excellence of our products and engineering capabilities. These
wins will ramp up in the coming years in line with our customers'
programmes, but they provide long-term, multi-year revenue
visibility, which supports the investment plans in our R&D
roadmap.
Additionally, we released several new cutting-edge
products in the year that have enriched our portfolio. We remain
committed to investing in our product portfolio and capabilities
and we are optimistic about the opportunities in FY24 to expand
into new markets and deepen our presence within our home
markets.
Our end markets remain robust, and we have not only
deepened several key relationships with existing customers and
partners in the year but, importantly, we are now seeing the
opportunity to engage with new customers, servicing a range of
projects and geographies, and expect to have the opportunity to bid
on larger programmes we were not historically considered
for.
The acquisition of Phillips Aerospace in September
2023 marked a significant milestone for the business and has
supported our strategic goal of adding both systems capability and
US-based manufacturing. We welcome our new Phillips Aerospace
colleagues to the Group and recognise the additional talent and
skills they bring to our ever-more expert team. The early impact of
the acquisition has been positive, and we believe it will
significantly improve the Company's capability to design and
manufacture rugged systems utilising its existing plug-in
cards.
Board
Post-period end, we further strengthened our Board
with the appointment of Issy Urquhart as an independent
Non-Executive Director to the Company. Issy is an experienced
commercial human resources (HR) director with over 30 years'
experience working with global technology and financial services
businesses in both the public and private sectors. She has joined
the Group at a particularly exciting time, and we are already
benefiting from her guidance in driving people and change
management strategies across our transatlantic
operations.
Dividend
With the return to profitability, a 1.0p dividend
has been proposed for shareholder approval at the annual general
meeting (AGM) which, if passed, will amount to £862,000 paid in
early July 2024. Going forward, the Board anticipates dividends
will increase in line with profits, with an appropriate level of
cover maintained to enable investment for future growth.
Outlook for
FY24
In FY24 our strategic focus will remain on
developing and designing boards and systems at pace for a range of
applications. The year will also see us continue our investment in
systems and onboarding new programmes to deliver on our short-term
financial targets. Alongside this, a combination of our product
leadership and a drive to expand our presence in our focus sectors
should deliver a significant increase in multi-year contracts in
the medium term.
Mark
Cubitt
Chairman
CEO's
statement
Overview
FY23 was an outstanding year both financially and
operationally. As the headwinds of the global components shortages
subsided during the year, the underlying progress in order intake
and execution has been reflected in the Group's results,
particularly in the second half. Solid progress was also made on
our strategic priorities, including the acquisition of Phillips
Aerospace in the US, and a material increase in our 'major design
wins' that underpin a real step up in revenues in future years as
our customers ramp up production and reach their own planned
delivery volumes. With a significant investment in additional
managerial, technical and sales professionals, we now have an
excellent team in place to take the business forward for a period
of growth. It is clear the revised strategy and associated
transformation are coming together and, as a Board, we are
extremely excited about the Group's future.
Financial performance
FY23 was a record year for the Group, achieving
revenues of £31.7m (FY22: £18.3m) and profit before tax (excluding
exceptional costs of £0.2m, related to the acquisition of Phillips
Aerospace) of £3.7m, notwithstanding a significant investment in
the cost base throughout the year to accelerate future growth. The
strength of our order intake over the preceding 24 months enabled
this significant investment in product development to facilitate
new customers and design wins. We also worked closely with
suppliers and customers to successfully manage the supply chain
issues that previously impacted performance and we are pleased to
report that these factors eased as the year progressed. Our gross
margin has now stabilised, with a slight improvement on FY22. We do
believe FY24 should be predominantly unhindered by the issues of
the last two years regarding component availability and resulting
price pressures.
On 6 September 2023, the Company completed the
acquisition of Phillips Aerospace for $3.3m (£2.8m) through a
combination of $1.1m (£0.8m) cash, the issue of equity of $1.5m
(£1.3m) to the owners of Phillips Aerospace and a further $0.8m
(£0.7m) cash in repayment of outstanding loans balances within
Phillips Aerospace. Simultaneously, the Company raised £6.8m
through the issue of fresh equity to broaden our product offering
and strengthen the balance sheet to drive further growth.
Investing for growth amid supply chain shortages
inevitably impacted cash. Having started the year at £4.5m, the
first half of FY23 experienced a net outflow of £1.5m to a cash
balance low of £3m in June. As shipments, and hence invoicing,
strengthened, the business reverted to being cash generative, with
a year-end cash balance of £11.12m. Q4 was our most productive
period, for which only some of the associated customer invoices
were paid in 2023, with £5.4m of FY23 revenue to be collected as
cash in Q1 FY24, as per our payment terms with customers.
In-year order intake of £28.2m remains strong,
despite c.£8m of a small number of large orders slipping into FY24.
In all cases, these are opportunities we are down-selected for
(i.e. we already secured the design win), but the customers'
programme of work experienced delays vs expectations. Positively,
this had little detrimental impact on in-year revenue. While we
expect order intake to continue to build in FY24 and FY25, it is in
subsequent years that we will experience the material benefit of
the design wins secured in FY23. This focus on design wins is a
large investment in time and activity, since they are typically
larger and more strategic business-winning campaigns. While they
yield little immediate business benefit, the impact on the
medium-to-long-term business is transformative in terms of scale.
We intend to ever-increase the number of design wins secured each
year. We expect the design wins secured in FY23 to yield a
significant lifetime value of at least £100m to be realised from
FY26 onwards.
Having already doubled the capacity of our
Colchester, UK-based factory, we are planning to enhance both
internal and external capacity to accommodate this growth, and
indeed any major binary upside opportunities that will require a
further capacity increase.
Delivery against
strategy
With a year-on-year increase in revenue of over 70%,
it is clear our revised strategy and focus on creating a
sustainable, high-growth business is delivering the intended
results. The Company now comprises two divisions: a Boards division
and a nascent Systems division, which we expect to represent an
increasing percentage of Group sales in the coming years. The
refreshed sales team is core to delivering the Company's strategy,
and the level of order intake and revenue delivery in FY23 are
evidence of their capability.
Boards
division
This is our long-standing business that designs and
manufactures computer boards, where we have substantial expertise
and a reputation for quality and collaboration. During FY23, we
continued to transition the business towards having a culture and
go-to-market strategy that is positioned to scale. The strategy
here is simple: to provide the right product to market as quickly
as possible, with a refreshed focus on customer engagement
utilising talented engineers and sales professionals. We have now
created a team, cost base and sales strategy capable of delivering
c.£40m per annum, before any other material investment is
required.
As demonstrated by the revenue performance during
FY23 H2, the business has already made material progress and is now
positioned to deliver much higher volumes thanks to the investment
we have made in expanding the capacity in our Colchester factory.
Much of our business in boards is secured via 'design wins',
whereby a customer designs us into their own programme, and we can
then plan for purchase orders in future years as they reach their
own production volumes, typically two to three years after the
initial design win. A 'major design win' is one with the potential
to achieve peak volumes of >£1m per annum for several
consecutive years. Historically, the Company may have secured one
or two major design wins per annum. In FY23, we secured eight major
design wins, which is an extremely positive leading indicator for
future growth, representing a lifetime value to the business of at
least £100m. Every region is important to us, but the UK and US are
our home markets in which we have a material presence
operationally. I am pleased to confirm that we won over £5m of
orders from the UK in FY23, a five-fold increase on typical prior
volumes.
The boards division has been through significant
transformation in all aspects during the year and is now fit to
focus on execution in FY24 across our key markets. We are exploring
options for additional internal and external capacity in line with
our anticipated continued order intake growth in the medium
term.
Concurrent Technologies is a Titanium member of the
Intel® Partner Alliance, meaning we get direct support from Intel®
with allocated resources. In addition, our applications for early
access to future silicon are given priority over Gold members and
we've been successful in all our recent applications. We also have
access to Intel®'s 'Market Development Funds' programme, which
allows us to claim a percentage of our marketing costs back if we
explicitly promote that we're using Intel® devices. Having our
products on the Intel® Partner Showcase enables Intel® salespeople
globally to search for our products easily.
Systems
division
Since I joined the Company in 2021, we have explored
ways to enter the systems market and move up the value chain by
supplying whole systems rather than single boards, enabling us to
generate substantially higher revenues and open up new market
opportunities. We have made excellent progress this year; the
systems line of business now includes the acquired Phillips
Aerospace in the US in addition to the capability in the UK
business, which will be moved out of the boards line of business
going forward. This means that from FY24 we will report the
top-level financials of both boards and systems individually. This
is to give increased transparency and also recognises that each
will have different characteristics financially. For example,
average sell prices for systems are typically higher, but gross
margins are less than for boards because there is more third-party
content. Systems will also often include upfront funding from
customers for the design of their customer solution. While we do
not currently have a business unit structure (with the exception of
the acquired business), this will likely be implemented as revenue
from systems grows, in order to provide the necessary, dedicated
focus and resources on this business.
In the first half of FY23, we won a £1.27m contract
for a UK-based system, providing validation of our proposition and
capability. The addition of Phillips Aerospace provides a further
platform for the Systems division to be a core part of our future
growth. Previously, Phillips Aerospace had designed and
manufactured our initial standard products for systems, meaning
both teams had a successful history of working together and
integration post-acquisition was seamless. We have welcomed a
highly capable team into the Group, who provide the credibility
needed to win and deliver systems solutions that complement our
existing boards business. The Board has been encouraged by the
level of motivation and integration that the Phillips Aerospace
senior management team has shown, contributing significantly to the
technical and managerial community within the Group. Revenue
contribution by the Phillips Aerospace business since the
completion of the acquisition is approximately £0.8m, slightly
stronger than we had expected based on the prior annual
performance. The Board expects this to increase significantly
as systems contracts are secured in the future.
Acquisitive growth
In the medium term, we believe there are a range of
opportunities to expand our capability, customer list and market
penetration through acquisition. The acquisition of Phillips
Aerospace is a good example of our acquisition criteria: a business
we knew well; a business that had long-standing customer
relationships; and an opportunity for us to add new product
expertise, additional major customers, appropriate necessary
accreditations and strengthening of our position in our chosen home
markets. We are excited by our opportunity to significantly scale
Concurrent Technologies organically over the next few years, but we
have a clear target to participate in industry consolidation and
add to our growth and offering by acquiring leading businesses
where possible.
R&D
We continue to focus on investing in R&D in line
with our strategy to improve the cadence and time to market of our
products that offer the very latest technology.
At the same time that Intel® launched its Raptor Lake-P processor for the embedded market, we
announced Hermes, our latest flagship board based on the VPX
standard for critical defence applications at the edge. This was
our first card based on Intel®'s hybrid architecture consisting of
six performance and eight efficient cores, allowing our customers
to scale their performance to fit their power and thermal
envelope.
In Q3, to meet a key customer need, we shipped a new
variant of one of our popular boards with double the amount of
memory. We were able to react extremely quickly to secure a
critical long-term design win with this variant against strong
competition, demonstrating that our robust processes and
revitalised culture are succeeding.
We also announced a rugged board to the CompactPCI
standard that is still widely used for industrial and defence
applications. This was deliberately backwards compatible with
legacy cards to secure design wins where programs are undergoing a
technology transition extending the life span.
In Q4, we announced our highest-performance
processor board, using 'Air Flow Through' technology. This and our
first Air Flow Through card, a novel technology for a cooling board
that was announced in FY22, are being integrated by the end
customers and, having learned a lot by designing boards, we are
looking to offer integrated Air Flow Through systems in the
future.
To interconnect our processor boards with systems,
we introduced a high-performance dual enclave switch. This supports
separate 100Gb Ethernet data and 10Gb Ethernet control connections
to each board. Having physical data and control separation is
critical in many defence applications to ensure security between
the two enclaves.
Post-period end, we announced the launch of the Rhea
VME single-board computer, which coincided with the launch of
Intel®'s latest Atom processor, to harness this very latest
technology for customers looking for a simple, cost-effective
upgrade.
The product portfolio strengthens with continued
investment in R&D and sales, enabling a strong pipeline of
opportunities, and conversion of these, to underpin future revenue
growth.
Partnerships
As part of our strategy to develop a broader range
of products and services, securing and maintaining partnerships is
critical for expanding the size and markets available to us.
In H1 FY23, we signed a distribution agreement with
SoC-e, an internationally recognised provider of advanced equipment
for real-time and deterministic Ethernet networking for critical
sectors, to enhance our product offering. The collaboration enables
us to enhance our leading range of solutions and systems to our
home and global markets with the addition of time-sensitive
networking capability, which we are starting to see as a
requirement for future combat platforms. We also secured a key
partnership agreement with Alpha Data to act as a reseller of
its field programmable gate array- (FPGA)
based boards and modules.
In H2 FY23, we showcased our defence-related
products at the DSEI Exhibition, Europe's largest defence and
aerospace show. We worked with partners like Alpha Data and SoC-e
to demonstrate our integration capability by showing products like
Helios, our new rugged vision computer.
Markets
Defence is the dominant target market for the Group,
now accounting for 85% of our board revenue. Industrial (6%),
medical (5%) and scientific (4%) are our other important
domains.
People and ESG
In recent years, we have assembled a Board and
Leadership Team with experience in transforming businesses and
growing sales globally, and our success in FY23 is due to the
efforts of this driven, refreshed team. During the year, we
increased headcount by 17.8%. Attracting and retaining talent
is core to our strategy, and I am delighted that in November 2023
we were awarded Gold status by the 5% Club, recognising that more
than 5% of our workforce is engaged in 'earn & learn' learning
programmes.
Culture
change
We believe that culture is what you do and how you
behave and that it drives business performance, so we have taken
deliberate and active action partnering with Coode Associates to
create the company culture that is right for us. Our target culture
includes a renewed focus on output, collaboration, empowerment and
growth, which in turn has positively impacted our productivity and
output.
We will continue to instil this through the
business, led by our Leadership Team who, on a daily basis,
demonstrate and represent our culture. We have invested heavily in
our leadership capability to lead our culture and will continue to
do so at all levels.
ESG
We are continuing with our significant
transformation to deliver more products faster to
market through operational excellence and refined
governance. Our key focus for ESG is our people and
therefore we have largely invested our time and energy in making
sure that we have an attractive reward and benefits offering and
providing a developmental place to work.
Outlook
We have achieved remarkable success in FY23, marked
by a record financial performance, and have put in place the
building blocks that will enable us to deliver long-term,
sustainable growth. This is driven by significant design-in wins
and strategic investment in the Systems divisions, including the
acquisition of Phillips Aerospace.
During the year, there was a step change in how the
Group invests in marketing, sales and partnerships to expand our
market opportunities. Looking ahead, we will remain focused on
leveraging the knowledge and the long-standing relationships the
Leadership Team has developed to invest in a measured way to design
boards and systems for a range of applications. FY24 will be about
balancing our investment and mobilising to win and deliver systems
to achieve our short-term financial targets.
Miles
Adcock
Chief Executive
Officer
CFO's Statement
The Group delivered a strong financial performance in
the FY23, with a significant growth in revenue and profit before
tax (adjusted for exceptional items), resulting in a solid cash
position.
