TIDMCML
RNS Number : 7158G
CML Microsystems PLC
11 June 2013
CML Microsystems Plc
PRELIMINARY RESULTS
Organic Growth Generates Record Operating Profit
CML Microsystems Plc ("CML"), which designs, manufactures and
markets a broad range of semiconductor products, primarily for the
global communication and data storage markets, announces
Preliminary Results for the year ended 31 March 2013.
Financial Highlights
-- Group revenues up 8% to GBP25.24m (2012: GBP23.41m)
-- Gross profit up 8% to GBP17.56m (2012: GBP16.21m)
-- Profit before tax up 28% to GBP5.07m (2012: GBP3.95m)
-- Basic EPS up 22% to 25.59p (2012: 21.06p)
-- Net cash inflow GBP3.74m (2012: GBP2.92m)
-- Cash reserves of GBP9.32m (2012: GBP7.74m)
-- Net cash of GBP8.98m (2012: GBP5.24m)
-- Final dividend increased 37.5% to 5.5p (2012: 4p)
Operational Highlights
-- Storage: 46% of group revenue
- Revenues from solid state storage market up 6.5% to GBP11.55m (2012: GBP10.84)
- CAGR of 23% over the last 5 years
- Volume shipments of the Group's SATA controller commenced in Q4
-- Wireless: 39% of group revenues
- Product revenues grew by approximately 14% to GBP9.80m (2012: GBP8.60)
- CAGR of 8% over the last 5 years
- Multi-chip strategy gaining customer adoption
-- Wireline telecom: 11% of group revenues
- Product revenues slightly decreased to GBP2.68m (2012:GBP2.78m)
- Gross margin increased resulting in maintained profit
- Underlying overall trend is one of stability for the segment
Post Period End Events
The Board has taken the decision to close its equipment segment
comprising of Radio Data Technology Ltd (RDT) due to declining
revenues and increasing losses for the year to 31 March 2013. The
equipment segment represented approximately 2% of Group revenues
with an operating loss of GBP383k for the reported period. An
orderly closure is expected, which will result in a positive impact
on the profitability of the Group going forward despite exit
costs.
Chris Gurry, Managing Director of CML, said: "The results serve
to highlight the very positive effects we are seeing from
progressive revenue growth built on the foundations of a stable
cost base and a focussed product strategy with high technical
barriers to entry. The Group's two main semiconductor market
sectors, storage and wireless, each posted solid revenue gains as
the products emanating from our multi-year research and development
activities gained traction with customers.
"Overall, the Group expects to make further firm progress in
profitability during the coming year."
CML Microsystems plc www.cmlmicroplc.com
Chris Gurry, Managing Director Tel: 01621 875 500
Nigel Clark, Financial Director
SP Angel Corporate Finance LLP Tel: 020 3463 2260
Jeff Keating
Cenkos Securities plc Tel: 020 7397 8900
Jeremy Warner Allen (Sales)
Max Hartley (Corporate Finance)
Walbrook PR Ltd Tel: 020 7933 8780
Paul McManus paul.mcmanus@walbrookpr.com
Helen Westaway helen.westaway@walbrookpr.com
Chairman's Statement
Introduction
I am pleased to report that the results for the full year to 31
March 2013 demonstrate a further clear performance improvement in
the Group's trading position against the continued backdrop of
economic uncertainty.
Particular encouragement can be drawn from the positive sales
gains that were posted in the two principal market areas of storage
and wireless and from the increased adoption of the Group's
expanded product range. The Operating and Financial review makes
clear the details.
The firm uplift in trading profitability in conjunction with
diligent cost management practices pushed net cash reserves higher
and serves to satisfy the confidence reported by the Board at the
interim stage.
Results
To summarise the results, Group revenues for the year just ended
were GBP25.24m (2012: GBP23.41m) while gross profit was GBP17.56m
(2012: GBP16.21m). A profit before tax of GBP5.07m compares to the
previous year's profit of GBP3.95m.
The Group generated GBP3.74m of cash and further enhanced its
net cash position to GBP8.98m (2012: GBP5.24m). Diluted earnings
per share increased by 20% to 25.18p (2012: 20.94p).
Dividend
Your directors believe that shareholders should receive
appropriate benefit according to the performance of their Company.
Having considered the trading improvement made along with the
current outlook, the Board is recommending payment of a final
dividend of 5.5p per ordinary share (2012: 4.0p per ordinary share)
to be paid on 2 August 2013 to all shareholders whose names appear
on the register at close of business on 20 June 2013.
Property
Efforts directed at realising both income and capital value from
the Group's non-operational property assets continued through the
year. Almost all industrial properties are now let to tenants and
the potential to further develop the Group's headquarters site in
Langford, Essex, is the subject of an on-going planning application
appeal process.
Equipment Segment
The Board has taken the decision to exit from the Group's loss
making equipment segment, Radio Data Technology Ltd (RDT). For the
year to 31 March 2013, RDT posted revenues of GBP590k and recorded
a trading loss of GBP383k. The exit of this business segment is
scheduled to be completed during the first half of the current
financial year.
