Aim listed single-board computer maker Concurrent Technologies (CNC) is preparing for a US acquisition after beating market expectations with profits of £1.2 million for last year, writes Ben Cobley.

Essex-based Concurrent Technologies boosted pre-tax profits by more than £1 million to £1.19 million, nearly £100,000 ahead of analysts' forecasts. The company is looking for a suitable acquisition in the US, which could require funding from shareholders.

Turnover rose by 149 per cent last year to £8.3 million. The company's directors expect this year's figures to be 'much better' again as the number of new customers for its products is rising even faster, especially in the USA. As a sign of its confidence, the board has agreed to pay out a final dividend of 0.5p per share and it expects to maintain the payout from now on.

To meet demand, new manufacturing equipment has been installed that would enable up to £30 million of orders to go through every year. Chairman Michael Collins says he would not be worried if this new production facility ran at only 50 per cent capacity, which implies the company expects about £15 million sales for the current year (directors are sensibly remaining tight-lipped about expectations). Gross margins are expected to remain at the current level of about 45 per cent. This is possible because competition in the sector is sparse.

The plan for this year is to expand further into the USA. The reasons are twofold: demand is very strong there and, crucially, that is where to find sorely needed software engineers to drive forward product development.

Managing director Glen Fawcett describes recruitment of engineers as the company's 'fundamental problem', with a dearth of qualified individuals in the UK. At the moment Concurrent is scouting for a California-based acquisition, around which to base new design and development facilities in the US, the crucial component of any purchase being the personnel. This would require a call on investors, most likely to be a placing of shares, perhaps augmented with a rights issue.

Reflecting Concurrent's relative immunity to technology turmoil, its share price has held up pretty well over the past year - at 53p, it is trading at around March 2000 levels. This is unusual for a technology firm, especially one with such exposure to telecoms and US markets (both currently account for about 50 per cent of sales). Growth in demand from telecom companies has fallen back a bit, though apparently this is being offset by increased demand from military, medical and air traffic control markets.

At today's price, Concurrent is trading on a historic p/e ratio of 45.7 and, on some conservative estimates, a prospective multiple of 17. That is far from demanding for a genuine growth company and one making profits at that.

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