Financial KPIs
|
|
2023
|
2022
|
2021
|
|
Revenue
|
£31.7m
|
£18.3m
|
£20.5m
|
|
% change vs previous year
|
73%
|
-10%
|
-3%
|
|
Gross profit
|
£15.6m
|
£8.88m
|
£11.4m
|
|
% gross margin
|
49%
|
49%
|
56%
|
|
Profit before tax & exceptionals
|
£3.7m
|
£0.4m
|
£3.5m
|
|
% change vs previous year
|
959%
|
-89%
|
25%
|
|
Earnings per share
|
4.98p
|
1.35p
|
3.84p
|
|
Proposed dividend per share
|
1p
|
0p
|
2.55p
|
|
EBITDA*
|
£6.0m
|
£2.1m
|
£4.9m
|
|
Closing cash
|
£11.12m
|
£4.51m
|
£11.84m
|
|
% change vs previous year
|
146%
|
-62%
|
5%
|
|
Investment in R&D
|
£3.8m
|
£3.69m
|
£1.82m
|
|
% change vs previous year
|
3%
|
103%
|
50%
|
|
Total assets
|
£47.8m
|
£32.6m
|
£29.8m
|
|
Shareholders' funds
|
£35.0m
|
£23.2m
|
£22.7m
|
*EBITDA is defined as operating
profit excluding finance costs, taxation, depreciation and
amortisation.
Revenue
The Company generates sales through products and
associated services. A minimal amount of revenue (c.£1.1m) is
included in FY23 for system sales (including sales for the
acquisition of Phillips Aerospace from 6 September 2023). FY23 saw
a record year for revenue, despite being constrained in the first
half of the year due to component shortages.
Geographical split of
revenue
|
Revenue
|
|
|
|
|
|
Year to
|
|
Year to
|
|
|
|
|
|
|
|
31
December
|
|
31
December
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
£
|
|
£
|
|
|
|
|
|
United States
|
|
13,060,691
|
|
6,564,816
|
|
|
|
|
|
Malaysia
|
|
392,850
|
|
3,047,798
|
|
|
|
|
|
Germany
|
|
6,450,372
|
|
|
|
|
|
|
|
United Kingdom
|
|
2,148,568
|
|
1,167,266
|
|
|
|
|
|
Other Europe
|
|
4,178,401
|
|
4,003,849
|
|
|
|
|
|
Rest of the World
|
|
5,425,434
|
|
3,491,042
|
|
|
|
|
|
|
|
31,656,316
|
|
18,274,771
|
The geographical split of revenue is quite different
in FY23 versus the prior year. FY22 was driven by component
availability and, therefore, what we were able to ship to
customers. FY23 still had an element of this but it was less
extreme, with H2 being relatively unconstrained by component
availability. We have one customer in Malaysia, and the profile is
simply reflective of its schedule. Germany has represented a
significant growth area due to timing of programs (orders in FY22
and FY23), with higher production and development volume creating
revenue in FY23. A key point to note is the growth in the UK and
US, both our home markets, where we have been concentrating our
business development activities. An important element of our
strategy has been to reduce our reliance on one customer, which was
a feature of the past business, and this strategy is clearly
working, as evidenced by the table below.
% Revenue by top
customers
Revenue by
market
|
Defence
|
£26,758,184
|
85%
|
|
Industrial and scientific
|
£3,169,680
|
10%
|
|
Medical, communications and other
|
£1,728,452
|
5%
|
|
Total
|
£31,656,316
|
|
Gross profit
Gross profit increased by 76% to £15.64m (FY22:
£8.88m), reflecting the significant increase in revenue. Our gross
profit margin of 49.4% (FY22: 48.6%) is reflective of the improving
components situation and more efficient delivery.
Profit
Profit before tax (excluding exceptionals) increased
by 959% to £3.7m (FY22: £0.4m). This is a result of the record
revenues achieved in FY23. EBITDA (measured as operating profit
plus depreciation and amortisation) increased by 184% to £6.0m
(FY22: £2.1m). Amortisation of our products was up by 23% to
£1.35m, reflecting the new product portfolio starting to be
released into the profit-and-loss account. Depreciation is also
significantly up by 91%, of which 17% reflects the investment in
new machinery and the improved offices of Theale, Reading and the
remainder is the effect of bringing in the acquisition balances.
The new products and the new facility are both key elements in the
growth strategy of the Group and will enable the realisation of
exceptional further growth.
Earnings per share (EPS) was 4.98p (FY22: 1.35p).
This reflects the increased weighted average number of ordinary
shares in FY23 generated by the equity raise completed in August
2023. On the previous basis, the EPS would have been 5.0p.
Cost base
It has been necessary to improve the cost base of the
business; it has significantly increased with FY23 at £12.2m (FY22:
£8.3m). This reflects the investment needed in the business to
prepare and be ready for growth. This will be achieved through our
new ways of working (e.g. business development, systems, design
wins, product development).
The Group continues to pursue the strategy, investing
in R&D, developing new products and securing talented people to
deliver and drive the business. Through FY23, the business has
started to see the results of that investment.
As per the table above, a major
part of the cost increase has been the investment in people, with
salaries increasing by £2.1m. Headcount has increased by 23, from
129 to 152 (including 12 from the acquisition of Phillips) from 31
December 2022, and has increased from 109 at the beginning of
FY22.
Bonuses and commission have also risen in FY23, due
to excellent performance and a change to the commission scheme (to
simplify and pay on order performance), which generated a one-off
catch-up in FY23 of c.£0.3m.
Foreign exchange rates also had a significant impact
on the FY23 accounts, with a swing in rates causing a negative
effect against FY22. All other costs were relatively flat.
Tax
The Group has undertaken a full tax review and
computation, in accordance with UK tax regulations. Due to having
significant R&D investment, we remain in a tax credit position
for FY23.
Cash flow
The business has a healthy cash balance of £11.1m,
with £5.6m generated from normal operations (a strong increase from
FY22 at -£0.9m). Revenue was strong in Q4, meaning trade debtors
going out of FY23 were high at £5.4m. The business was cash
generative in FY23; this is a reversal of the difficult position in
FY22 (due to components availability), which saw a decrease of
£7.3m.
Statement of financial
position
Inventory at the close of FY23 was £11.96m (FY22:
£10.09m). This was driven by the management of parts throughout the
challenging period due to the components crisis, where the business
chose to invest cash in increasing inventory based on market
availability to enable the delivery of products. This is now
followed by a period of growth and, therefore, inventory holding
will revert to 'normal' levels based on a higher-revenue business.
These two drivers will continue to play out throughout FY24. The
business reviews inventory regularly and provides for obsolescence
and slow-moving inventory accordingly, which totalled £1.26m in
FY23 (FY22: £0.7m).
Inventory is a key factor in enabling the business
to deliver most efficiently and effectively, with careful
management contributing to the reduction in lead times in getting
products to customers.
Trade payables have increased to £5.7m (FY22:
£2.98m). This is predominantly due to the purchase of an
end-of-life component that is used across many of the products.
This component was delivered in FY23; however, payment terms were
agreed that enable payment in April FY24.
Acquisition
On 5 September 2023, Concurrent Technologies Group
completed the acquisition of Phillips Aerospace in California,
USA.
The acquisition aims to underpin and execute the
systems strategy of the business. It provides a footprint,
capability, accreditations and credibility that will support the
drive for systems revenue going forward.
Phillips Aerospace was purchased for $3.3m (£2.8m),
split between cash at $1.1m (£0.8m), equity of $1.5m (£1.3m), and
repayment of outstanding loan balances within Phillips Aerospace of
$0.8m (£0.7m). A detailed summary of the transaction is set out in
Note 27 to the financial statements.
Two of the owners (the third was a silent partner)
remain with the business and are fully committed to driving the
systems strategy forward with the business.
The fair value of the assets acquired has been
considered under IFRS 3 and a purchase price allocation exercise
has been undertaken and reflected in Note 27 of the accounts.
In the period since the business has been owned by
Concurrent Technologies, it delivered £0.8m revenue and contributed
£0.2m profit to the Group.
Kim
Garrod
Chief Financial
Officer
Consolidated statement of
comprehensive income for the year ended 31 December
2023
|
For the
year ended 31 December 2023
|
Note
|
|
|
|
|
|
|
|
|
Year to
|
|
Year to
|
|
|
|
|
31
December
|
|
31
December
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
£
|
|
£
|
|
Revenue
|
3
|
|
31,656,316
|
|
18,274,771
|
|
Cost of
sales
|
|
|
(16,018,368)
|
|
(9,397,449)
|
|
Gross
profit
|
|
|
15,637,948
|
|
8,877,322
|
|
Administrative expenses
|
|
|
(11,951,314)
|
|
(8,390,682)
|
|
Group operating
profit
|
4
|
|
3,686,634
|
|
486,640
|
|
Finance
expense
|
|
|
(86,010)
|
|
(104,505)
|
|
Finance
income
|
5
|
|
68,145
|
|
546
|
|
Exceptional acquisition expenses
|
27
|
|
(195,881)
|
|
-
|
|
Profit before
tax
|
|
|
3,472,888
|
|
382,681
|
|
Tax
credit
|
6
|
|
400,248
|
|
604,344
|
|
Profit for the
year
|
|
|
3,873,136
|
|
987,025
|
|
|
|
|
|
|
|
|
Other comprehensive
income
|
|
|
|
|
|
|
Exchange
(losses)/gains) on translating foreign operations
|
|
|
(101,340)
|
|
69,463
|
|
Other comprehensive income
for the year, net of tax
|
|
|
(101,340)
|
|
69,463
|
|
Total comprehensive income
for the year
|
|
|
3,771,796
|
|
1,056,488
|
|
|
|
|
|
|
|
|
Profit for the period
attributable to:
|
|
|
|
|
|
|
Equity
holders of the Parent
|
|
|
3,873,136
|
|
987,025
|
|
|
|
|
|
|
|
|
Total comprehensive income
attributable to:
|
|
|
|
|
|
|
Equity
holders of the Parent
|
|
|
3,771,796
|
|
1,056,488
|
|
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
|
Basic
earnings per share
|
8
|
|
4.98p
|
|
1.35p
|
|
|
|
|
|
|
|
|
Diluted
earnings per share
|
8
|
|
4.85p
|
|
1.35p
|
All operations were continuing
within the year.
This statement should be read in conjunction with
accompanying notes
Consolidated Statement of
Financial Position for the year ended 31 December 2023
|
For the
year ended 31 December 2023
|
|
|
31
December
|
31
December
|
|
|
|
|
2023
|
2022
|
|
|
|
|
£
|
£
|
|
ASSETS
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
Property, plant and equipment
|
11
|
|
2,465,883
|
2,685,107
|
|
Intangible assets
|
12
|
|
13,914,398
|
8,807,290
|
|
Deferred
tax assets
|
13
|
|
432,642
|
350,753
|
|
|
|
|
16,812,923
|
11,843,150
|
|
Current
assets
|
|
|
|
|
|
Inventories
|
15
|
|
11,958,500
|
10,090,437
|
|
Trade
and other receivables
|
16
|
|
6,442,827
|
5,439,912
|
|
Current
tax assets
|
6
|
|
1,492,621
|
762,545
|
|
Cash and
cash equivalents
|
|
|
11,118,728
|
4,512,720
|
|
|
|
|
31,012,676
|
20,805,614
|
|
|
|
|
|
|
|
Total
assets
|
|
|
47,825,599
|
32,648,764
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
Deferred
tax liabilities
|
13
|
|
2,094,095
|
2,126,588
|
|
Trade
and other payables
|
17
|
|
695,273
|
1,257,820
|
|
Provisions
|
19
|
|
315,135
|
304,336
|
|
|
|
|
3,104,503
|
3,688,744
|
|
Current
liabilities
|
|
|
|
|
|
Trade
and other payables
|
17
|
|
9,666,412
|
5,765,262
|
|
Provisions
|
19
|
|
18,256
|
18,256
|
|
|
|
|
9,684,668
|
5,783,518
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
12,789,171
|
9,472,262
|
|
|
|
|
|
|
|
Net assets
|
|
|
35,036,428
|
23,176,502
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
Capital and
reserves
|
|
|
|
|
|
Share
capital
|
21
|
|
861,692
|
739,000
|
|
Share
premium account
|
21
|
|
9,950,231
|
3,699,105
|
|
Merger
reserve
|
21
|
|
1,283,457
|
-
|
|
Capital
redemption reserve
|
21
|
|
256,976
|
256,976
|
|
Cumulative translation reserve
|
21
|
|
(129,276)
|
(27,936)
|
|
Profit-and-loss account
|
|
|
22,813,348
|
18,509,357
|
|
Equity attributable to
equity holders of the Parent
|
|
|
35,036,428
|
23,176,502
|
|
|
|
|
|
|
|
Total
equity
|
|
|
35,036,428
|
23,176,502
|
This statement should be read in
conjunction with accompanying notes.
Company Statement of Financial
Position for the year ended 31 December 2023
|
|
|
|
31
December
|
|
31
December
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
£
|
|
£
|
|
ASSETS
|
|
|
|
|
|
|
Non-current
assets
|
|
|
|
|
|
|
Property, plant and equipment
|
11
|
|
2,374,209
|
|
2,628,501
|
|
Intangible assets
|
12
|
|
11,217,904
|
|
8,807,290
|
|
Deferred
tax assets
|
13
|
|
432,642
|
|
350,753
|
|
Investments
|
14
|
|
1,572,640
|
|
1,446,952
|
|
|
|
|
15,597,395
|
|
13,233,496
|
|
Current
assets
|
|
|
|
|
|
|
Inventories
|
15
|
|
11,754,564
|
|
10,090,437
|
|
Trade
and other receivables
|
16
|
|
8,534,995
|
|
5,870,077
|
|
Current
tax assets
|
6
|
|
1,434,921
|
|
703,087
|
|
Cash and
cash equivalents
|
|
|
9,111,243
|
|
1,704,517
|
|
|
|
|
30,835,723
|
|
18,368,118
|
|
|
|
|
|
|
|
|
Total
assets
|
|
|
46,433,118
|
|
31,601,614
|
|
|
|
|
|
|
|
|
LIABILITIES
|
|
|
|
|
|
|
Non-current
liabilities
|
|
|
|
|
|
|
Deferred
tax liabilities
|
13
|
|
1,834,823
|
|
2,178,634
|
|
Trade
and other payables
|
17
|
|
677,607
|
|
1,211,405
|
|
Provisions
|
19
|
|
315,135
|
|
304,336
|
|
|
|
|
2,827,565
|
|
3,694,375
|
|
Current
liabilities
|
|
|
|
|
|
|
Trade
and other payables
|
17
|
|
8,890,046
|
|
5,171,306
|
|
Provisions
|
19
|
|
18,256
|
|
18,256
|
|
|
|
|
8,908,302
|
|
5,189,562
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
11,735,867
|
|
8,883,937
|
|
|
|
|
|
|
|
|
Net assets
|
|
|
34,697,251
|
|
22,717,677
|
|
|
|
|
|
|
|
|
EQUITY
|
|
|
|
|
|
|
Capital and
reserves
|
|
|
|
|
|
|
Share
capital
|
21
|
|
861,692
|
|
739,000
|
|
Share
premium account
|
21
|
|
9,950,231
|
|
3,699,105
|
|
Merger
reserve
|
21
|
|
1,283,457
|
|
-
|
|
Capital
redemption reserve
|
21
|
|
256,976
|
|
256,976
|
|
Profit-and-loss account
|
21
|
|
22,344,895
|
|
18,022,596
|
|
Equity attributable to
equity holders of the Parent
|
|
|
34,697,251
|
|
22,717,677
|
|
|
|
|
|
|
|
|
Total
equity
|
|
|
34,697,251
|
|
22,717,677
|
This statement should be read in conjunction with
accompanying notes.
