RNS Number:5145N
CML Microsystems PLC
14 June 2005
CML MICROSYSTEMS Plc
PRELIMINARY RESULTS
Results in Line with Expectations; Confident Outlook
CML Microsystems Plc ("CML"), which designs, manufactures and markets a broad
range of semiconductor products, primarily for the global communications market,
announces its Preliminary Results for the year ending 31st March 2005.
CML's semiconductor solutions serve customers in the wire-line telecom, wireless
data, two-way radio, memory card controller and programmable platform markets.
Operations are in the UK, Germany, the US, Singapore, China and Taiwan.
Commenting on the results, George Gurry, Chairman said:
"Achieved the further improvement in performance that had been anticipated.
Turnover and operating profit both moved firmly ahead, despite pressures from
currency and marketplace issues mentioned at the interim stage and second half R
& D expenditure materially higher than originally planned."
Financial Highlights
* Turnover up 43% to #23.46m (2004: #16.32m)
* First full year contribution by Hyperstone, acquired July 2003
* Operating profit before amortisation of goodwill up to #2.1m (#0.2m)
* Pre-tax profit of #3k (2004: Loss #0.97m)
* Earnings per share of 2.66p (2004: Loss 5.28p)
* Net cash reserves increased to #4.07m (2004: #3.86m)
* Annual dividend of 10.5p per share unchanged (2004: 10.5p per share),
payable 5 August 2005
* Research & development expenditure grew 27% to #3.57m (2004: #2.81m).
Business Review
* Increased sales volume and market presence for controller devices for
memory card application produced best revenues; major European memory card
producer secured; competitive margins.
* Expected sales gains of radio and wireless communications market
products, second best performing revenue producer up 10%; improved gross
margins.
* Sales into traditional wireline telecom markets, up 4%, after weak
second half following strong first half.
* Sales in Far East up around 48% on 2004 - gains in Taiwan and PRC
sales.
* Sales in Europe doubled on previous year - progress in Germany,
Spain, Near-East territories.
* Underlying device sales in the Americas up 18%.
* New products / solutions for new sectors introduced second half, set
for imminent release current fiscal year.
Regarding Prospects, George Gurry, Chairman, said:
"I am encouraged by the further progress during the year, and with the
positioning advantages in its marketplaces that the group is progressively
beginning to achieve. I feel quite confident that the forward-looking
strategies employed will produce the expected success.
"Although the present trading year is at an early stage, my expectations are
that subject to unforeseen circumstances, your Company will continue to achieve
firm progress in its markets this year and to secure the consequent benefits. I
remain confident in the successful future of your Company."
ENDS
Enquiries:
CML Microsystems Plc www.cmlmicroplc.com Binns & Co PR
Nigel Clark, Financial Director 020 7786 9600 (today) Peter Binns, 020 7153 1485
Chris Gurry, Business Development Director 01621 875500 (thereafter) Paul McManus, 020 7153 1485
Or 07980 541 893
CHAIRMAN'S STATEMENT
PRELIMINARY RESULTS
I am pleased to report on a year that saw your Company achieve the further
improvement in performance that had been anticipated. Turnover and operating
profit both moved firmly ahead, despite pressures from the currency and
marketplace issues mentioned at the interim stage and R&D expenditure in the
second half that proved materially higher than originally planned. I am
particularly pleased to report that Hyperstone's first full year contribution
formed a healthy component in the Group's overall results.
Group turnover for the year ending 31 March 2005 rose by 43% to #23.46M (2004:
#16.32M), with a large proportion of this gain marked by the progress achieved
with increasing the sales volume and market presence for the Group's controller
devices aimed towards Memory Card applications. A major European memory card
producer is among customers contracted during the year.
Expected gains were also posted in sales of Group products into radio and
wireless communication markets, but sales for products into traditional wireline
telecom market areas were only slightly higher on a full year basis, resulting
from a weaker second half performance following the strong gains reported for
the opening half.
Gross margins returned by products targeted at communications markets may vary
quite widely according to the target market application, but are on average
higher than the gross margins typical in the case of the high volume memory card
products that contributed materially to the sales increase reported.
Although a simplistic direct connection would not be entirely appropriate to the
current Group results, the bias towards including higher volume but lower margin
product strategies has bearing on the overall gross margin achieved, which shows
a 5% reduction to 58% (2004: 63%).