Prospects
There is no doubt that the continuing economic uncertainty
remains a concern for most global companies. That said, the
evidence at this stage is for further profitable growth by your
Company through the year ahead and, subject to unforeseen
circumstances, I am confident that my expectations will be
realised.
In concluding, I would like to once again express the Board's
thanks to our worldwide employee base for their skills, the
dedication they show and their on-going commitment towards the
Group's success.
G W Gurry
Chairman
10 June 2013
Operating and financial review
Overview
The 12 month trading period to 31 March 2013 represented another
year of firm progress for the Group as a whole as we continued to
execute our sustainable growth strategy.
With a clear focus on industrial application areas, our policy
has been to combine our resources and proprietary technology
together with an intimate knowledge of the target market
applications to develop class-leading semiconductor products. These
products typically address difficult-to-solve customer problems
linked to technical performance and cost.
The Group's two main semiconductor market sectors, storage and
wireless, each posted solid revenue gains as the products emanating
from our multi-year research and development activities gained
traction with customers.
The following results serve to highlight the very positive
effects we are seeing from progressive revenue growth built on the
foundations of a stable cost base and a focussed product strategy
with high technical barriers to entry.
Financial results
Overall Group revenues for the year ended 31 March 2013 grew by
almost 8% to GBP25.24m (2012: GBP23.41m) driven once again by
improved sales of semiconductors into the storage and wireless
equipment sectors. The Group's equipment segment, Radio Data
Technology, posted a disappointing fall in sales to GBP590k (2012:
GBP759k). Revenues from the semiconductor segment alone were
GBP24.65m against a prior year comparable of GBP22.65m representing
growth of just under 9%.
Whilst the majority of customer transactions were denominated in
US Dollars, the Group had exposure to a number of foreign
currencies throughout the year. The effects of foreign exchange
recognised in the income statement amounted to a profit GBP219k
(2012: profit GBP160k).
Gross profit recorded was GBP17.56m representing an increase of
over to 8% against the prior year (2012: GBP16.21m) and the overall
gross margin remained stable at 69%.
The figure recorded for the Group's distribution and
administration expenses shows an overall reduction to GBP12.74m
from GBP13.05m in the previous year. The main reason for the
comparative decrease is a reduction in the amortisation of
development costs to GBP2.52m (2012: GBP2.94m). A constant
amortisation charge year on year would have seen overall expenses
at GBP13.17m which is a better reflection of the fact that real
costs increased over the period.
At the operating level, and prior to the effects of other
operating income, profits rose by 52% to GBP4.82m (2012: GBP3.16m)
representing a record achievement for the Group.
Other operating income consists mainly of EU grant funding and
rental income from Group-owned industrial properties that are
surplus to operational requirements. The level of EU funding
reduced from GBP206k in 2012 to GBP71k this year whilst the level
of rental income also fell to GBP117k (GBP2012: GBP166k) reflecting
the lack of a full year contribution from new tenants.
The Group's improved cash position led to net finance income of
GBP25k (2012 net expense of GBP30k) excluding pensions effects.
Profit before taxation rose by 28% to total GBP5.07m (2012:
GBP3.95m).
The Group generated a healthy level of cash through the year.
Net cash inflow was GBP3.74m (2012: GBP2.92m) following payment of
a GBP631k dividend (2012: GBP550k) relating to the prior financial
year and a decrease in bank loans and short term borrowings of
GBP2.16m. At 31 March 2013 cash reserves stood at GBP8.98m (2012:
GBP5.24m) and bank loans and overdrafts had reduced to GBP338k
(2012: GBP2.50m).
Inventory levels were well managed through the year and closed
at GBP1.69m, slightly down on the prior year end position of
GBP1.78m.
Total research and development expenses reduced to GBP3.75m
(2012: GBP4.59m). Of this, an amount of GBP698k (2012: GBP1.07m)
was written off through the consolidated income statement. Internal
development costs increased from GBP2.47m in 2012 to GBP2.75m this
year but a large decrease in external expenditure with third party
partners to GBP302k (2012: GBP1.05m) produced an overall
decline.
Income tax expense amounted to GBP1.02m against a prior year
expense of GBP633k. The change was largely attributable to deferred
tax movements and equated to an effective tax rate of 20% (2012:
16%) being recorded.
This year, the income statement benefited from a small
improvement associated with pensions accounting under IAS 19 and
distribution and administration costs fell by GBP158k as a result.
However, there was a material adverse effect on the Group's balance
sheet due to the liability associated with the Group's defined
benefit pension scheme that has been closed to new entrants and
future accruals for many years. The deficit now stands at GBP6.12m
(2012: GBP4.54m).
This substantial increase in the Group's retirement benefit
obligation is attributable to a number of factors but the one
significant variable that contributes is that of the discount rate
applied. The scheme actuary, in keeping with current practice, has
reduced the discount rate used from 4.80% in 2012 to 4.25% this
year. As a comparison, in our 2008 report and accounts the rate
used was 6.70%. Whilst it is impossible to predict future discount
rates, the effect of this one variable is clearly visible when
considering that if the 2008 discount rate was applied this year,
the scheme would be significantly in surplus.