Consolidated Cash Flow Statement
for the year ended 31 December 2023
|
For the
year ended 31 December 2023
|
|
|
Year to
|
|
Year to
|
|
|
|
|
31
December
|
|
31
December
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
Cash flows from operating
activities
|
|
|
|
|
|
|
Profit
before tax for the period
|
|
|
3,472,888
|
|
382,681
|
|
Adjustments for:
|
|
|
|
|
|
|
Finance
income
|
|
|
(68,145)
|
|
(546)
|
|
Finance
expense
|
|
|
86,010
|
|
104,505
|
|
Depreciation
|
|
|
806,236
|
|
422,047
|
|
Amortisation
|
|
|
1,509,167
|
|
1,197,972
|
|
Impairment
loss
|
|
|
31,557
|
|
327,526
|
|
Share-based
payment
|
|
|
430,854
|
|
219,363
|
|
Exchange
differences
|
|
|
(145,706)
|
|
82,384
|
|
Increase
in inventories
|
|
|
(1,868,063)
|
|
(3,665,001)
|
|
Increase
in trade and other
receivables
|
|
|
(1,029,033)
|
|
(2,451,279)
|
|
Increase
in trade and other
payables
|
|
|
2,853,322
|
|
2,222,123
|
|
Cash
generated/(used in) from operations
|
|
|
6,079,087
|
|
(1,158,225)
|
|
Tax
received/(paid)
|
|
|
(444,210)
|
|
267,884
|
|
Net cash
generated/(used in) from operating activities
|
|
|
5,634,877
|
|
(890,341)
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities
|
|
|
|
|
|
|
Interest
received
|
|
|
68,145
|
|
546
|
|
Purchases of property, plant and equipment (PPE)
|
|
|
(495,973)
|
|
(1,480,394)
|
|
Payment
of acquisition of subsidiary net of cash acquired
|
|
|
(685,767)
|
|
-
|
|
Capitalisation of development costs and purchases of
intangible assets
|
|
|
(3,977,839)
|
|
(3,711,617)
|
|
Net cash
used in investing activities
|
|
|
(5,091,434)
|
|
(5,191,465)
|
|
|
|
|
|
|
|
|
Cash flows from financing
activities
|
|
|
|
|
|
|
Equity
dividends paid
|
|
|
-
|
|
(1,027,088)
|
|
Repayment of leasing liabilities
|
|
|
(215,209)
|
|
(94,842)
|
|
Interest
paid
|
|
|
(86,010)
|
|
(104,505)
|
|
Issue of
ordinary shares net of issue costs
|
|
|
6,355,741
|
|
-
|
|
Sale of
treasury shares
|
|
|
-
|
|
2,425
|
|
Net cash
generated/(used) in financing activities
|
|
|
6,054,522
|
|
(1,224,010)
|
|
|
|
|
|
|
|
|
Effects
of exchange-rate changes on cash and cash equivalents
|
|
|
8,043
|
|
(21,222)
|
|
|
|
|
|
|
|
|
Net increase/(decrease) in
cash
|
|
|
6,606,008
|
|
(7,327,038)
|
|
Cash at
beginning of period
|
|
|
4,512,720
|
|
11,839,758
|
|
Cash at
the end of the period
|
|
|
11,118,728
|
|
4,512,720
|
This statement should be read in
conjunction with accompanying notes.
Consolidated Statement of Changes
in Equity for the year ended 31 December 2023
|
|
|
|
|
|
Capital
|
Cumulative
|
Profit-
|
|
|
|
|
Share
|
Share
|
Merger
|
redemption
|
translation
|
and-loss
|
Total
|
|
|
|
capital
|
premium
|
reserve
|
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
|
|
-
|
-
|
-
|
-
|
-
|
987,025
|
987,025
|
|
Exchange
differences on translating foreign operations
|
|
-
|
-
|
-
|
-
|
69,463
|
-
|
69,463
|
|
Total
comprehensive income for the period (restated)
|
|
-
|
-
|
-
|
-
|
69,463
|
987,025
|
1,056,488
|
|
Share-based payment
|
|
-
|
-
|
-
|
-
|
-
|
219,363
|
219,363
|
|
Deferred
tax on share-based payment
|
|
-
|
-
|
-
|
-
|
-
|
245,555
|
245,555
|
|
Dividends paid
|
|
-
|
-
|
-
|
-
|
-
|
(1,027,088)
|
(1,027,088)
|
|
Sale/purchase of treasury shares
|
|
-
|
-
|
-
|
-
|
-
|
2,425
|
2,425
|
|
Issue of
ordinary shares
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Balance at 31 December
2022
|
|
739,000
|
3,699,105
|
-
|
256,976
|
(27,936)
|
18,509,357
|
23,176,502
|
|
|
|
|
|
|
|
|
|
|
|
Profit
for the period
|
|
-
|
-
|
-
|
-
|
-
|
3,873,136
|
3,873,136
|
|
Exchange
differences on translating foreign operations
|
|
-
|
-
|
-
|
-
|
(101,340)
|
-
|
(101,340)
|
|
Total
comprehensive income for the period
|
|
-
|
-
|
-
|
-
|
(101,340)
|
3,873,136
|
3,771,796
|
|
Share-based payment
|
|
-
|
-
|
-
|
-
|
-
|
430,854
|
430,854
|
|
Deferred
tax on share-based payment
|
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Dividends paid
|
|
-
|
-
|
-
|
-
|
-
|
0
|
0
|
|
Sale/purchase of treasury shares
|
|
-
|
-
|
|
-
|
-
|
-
|
-
|
|
Merger
reserve
|
|
18,077
|
|
1,283,457
|
-
|
-
|
-
|
1,301,534
|
|
Shares
issued during the year
|
|
104,615
|
6,251,126
|
-
|
-
|
-
|
-
|
6,355,741
|
|
Balance at 31 December
2023
|
|
861,692
|
9,950,231
|
1,283,457
|
256,976
|
(129,276)
|
22,813,347
|
35,036,427
|
This
statement should be read in conjunction with accompanying
notes.
Company Statement of Changes in
Equity for the year ended 31 December 2023
|
|
|
|
|
|
|
Capital
|
Profit-
|
|
|
|
|
|
Share
|
Share
|
Merger
|
redemption
|
and-loss
|
Total
|
|
|
|
|
capital
|
premium
|
reserve
|
reserve
|
account
|
equity
|
|
|
|
|
£
|
£
|
£
|
£
|
£
|
£
|
|
Balance at 1 January
2022
|
|
|
739,000
|
3,699,105
|
-
|
256,976
|
17,493,403
|
22,188,484
|
|
|
|
|
|
|
|
|
|
|
|
Total
profit and comprehensive income for the period
|
|
|
-
|
-
|
-
|
-
|
1,086,851
|
1,086,851
|
|
Share-based payment
|
|
|
-
|
-
|
-
|
-
|
221,450
|
221,450
|
|
Deferred
tax on share-based payment
|
|
|
-
|
-
|
-
|
-
|
245,555
|
245,555
|
|
Dividends paid
|
|
|
-
|
-
|
-
|
-
|
(1,027,088)
|
(1,027,088)
|
|
Sale/purchase of treasury shares
|
|
|
-
|
-
|
-
|
-
|
2,425
|
2,425
|
|
Issue of
ordinary shares
|
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Balance at 31 December
2022
|
|
|
739,000
|
3,699,105
|
-
|
256,976
|
18,022,596
|
22,717,677
|
|
|
|
|
|
|
|
|
|
|
|
Total
profit and comprehensive income for the period
|
|
|
-
|
-
|
-
|
-
|
3,632,774
|
3,632,774
|
|
Share-based payment
|
|
|
-
|
-
|
-
|
-
|
430,854
|
430,854
|
|
Deferred
tax on share-based payment
|
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Dividends received
|
|
|
-
|
-
|
-
|
-
|
258,670
|
258,670
|
|
Sale/purchase of treasury shares
|
|
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Merger
reserve
|
|
|
18,077
|
|
1,283,457
|
-
|
-
|
1,301,534
|
|
Shares
issued during the year
|
|
|
104,615
|
6,251,126
|
-
|
-
|
-
|
6,355,741
|
|
Balance at 31 December
2023
|
|
|
861,692
|
9,950,231
|
1,283,457
|
256,976
|
22,344,894
|
34,697,250
|
This statement should be read in
conjunction with accompanying notes.
Notes to the Financial
Statements
|
Note 1
|
GENERAL INFORMATION
|
|
|
The principal activity of
Concurrent Technologies plc ('the Company') and its subsidiaries
(together 'the Group') is the design, development, manufacture and
marketing of single-board computers for system integrators and
original equipment manufacturers.
On 6 September 2023, the Group
acquired 100% of the voting shares of Phillips Aerospace Limited.
Please refer to Note 27 for further details.
|
|
|
Concurrent Technologies plc is the
Group's ultimate Parent Company. It is incorporated and domiciled
in the United Kingdom. Concurrent Technologies plc's shares are
listed on the Alternative Investment Market of the London Stock
Exchange.
|
|
|
The Group's financial statements
are presented in pounds sterling (£), which is also the functional
currency of the Parent Company. They have been approved for issue
by the Board of Directors on 30 April 2024.
|
|
Note 2
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
|
Basis of
preparation
|
These financial statements are for
the year ended 31 December 2023. They have been prepared in
accordance with UK-adopted international accounting standards and
with the requirements of the Companies Act 2006. These financial
statements have been prepared under the historical cost
convention.
New and amended IFRS accounting standards that are effective
for the current year
In the current year, the Company
has applied a number of amendments to IFRS accounting standards
issued by the International Accounting Standards Board (IASB) that
are mandatorily effective for an accounting period that begins on
or after 1 January 2023. Their adoption has not had any material
impact on the disclosures or on the amounts reported in these
financial statements.
· IAS
1: Classifications of Liabilities as Current or Non-Current
(effective for periods commencing on or after 1 January
2023)
· IAS
1 and IFRS Practice Statement 2: Disclosure of Accounting Policies
(effective for periods commencing on or after 1 January
2023)
· IAS
8: Definition of Accounting Estimates (effective for periods
commencing on or after 1 January 2023)
· IAS
12: Deferred Tax Related to Assets and Liabilities Arising from a
Single Transaction (effective for periods commencing on or after 1
January 2023)
New and revised IFRS accounting standards in issue but not
yet effective
Certain standards, amendments to
and interpretations of published standards have been published that
are mandatory for the Group's accounting years beginning on or
after 1 January 2024, or later years, and which the Group has
decided not to adopt early:
· IFRS
7 and IAS 7: Supplier Finance Arrangements (effective for periods
commencing on or after 1 January 2024)
· IAS
1: Non-Current Liabilities with Covenants (effective for periods
commencing on or after 1 January 2024)
None of the above listed changes
are anticipated to have a material impact on the Group's financial
statements.
|
|
|
Changes in significant accounting policies
There have been no changes in the
year to significant accounting policies in the period.
|
|
|
The Parent Company has relied on
the exemption conferred by Section 408 of the Companies Act 2006 in
not publishing its own profit-and-loss account. The Parent Company
retained profit for the year was £3,632,774 (2022:
£1,086,850).
|
|
|
The policies set out below have
been consistently applied to all the years presented, except where
stated.
|
|
Basis of
presentation
|
The consolidated financial
statements are presented in accordance with IAS 1: Presentation of
Financial Statements. The Group has elected to present the 'Income
Statement' and 'Statement of Other Comprehensive Income' in one
statement.
The basis of presentation is the
UK-adopted international accounting standards to FRS 101 for the
Parent Company information. This has been prepared using the
adapted format of the balance sheet. Disclosure exemptions taken
include no cash flow statement for the Company, reduced disclosures
for financial instruments, financial risk management, related party
transactions, share-based payment, key management personnel and
other relevant exemptions.
|
|
Note 2
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(CONTINUED)
|
|
Going
concern
|
The Directors have reviewed the
approved budget and projections sensitised for different scenarios
through to December 2025, considering general and specific market
conditions, status of suppliers, liquidity and funding requirements
and the needs of subsidiary companies.
The Directors have assessed the
viability of the Group using extreme assumptions to reverse stress
test the cash forecast. Assumptions include extreme reduction in
sales, decrease in gross margin and a reduction in stock levels (as
anticipated in 2024 to reduce working capital). Additionally,
within these scenarios we have excluded any potential beneficial
impacts such as tighter management of working capital and cost
reduction measures. These have been excluded to retain headroom in
the forecast and to provide a worst expected case scenario. The
forecast cash balances within the Group show that there is no
borrowing requirement or going concern issues, enabling the
Directors to be confident the Group will be able to meet its
obligations.
|
|
Basis of
consolidation
|
The consolidated financial
statements incorporate the financial statements of the Company and
its subsidiary undertakings. A subsidiary is a company controlled
directly by the Group. Control is achieved where the Group has the
power over the investee, rights to variable returns and the ability
to use the power to affect the investee's returns.
The acquisition method views a
business combination from the perspective of the combining entity
that is identified as the acquirer. The acquirer recognises the
assets acquired and liabilities and contingent liabilities assumed,
including those not previously recognised by the acquiree, where
recognition criteria are met. Measurement of these items is
generally at fair value at acquisition date. The measurement of the
acquirer's assets and liabilities is not affected by the
transaction, nor are any additional assets or liabilities of the
acquirer recognised as a result of the transaction, because they
are not the subjects of the transaction. All subsidiaries are 100%
wholly owned and are fully controlled by the Group. All intra-Group
transactions, balances, income and expenses are eliminated on
consolidation.
|
|
Revenue
recognition
|
Revenue is recognised by the Group
using the five-step process outlined in IFRS 15:
· Identification of a contract with a customer
· Identification of the performance obligations
· Determination of the transaction price
· Allocation of the transaction price to the performance
obligations
· Recognise revenue when the performance obligations are
satisfied
|
|
|
The Group's principal source of
revenue is from the sale of single-board computers and associated
products (which could include software products that are required
by the customer to be added to the boards sold - for example,
security software). Revenue from the sale of products,
including any added software (this is so interlinked with the
single-board computer that they are considered one performance
obligation under IFRS 15) is recognised when the Group satisfies
its performance obligations by transferring the promised goods to
its customers. Control is considered to transfer, at the point in
time when the customer takes undisputed responsibility for the
goods. This depends on the terms and conditions of sale with the
customer. There are three main terms for delivery: 1) The Group are
responsible for the goods until delivered at the stated delivery
address under the contract; 2) Free on board contract terms means
the goods remain the Group's responsibility until they are placed
onboard the vehicle for shipping, with export duty being the
Group's responsibility as well. The customer is responsible post
this point; 3) Ex-works contract terms, where the customer is
responsible from the point the goods leave the factory or
appropriate site, often under control of the customer's defined
shipping arrangement.
