Embedded technology components maker Concurrent Technologies blamed a delayed defence contract for the first-half decline in revenues and profits.
But even if the £1m home-made explosives detection contract had come through on time, sales for the six months period would still have been flat at £6.4m. And this doesn’t explain why gross margins reversed from 60.8 to 53.7 per cent. In fact, it was the £700,000 reduction in operating costs that limited the decline in reported profits. This is surprising since preliminary results in April showed robust trading in defence budgets offset weaker telecoms markets, which are finally in recovery mode after two years of tough trading.
The contract delay aside, Concurrent seems to have maintained reasonable sales momentum overall, saying its “current” order book is “up substantially on this time last year”. New products will be a big feature for the rest of the year, with three launches built on Intel’s high performance i7 processor technology planned, and R&D spend is set to rise at least 5 per cent over the course of this year. And broker HB Markets expects full-year pre-tax profits to only be down slightly on last year at £2.7m, giving EPS of 3.4p (3.55p in 2009).
CONCURRENT TECHNOLOGIES (CNC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 32p | MARKET VALUE: | £22.9m | |
| TOUCH: | 31-32p | 12-MONTH HIGH: | 46p | 26p |
| DIVIDEND YIELD: | 4.6% | PE RATIO: | 10 | |
| NET ASSET VALUE: | 16p* | NET CASH: | £4.6m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 6.52 | 1.37 | 1.54 | 0.50 |
| 2010 | 5.41 | 1.01 | 1.08 | 0.55 |
| % change | -17 | -27 | -30 | +10 |
Ex-div: 8 Sep Payment22 Sep *Includes intangible assets of £4.2m, or 6p per share | ||||