Research and Development expenditure grew by 27% to #3.57M against #2.81M
reported the year earlier, and reflects the strong investment by the Group in
support of its product development strategies. Products announced during the
second half or progressing towards imminent release include solutions for new
market areas, as well as a range of new and uniquely flexible programmable
platform devices. These latter products offer exceptional advantages in
minimising both the cost and time to market of devices for both standard and
custom market applications.
In addition to increased R&D investment during the year, the Group effected the
transfer of the entire operations of Integrated Micro Systems from its location
at Rochester, Kent to the Group's main UK operating centre at Maldon, Essex.
A #420k charge has been taken against the exceptional restructuring costs that
are expected to arise during the current trading year as the result of that
relocation.
Operating profit before amortisation of goodwill is increased to #2.1M (2004:
#0.2M), reducing to #0.54M after amortisation is taken to account (2004: #0.98M
loss). The goodwill in question is the goodwill charge arising through the
acquisition of Hyperstone, which is being written off over a three-year period.
A nominally positive pre-tax outcome of #3k is reported (2004: #0.97M loss)
which, with the benefit of a positive tax charge, translates to earnings of
2.66p per ordinary share (2004: 5.28p loss per ordinary share). Net cash
reserves at the year-end were slightly increased at #4.07M (2004: #3.86M).
Your Directors are recommending payment of an unchanged annual dividend of 10.5p
per ordinary share (2004: 10.5p per ordinary share) payable, if approved by the
shareholders, on 5th August 2005 to shareholders registered on 8th July 2005.
On a geographic basis, sales into the Far East were increased by approximately
48% over the year earlier, with Taiwan and PRC sales recording particularly
pleasing gains. European sales, although lower in total, were more than
doubled when compared with the year earlier on the back of good progress in
Germany, Spain and near-east territories.
Underlying device sales into the Americas posted an 18% rise, although the
figures quoted under "geographical classification" in the full accounts do not
support that increase. This results from the treatment of royalty income
within the full accounts figures due to an arrangement inherited with the
acquisition of Hyperstone. I have referred to this in an earlier Report, and
its effect can be expected to diminish in future years.
In product terms, memory card controller sales led with highest growth rate and
highest total revenue, while radio and wireless category devices were a close
second in combined revenue, albeit posting a more modest 10% growth rate.
Turnover from products aimed at Wireline telecom applications achieved only a 4%
overall rise, with second half sales into Far East markets failing to match the
first half strength as foreseen.
I am encouraged by the further progress your company has demonstrated during the
year just ended, and with the positioning advantages in its marketplaces that
the group is progressively beginning to achieve. I feel quite confident that
the forward-looking strategies with which it has been particularly engaged will
produce the expected success.
Although the present trading year is at an early stage, my expectations are that
subject to unforeseen circumstances, your Company will continue to achieve firm
progress in its markets this year and to secure the consequent benefits. I
remain confident in the successful future of your Company.
I would like to close by joining with your Directors in thanking all of the
Group's employees for their efforts and commitment towards the Company
throughout the year, without which its continuing growth would not have been
achieved.
G. W. Gurry
Chairman
SUMMARY GROUP PROFIT AND LOSS ACCOUNT
for the year ended 31st March 2005
PRELIMINARY RESULTS
Notes Unaudited 2005 Audited 2004
# # # #
Turnover 23,458,744 16,321,691
Cost of sales (9,685,131) (5,998,681)
Gross Profit 13,773,613 10,323,010
Amortisation of goodwill 3 (1,561,024) (1,170,768)
Other distribution costs and administrative (12,255,207) (10,389,572)
expenses
Other operating income 583,102 253,583
Operating profit before amortisation of goodwill 2,101,508 187,021
Amortisation of goodwill (1,561,024) (1,170,768)
Operating Profit/(Loss) 540,484 (983,747)
Exceptional restructuring costs 4 (420,000) -
120,484 (983,747)
Interest receivable 118,210 125,677
Interest payable (235,495) (121,196)
Profit/(Loss) on Ordinary Activities before
Taxation 3,199 (979,266)
Tax on loss on ordinary activities 415,974 208,595