The Group provides a basic
warranty on its products but does offer customers the opportunity
to purchase an extended warranty of one, two or three years for
their boards. As the customer has the option of purchasing the
additional warranty separately, this is accounted for as a separate
performance obligation under IFRS 15 where the Group will repair or
replace faulty boards at no additional charge to the customer.
Contract liabilities on these extended warranties are recognised
and released to income over the warranty period until the
performance obligation is satisfied. During the 12 months to 31
December 2023, £28,235 was released to profit and loss.
|
|
|
Revenue recognised for systems
contracts, under IFRS 15, was £1.1m (including Phillips Aerospace)
for 2023 financial statements. Systems revenue will continue into
2024 and beyond. Revenue will normally be recognised over time, in
accordance with IFRS 15, based on the stage of completion of the
relevant performance obligations, and will be dependent on the
conditions of each specific contract.
|
|
Revenue recognition
(continued)
|
For our single-board business,
invoices are raised on despatch and payment terms are usually 30
days from date of invoice. For the systems business, payment terms
will be based on negotiations and could include pro-forma and
30-day payment terms, but will be subject to negotiated
positions.
|
|
Cost of
sales
|
Cost of sales consists of external
purchases and stock used on delivering specific contracts, plus the
direct workforce (predominantly manufacturing) related to the
fulfilment of the specific contracts and direct ancillary costs
such as shipping.
|
|
Administrative
expenses
Exceptional
items
|
This includes all non-direct costs
(e.g. general overheads such as rent, rates, sales and indirect
functions.) This also includes non-direct engineering
expenses.
This is made up of costs incurred
as a result of the acquisition of Phillips Aerospace. The Company
considers these to be outside of the normal course of business so
have treated these as exceptional expenses.
|
|
Foreign
currencies
|
The functional and presentational
currency of the Company is pounds sterling (GBP). Transactions in
currencies other than the functional currency of the individual
entities within the Group are recorded at the rates of exchange
prevailing on the dates of the transactions. Foreign exchange gains
and losses resulting from the settlement of such transactions and
from the re-measurement of monetary items at year-end exchange
rates are recognised in profit or loss.
|
|
|
In the Group's financial
statements, all assets, liabilities and transactions of Group
entities with a functional currency other than GBP are translated
into pounds sterling upon consolidation. The functional currencies
of the entities in the Group have remained unchanged during the
reporting period.
|
|
|
On consolidation, assets and
liabilities have been translated into GBP at the closing rate at
the reporting date. Foreign exchange differences arising for
intercompany transactions are charged within profit and loss.
Income and expenses have been translated into GBP at the rates of
exchange prevailing on the dates of the transactions over the
reporting period. In line with IAS 21, an average rate is used for
the period unless exchange rates fluctuate significantly and then
the weighted average rate is used. Exchange differences are
charged/credited to other comprehensive income and recognised in
the cumulative translation reserve in equity. On disposal of a
foreign operation, the cumulative translation differences
recognised in equity are reclassified to profit or loss and
recognised as part of the gain or loss on disposal. Goodwill and
fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity
and translated into GBP at the closing rate.
|
|
|
|
|
Inventories
|
Inventories are stated at the
lower of cost and net realisable value on a first-in first-out
basis. Cost includes materials, direct labour and an attributable
proportion of manufacturing overheads based on normal levels of
activity. Net realisable value represents the estimated selling
price after allowing for the costs of realisation and, where
appropriate, the cost of conversion from their existing state into
a finished condition. Provision is made where necessary for
obsolete, slow-moving or defective inventories.
|
|
|
|
|
Leases
|
A lease is defined as a contract,
or part of a contract, that conveys the right to use an asset (the
underlying asset) for a period of time in exchange for
consideration. To apply this definition, the Group assesses whether
the contract meets three key evaluations, which are whether the
contract contains an identified asset, which is either explicitly
identified in the contract or implicitly specified by being
identified at the time the asset is made available to the Group;
the Group has the right to obtain substantially all of the economic
benefits from use of the identified asset throughout the period of
use, considering its rights within the defined scope of the
contract; and the Group has the right to direct the use of the
identified asset throughout the period of use.
At lease commencement, the Group
recognises a right of use asset and a lease liability on the
balance sheet. The right of use asset is measured at cost and
initial direct costs incurred by the Group. The right of use asset
is then depreciated on a straight-line basis over the term of the
lease or the estimated useful life of the asset if shorter. At
commencement date, the Group measures the lease liability at the
present value of the future lease payments, discounted using the
Group's incremental borrowing rate.
The Group has elected to account
for short-term leases and leases of low-value assets using the
recognition exemptions of IFRS 16, and payments in relation to
these are recognised as an expense in the appropriate
period.
Right of use assets have been
included in property, plant and equipment and the corresponding
lease liability included in trade and other payables. Detailed
lease liability information is included in Notes 17 and
20.
|
|
|
|
|
Property, plant and
equipment
|
Property, plant, and equipment is
stated at original historical cost, net of depreciation and any
provision for impairment. Depreciation is charged so as to write
off the cost of assets together with any cost directly attributable
with bringing the asset into use, less estimated residual value, on
a straight-line basis over their estimated useful lives in
accordance with the table below:
Plant and
machinery
5-15 years on a straight-line basis
Fixtures, fittings and
equipment
3-7 years on a straight-line basis
Computer
equipment
3-5 years on a straight-line basis
Improvements to short leasehold
property 5-10
years on a straight-line basis
The gain or loss arising on the
disposal or retirement of an asset is determined as the difference
between the sales proceeds and the carrying amount of the asset and
is recognised in the statement of comprehensive income.
The residual values and useful
economic lives of property, plant and equipment are reviewed
annually.
|
|
Intangible
assets
|
All intangible assets are stated
at cost less accumulated amortisation and any accumulated
impairment losses.
Goodwill
Goodwill has arisen upon the
acquisition of Phillips Aerospace made on 6 September 2023, which
is defined as a single cash-generating unit (CGU). The assets
acquired are not capable of individually generating revenue on
their own, so they are deemed combined within the business as a
whole to generate revenue, and therefore the business (Phillips
Aerospace) is defined as a single CGU.
The goodwill is the amount
attributable to the excess of consideration over the fair value of
the net assets acquired, including expected synergies, future
growth, critical accreditations and technical knowledge of the
employee, and is recorded in accordance with IFRS 3 'Business
Combinations'.
Goodwill is reviewed and tested
annually for impairment.
Research costs
Research costs are charged
directly to administrative expense in the statement of
comprehensive income as incurred.
Development costs
Development costs are capitalised
as intangible assets if the asset can be separately identified; it
is in the control of the Group; future economic benefits will
accrue to Group; it is technically feasible, the Group has adequate
resources to complete the development of the asset and the costs
can be reliably determined.
Capitalised development costs
comprise all directly attributable costs necessary to create,
produce and prepare the asset to be capable of operating in the
manner intended by management, including development-related
overheads. Amortisation commences upon completion of the
development or when the asset becomes available for commercial
production. Capitalised development costs are amortised on a
straight-line basis, over the estimated product life, which is
generally five to seven years. The asset will be reviewed annually
for indicators of impairment, and whenever indicators suggest that
the carrying amount may not be recovered throughout the period in
which it is being used, the asset will be subject to a full
impairment review. All intangible assets, including those not yet
available for use, will be reviewed for indicators of
impairment.
|
|
|
All other development costs are
recorded under administrative expense in the statement of
comprehensive income in the period they are incurred. The table
below shows products with an NBV of £500,000 or more:
|
|
Product
|
NBV
|
Remaining amortisation
period
|
|
Board
A
|
2,128,699
|
84
months
|
|
Board
B
|
1,393,825
|
84
months
|
|
Board
C
|
1,085,150
|
70
months
|
|
Board
D
|
806,608
|
84
months
|
|
Board
E
|
576,782
|
84
months
|
|
|
Customer relationships
Customer relationships were
acquired as part of the acquisition of Phillips Aerospace on 6
September 2023 and have applied an income approach valuation using
the multi-period excess earning method with a useful economic life
of ten years.
Other intangible assets
Intangible assets purchased
separately, such as software licences that do not form an integral
part of hardware, are capitalised at cost and amortised over their
useful lives of three to seven years.
The carrying values of intangible
assets with finite lives are reviewed for impairment when events or
changes in circumstance indicate the carrying value may be
impaired. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of
impairment loss.
The recoverable amount of the
asset will be used as for all other intangible assets (e.g. backlog
and pipeline opportunities), except where the asset does not
generate independent cash flows, i.e. additional software packages
sold as an add-on to a board.
This also contains the AS9110C
licence obtained as part of the acquisition of Phillips Aerospace.
This has been valued using an income approach based upon the
'relief from royalty' method with a useful economic life of ten
years.
|
|
Impairment of property,
plant and equipment, and intangible assets
|
At each balance sheet date, the
Group reviews the carrying amounts of its tangible and intangible
assets to determine whether there is any indication that those
assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss.
Recoverable amount is the higher
of fair value less costs to sell and value in use. In assessing
value in use, the estimated future cash flows (using both backlog
and weighted pipeline) are discounted (8.1% rate used) to their
present value. If the recoverable amount of an asset is estimated
to be less than its carrying amount, the carrying amount of the
asset is reduced to its recoverable amount. An impairment loss is
immediately recognised as an expense in the statement of
comprehensive income.
Where an impairment loss
subsequently reverses, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount, but so
that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been
recognised for the asset in prior years. A reversal of an
impairment loss is recognised as a credit to expenses
immediately.
|
|
|
Taxation
|
Current tax is the tax currently
payable based on taxable profit for the year. Current tax for
current and prior periods shall, to the extent unpaid, be
recognised as a liability. If the amount already paid in respect of
current and prior periods exceeds the amount due for those periods,
the excess shall be recognised as an asset.
The tax expense for the period
comprises current and deferred tax. Tax is recognised in the income
statement, except to the extent that it relates to items recognised
in other comprehensive income, or directly in equity. In this case,
the tax is also recognised in other comprehensive income or
directly in equity, respectively.
The Group takes advantage of the
small and medium enterprise tax scheme in respect of R&D tax
credits. These are included in the taxation line and are accounted
for on a receivable basis. This means the Group applies certain
assumptions based on previous R&D claims and any changes to the
business and applicable legislation to record a credit through
profit or loss and an associated receivable on the balance sheet in
the accounting period in question.
Deferred income taxes are
calculated using the liability method on temporary differences.
Deferred tax is generally provided on the difference between the
carrying amounts of assets and liabilities and their tax
bases. However, deferred tax is not provided on the initial
recognition of goodwill, nor on the initial recognition of an asset
or liability unless the related transaction is a business
combination or affects tax or accounting profit. Deferred tax
on temporary differences associated with shares in subsidiaries is
not provided if reversal of these temporary differences can be
controlled by the Group and it is probable that reversal will not
occur in the foreseeable future. In addition, tax losses available
to be carried forward as well as other income tax credits to the
Group are assessed for recognition as deferred tax
assets.
|
|
|
|
Deferred tax liabilities are
provided in full, with no discounting. Deferred tax assets are
recognised to the extent that it is probable that the underlying
deductible temporary differences will be able to be offset against
future taxable income. Current and deferred tax assets and
liabilities are calculated at tax rates that are expected to apply
to their respective period of realisation, provided they are
enacted or substantively enacted at the year-end date.
|
|
|
Financial
instruments
|
Financial assets and financial
liabilities are recognised in the balance sheet when the Group
becomes a party to the contractual provisions of the
instrument.
|
|
|
|
(i) Financial assets
Financial assets are held at
amortised cost if the assets are held with the objective to collect
contractual cash flows and where the contractual terms of the
financial assets give rise to cash flows that are solely payments
of principal and interest on the principal amount outstanding.
After initial recognition at transaction price being the amount of
consideration that is unconditional, receivable balances are
measured at amortised cost using the effective interest method,
less loss allowance for expected credit losses. The Group's cash
and cash equivalents, other financial assets (fixed-term deposits),
trade and most other receivables fall into this category of
financial instruments.
The Group applies the IFRS 9
simplified approach to measuring expected credit losses, which uses
a lifetime expected loss allowance for all trade
receivables.
|
|
|
|
|
|
|
Financial instruments
(continued)
|
(i) Financial liabilities
Trade and other payables are not
interest bearing and are initially recognised at fair value plus
transaction costs directly attributable to their acquisition and
then subsequently measured at amortised cost.
(ii) Financial liabilities and equity
Financial liabilities and equity
instruments are classified according to the substance of the
contractual arrangements entered into. Financial liabilities are
obligations to pay cash or other financial assets and are
recognised when the Group becomes a party to the contractual
provisions of the instrument. They are initially recognised at fair
value plus transaction costs directly attributable to their
acquisition and subsequently measured at amortised cost using the
effective interest method. An equity instrument is any contract
that evidences a residual interest in the assets of the Group after
deducting all of its liabilities.
|
|
Investments in
subsidiaries
|
Investments in subsidiaries, as
reported in the Parent Company financial statements, are included
at cost less provision for impairment.
|
|
Finance
income
|
Finance income comprises interest
income accrued on a time basis, by reference to the principal
outstanding at the effective interest rate applicable.
|
|
Dividends
|
Dividends to the Company's
shareholders are recognised as a liability and deducted from
shareholders' equity in the period in which the shareholders' right
to receive payment is established.
|
|
Employee
benefits
|
Retirement benefits
The Company operates a defined
contribution retirement benefit plan. The cost of the defined
contribution plan is charged to administrative expenses in the
statement of comprehensive income on the basis of contributions
payable by the Company during the year.
Share-based payments
The Group issues equity-settled
share-based payments to certain employees. Equity-settled
share-based payments are measured at fair value at the date of
grant. In the consolidated financial statements, the fair value
determined at the grant date of equity-settled share-based payments
is expensed on a straight-line basis over the vesting period based
on the Group's estimate of shares, which will eventually vest,
together with a corresponding increase in equity. In the financial
statements of the Company, equity-settled share-based payments
issued to employees of the Company are treated in the same manner
as in the consolidated financial statements. Equity-settled
share-based payments issued to employees of subsidiary undertakings
are treated in the financial statements of the Company as an
increase in investment in subsidiary companies, together with a
corresponding increase in equity, over the vesting period based on
the Group's estimate of shares, which will eventually
vest.
Fair value is measured by use of a
binomial option pricing model and has been adjusted for the
estimated effect of non-transferability, exercise restrictions and
behavioural considerations.
For options that have non-market
vesting conditions, such as EPS growth, the award has been valued
using the Black-Scholes model. This type of model is typically used
where no market conditions are associated with the
awards.