In the year to 31 March 2013 the overall performance of the
investments in the pension fund exceeded the predictions made by
the actuary in the previous annual report and the Company made
additional contributions in accordance with the agreed deficit
reduction plan.
Markets review
Storage
During the year under review, revenues from the shipment of
flash memory controller integrated circuits (IC's) into the solid
state storage market increased by 6.5% to GBP11.55m year on year
(2012: GBP10.84m). This represented 46% of total Group revenues and
equated to a five year compound annual growth rate (CAGR) of 23%.
The main contributing growth factor was the increase in shipment
volumes. Average selling prices were fractionally ahead of the
prior year as a result of product mix.
The majority of semiconductors sold into this category contained
a PATA host interface and were used within industrial compact flash
card applications amongst many of the top networking and telecom
equipment manufacturers. Meaningful deliveries of industrial SD
controllers were also made to address the growing trend within
certain applications to utilise this form factor. Production
quantity shipments of the Group's first SATA controller commenced
during the final quarter of the year to initial lead customers
developing CFast and other industry standard SATA SSD form
factors.
The Group had only one customer accounting for more than 10% of
overall revenues. The contribution to revenue from this customer
was 13.5% (2012: 10.5%).
Following full production release of the SATA controller during
the year, engineering resources focussed on the development of next
generation solutions that will integrate updated and alternative
host interface technologies. A key objective is to also ensure high
levels of compatibility with the third party NAND flash memory
technology that is expected to dominate our end markets over the
coming years. It is expected that the first of these products, a
next generation SD controller, will be sampled to customers during
the summer months.
Wireless
Wireless product revenues grew by approximately 14% to a total
of GBP9.80m (2012: GBP8.60) and represented close to 39% of overall
group sales. Average selling prices remained stable with the growth
being delivered through higher shipment quantities. Across the
prior five full financial years, the Group has achieved a CAGR of
8% in revenue terms for the wireless sector.
Only three of the Group's top twenty wireless customers failed
to increase their spend year on year and no single customer
accounted for more than 6% of total Group revenues.
The product mix was dominated by the shipment of analogue and
digital baseband processing IC's for voice centric analogue and
digital two-way radio sub-markets as well as a strong year of
growth from the Group's complementary high performance radio
frequency (RF) products. The revenue levels from legacy
semiconductors targeted at data specific application areas was
slightly down but progress with newer higher speed products that
interface to the RF portfolio was encouraging. The year under
review demonstrated that our strategy for developing high
performance multi-chip wireless solutions has started to deliver
meaningful revenue growth.
The potential exists for contractual volatility within certain
public safety wireless applications as was evidenced by the
contrasting revenues between the first six month period and the
second half. The relative effects of this are expected to diminish
over time as a growing number of customers enter production using
Group multi chip solutions.
Engineering development activities were directed at expanding
the functionality and performance of the RF product range, ensuring
our configurable FirmASIC technology is optimised for future
performance and cost requirements and for developing next
generation connectivity IC's for digital radio standards.
Wireline telecom
The sales recorded from wireline telecom semiconductors as a
whole were slightly down at GBP2.68m (2012: GBP2.78m) representing
11% of group revenues. This follows from the two prior years where
revenue gains of 6% (2012) and 13% (2011) were posted. There was no
impact at the gross profit level due to product mix.
The main reason for the reduction was lower value shipments into
Chinese point of payment terminals. Apart from this one application
area there was a measurable increase in sales across the other
wireline telecom application areas. A healthy level of customer
design activity surrounds the wireline modem product family and the
underlying overall trend is one of stability in this sector.
Engineering activities remained focussed on ensuring that the
telecom product range is price and performance competitive for the
sub-markets addressed and that the Group can continue to benefit
from the low rates of product obsolescence that customers associate
with the CML name.
Equipment
The Chairman's report highlighted the disappointing performance
from Radio Data Technology (RDT), which represents the Group's
equipment segment. Revenues dropped to GBP590k from GBP759k in the
prior year and contributed 2% to overall Group revenues. The
segment posted a loss of GBP383k compared to a loss of GBP55k in
the prior year.
The traditional wireless markets addressed by RDT have suffered
from a downturn associated with the global economic volatility of
the last few years whilst a trend amongst the customers to use more
recent technologies has not played to the company's historical
technical strengths.
The Board decided to take appropriate action to address the
negative effect of RDT's trading on the Group's performance and
this has culminated in an exit from the business being agreed.
An orderly closure of the company has been initiated which is
expected to be completed during the first six months trading period
of the current financial year to 31 March 2014. Thereafter, the
Group's sole reporting segment will be semiconductors.
Summary and outlook
One of the priorities reported in the 2012 Operating and
Financial Review, was to drive increased sales revenues by
focussing on multi-year sustainable end market opportunities. Given
the niche nature of the markets addressed, and the lengthy customer
design and qualification periods that are prevalent, this on-going
process will take time. Nevertheless, the trading performance
reported for the year highlights the advances that are being
made.