Profit/(Loss) on Ordinary Activities after
Taxation
Parent Company (75,958) 143,779
Subsidiary undertakings 495,131 (914,450)
419,173 (770,671)
Minority interests (24,046) (4,169)
Profit/(Loss) for the Financial Year 395,127 (774,840)
Proposed dividend 2 (1,564,310) (1,554,143)
Retained Loss for the Year (1,169,183) (2,328,983)
Earnings/(Loss) per share
Basic 5 2.66p (5.28)p
Diluted 5 2.64p (5.28)p
Statement of Total Recognised Gains and
Losses
Profit/(Loss) for the financial year 395,127 (774,840)
Currency translation differences on foreign
currency
net investments (62,765) (1,017,390)
Total gains and losses recognised since last
Report
and Accounts 332,362 (1,792,230)
SUMMARY GROUP BALANCE SHEET
at 31st March 2005
PRELIMINARY RESULTS
Unaudited 2005 Audited 2004
# # # #
Fixed Assets
Intangible assets 1,951,281 3,512,305
Tangible assets 10,345,139 9,671,475
12,296,420 13,183,780
Current Assets
Stocks 1,723,106 1,784,261
Debtors 4,093,607 3,387,498
Investments 5,388,449 6,933,510
Cash at bank and in hand 3,060,263 1,479,599
14,265,425 13,584,868
Creditors: Amounts falling due within one year (10,298,782) (9,484,710)
Net Current Assets 3,966,643 4,100,158
Total Assets less Current Liabilities 16,263,063 17,283,938
Provisions for liabilities and charges (724,920) (584,574)
Net Assets 15,538,143 16,699,364
Capital and Reserves
Called up share capital 744,048 740,068
Convertible warrants 120,230 240,433
Share premium account 3,752,510 3,589,606
Capital redemption reserve 254,730 254,730
Revaluation reserve 985,604 985,604
Profit and loss account 9,649,761 10,881,709
Shareholders' Funds 15,506,883 16,692,150
Minority interests 31,260 7,214
15,538,143 16,699,364
SUMMARY GROUP CASH FLOW STATEMENT
for the year ended 31st March 2005
PRELIMINARY RESULTS
Unaudited Audited
2005 2004
#'000 #'000
Net cash inflow/(outflow) from operating activities 3,009 (596)
Returns on investments and servicing of finance (117) 4
Taxation 142 329
Capital expenditure and financial investment (1,252) (166)
Acquisition of Hyperstone AG - (3,228)
Equity dividends paid (1,556) (1,535)
Net cash inflow/(outflow) before financing 226 (5,192)
Financing 46 4,735
Increase/(decrease) in cash 272 (457)
Reconciliation of Operating Profit to Net Cash Inflow/(Outflow) from Operating Activities
Operating profit/(loss) 540 (984)
Depreciation 666 575
Amortisation of goodwill 1,561 1,171
(Profit)/loss on sale of fixed assets (81) 4
Decrease/(increase) in stocks 61 (138)
(Increase)/decrease in debtors (691) 1,266
Increase/(decrease) in creditors 953 (2,490)
3,009 (596)
Reconciliation of Movement of Funds
Funds at start of period 3,868 9,599
Translation difference (69) (896)
Increase/(decrease) in cash 272 (457)
Cash inflow from increase in loans - (4,378)
Funds at close of period 4,071 3,868
Analysis of Funds
Cash at bank and in hand 3,060 1,480
Current asset investments 5,389 6,934
Bank overdrafts - (168)
8,449 8,246
Bank loans due within one year (4,378) (4,378)
Funds at close of period 4,071 3,868
NOTES
1. Presentation of results
This Preliminary Statement was approved by the directors on 13th June 2005.
The results have been prepared using accounting policies and practices
consistent with those adopted in the 2004 Report and Accounts but have not been
audited.
The audited results for the year ended 31st March 2004 are an abridged version
of the Company's Report and Accounts which have been filed with the Registrar of
Companies and on which the auditors gave an unqualified audit option.
The financial information contained in this Preliminary Statement does not
constitute statutory accounts as defined by section 240 of the Companies Act
1985
2. Dividends
A dividend of 10.5p per Ordinary Share (2004: 10.5p per Ordinary Share) is
recommended in respect of the year ended 31st March 2005 and will be paid on 5th
August 2005 to shareholders on the register as at 8th July 2005
3. Exceptional goodwill written off
Goodwill arising on the acquisition of Hyperstone AG is being amortised over a
period of 36 months from 2nd July 2003.
4. Exceptional restructuring costs
Exceptional restructuring costs represents anticipated costs of expenditure that
are expected to be incurred during the next financial year in closing down the
Group's operation in Rocester, Kent and relocating the business to the
purpose-built facility in Maldon, Essex.
5. Basic and diluted earnings/(loss) per share
The calculation of the basic and diluted earnings/(loss) per share is based on
the earnings/(loss) attributable to ordinary shareholders, divided by the
weighted average number of shares in issue during the year.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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