Options granted from November 2021
have been valued using the Black-Scholes model. Option pre-November
2021 used the binomial option pricing model.
|
|
Treasury
shares
|
The Company's shares that have
been purchased and not cancelled are held as treasury shares and
deducted from shareholders' equity. No gain or loss is recognised
in profit or loss on the purchase, sale, issue or cancellation of
the shares.
|
|
Reserves
|
Share premium account
represents the difference between the price
received on the sale of shares and their par value.
Capital redemption reserve
arose from the purchase of shares and represents
their nominal value.
Cumulative translation
reserve arises from the consolidation of
foreign subsidiaries.
Share capital represents the nominal value of shares that have been
issued.
Merger reserve represents the difference between the price of the shares
issued on acquisition of Phillips Aerospace and their par
value.
Profit-and-loss account
includes all current and prior period retained
profits and share-based payments less treasury shares held at the
balance sheet date.
|
|
Provisions
|
Provisions are recognised when
present obligations resulting from a past event will probably lead
to an outflow of economic resources from the Group and amounts can
be estimated reliably. Provisions reported are for non-purchased
warranties (all additional purchased warranties are accounted for
under contract liabilities). The obligation under IFRS 15 is for
the Group to repair or replace faulty boards at no additional
charge to the customer.
|
|
EPS
DEPS
|
Basic earnings per share is
calculated by dividing the profit attributable to the owners of
Concurrent Technologies plc, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number
of ordinary shares outstanding during the financial
year.
Diluted earnings per share is
calculated by dividing the profit attributable to the owners of
Concurrent Technologies plc, excluding any costs of servicing
equity other than ordinary shares, by the weighted average number
of ordinary shares and share options outstanding during the
financial year.
|
|
Key judgements and
estimates
|
In applying the Group's accounting
policies, the Directors are required to make judgements (other than
those involving estimations) that have a significant impact on the
amounts recognised and to make estimates and assumptions about the
carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from
these estimates.
Estimates and judgements are
continually evaluated.
Estimates
The resulting accounting estimates
will, by definition, seldom equal the related actual results. The
estimates and assumptions that have a significant risk of creating
a material adjustment to the carrying amounts of assets and
liabilities are discussed below.
Development costs
To substantiate the carrying value
of the capitalised development costs, management have applied the
criteria of IAS 36 'Impairment of Assets' and have projected the
future economic benefits. They are reviewed against current backlog
and estimated weighted (based on probability factors, predominantly
driven by stage of the opportunity), future pipeline opportunities,
which will be achieved from this investment, using an estimated
useful life of seven years and a value in use calculation.
Management considers the review to be sufficiently robust regarding
reasonable movements in discount rates (current rate used:
8.1%).
A 1% increase in the discount rate
would not lead to a material increase in impairment so, therefore,
the discount rate is not considered to be the key source of
estimation uncertainty, but it is the assumptions made around
conversion of future sales that is key to the estimate. Where
indicators exist, management then records judgement-based
impairment charges that consider project-specific technical issues,
customer feedback, opportunity for product substitution and other
market factors. Estimation uncertainty relates to assumptions about
future results.
The Group has reviewed revenue
sensitivity against our top five boards in terms of NBV. Revenue
forecast would need to reduce by between 75% and 90% for the
discounted cash flow to reach a breakeven position. This provides
the Directors with comfort in respect of headroom in the impairment
calculations.
Inventory
A slow-moving stock provision has
been made, where necessary, where inventory has had no movement in
three years or more as per our accounting policy. Items that are
provided for, should they start being used again, will have the
provision removed/reversed.
|
|
|
R&D tax credits
The Group takes advantage of the
small and medium enterprise tax scheme in respect of R&D tax
credits. These are included in the taxation line and are accounted
for on a receivable basis. This means that the Group applies
certain assumptions based on previous R&D claims and any
changes to the business and applicable legislation to record a
credit through profit or loss and an associated receivable on the
balance sheet in the accounting period in question.
Goodwill and intangible assets on
acquisition
Application of IFRS 3
During the year, the Group
acquired Phillips Aerospace and accordingly reviewed the
acquisition of the entity in accordance with IFRS 3 'Business
Combinations'. Any assets that were identified as being separately
identifiable assets have been valued using appropriate valuation
techniques in order to determine the fair value of intangible
assets acquired as part of the business combination aside from any
goodwill arising as a result of the transaction.
These are accordingly recorded as
separate intangible assets in Note 12 and have been reviewed for
impairment as noted in Note 12.
CGU
The classification of Phillips
Aerospace as a single CGU is a key judgement based on the
understanding of the elements that have been purchased. The assets
purchased (e.g. accreditation, customer relationships, working
capital etc.) are not capable of generating revenue in their own
right, individually, and, therefore, they are judged to be
intrinsically linked as one to define the business of Phillips
Aerospace to be one single CGU. Accordingly, any goodwill arising
as a result of this acquisition has been allocated to the CGU
identified.
The subsequent impairment and
amortisation of the goodwill and assets are based on key estimates
and judgements, reviewing the capability of the business from key
forecasts of revenue and orders. These are tested for impairment in
the same way as development costs (i.e. the use of a discounted
cash flow forecast to determine the value in use of the CGU, which
has been prepared in accordance with IAS 36).
|
|
Key judgements and estimates
(continued)
|
Capitalisation of development
costs IAS 38 - Intangible Assets
Judgement is required when
distinguishing the research and development phases of new projects
and determining whether the recognition requirements for
capitalisation of the development costs are met under IAS 38.
Research covers pre-solution options often through feasibility
studies of various technologies. Development is the application of
research findings or other knowledge to plan or design for the
production of new or substantially improved products before the
start of commercial production. Development costs are capitalised
as an intangible asset if all the following criteria are met: there
is technical feasibility of completing the asset so that it will be
available for use or sale; the intention is to complete the asset
and use or sell it; there is an ability to use or sell the asset;
the asset will generate future economic benefits and demonstrate
the existence of a market or the usefulness of the asset if it is
to be used internally; the availability of adequate technical,
financial and other resources to complete the development and to
use or sell it; and the ability to measure reliably the expenditure
attributable to the intangible asset.
|
|
|
|
|
|
The Directors consider that there
is only one operating segment: design, manufacture and supply of
high-end embedded computer products. The disclosures for this
operating segment have already been provided in these financial
statements. The Company's products can be supplied to more than one
business sector and are sold on a global basis. All manufacturing
is undertaken in the UK.
While looking at sales by business
sectors, the Executive Board members of the Company, as the Chief
Operating Decision Maker, does not make decisions regarding
allocation of Group resources on such a basis.
The Board in its entirety, i.e.
including Non-Executive members, is not involved in making
operational decisions. Further, Group profits are not categorised
for internal reporting purposes by sectors or geography. The
historical and anticipated performance of the Group is therefore
reported to the Board of Concurrent Technologies plc as a single
entity. Thus, the Directors consider that there are no additional
segments required to be disclosed under IFRS 8 'Operating Segments'
but have provided the following geographic sales analysis. No
geographical analysis of non-current assets is provided as
non-current assets outside of the UK are immaterial.
|
|
|
During 2023, £3.49m or 11.0% of
Group revenue depended on a single customer. In 2022, £3.17m or
17.3% of Group revenue depended on a single customer.
All board revenue is recognised at
a point in time in relation to the terms and conditions of each
contract, with systems and warranty (immaterial) revenue recognised
over time.
|
|
Revenue
|
|
|
|
|
|
Year to
|
|
Year to
|
|
|
|
|
|
|
|
31
December
|
|
31
December
|
|
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
|
|
£
|
|
£
|
|
|
|
|
|
United States
|
|
13,060,691
|
|
6,564,816
|
|
|
|
|
|
Malaysia
|
|
392,850
|
|
3,047,798
|
|
|
|
|
|
Germany
|
|
6,450,372
|
|
-
|
|
|
|
|
|
United Kingdom
|
2,148,568
|
|
1,167,266
|
|
|
|
|
|
Other Europe
|
|
4,178,401
|
|
4,003,849
|
|
|
|
|
|
Rest of the World
|
5,425,434
|
|
3,491,042
|
|
|
|
|
|
|
|
31,656,316
|
|
18,274,771
|
|
Note 4
|
GROUP OPERATING PROFIT
|
|
|
|
|
|
Year to
31 December
2023
|
|
Year to
31 December
2022
|
|
|
|
|
|
|
£
|
|
£
|
|
|
|
|
Group operating profit is
stated after charging to cost of sales:
|
|
|
|
|
Cost of
inventories recognised as expense
|
|
14,884,586
|
|
8,229,285
|
|
|
|
|
Staff
costs (see Note 10)
|
|
1,133,781
|
|
815,915
|
|
|
|
|
Group operating profit is
stated after charging/(crediting) to operating
expenses:
|
|
|
|
|
Net
foreign exchange losses/(gains)
|
|
279,491
|
|
(462,900)
|
|
|
|
|
Total
expensed research and development costs
|
|
1,930,389
|
|
1,096,657
|
|
|
|
|
Amortisation of intangible assets
|
|
1,509,167
|
|
1,197,972
|
|
|
|
|
Impairment of intangible assets
|
|
31,557
|
|
327,526
|
|
|
|
|
Depreciation of owned property, plant and
equipment
|
|
686,403
|
|
244,648
|
|
|
|
|
Depreciation of ROU Asset
|
|
203,870
|
|
177,399
|
|
|
|
|
Staff
costs (see Note 10)
|
|
9,002,640
|
|
6,712,098
|
|
|
|
|
Group principal auditor's
remuneration:
|
|
|
|
|
|
|
|
|
Audit of
Group financial statements pursuant to legislation
|
|
150,000
|
|
232,443
|
|
|
|
|
Other
non-auditor remuneration relating to taxation compliance
|
|
25,000
|
|
6,026
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year to
31 December
2023
|
|
Year to
31 December
2022
|
|
|
|
|
|
£
|
|
£
|
|
|
|
Interest
earned on bank deposits
|
|
68,145
|
|
546
|
|
|
|
|
|
Year to
31
December
2023
|
|
Year to
31
December
2022
|
|
|
|
|
|
£
|
|
£
|
|
|
|
Current
tax expense
|
|
-
|
|
(723,737)
|
|
|
|
Current
deferred tax
|
|
401,271
|
|
393,695
|
|
|
|
Prior
year tax expense
|
|
(4,970)
|
|
(41,142)
|
|
|
|
Prior
year deferred tax
|
|
(826,969)
|
|
(111,835)
|
|
|
|
Current
overseas tax charge
|
|
30,420
|
|
(121,325)
|
|
|
|
|
|
(400,248)
|
|
(604,344)
|
|
|
The tax assessed on the Group's
profit before tax for the year is less than the standard rate of
corporation tax in the UK. The applicable rate of corporation tax
for the year to 31 December 2023 was 23.52% (2022: 19.00%). Within
the deferred tax charge for the year is an amount of £23,747 to
reflect the effect of change in the UK tax rate. The differences
are explained below:
|
|
|
|
|
|
Year to
|
|
Year to
|
|
|
|
|
|
31
December
|
|
31
December
|
|
|
|
|
|
2023
|
|
2022
|
|
|
|
|
|
£
|
|
£
|
|
|
|
Profit
before tax
|
|
3,472,888
|
|
382,681
|
|
|
|
|
|
|
|
|
|
|
|
Corporation tax on profit before tax at standard
rate
|
|
816,823
|
|
72,710
|
|
|
|
Expenses
not deductible for tax purposes
|
|
282,141
|
|
22,632
|
|
|
|
UK tax
credits
|
|
(486,705)
|
|
(502,248)
|
|
|
|
Effect
of change in UK tax rate
|
|
23,747
|
|
87,757
|
|
|
|
Share
options
|
|
-
|
|
(5,746)
|
|
|
|
Effects
of other reliefs
|
|
-
|
|
(25,062)
|
|
|
|
Difference in overseas effective tax rates
|
|
(24,150)
|
|
(38,264)
|
|
|
|
Adjustment in respect of previous years
|
|
(1,012,104)
|
|
(216,123)
|
|
|
|
Tax
(credit)/charge
|
|
(400,248)
|
|
(604,344)
|
|
|
|
|
|
|
|
|
|
|
Factors that may affect future tax
charges are as follows:
UK tax rates and any changes to
R&D tax credits would have an impact on the tax position of the
Group and Parent Company.
The current tax asset balance on
the statement of financial position is made up of £708,057 current
year and £784,564 historic repayment due.
|
|
|
|
|
|
2023
£
|
|
2022
£
|
|
2023
pence per
share
|
|
2022
pence per
share
|
|
|
|
Second
interim (for the previous year)
|
|
-
|
|
1,027,088
|
|
-
|
|
1.40
|
|
|
|
Interim
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
-
|
|
1,027,088
|
|
-
|
|
1.40
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interim dividends are recognised
in the financial statements in the period they are paid. The
Directors have proposed a 1p dividend for the year ended 31
December 2023 as a resolution for the AGM. (Total dividend for 2022
was nil.)
|
|
Note 8
|
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 by 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 the share
options.