The record profit posted at the Operating level was a pleasing
result as was the recorded increase in net cash reserves. This
performance comes whilst we continue to invest in class leading
semiconductors for our storage and wireless market areas, expand
our valuable engineering resources and look to enhance financial
resources further by capitalising on our non-operational property
assets.
A consistent level of engineering expenditure targeted at
standard product offerings has led to good levels of new customer
design-in opportunities. The Group's internal and external selling
resources are focussed on positioning us appropriately with those
companies that are or will be the leading equipment manufacturers
of the future in each of the focus end markets. This is a key
requirement to drive sustainable growth.
Within the industrial storage markets addressed, flash memory
controller technology is key to the performance required by some of
the world's most demanding manufacturers. The market is growing as
more and more applications switch to solid state storage and away
from traditional hard disk technology.
Revenues to date have largely been derived from the sale of
controllers into compact flash applications with relatively small
contribution from SD controllers. The year ahead will be the first
full year that the Group can benefit from a production ready SATA
controller and through the year ahead we aim to expand the product
range further.
For the wireless markets addressed there are a number of drivers
that are expected to deliver increasing revenues through the years
ahead. The gradual migration of the analogue radio technology
within two-way radio applications to the newer digital standards
has started and the move to higher data rates within the narrowband
wireless data end markets is also underway. As already reported,
the Group's RF product range is expanding and customers are
increasingly adopting Group multi-chip solutions.
During April 2013, the Group announced the expansion of its UK
engineering team with the opening of a design office in Sheffield,
England. The integration of this team is proceeding according to
plan. As reported at the time, the combined capabilities of the
enlarged development group will enable us to expand our wireless
product roadmap to capitalise on a wider range of growth
opportunities.
For the year ahead we expect additional revenue growth although
the exit of the equipment segment will lead to 2013 revenues being
restated within the income statement next year. At the operating
level, the higher expenses associated with the expansion of our
engineering team will be partially offset by the reduction in
operating expenses from the equipment segment.
Overall, the Group expects to make further firm progress in
profitability during the coming year as we make the transition to a
fully focussed semiconductor operation.
The Board is pleased with the positive developments made through
the course of the year and looks forward to delivering increased
shareholder value for the full year to 31 March 2014.
C A Gurry
Managing Director
10 June 2013
Consolidated income statement
for the year ended 31 March 2013
Unaudited Audited
2013 2012
GBP GBP
---------------------------------------------------- ------------ ------------
Continuing operations
Revenue 25,237,939 23,409,402
Cost of sales (7,673,852) (7,196,586)
---------------------------------------------------- ------------ ------------
Gross profit 17,564,087 16,212,816
Distribution and administration costs (12,742,667) (13,050,186)
---------------------------------------------------- ------------ ------------
4,821,420 3,162,630
Other operating income 296,547 458,745
---------------------------------------------------- ------------ ------------
Profit from operations 5,117,967 3,621,375
Share-based payments (101,525) (63,255)
---------------------------------------------------- ------------ ------------
Profit after share-based payments 5,016,442 3,558,120
Net profit on properties sold or revalued - 328,143
Finance costs (34) (38,514)
Finance income 54,668 101,780
---------------------------------------------------- ------------ ------------
Profit before taxation 5,071,076 3,949,529
Income tax expense (1,016,895) (633,251)
---------------------------------------------------- ------------ ------------
Profit after taxation attributable to equity owners
of the parent 4,054,181 3,316,278
---------------------------------------------------- ------------ ------------
Profit per share
Basic 25.59p 21.06p
---------------------------------------------------- ------------ ------------
Diluted 25.18p 20.94p
---------------------------------------------------- ------------ ------------
Consolidated statement of comprehensive income
for the year ended 31 March 2013
Unaudited Unaudited Audited Audited
2013 2013 2012 2012
GBP GBP GBP GBP
------------------------------- ----------- ----------- ----------- -----------
Profit for the year 4,054,181 3,316,278
Other comprehensive income,
net of tax
Foreign exchange differences 180,620 6,432
Actuarial loss on retirement
benefit obligations (1,768,000) (1,962,000)
Deferred tax on actuarial
losses 406,640 457,840
------------------------------- ----------- ----------- ----------- -----------
Other comprehensive income
for the year net of taxation
attributable to equity owners
of the parent (1,180,740) (1,497,728)
------------------------------- ----------- ----------- ----------- -----------
Total comprehensive income
for the year 2,873,441 1,818,550
------------------------------- ----------- ----------- ----------- -----------
Consolidated statement of financial position
for the year ended 31 March 2013
Unaudited Unaudited Audited Audited
2013 2013 2012 2012
GBP GBP GBP GBP
---------------------------------- --------- ---------- --------- ----------
Assets
Non-current assets
Property, plant and equipment 5,094,035 5,155,713
Investment properties 3,450,000 3,450,000
Development costs 4,674,421 4,153,659
Goodwill 3,512,305 3,512,305
Deferred tax asset 2,737,409 2,731,219
---------------------------------- --------- ---------- --------- ----------
19,468,170 19,002,896
Current assets
Inventories 1,692,599 1,780,688
Trade receivables and prepayments 2,522,168 1,566,207
Current tax assets 138,720 135,241
Cash and cash equivalents 9,322,957 7,742,038
---------------------------------- --------- ---------- --------- ----------
13,676,444 11,224,174
Non-current assets classified
as held for sale properties 109,977 104,519
---------------------------------- --------- ---------- --------- ----------
Total assets 33,254,591 30,331,589
---------------------------------- --------- ---------- --------- ----------
Liabilities
Current liabilities
Bank loans and overdrafts 338,267 2,500,431
Trade and other payables 3,308,282 2,603,646
Current tax liabilities 56,851 102,034
---------------------------------- --------- ---------- --------- ----------
3,703,400 5,206,111
Non-current liabilities
Deferred tax liabilities 2,063,299 1,672,425
Retirement benefit obligation 6,122,000 4,542,000
---------------------------------- --------- ---------- --------- ----------
8,185,299 6,214,425
---------------------------------- --------- ---------- --------- ----------
Total liabilities 11,888,699 11,420,536
---------------------------------- --------- ---------- --------- ----------
Net assets 21,365,892 18,911,053
---------------------------------- --------- ---------- --------- ----------
Capital and reserves attributable
to equity owners of the parent
Share capital 793,630 788,117
Share premium 4,977,531 4,872,587
Share-based payments reserve 171,199 108,085
Foreign exchange reserve 513,532 332,912
Accumulated profits 14,910,000 12,809,352
---------------------------------- --------- ---------- --------- ----------
Shareholders' equity 21,365,892 18,911,053
---------------------------------- --------- ---------- --------- ----------
Consolidated cash flow statement
for the year ended 31 March 2013
Unaudited Audited
2013 2012
GBP GBP
--------------------------------------------------- ----------- -----------
Operating activities
Net profit for the year before taxation 5,071,076 3,949,529
Adjustments for:
Depreciation 241,546 213,394
Amortisation of development costs 2,517,374 2,944,039
Revaluation of investment properties/properties
held for sale - 68,847
Movement in pensions deficit (188,000) 66,000
Share-based payments 101,525 63,255
Finance costs 34 38,514
Finance income (24,668) (6,780)
Increase in working capital (163,686) (492,187)
--------------------------------------------------- ----------- -----------
Cash flows from operating activities 7,555,201 6,844,611
Income tax paid (70,620) (398,274)
--------------------------------------------------- ----------- -----------
Net cash flows from operating activities 7,484,581 6,446,337
--------------------------------------------------- ----------- -----------
Investing activities
Purchase of property, plant and equipment (179,448) (145,077)
Investment in development costs (3,048,481) (3,518,010)
Disposal of property, plant and equipment 450 9,039
Disposal of assets held for sale - 668,590
Finance income 24,668 6,780
--------------------------------------------------- ----------- -----------
Net cash flows from investing activities (3,202,811) (2,978,678)
--------------------------------------------------- ----------- -----------
Financing activities
Issue of ordinary shares 110,457 55,283
Dividend paid to shareholders (630,584) (549,938)
Finance costs (34) (38,514)
Decrease in bank loans and short-term
borrowings (2,162,164) (1,418,980)
--------------------------------------------------- ----------- -----------
Net cash flows from financing activities (2,682,325) (1,952,149)
--------------------------------------------------- ----------- -----------
Increase/(Decrease) in cash and cash
equivalents 1,599,445 1,515,510
--------------------------------------------------- ----------- -----------
Movement in cash and cash equivalents:
At start of year 7,742,038 6,245,694
Increase in cash and cash equivalents 1,599,445 1,515,510
Effects of exchange rate changes (18,526) (19,166)
--------------------------------------------------- ----------- -----------
At end of year 9,322,957 7,742,038
--------------------------------------------------- ----------- -----------
Consolidated statement of changes in equity
for the year ended 31 March 2013
Share Share Share-based Foreign exchange Accumulated
capital premium payments reserve profits Total
Audited GBP GBP GBP GBP GBP GBP
--------------------------------------- -------- --------- ----------- ---------------- ----------- -----------
At 31 March 2011 785,335 4,820,086 297,886 326,480 11,294,116 17,523,903
--------------------------------------- -------- --------- ----------- ---------------- ----------- -----------
Profit for year 3,316,278 3,316,278
Other comprehensive income net of
taxes
Foreign exchange differences 6,432 6,432
Net actuarial loss recognised directly
to equity (1,962,000) (1,962,000)
Deferred tax on actuarial losses 457,840 457,840
--------------------------------------- -------- --------- ----------- ---------------- ----------- -----------
Total comprehensive income for year - - - 6,432 1,812,118 1,818,550
--------------------------------------- -------- --------- ----------- ---------------- ----------- -----------
785,335 4,820,086 297,886 332,912 13,106,234 19,342,453
Transactions with owners in their
capacity as owners
Issue of ordinary shares 2,782 52,501 55,283
Dividend paid (549,938) (549,938)
--------------------------------------- -------- --------- ----------- ---------------- ----------- -----------
Total transactions with owners in
their capacity as owners 2,782 52,501 - - (549,938) (494,655)
--------------------------------------- -------- --------- ----------- ---------------- ----------- -----------
Share-based payments in year 63,255 63,255