The inputs to the earnings per
share calculation are shown below:
|
|
|
2023
|
|
2022
|
|
|
Earnings
|
Weighted average number of shares
|
Per
share amount
|
|
Earnings
|
Weighted average number of shares
|
Per
share amount
|
|
Earnings attributable to ordinary
shareholders on continuing operations after tax
|
3,873,136
|
77,833,759
|
4.98
|
|
987,025
|
73,363,490
|
1.35
|
|
Dilutive effect of share
options
|
-
|
2,069,974
|
-
|
|
-
|
-
|
-
|
|
Diluted earnings per
share
|
3,873,136
|
79,903,733
|
4.85
|
|
987,025
|
73,363,490
|
1.35
|
The diluted EPS figure reflects the
impact of historic grants of share options and is calculated by
reference to the number of options granted for which the average
share price for the year was in excess of the option exercise
price.
|
Note 9
|
DIRECTORS' EMOLUMENTS
|
|
|
|
|
|
Year to
31
December
2023
|
|
Year to
31
December
2022
|
|
|
|
|
|
£
|
|
£
|
|
|
|
Fees and
emoluments
|
|
1,182,172
|
|
769,650
|
|
|
|
Pension
contributions
|
|
18,632
|
|
20,697
|
|
|
|
|
|
1,200,804
|
|
790,347
|
|
|
|
|
|
|
|
The
emoluments of Directors disclosed above include in respect of the
highest paid Director:
|
|
|
|
|
|
|
|
Fees and
emoluments
|
|
571,029
|
|
334,961
|
|
|
|
Pension
contributions
|
|
9,847
|
|
13,812
|
|
|
|
The
number of Directors to whom retirement benefits are accruing under
a defined contribution scheme is:
|
|
2
|
|
2
|
|
|
Detailed information concerning
Directors' emoluments, shareholdings and options is provided in the
Report of the Remuneration Committee.
|
|
STAFF COSTS
|
|
Group
|
|
Company
|
|
Group
|
|
Company
|
|
|
|
|
Year to
|
|
Year to
|
|
Year to
|
|
Year to
|
|
|
|
|
31
December
|
|
31
December
|
|
31
December
|
|
31
December
|
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
Wages
and salaries
|
|
8,501,442
|
|
7,055,210
|
|
6,218,053
|
|
5,190,752
|
|
|
Social
security costs
|
|
958,837
|
|
867,527
|
|
704,416
|
|
637,174
|
|
|
Defined
contribution pension costs
|
|
438,431
|
|
418,231
|
|
386,181
|
|
370,846
|
|
|
Share-based payment
|
|
430,854
|
|
283,761
|
|
219,363
|
|
169,859
|
|
|
|
|
10,329,564
|
|
8,624,729
|
|
7,528,013
|
|
6,368,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average
number of employees:
|
|
No
|
|
No
|
|
No
|
|
No
|
|
|
Production
|
|
39
|
|
38
|
|
34
|
|
34
|
|
|
Other
|
|
103
|
|
88
|
|
87
|
|
78
|
|
|
|
|
142
|
|
126
|
|
121
|
|
112
|
|
|
Direct employment costs
capitalised for the year to 31 December 2023: £2,389,672 (2022:
£1,959,447).
|
|
Note 11
|
PROPERTY, PLANT AND EQUIPMENT
|
|
GROUP
|
|
Improvements to short
leasehold property
|
|
|
|
Plant, fixtures and computer
equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Right of use
asset
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
COST
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
293,556
|
|
850,707
|
|
4,034,955
|
|
5,179,218
|
|
|
Foreign
exchange movement
|
|
|
|
11,202
|
|
16,102
|
|
27,304
|
|
|
Additions
|
|
490,613
|
|
635,248
|
|
354,533
|
|
1,480,394
|
|
|
At 31
December 2022
|
|
784,169
|
|
1,497,157
|
|
4,405,590
|
|
6,686,916
|
|
|
Foreign
exchange movement
|
|
(6,251)
|
|
|
|
(8,624)
|
|
(14,875)
|
|
|
Additions
|
|
227,733
|
|
|
|
523,184
|
|
750,917
|
|
|
Modification and amendment
|
|
|
|
(234,905)
|
|
|
|
(234,905)
|
|
|
Transfer
from intangibles
|
|
|
|
|
|
75,045
|
|
75,045
|
|
|
At 31
December 2023
|
|
1,005,651
|
|
1,262,252
|
|
4,995,195
|
|
7,263,098
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED
DEPRECIATION
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
210,371
|
|
269,834
|
|
3,080,550
|
|
3,560,755
|
|
|
Foreign
exchange movement
|
|
|
|
4,595
|
|
14,412
|
|
19,007
|
|
|
Charge
for the year
|
|
49,657
|
|
177,399
|
|
194,991
|
|
422,047
|
|
|
At 31
December 2022
|
|
260,028
|
|
451,828
|
|
3,289,953
|
|
4,001,809
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
exchange movement
|
|
(5,193)
|
|
1,651
|
|
(7,288)
|
|
(10,830)
|
|
|
Charge
for the year
|
|
252,370
|
|
203,870
|
|
434,033
|
|
890,273
|
|
|
Modification and amendment
|
|
|
|
(84,037)
|
|
|
|
(84,037)
|
|
|
At 31
December 2023
|
|
507,205
|
|
573,312
|
|
3,716,698
|
|
4,797,215
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET BOOK
VALUE
|
|
|
|
|
|
|
|
|
|
|
At 31
December 2022
|
|
524,141
|
|
1,045,329
|
|
1,115,637
|
|
2,685,107
|
|
|
At 31
December 2023
|
|
498,446
|
|
688,940
|
|
1,278,497
|
|
2,465,883
|
|
Note 11
|
PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
|
|
COMPANY
|
Improvements to short
leasehold property
|
|
|
|
Plant, fixtures and computer
equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Right of
use
|
|
|
|
|
|
|
|
asset
|
|
|
Total
|
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
COST
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
289,738
|
|
764,917
|
|
3,907,981
|
|
4,962,636
|
|
|
Transfer
to intangibles
|
|
|
|
|
|
|
|
-
|
|
|
Additions
|
|
490,613
|
|
635,248
|
|
347,607
|
|
1,473,468
|
|
|
At 31
December 2022
|
|
780,351
|
|
1,400,165
|
|
4,255,588
|
|
6,436,104
|
|
|
Additions
|
|
60,672
|
|
-
|
|
303,337
|
|
364,009
|
|
|
Modification and amendment
|
|
|
|
(234,905)
|
|
|
|
(234,905)
|
|
|
Transfer
from intangibles
|
|
|
|
|
|
75,045
|
|
75,045
|
|
|
At 31
December 2023
|
|
841,023
|
|
1,165,260
|
|
4,633,970
|
|
6,640,253
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ACCUMULATED
DEPRECIATION
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
206,552
|
|
241,554
|
|
2,969,017
|
|
3,417,123
|
|
|
Charge
for the year
|
|
49,657
|
|
159,924
|
|
180,900
|
|
390,481
|
|
|
At 31
December 2022
|
|
256,209
|
|
401,478
|
|
3,149,917
|
|
3,807,604
|
|
|
Charge
for the year
|
|
94,546
|
|
186,393
|
|
261,538
|
|
542,477
|
|
|
Modification and amendment
|
|
|
|
(84,037)
|
|
|
|
(84,037)
|
|
|
At 31
December 2023
|
|
350,755
|
|
503,834
|
|
3,411,455
|
|
4,266,044
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET BOOK
VALUE
|
|
|
|
|
|
|
|
|
|
|
At 31
December 2022
|
|
524,142
|
|
998,687
|
|
1,105,671
|
|
2,628,500
|
|
|
At 31
December 2023
|
|
490,268
|
|
661,426
|
|
1,222,515
|
|
2,374,209
|
|
Note 12
|
INTANGIBLE ASSETS INCLUDING GOODWILL
|
|
GROUP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
|
|
|
|
Customer
|
|
|
|
|
|
|
|
|
costs
|
|
Goodwill
|
|
relationships
|
|
Other
|
|
Total
|
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
COST
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
27,374,092
|
|
|
|
|
|
1,079,817
|
|
28,453,909
|
|
|
Foreign
exchange movement
|
|
-
|
|
|
|
|
|
5,378
|
|
5,378
|
|
|
Additions
|
|
3,687,351
|
|
|
|
|
|
24,266
|
|
3,711,617
|
|
|
At 31
December 2022
|
|
31,061,443
|
|
-
|
|
-
|
|
1,109,461
|
|
32,170,904
|
|
|
Foreign
exchange movement
|
|
|
|
|
|
|
|
(1,106)
|
|
(1,106)
|
|
|
Additions
|
|
3,939,539
|
|
|
|
|
|
38,300
|
|
3,977,839
|
|
|
Additions on acquisition
|
|
|
|
1,230,594
|
|
1,130,851
|
|
383,593
|
|
2,745,038
|
|
|
Transfer
between classes
|
|
(64,413)
|
|
|
|
|
|
64,413
|
|
-
|
|
|
Transfer
to tangibles
|
|
(75,046)
|
|
|
|
|
|
|
|
(75,046)
|
|
|
At 31
December 2023
|
|
34,861,523
|
|
1,230,594
|
|
1,130,851
|
|
1,594,661
|
|
38,817,629
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMORTISATION
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
21,056,492
|
|
|
|
|
|
776,251
|
|
21,832,743
|
|
|
Foreign
exchange movement
|
|
-
|
|
|
|
|
|
5,373
|
|
5,373
|
|
|
Charge
for the year
|
|
1,093,820
|
|
|
|
|
|
104,152
|
|
1,197,972
|
|
|
Impairment loss
|
|
327,526
|
|
|
|
|
|
|
|
327,526
|
|
|
At 31
December 2022
|
|
22,477,838
|
|
-
|
|
-
|
|
885,776
|
|
23,363,614
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
exchange movement
|
|
|
|
|
|
|
|
(1,106)
|
|
(1,106)
|
|
|
Charge
for the year
|
|
1,349,203
|
|
|
|
36,248
|
|
123,716
|
|
1,509,167
|
|
|
Impairment loss
|
|
31,557
|
|
|
|
|
|
|
|
31,557
|
|
|
At 31
December 2023
|
|
23,858,598
|
|
-
|
|
36,248
|
|
1,008,386
|
|
24,903,232
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31st
December 2022
|
|
8,583,605
|
|
-
|
|
-
|
|
223,685
|
|
8,807,290
|
|
|
At 31
December 2023
|
|
11,002,925
|
|
1,230,594
|
|
1,094,603
|
|
586,275
|
|
13,914,397
|
|
COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
|
|
|
|
|
|
|
|
|
costs
|
|
Other
|
|
Total
|
|
|
|
|
£
|
|
£
|
|
£
|
|
|
COST
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
27,374,092
|
|
1,079,817
|
|
28,453,909
|
|
|
Foreign
exchange movement
|
|
-
|
|
5,378
|
|
5,378
|
|
|
Additions
|
|
3,687,351
|
|
24,266
|
|
3,711,617
|
|
|
Disposals
|
|
|
|
|
|
-
|
|
|
At 31
December 2022
|
|
31,061,443
|
|
1,109,461
|
|
32,170,904
|
|
|
Additions
|
|
3,939,539
|
|
38,300
|
|
3,977,839
|
|
|
Transfer
between classes
|
|
(64,413)
|
|
64,413
|
|
-
|
|
|
Transfer
to tangibles
|
|
(75,046)
|
|
-
|
|
(75,046)
|
|
|
At 31
December 2023
|
|
34,861,523
|
|
1,212,174
|
|
36,073,697
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AMORTISATION
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
21,056,492
|
|
776,251
|
|
21,832,743
|
|
|
Foreign
exchange movement
|
|
-
|
|
5,373
|
|
5,373
|
|
|
Charge
for the year
|
|
1,093,820
|
|
104,152
|
|
1,197,972
|
|
|
Disposals
|
|
|
|
|
|
-
|
|
|
Impairment loss
|
|
327,526
|
|
|
|
327,526
|
|
|
At 31
December 2022
|
|
22,477,838
|
|
885,776
|
|
23,363,614
|
|
|
|
|
|
|
|
|
|
|
|
Charge
for the year
|
|
1,349,203
|
|
111,420
|
|
1,460,623
|
|
|
Disposals
|
|
|
|
|
|
-
|
|
|
Impairment loss
|
|
31,557
|
|
|
|
31,557
|
|
|
At 31
December 2023
|
|
23,858,598
|
|
997,196
|
|
24,855,794
|
|
|
|
|
|
|
|
|
|
|
|
31
December 2022
|
|
8,583,605
|
|
223,685
|
|
8,807,290
|
|
|
At 31
December 2023
|
|
11,002,925
|
|
214,978
|
|
11,217,903
|
|
|
Development costs can be broken
down as assets under development (based on original cost):
£7,428,960 (2022: £4,652,822) and assets available for use (based
on original cost): £27,432,563 (2022: £26,343,643). The cost of
assets transferred from assets under development to available for
use in the year was £1,088,920 (2022: £2,609,098).
Other intangible assets comprise
purchased software used within the business and software
licences.
All amortisation and impairment
charges (or reversals if any) are included within 'Administrative
Expenses'.
|
|
Note 12
|
INTANGIBLE ASSETS (CONTINUED)
|
|
|
Impairment Loss
At the end of the year, the
Directors reviewed the development projects. Each project is
treated as a separate CGU. Expected future cash flows ('value in
use' calculation, the discount rate and cash flows were calculated
on a pre-tax basis) attributable to these projects are calculated
over the lower of seven years or the remaining life of the project,
discounted at the applied rate of 8.1%. Where indicators for
impairment exist, management considers pipeline sales volume and
the relevant margin of the product along with project-specific
technical issues, customer feedback, opportunity for product
substitution and other market factors.
Following full review of all
projects, the Company impaired a number of projects totalling
£112,028. These products are all older products and all costs now
impaired refer to historical costs. One previously impaired project
had an impairment reversal upon further review in 2023; future
revenue streams have become apparent and the impairment of £80,471
was reversed.
Goodwill has arisen in FY23 due to
the acquisition of Phillips Aerospace on 6 September 2023, which is
a single CGU. The Group has undertaken an impairment review of the
carrying value of the goodwill, using detailed forecasts of revenue
(based on forecast orders and contracted backlog), costs of
delivery and resulting profitability. The Group has reviewed using
a discounted cash flow, with a discount rate of 8.1%. A number of
sensitivities have been performed against the performance,
especially against revenue (which drives the profitability) and the
Directors are comfortable that there is sufficient headroom to
strongly support the goodwill carried on the balance and,
therefore, no impairment is necessary. Revenue would need to reduce
by 67% for the headroom to be nil.
|
|
Note 13
|
DEFERRED TAX LIABILITY
|
|
|
|
|
Share-
|
|
Accelerated
|
|
|
|
|
|
|
|
|
|
|
based
|
|
capital
|
|
Tax
|
|
|
|
|
|
|
|
|
payments
|
|
allowances
|
|
losses
|
|
Other
|
|
Total
|
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROUP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
24,139
|
|
(1,826,126)
|
|
(54,026)
|
|
6,903
|
|
(1,849,110)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credited/(charged) to statement of comprehensive
income
|
|
81,059
|
|
(345,221)
|
|
91,825
|
|
57
|
|
(172,280)
|
|
|
Credited
to equity
|
|
245,555
|
|
-
|
|
-
|
|
-
|
|
245,555
|
|
|
At 31
December 2022
|
|
350,753
|
|
(2,171,347)
|
|
37,799
|
|
6,960
|
|
(1,775,835)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credited/(charged) to statement of comprehensive
income
|
|
-81,889
|
|
529,429
|
|
(185,619)
|
|
-
|
|
425,699
|
|
|
Deferred
tax acquired and arising from acquisition
|
|
|
|
|
|
|
|
(311,317)
|
|
(311,317)
|
|
|
At 31
December 2023
|
|
432,642
|
|
(1,641,918)
|
|
147,820
|
|
(304,357)
|
|
(1,661,453)
|
|
COMPANY
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1
January 2022
|
|
24,139
|
|
(1,815,715)
|
|
-
|
|
-
|
|
(1,791,576)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credited/(charged) to statement of comprehensive
income
|
|
81,059
|
|
(362,918)
|
|
-
|
|
-
|
|
(281,859)
|
|
(Charged) to equity
|
|
245,555
|
|
-
|
|
-
|
|
-
|
|
245,555
|
|
At 31
December 2022
|
|
350,753
|
|
(2,178,633)
|
|
-
|
|
-
|
|
(1,827,880)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Credited/(charged) to statement of comprehensive
income
|
|
81,889
|
|
529,429
|
|
(185,619) -
|
|
-
|
|
425,699
|
|
At 31
December 2023
|
|
432,642
|
|
(1,649,204)
|
|
(185,619)
-
|
|
-
|
|
(1,402,181)
|
|
COMPANY
|
|
31
December
2023
£
|
|
31
December
2022
£
|
|
Investment in subsidiary companies
|
|
|
|
|
|
Shares
at cost
|
|
19,705
|
|
19,705
|
|
|
|
|
|
|
|
Capital
contribution
|
|
1,361,656
|
|
1,361,656
|
|
Equity-settled share-based payment
|
|
191,278
|
|
65,591
|
|
Total
investment in subsidiary companies
|
|
1,572,639
|
|
1,446,952
|
|
|
|
|
|
|
|
|
The Group has closed the R&D
facility located in India. The investment in the subsidiary company
has not been impaired during 2023. This will be impaired in 2024
upon formal dissolution. The investment carried in the financial
statements is £12,994.