Cancellation/transfer of share-based
payments (253,056) 253,056 -
--------------------------------------- -------- --------- ----------- ---------------- ----------- -----------
At 31 March 2012 788,117 4,872,587 108,085 332,912 12,809,352 18,911,053
--------------------------------------- -------- --------- ----------- ---------------- ----------- -----------
Unaudited
Profit for year 4,054,181 4,054,181
Other comprehensive income net of
taxes
Foreign exchange differences 180,620 180,620
Net actuarial loss recognised directly
to equity (1,768,000) (1,768,000)
Deferred tax on actuarial losses 406,640 404,640
--------------------------------------- -------- --------- ----------- ---------------- ----------- -----------
Total comprehensive income for year - - - 180,620 (1,361,360) (1,182,740)
--------------------------------------- -------- --------- ----------- ---------------- ----------- -----------
788,117 4,872,587 108,085 513,532 15,502,173 21,784,494
Transactions with owners in their
capacity as owners
Issue of ordinary shares 5,513 104,944 110,457
Dividend paid (630,584) (630,584)
------------------------------------- ------- --------- -------- ------- ---------- ----------
Total transactions with owners in
their capacity as owners 5,513 104,944 - - (630,584) (520,127)
------------------------------------- ------- --------- -------- ------- ---------- ----------
Share-based payments in year 101,525 101,525
Cancellation/transfer of share-based
payments (38,411) 38,411 -
------------------------------------- ------- --------- -------- ------- ---------- ----------
At 31 March 2013 793,630 4,977,531 171,199 513,532 14,910,000 21,365,892
------------------------------------- ------- --------- -------- ------- ---------- ----------
Notes to the financial statements
1. Segmental analysis
Reported segments and their results in accordance with IFRS 8,
are based on internal management reporting information that is
regularly reviewed by the chief operating decision maker (C. A.
Gurry). The measurement policies the Group uses for segmental
reporting under IFRS 8 are the same as those used in its financial
statements.
Information about revenue, profit/loss, assets and
liabilities
Unaudited Audited
2013 2012
--------------------------------------- --------------------------------------
Semiconductor Semiconductor
Equipment components Group Equipment components Group
GBP GBP GBP GBP GBP GBP
------------------------ --------- ------------- ------------ --------- ------------- ------------
Revenue
By origination 589,919 40,493,752 41,083,671 758,700 38,245,773 39,004,473
Inter-segmental
revenue - (15,845,732) (15,847,732) - (15,595,071) (15,595,071)
------------------------ --------- ------------- ------------ --------- ------------- ------------
Total segmental
revenue 589,919 24,648,020 25,237,939 758,700 22,650,702 23,409,402
------------------------ --------- ------------- ------------ --------- ------------- ------------
Segmental result (383,207) 5,399,649 5,016,442 (55,474) 3,613,594 3,558,120
--------- ------------- --------- -------------
Net profit on
properties sold
or revalued - 328,143
Finance expense (34) (38,514)
Finance income 54,688 101,780
Income tax (1,016,895) (633,251)
------------------------ --------- ------------- ------------ --------- ------------- ------------
Profit after
taxation 4,054,181 3,316,278
------------------------ --------- ------------- ------------ --------- ------------- ------------
Assets and liabilities
Segmental assets 273,128 26,545,357 26,818,485 610,697 23,299,913 23,910,610
--------- ------------- --------- -------------
Unallocated
corporate assets
Investment properties 3,450,000 3,450,000
Properties held
for sale 109,977 104,519
Deferred taxation 2,737,409 2,731,219
Current tax
receivable 138,720 135,241
------------------------ --------- ------------- ------------ --------- ------------- ------------
Consolidated
total assets 33,254,591 30,331,589
------------------------ --------- ------------- ------------ --------- ------------- ------------
Segmental liabilities 228,325 3,079,957 3,308,282 182,761 2,420,885 2,603,646
--------- ------------- --------- -------------
Unallocated
corporate liabilities
Deferred taxation 2,063,299 1,672,425
Current tax
liability 56,851 102,034
Bank loans and
overdrafts 338,267 2,500,431
Retirement benefit
obligation 6,122,000 4,542,000
----------------------- ---------- ----------
Consolidated
total liabilities 11,888,699 11,420,536
----------------------- ---------- ----------
Other segmental information
Unaudited Audited
2013 2012
----------------------------------- -----------------------------------
Semiconductor Semiconductor
Equipment components Group Equipment components Group
GBP GBP GBP GBP GBP GBP
------------------------- --------- ------------- --------- --------- ------------- ---------
Property, plant
and equipment additions - 179,448 179,448 4,068 141,009 145,077
------------------------- --------- ------------- --------- --------- ------------- ---------
Development cost
additions 58,964 2,989,517 3,048,481 78,352 3,439,658 3,518,010
------------------------- --------- ------------- --------- --------- ------------- ---------
Depreciation 1,120 240,426 241,546 5,925 207,469 213,394
------------------------- --------- ------------- --------- --------- ------------- ---------
Amortisation 171,073 2,346,301 2,517,374 73,840 2,870,199 2,944,039
------------------------- --------- ------------- --------- --------- ------------- ---------
Other non-cash
expenditure/(income) - 188,000 188,000 - (41,848) (41,848)
------------------------- --------- ------------- --------- --------- ------------- ---------
Inter-segmental transfers or transactions are entered into under
commercial terms and conditions appropriate to the location of the
business entity whilst considering that the parties are related. It
is the director's intention to exit the equipment segment in the
year ended 31 March 2014.