Subsidiary undertakings included
in these financial statements, which are all wholly owned, at 31
December 2023 are:
|
|
|
|
Place of
|
|
Class of
|
Percentage
|
Nature
|
|
|
Name
|
|
incorporation
|
share
|
held
|
of
business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By
Company:
|
|
|
|
|
|
|
|
|
|
|
Concurrent Tech
|
|
Bangalore,
|
|
Ordinary
|
100%
|
Non-trading
|
|
|
India Private Ltd
|
|
India
|
|
|
|
|
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Concurrent
|
|
California,
|
|
Ordinary
|
100%
|
Sale and service of Company
products
|
|
|
Technologies, Inc.
|
|
USA
|
|
|
|
|
and R&D services for the
Company
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
By
Concurrent Technologies, Inc.:
|
|
|
|
|
|
|
|
|
Omnibyte
|
|
Illinois,
|
|
Ordinary
|
100%
|
Dormant
|
|
|
Corporation
|
|
USA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Phillips Machine & Welding Co.,
Inc.
|
|
California,
|
|
Ordinary
|
100%
|
Developer and manufacturer of
industrial
|
|
|
|
USA
|
|
|
|
|
products and associated
services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Group
31 Dec
2023
|
|
Company
31 Dec
2023
|
|
Group
31 Dec
2022
|
|
Company
31 Dec
2022
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
Raw
materials
|
|
8,357,855
|
|
8,153,919
|
|
6,637,883
|
|
6,637,883
|
|
Work in
progress
|
|
3,407,901
|
|
3,407,901
|
|
3,193,400
|
|
3,193,400
|
|
Finished
goods
|
|
192,744
|
|
192,744
|
|
259,154
|
|
259,154
|
|
|
|
11,958,500
|
|
11,754,564
|
|
10,090,437
|
|
10,090,437
|
|
|
During 2023, the provision for
obsolete and slow-moving inventories has been increased by £543,686
(2022: decreased by £241,310). In accordance with IAS 2,
inventories are measured at the lower of cost and net realisable
value.
The inventory balance movement
includes an obsolescence provision, which has decreased by £80,509
in the period. £236,767 has been reversed due to these items of
inventory not being considered obsolete any longer and £156,257
added to the provision. This comprises obsolete stock following an
in-depth analysis of the Group's inventory.
In 2023, a total of £14.8m (2022:
£7.4m) of inventories was included in the Consolidated Statement of
Comprehensive Income as an expense.
|
|
Note 16
|
TRADE AND OTHER RECEIVABLES
|
|
|
|
|
Group
|
|
Company
|
|
Group
|
|
Company
|
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Trade
receivables
|
|
5,430,181
|
|
2,667,667
|
|
4,755,594
|
|
3,056,417
|
|
|
Prepayments and accrued income
|
|
687,535
|
|
577,182
|
|
684,318
|
|
606,061
|
|
|
Other
debtors
|
|
325,111
|
|
325,111
|
|
-
|
|
-
|
|
|
Loan to
subsidiary
|
|
-
|
|
2,786,644
|
|
-
|
|
-
|
|
|
Amounts
due from subsidiary undertakings
|
|
-
|
|
2,178,391
|
|
-
|
|
2,207,599
|
|
|
|
|
6,442,827
|
|
8,534,995
|
|
5,439,912
|
|
5,870,077
|
|
|
The Group applies the IFRS 9
simplified approach to measuring expected credit losses, which uses
a lifetime expected loss allowance for all trade receivables. Trade
receivables have been grouped based on shared credit risk
characteristics. The expected loss rates are based on historic
performance, as well as current macroeconomic conditions. The
Company has assessed the recoverability of intercompany balances
and deem no issues in terms of credit losses, with all amounts
being repayable on demand. There have been no previous write-offs
of intercompany balances and there are sufficient cash and other
current assets to cover the amount.
|
ECL provision matrix
|
31 December
2023
|
Current
|
More than
30 days
past due
|
More than
60 days
past due
|
More than
90 days
past due
|
Total
|
|
Expected
loss rate
|
-
|
-
|
-
|
0.001%
|
|
|
Gross
carrying amount
|
5,282,708
|
18,712
|
128,551
|
210
|
5,430,181
|
|
Lifetime
expected credit loss
|
-
|
-
|
-
|
210
|
210
|
|
|
As a Group, we don't have a
significant amount of bad debt, and historically bad debts have
been very close to nil; due to the recurring nature of orders, our
customers pay what is owed so it is not necessary for us to provide
for any balances as bad debt, and when considering current and
future macroeconomic conditions, the anticipated loss rate is
expected to remain close to nil.
|
|
|
|
Group
2023
£
|
|
|
|
Group
2022
£
|
|
|
|
At 1
January
|
|
210
|
|
|
|
1,188
|
|
|
|
Charged/(credited) to statement of comprehensive
income
|
|
-
|
|
|
|
(978)
|
|
|
|
At 31
December
|
|
210
|
|
|
|
210
|
|
|
|
|
|
Group
2023
£
|
|
Company
2023
£
|
|
Group
2022
£
|
|
Company
2022
£
|
|
More
than 30 days
|
|
18,712
|
|
17,998
|
|
76,881
|
|
76,881
|
|
More
than 60 days
|
|
128,551
|
|
128,448
|
|
73,086
|
|
49,336
|
|
More
than 90 days
|
|
125,876
|
|
125,096
|
|
8,150
|
|
5,934
|
|
|
|
273,139
|
|
271,542
|
|
158,117
|
|
132,151
|
Notes to the Financial Statements
(continued)
|
Note 17
|
TRADE AND OTHER PAYABLES
|
|
Current
|
|
Group
2023
£
|
|
Company
2023
£
|
|
Group
2022
£
|
|
Company
2022
£
|
|
Trade
payables
|
|
5,707,674
|
|
5,608,259
|
|
2,977,750
|
|
2,880,305
|
|
Contract
liabilities
|
|
1,030,449
|
|
1,030,449
|
|
681,044
|
|
681,044
|
|
Other
payables
|
|
355,549
|
|
46,329
|
|
233,990
|
|
55,159
|
|
Current
right of use lease liability
|
|
294,662
|
|
268,472
|
|
202,287
|
|
180,044
|
|
Other
taxes and social security costs
|
|
207,385
|
|
202,605
|
|
188,986
|
|
185,557
|
|
Accruals
|
|
2,070,693
|
|
1,733,933
|
|
1,500,205
|
|
1,189,197
|
|
|
|
9,666,412
|
|
8,890,047
|
|
5,784,262
|
|
5,171,306
|
|
Non-Current
|
|
Group
2023
£
|
|
Company
2023
£
|
|
Group
2022
£
|
|
Company
2022
£
|
|
|
Right of
use lease liability
|
|
695,272
|
|
677,607
|
|
1,257,820
|
|
1,211,405
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
695,272
|
|
677,607
|
|
1,257,820
|
|
1,211,405
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract liabilities have been
disaggregated from other payables in the current and prior years to
provide more detailed information to the reader of the accounts as
to the nature of other payables.
|
|
Contract
liabilities
|
|
Warranty
|
|
End
of
|
|
End
of
|
|
Non-
|
|
Total
|
|
(Group and
Company)
|
|
|
|
life
|
|
life
|
|
recurring
|
|
|
|
|
|
|
|
|
service
|
|
engineering
|
|
|
|
|
|
|
|
|
charge
|
|
|
|
|
B/fwd as
1 January 2022
|
|
94,556
|
|
445,592
|
|
6,941
|
|
133,955
|
|
681,044
|
|
Addition
|
|
42,174
|
|
266,676
|
|
-
|
|
389,685
|
|
698,535
|
|
Release
|
|
(87,486)
|
|
(121,332 )
|
|
(6,357)
|
|
(133,955)
|
|
(349,130)
|
|
Closing
at 31 December 2023
|
|
49,244
|
|
590,936
|
|
584
|
|
389,685
|
|
1,030,449
|
|
Note 18
|
FINANCIAL INSTRUMENTS
|
|
|
Financial Instruments by category
|
|
|
|
|
|
Financial assets measured at
amortised cost
£
|
|
GROUP
|
|
|
|
|
|
2022
|
|
Non-current:
|
|
|
|
2022
|
|
Current:
|
|
|
|
|
|
Trade and other
receivables
|
|
4,755,594
|
|
|
|
Cash and cash
equivalents
|
|
4,512,720
|
|
|
|
Total for
category
|
|
9,268,314
|
|
2023
|
|
Non-current:
|
|
|
|
2023
|
|
Current:
|
|
|
|
|
|
Trade and other
receivables
|
|
5,430,181
|
|
|
|
Cash and cash
equivalents
|
|
11,118,728
|
|
|
|
Total for
category
|
|
16,548,909
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities
measured at amortised cost
£
|
|
GROUP
|
|
|
|
|
|
2022
|
|
Current:
|
|
|
|
|
|
Trade and other payables
|
|
4,895,232
|
|
|
|
|
|
|
|
2023
|
|
Current:
|
|
|
|
|
|
Trade and other
payables
|
|
8,428,578
|
|
|
Included in the above are trade
payables, other payables, accruals and lease liabilities. All
non-current liabilities, as displayed in Note 17, relate to lease
liabilities, which are financial liabilities measured at amortised
cost.
|
|
|
|
GROUP AND COMPANY
|
|
Dilapidation
£
|
|
Product
warranty
£
|
|
|
|
Carrying
amount at 1 January 2023
|
|
286,080
|
|
36,512
|
|
|
|
Increase
in provisions
|
|
10,799
|
|
-
|
|
|
|
Amount
utilised
|
|
-
|
|
-
|
|
|
|
Carrying
amount at 31 December 2023
|
|
296,879
|
|
36,512
|
|
|
|
|
|
|
|
|
|
|
|
Provisions have been analysed between current and non-current
as follows:
|
|
|
|
|
|
|
|
Current
|
|
|
|
18,256
|
|
|
|
Non-current
|
|
|
|
315,135
|
|
|
Warranties are provided for on the
basis of management's best estimate of the Group's liability under
24-month warranties granted on its hardware products, based on past
experience.
Dilapidations are provided for on
the basis of management's best estimate for both the Colchester and
Theale office. This is recognised over the life of each
lease.
|
|
Note 20
|
LEASES AND COMMITMENTS
|
|
|
The Group leases properties for
its operations in the UK and US, and the information is presented
below; all leases relate to property.
|
|
|
|
|
Reconciliation of lease
|
Group
|
Company
|
Group
|
Company
|
|
liabilities
|
2023
|
2023
|
2022
|
2022
|
|
|
£
|
£
|
£
|
£
|
|
Opening
|
1,460,107
|
1,391,449
|
910,210
|
834,274
|
|
Additions
|
-
|
-
|
635,248
|
635,248
|
|
Modification and
amendment
|
(265,325)
|
(265,325)
|
-
|
-
|
|
Payments
|
(301,219)
|
(269,641)
|
(199,347)
|
(165,927)
|
|
Interest
|
103,008
|
89,596
|
104,469
|
87,854
|
|
FX
|
(6,636)
|
-
|
9,527
|
-
|
|
Closing
|
989,935
|
946,079
|
1,460,107
|
1,391,449
|
|
|
|
|
|
|
|
Non-current (Note 17)
|
(695,273)
|
(677,607)
|
(1,257,820)
|
(1,211,405)
|
|
Current (Note 17)
|
(294,662)
|
(268,472)
|
(202,287)
|
(180,044)
|
|
|
(989,935)
|
(946,079)
|
(1,460,107)
|
(1,391,449)
|
|
|
|
|
|
|
|
|
Group
2023
£
|
|
Company
2023
£
|
|
Opening
balance
|
|
1,045,328
|
|
998,687
|
|
Modification & amendment
|
|
(150,868)
|
|
(150,868)
|
|
Depreciation
|
|
(203,870)
|
|
(186,393)
|
|
Foreign
exchange
|
|
(1,651)
|
|
-
|
|
Closing
balance
|
|
688,939
|
|
661,426
|
The right of use in relation to
leasehold property are disclosed as PPE (Note 11).
Leases are made up of three
properties, with the terms as follows: UK office (Colchester) has
no remaining break clauses; UK office (Theale) has a break clause
of 1 April 2028; US office has an annual automatic one-year
extension unless notice is given.
|
|
Amounts payable under lease
arrangements
|
|
Group
|
|
Company
|
|
Group
|
|
Company
|
|
|
|
|
2023
|
|
2023
|
|
2022
|
|
2022
|
|
|
|
|
£
|
|
£
|
|
£
|
|
£
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Within one year
|
|
(357,040)
|
|
(325,462)
|
|
(303,061)
|
|
(269,641)
|
|
|
Within two to six years
|
|
(757,806)
|
|
(739,386)
|
|
(1,433,763)
|
|
(1,380,848)
|
|
|
Add unearned interest
|
|
124,911
|
|
118,769
|
|
276,717
|
|
259,040
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(989,935)
|
|
(946,079)
|
|
(1,460,107)
|
|
(1,391,449)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2023, the Group was
committed to a short-term lease for the Phillips Aerospace office
lease (2022: None).
The Group has elected not to
recognise a lease liability for short-term leases or for leases of
low-value assets. Payments made on these leases are expensed on a
straight-line basis and the value of these expenses in the year was
£49,606.