Geographical Information
UK Germany Americas Far East Total
GBP GBP GBP GBP GBP
------------------------------ ----------- ----------- --------- ---------- ------------
Year ended 31 March 2013
- Unaudited
Revenue by origination 13,383,113 11,402,649 6,258,588 10,039,321 41,083,671
Inter-segmental revenue (6,244,716) (9,601,016) - - (15,845,732)
------------------------------ ----------- ----------- --------- ---------- ------------
Revenue to third parties 7,138,397 1,801,633 6,258,588 10,039,321 25,237,939
------------------------------ ----------- ----------- --------- ---------- ------------
Property, plant and equipment 4,887,586 60,187 136,348 9,914 5,094,035
------------------------------ ----------- ----------- --------- ---------- ------------
Investment properties 3,450,000 - - - 3,450,000
------------------------------ ----------- ----------- --------- ---------- ------------
Property held for sale - - 109,977 - 109,977
------------------------------ ----------- ----------- --------- ---------- ------------
Goodwill - 3,512,305 - - 3,512,305
------------------------------ ----------- ----------- --------- ---------- ------------
Development cost 1,969,306 2,714,115 - - 4,674,421
------------------------------ ----------- ----------- --------- ---------- ------------
Total assets 25,088,461 5,135,199 1,404,040 1,626,891 33,254,591
------------------------------ ----------- ----------- --------- ---------- ------------
Year ended 31 March 2012
- Audited
Revenue by origination 12,361,850 10,529,275 6,278,721 9,834,627 39,004,473
Inter-segmental revenue (6,705,257) (8,859,116) - (30,698) (15,595,071)
------------------------------ ----------- ----------- --------- ---------- ------------
Revenue to third parties 5,656,593 1,670,159 6,278,721 9,803,929 23,409,402
------------------------------ ----------- ----------- --------- ---------- ------------
Property, plant and equipment 4,968,013 55,416 115,995 16,289 5,155,713
------------------------------ ----------- ----------- --------- ---------- ------------
Investment properties 3,450,000 - - - 3,450,000
------------------------------ ----------- ----------- --------- ---------- ------------
Property held for sale - - 104,519 - 104,519
------------------------------ ----------- ----------- --------- ---------- ------------
Goodwill - 3,512,305 - - 3,512,305
------------------------------ ----------- ----------- --------- ---------- ------------
Development cost 1,907,456 2,246,203 - - 4,153,659
------------------------------ ----------- ----------- --------- ---------- ------------
Total assets 22,882,808 5,058,799 1,184,699 1,205,283 30,331,589
------------------------------ ----------- ----------- --------- ---------- ------------
Inter-segmental transfers or transactions are entered into under
commercial terms and conditions appropriate to the location of the
business entity whilst considering that the parties are
related.
2. Dividend paid and proposed
It is proposed to pay a dividend of 5.5p per Ordinary Share of
5p in respect of the year end 31 March 2013 (2012: 4.0p per
Ordinary Share of 5p).
3. Income Tax
The Directors consider that tax will be payable at varying rates
according to the country of incorporation of a subsidiary and have
provided on that basis.
Unaudited Audited
2013 2012
GBP GBP
----------------------------- ---------- ----------
UK income tax (142,549) (133,870)
Overseas income tax 382,549 446,721
----------------------------- ---------- ----------
Total current tax credit 240,000 312,851
Deferred tax 776,895 320,400
----------------------------- ---------- ----------
Reported income tax expense 1,016,895 633,251
----------------------------- ---------- ----------
4. Profit per ordinary share
The calculation of basic and diluted earnings per share is based
on the profit attributable to ordinary shareholders, divided by the
weighted average number of shares in issue during the year.
Weighted Weighted
average average
number Profit number Profit
per per
Profit of shares share Profit of shares share
2013 2013 2013 2012 2012 2012
GBP Number p GBP Number p
------------------------- --------- ---------- ------ --------- ---------- ------
Basic profit per share 4,054,181 15,841,435 25.59 3,316,278 15,743,946 21.06
------------------------- --------- ---------- ------ --------- ---------- ------
Diluted profit per share
Basic profit per share 4,054,181 15,841,435 25.59 3,316,278 15,743,946 21.06
Dilutive effect of share
options - 256,941 (0.42) - 91,376 (0.12)
------------------------- --------- ---------- ------ --------- ---------- ------
Diluted profit per share 4,054,181 16,098,376 25.18 3,316,278 15,835,322 20.94
------------------------- --------- ---------- ------ --------- ---------- ------
5. Investment properties
Investment properties are revalued at each discrete period end
by the directors and every third year by independent Chartered
Surveyors on an open market basis. No depreciation is provided on
freehold investment properties or on leasehold investment
properties. In accordance with IAS 40, gains and losses arising on
revaluation of investment properties are shown in the income
statement. At the 31 March 2012 the investment properties were
professionally valued by Everett Newlyn, Chartered Surveyors and
Commercial Property Consultants on an open market basis. The
directors do not consider that the properties require a change in
valuation at 31 March 2013 having considered the local property
market.
6. Analysis of cash flow movement in net debt
The cash flow below is a combination of the actual cash flow and
the exchange movement.
Audited Unaudited Unaudited Unaudited
Net cash Exchange Net cash
at at
1 April Cash flow movement 31 March
2012 2013
GBP GBP GBP GBP
-------------------------- ----------- --------- --------- ---------
Cash and cash equivalents 7,742,038 1,599,445 (18,526) 9,322,957
Bank loans and overdrafts (2,500,431) 2,162,164 - (338,267)
-------------------------- ----------- --------- --------- ---------
5,241,607 3,761,609 (18,526) 8,984,690
-------------------------- ----------- --------- --------- ---------
7. Principal risks and uncertainties
Key risks of a financial nature
The principal risks and uncertainties facing the Group are with
foreign currencies and customer dependency. With the majority of
the Group's earnings being linked to the US Dollar a decline in
this currency will have a direct effect on revenue, although since
the majority of the cost of sales are also linked to the US Dollar,
this risk is reduced at the gross profit line. Additionally, though
the Group has a very diverse customer base in certain market
segments, key customers can represent a significant amount of
revenue. Key customer relationships are closely monitored, however
changes in buying patterns of a key customer could have an adverse
effect on the Group's performance.
Key risks of a non-financial nature
The Group is a small player operating in a highly competitive
global market, which is undergoing continual and geographical
change. The Group's ability to respond to many competitive factors
including, but not limited to pricing, technological innovations,
product quality, customer service, manufacturing capabilities and
employment of qualified personnel will be key in the achievement of
its objectives, but its ultimate success will depend on the demand
for its customers' products since the Group is a component
supplier.
A substantial proportion of the Group's revenue and earnings are
derived from outside the UK and so the Group's ability to achieve
its financial objectives could be impacted by risks and
uncertainties associated with local legal requirements, the
enforceability of laws and contracts, changes in the tax laws,
terrorist activities, natural disasters or health epidemics.
8. Directors' statement pursuant to the disclosure and transparency rules
The directors confirm that, to the best of their knowledge:
a. the condensed consolidated financial statements, prepared in
accordance with IFRS as adopted by the EU give a true and fair view
of the assets, liabilities, financial position and loss of the
company and the undertakings included in the consolidation taken as
a whole; and
b. the Chairman's statement and operating and financial review
includes a fair review of the development and performance of the
business and the position of the company and the undertakings
included in the consolidation taken as a whole together with a
description of the principal risks and uncertainties that they
face.
The directors are also responsible for the maintenance and
integrity of the CML Microsystems Plc website. Legislation in the
UK governing the preparation and dissemination of the financial
statements may differ from legislation in other jurisdictions.
9. Significant accounting policies
The accounting policies used in preparation of the annual
results announcement are the same accounting policies set out in
the year ended 31 March 2012 financial statements.
10. General
The results for the year have been prepared using the
recognition and measurement principles of international financial
reporting standards as adopted by the EU.
The audited financial information for the year ended 31 March
2012 is based on the statutory accounts for the financial year
ended 31 March 2012 that have been filed with the Registrar of
Companies. The auditor reported on those accounts: their report was
(i) unqualified, (ii) did not include references to any matters to
which the auditor drew attention by way of emphasis without
qualifying the reports and (iii) did not contain statements under
section 498(2) or (3) of the Companies Act 2006.
The statutory accounts for the year ended 31 March 2013 are
expected to be finalised and signed following approval by the board
of directors on 21 June 2013 and delivered to the Registrar of
Companies following the Company's annual general meeting on 31 July
2013.
The financial information contained in this announcement does
not constitute statutory accounts for the year ended 31 March 2013
or 2012 as defined by Section 434 of the Companies Act 2006.
A copy of this announcement can be viewed on the company website
http://www.cmlmicroplc.com.
11. Approval
The Directors approved this annual results announcement on 10
June 2013.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAKKEFADDEFF
Cml Microsystems (LSE:CML)
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