Amounts recognised in the
Consolidated Statement of Comprehensive Income.
|
|
Note 20
|
LEASES AND COMMITMENTS (CONTINUED)
|
|
|
Group
2023
£
|
|
Group
2022
£
|
|
|
Short-term and low-value lease expense
|
49,606
|
|
-
|
|
|
Depreciation charge
|
203,870
|
|
195,254
|
|
|
Interest
expense
|
103,008
|
|
111,941
|
|
|
|
Amounts recognised in the
Consolidated Statement of Cash Flows.
|
|
|
Group
2023
£
|
|
Group
2022
£
|
|
|
Short-term and low-value lease expense
|
-
|
|
-
|
|
|
Payment
of lease liabilities
|
301,219
|
|
94,842
|
|
|
|
Capital commitments
At the end of the year, the
capital expenditure commitment (for a machine for the factory) was
£142,008 (2022: £nil).
|
|
Note 21
|
SHARE CAPITAL, SHARE PREMIUM, MERGER RESERVE AND CAPITAL
REDEMPTION RESERVE
|
|
|
31 Dec
2023
£
|
|
31 Dec
2022
£
|
|
|
Allotted, issued and fully paid share capital:
|
|
|
|
|
|
Ordinary
shares (86,169,236 of 1p each)
|
861,692
|
|
739,000
|
|
Share capital
|
Balance as at 1 January
2023
|
|
739,000
|
|
Shares issued for equity
raise
|
|
104,615
|
|
Shares issued for
acquisition
|
|
18,077
|
|
Balance as at 31 December
2023
|
|
861,692
|
|
Share premium
|
|
|
|
|
|
Balance as at 1 January
2023
|
|
|
3,699,105
|
|
Shares issued for equity raise less
issue costs
|
6,251,126
|
|
Balance as at 31 December
2023
|
|
9,950,231
|
|
Merger reserve
|
|
|
|
Balance as at 1 January
2023
|
|
|
-
|
|
Shares issued for
acquisition
|
|
|
1,283,457
|
|
Balance as at 31 December
2023
|
|
1,283,457
|
|
Capital redemption reserve
|
|
|
|
Balance as at 1 January
2023
|
|
|
256976
|
|
|
|
|
-
|
|
Balance as at 31 December
2023
|
|
256,976
|
During the year, 10,461,538 shares
were issued as part of an equity raise for the Company. A further
1,807,686 were issued as part of the acquisition of Phillips
Aerospace.
|
|
At 31 December 2023, the Company
held 531,522 ordinary shares (2022: 531,522) with an aggregate
nominal value of £5,315 (2022: £5,315) in treasury.
|
|
|
|
|
|
Treasury
shares
|
|
|
|
|
|
|
|
Balance
as at 1 January 2023
|
|
|
|
531,522
|
|
Shares
sold
|
|
|
|
-
|
|
Balance
as at 31 December 2023
|
|
|
|
531,522
|
|
|
|
The Company operates a group
personal pension scheme, which all permanent employees may join.
The scheme, which is a defined contribution scheme, is independent
of the Company's finances. The Company's contributions are based on
between 5.5% and 13.5% of members' gross salaries, dependent upon
the length of service of the individual. The Company has also
chosen NEST (National Employment Savings Trust) as its workplace
pension scheme to meet its employer duties under the auto-enrolment
rules. Contributions to the NEST scheme are at the minimum rates.
The total charge to administrative expenses in the statement of
comprehensive income is disclosed in Note 10 'Staff Costs'. Pension
contributions payable to the schemes at the end of the year were
£63,681 (2022: £55,160).
|
|
Note 23
|
FINANCIAL RISK MANAGEMENT
|
|
|
The Group is exposed to various
risks in relation to financial instruments. The Group's financial
assets and liabilities by category are summarised in Note 18. The
main types of risks are market risk, credit risk and liquidity
risk. The Group's policy in respect of financial risk management is
referred to in the report on corporate governance.
The Group does not actively engage
in the trading or holding of financial assets for speculative
purposes. The most significant financial risks to which the Group
is exposed are described below.
|
|
|
Market risk analysis
The Group is exposed to market
risk through its use of financial instruments and specifically to
currency risk that results from its operating
activities.
|
|
|
Foreign currency
sensitivity
A number of transactions are
conducted by companies in the Group in currencies other than their
functional currency, which give rise to monetary assets and
liabilities denominated in other currencies. The Group's exposure
to foreign currency exchange risk is mitigated to a large extent by
natural hedging, as assets in currency are matched by liabilities
in the same currency. The value of monetary assets and liabilities
of the Group and Company not held in functional currencies at the
balance sheet date were as follows:
|
|
|
|
Net
foreign currency monetary assets/(liabilities)
|
|
|
|
|
|
2023
US dollar
£
|
|
|
|
|
|
2022
US dollar
£
|
|
|
|
|
|
|
|
Group
|
|
(447,522)
|
|
|
|
|
|
(175,103)
|
|
|
|
|
|
|
|
|
|
2023
US dollar
£
|
|
2022
US dollar
£
|
|
|
|
|
If
sterling had strengthened by 5% against US
dollar:
|
|
|
|
|
|
|
|
|
Impact
on net Group result and equity for the year
|
|
21,312
|
|
8,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
If
sterling had weakened by 5% against US dollar:
|
|
|
|
|
|
|
|
|
Impact
on net Group result and equity for the year
|
|
(23,555)
|
|
(9,216)
|
|
|
|
Exposures to foreign exchange
rates vary during the year depending on the volume of overseas
transactions. Nonetheless, the analysis above is considered to be
representative of the exposure to currency risk.
|
|
|
Credit risk analysis
Credit risk is the risk that a
counterparty fails to discharge an obligation to the Group. The
Group is exposed to this risk from cash and cash equivalents and
outstanding receivables.
The Group applies the IFRS 9
simplified approach to measuring expected credit losses, which uses
a lifetime expected loss allowance for all trade
receivables.
To measure the expected credit
losses, trade receivables and contract assets have been grouped
based on shared credit risk characteristics and the days past
due.
On that basis, the loss allowance
as at 31 December 2023 and 31 December 2022 was determined as
follows:
|
|
Note 23
|
FINANCIAL RISK MANAGEMENT (CONTINUED)
|
|
31 December 2023
|
Current
|
More than 30 days past
due
|
More than 60 days past
due
|
More than 90 days past
due
|
Total
|
|
Expected loss rate
|
-
|
-
|
-
|
100%
|
|
|
Gross carrying amount
|
5,282,708
|
18,712
|
128,551
|
210
|
5,430,181
|
|
Lifetime expected credit
loss
|
-
|
-
|
-
|
210
|
210
|
|
31 December 2022
|
Current
|
More than 30 days past
due
|
More than 60 days past
due
|
More than 90 days past
due
|
Total
|
|
Expected loss rate
|
-
|
-
|
-
|
100%
|
|
|
Gross carrying amount
|
4,605,417
|
76,881
|
73,086
|
210
|
4,755,594
|
|
Lifetime expected credit
loss
|
-
|
-
|
-
|
210
|
210
|
|
|
The Group loss allowances for
trade receivables as at 31 December reconcile to the opening loss
allowances as follows:
|
|
|
2023
|
2022
|
|
|
£
|
£
|
|
Opening loss allowance at 1
January
|
210
|
1,188
|
|
Loss allowance recognised during
the year
|
-
|
(978)
|
|
Closing loss allowance at 31
December
|
210
|
210
|
|
|
The credit risk for cash and cash
equivalents and fixed-term cash deposits is considered negligible
since the counterparties are reputable banks with high-quality
external credit ratings.
|
|
2023
|
Current
|
More than 30 days past
due
|
More than 60 days past
due
|
More than 90 days past
due
|
Total
|
|
Trade payables
|
4,747,497
|
673,864
|
154,861
|
131,452
|
5,707,674
|
|
Accruals
|
2,070,693
|
|
|
|
2,070,693
|
|
2022
|
Current
|
More than 30 days past
due
|
More than 60 days past
due
|
More than 90 days past
due
|
Total
|
|
Trade payables
|
1,446,455
|
1,331,839
|
120,802
|
78,654
|
2,977,750
|
|
Accruals
|
1,500,205
|
|
|
|
1,500,205
|
|
|
Liquidity risk is that the Group
might be unable to meet its obligations. The Group manages its
liquidity needs by monitoring forecast cash inflows and outflows
due in day-to-day business. Liquidity needs are monitored in
various time bands, on a week-to-week basis and by monthly
forecasting.
|
|
|
The Group's objective is to
maintain cash to meet its liquidity requirements for the
foreseeable future. This objective was met for the reporting
periods. Funding for long-term liquidity needs is assessed by the
Board on a regular basis.
The Group considers expected cash
flows from financial assets in assessing and managing liquidity
risk, in particular its cash resources and trade receivables. The
Group's existing cash resources and trade receivables (see Note 16)
exceed the current cash outflow requirements. Cash flows from trade
and other receivables are all contractually due within three
months.
|
|
Note 24
|
CAPITAL MANAGEMENT
|
|
|
The Group's objectives when
managing capital are:
(i) to ensure
the Group's ability to continue as a going concern, and
(ii) to provide an
adequate return to shareholders
by pricing products and services
commensurately with the level of risk.
|
|
|
The Group monitors capital on the
basis of the carrying amount of equity less cash and cash
equivalents as presented on the face of the Consolidated Balance
Sheet.
The Group manages the capital
structure and makes adjustments to it in the light of changes in
economic conditions and the risk characteristics of the underlying
assets. In order to maintain or adjust the capital structure, the
Group may adjust the number of dividends paid to shareholders,
return capital to shareholders, purchase its own shares to hold in
treasury, issue new shares or sell assets. There were no changes in
the Group's approach to capital management during the year. Neither
the Company nor any of its subsidiaries are subject to externally
imposed capital requirements.
Capital for the reporting periods
under review is summarised as follows:
|
|
|
|
Group
|
|
Group
|
|
|
|
2023
|
|
2022
|
|
|
|
£
|
|
£
|
|
Total equity
|
|
35,036,427
|
|
23,176,502
|
|
Cash and cash equivalents
|
|
(11,118,728)
|
|
(4,512,720)
|
|
Capital
|
|
23,917,699
|
|
18,663,782
|
|
Total equity and overall financing
|
|
35,036,427
|
|
23,176,502
|
|
Capital to overall financing ratio
|
|
0.68
|
|
0.81
|
|
Note 25
|
RELATED PARTY TRANSACTIONS
|
|
|
The Company has taken the FRS 101
exemption given that transactions are only with other wholly owned
Group companies. The are no transactions for the Group to report on
under IAS 24. All intra-Group transactions are removed on
consolidation.
|
|
|
Dividends paid to Directors during
the year amounted
to:
-
280
|
|
|
Transactions with key management
personnel during the period:
Key management personnel are the
Company's Board. Key management personnel remuneration includes the
following expenses:
|
|
|
|
|
|
Group
2023
£
|
|
Group
2022
£
|
|
|
|
|
Short-term employee benefits
|
|
1,305,205
|
|
869,717
|
|
|
|
|
Post-employment benefits
|
|
18,632
|
|
20,697
|
|
|
|
|
Share-based payment (IFRS 2)
|
|
287,773
|
|
161,114
|
|
|
|
|
|
|
1,611,610
|
|
1,051,528
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note 26
|
SHARE-BASED PAYMENT
|
|
|
At the beginning of 2021, the
Company operated an enterprise management incentive share option
scheme. During 2021, an LTIP was introduced.
The LTIP scheme provides for a
grant price equal to the nominal value of the Company's shares on
the date of grant. Options cannot be vested until three years after
grant date and vesting is conditional upon the Group achieving a
compound percentage growth of the Group average basic earnings per
ordinary share, for the complete years commencing 1 January of the
year of grant and ending with the year most immediately prior to
the vesting of the option. The latest date for exercising options
is ten years after grant date and vesting of options is subject to
continued employment with the Group.
|
|
|
|
|
|
2023
Options
No
|
|
2023
Weighted
average
price
pence
|
|
2022
Options
No
|
|
2022
Weighted
average
price
pence
|
|
|
|
Outstanding at 1 January
|
|
2,289,797
|
|
31.14
|
|
1,467,205
|
|
47.29
|
|
|
|
Granted
|
|
2,300,209
|
|
1.00
|
|
991,357
|
|
1.00
|
|
|
|
Exercised
|
|
-
|
|
-
|
|
(5,000)
|
|
48.50
|
|
|
|
Forfeited/Lapsed
|
|
(35,804)
|
|
1.00
|
|
(163,765)
|
|
70.20
|
|
|
|
Outstanding at 31 December
|
|
4,554,202
|
|
16.15
|
|
2,289,797
|
|
31.14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average share price at date of exercise
|
|
-
|
|
-
|
|
5,000
|
|
48.50
|
|
|
|
Exercisable at 31 December 2023
|
|
Nil
|
|
-
|
|
Nil
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at 31 December
2023 had exercise prices ranging from 1.0 pence to 101.50 pence and
a weighted average remaining contractual life of 2.49 years (2022:
3.97 years).
The inputs to the Black-Scholes
model for options granted over the period were as
follows:
|
|
Grant date
|
|
23 Oct
2023
|
|
20 Nov
2023
|
|
|
Share price at grant date
|
|
£0.67
|
|
£0.71
|
|
|
Exercise price
|
|
£0.01
|
|
£0.01
|
|
|
Dividend yield
|
|
2.85%
|
|
2.85%
|
|
|
Risk-free interest rate
|
|
4.50%
|
|
4.17%
|
|
|
Volatility
|
|
36.00%
|
|
36.10%
|
|
The share-based payment charge for 2023 was £430,854 (2022:
£219,363).
|
Note 27
|
BUSINESS COMBINATIONS
|
Acquisition in 2023
Acquisition of Phillips Aerospace
During the year, on 6 September
2023, the Group acquired 100% of the voting shares of Phillips
Aerospace Limited, a non-listed company based in the US and
specialising in the development and manufacture of industrial
products and associated services, in exchange for the Company's
shares and cash. The Group acquired Phillips Aerospace Limited
because its strategy was to use the Phillips business and diversify
it into actual systems, offering it additionally to the Group's
customer base, as well as gaining Phillips' customer relationships.
These expansion, growth and export opportunities provide an
established presence in North America.
Assets acquired and liabilities assumed
The fair values of the identifiable
assets and liabilities of Phillips Aerospace Limited as at the date
of acquisition were:
|
|
At
acquisition
|
|
|
£
|
|
Tangible fixed assets
|
20,039
|
|
Trade and other
receivables
|
251,984
|
|
Cash acquired
|
146,660
|
|
Current liabilities
|
(111,377)
|
|
Long-term liabilities
|
(1,007,336)
|
|
Net assets on acquisition
|
(700,030)
|
|
Separately identifiable intangible
assets on acquisition
|
1,538,429
|
|
Goodwill on acquisition
|
1,269,443
|
|
Total investment in
subsidiary
|
2,107,843
|
|
|
|
|
Initial consideration -
cash
|
832,427
|
|
Share consideration
|
1,301,534
|
|
Escrow
|
(26,118)
|
|
Total investment in
subsidiary
|
2,107,843
|
|
|
|
The deferred tax liability comprises
the tax effect of the accelerated depreciation for tax purposes of
tangible and intangible assets.
There was additional cash
transferred as part of the acquisition of £667,347 to pay off
outstanding loan balances within Phillips Aerospace.
Separately identifiable intangible
assets comprise customer relationships £1,148,761 and licences
£389,668.
The goodwill of £1,294,255 comprises
the value of expected synergies arising from the acquisition, the
assembled workforce and technological know-how, which is not
separately recognised.
From the date of acquisition,
Phillips Aerospace Limited contributed £819,500 of revenue and
£201,000 to profit before tax from continuing operations of the
Group.
Phillips Aerospace revenue for the
year was £1,584,587 and £36,680 profit before tax.
£195,881 of exceptional acquisition
expenses were incurred as a direct result of the Group acquiring
Phillips Aerospace.
The creation of a merger reserve of
£1,283,457 is a result of acquiring Phillips Aerospace in
accordance with s612 CA06. In total 1,807,686 shares were issued in
relation to the acquisition.
|
Note 28
|
ULTIMATE CONTROLLING PARTY
|
|
|
The Directors have assessed that
there is no ultimate controlling party.
|