TIDMCML
RNS Number : 5705P
CML Microsystems PLC
09 June 2015
9 June 2015
CML Microsystems Plc
PRELIMINARY RESULTS
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 2015. The results,
whilst down on last year, were slightly ahead of earlier revised
expectations and the Company is confident that it will move back
into growth.
Financial Highlights
-- Group revenues of GBP21.80m (2014: GBP24.39m)*
-- Gross profit of GBP15.46m (2014: GBP17.88m)*
-- Profit before tax of GBP3.18m (2014: GBP5.79m)*
-- Basic EPS up 7% to 16.71p (2014: 29.96p)*
-- Debt free and net cash increased to GBP13.19m (2014: GBP11.37m)
-- Final dividend increased 10% to 6.9p (2014: 6.25p)
*continuing operations
Operational Highlights
-- Storage: 50% of group revenue
- Overall sales down 9% to GBP10.82m, but year-on-year increase
in H2 revenues underpins a return to growth
- Good progress in developing a wider selection of interface options for our customers
- SD controller sales grew strongly year-on-year
- Launch of hyMap(TM) technology enabling high capacity,
cost-effective flesh memory technology
-- Wireless: 38% of group revenues
- Product revenues down 10% to GBP8.28m
- Orders improved as the year progressed, with H2 sales up 20% on H1
- Customers started manufacture of new products with CML
chip-set solutions to support future growth
- Pipeline of meaningful opportunities is growing
-- Wireline telecom: 10% of group revenues
- Product revenues down to GBP2.28m (2014: GBP2.92m)
- General weakness across existing customer base with delayed
uplift from more recently secured design wins
Chris Gurry, Managing Director of CML, said: "With the benefit
of hindsight, it is good to have the disruption largely behind us
and report that we were able to deliver against our management
objectives while at the same time making satisfying progress with
our medium term growth plans. For the current financial year, a
number of significant customer end-products have entered the
production phase and are expected to ramp as the year progresses.
The Board is confident that the Group will continue to be
prosperous and that a meaningful advance in revenue and
profitability is likely to be made over the coming year."
CML Microsystems plc www.cmlmicroplc.com
Chris Gurry, Group Managing Director Tel: 01621 875 500
Neil Pritchard, Group Financial
Director
Cenkos Securities plc Tel: 020 7397 8900
Jeremy Warner Allen (Sales)
Max Hartley (Corporate Finance)
SP Angel Corporate Finance LLP Tel: 020 3463 2260
Jeff Keating
Walbrook PR Ltd Tel: 020 7933 8780 / cml@walbrookpr.com
Paul McManus Mob: 07980 541 893
Paul Cornelius Mob: 07866 384 707
CHAIRMAN'S STATEMENT
Introduction
It is most pleasing to be delivering my first statement on the
Group's progress through the last year with results surpassing
market expectations, though this must be tempered with the fact
that expectations were disappointingly downgraded at the start of
the year. However, I can say it has been a year where we have moved
from not only addressing the issues that led to last year's
downgrade, but also putting procedures in place that will help
ensure the Group returns to a growth path that is sustainable over
the long term.
Results and dividend
In summary, revenues declined 11% to GBP21.80m (2014:
GBP24.39m), profit before taxation declined 45% to GBP3.18m (2014:
GBP5.79m) and basic EPS declined 44% to 16.71p (2014: 29.96p). On a
more positive note, cash increased to GBP13.19m (2014: GBP11.37m)
and net assets moved up to GBP28.97m (2014: GBP27.93m).
As a board we must always be mindful of the cash needs of the
business and ensure that the Group has appropriate resources
available, not only for the daily running of the business and the
on-going product development programme, but also to capitalise on
any potential opportunities that may arise. Additionally it is
clear that geographically the markets we address are in a period of
change and I expect some of that change to put demands on our cash
resources. That said, the Board remains focused on delivering
consistent and growing returns to shareholders in both the short
and the long term. Despite these results not delivering a
year-on-year improvement, the Board is confident that your Company
will return to a growth path through the current financial year.
This belief, coupled with a progressive dividend policy, means that
the Board is recommending the dividend increase by just over 10% to
6.9p (2014: 6.25p). If approved, the proposed dividend will be paid
on 3 August 2015 to all shareholders whose names appear on the
register at the close of business on 3 July 2015.
Management
One of the keys to ensuring sustainable growth is having the
right management in place and through the last year we have
strengthened the Group's management team both at the main board
level and at an operational level. Hugh Rudden was appointed Group
Sales and Marketing Director in June 2014 and in January 2015, Neil
Pritchard joined as Group Financial Director and Company Secretary.
Following these appointments it has enabled me, as previously
announced, to transition to the role of Chairman and also permitted
Chris Gurry to focus exclusively on the role of Managing Director,
relinquishing the post of Chairman he had held on an interim basis
following the death of our previous Chairman. This has strengthened
the Board's expertise, broadened its experience and added extra
impetus. At the operational level this has also meant change, which
is always challenging, but I am pleased to say that this has been
managed professionally and embraced enthusiastically by the
staff.
Prospects and outlook
Today CML is a semiconductor Group with a strong desire for
growth. We have world-class products, significant market knowledge,
a highly skilled engineering team and a strong balance sheet giving
us the ability to capitalise on the opportunities we see to grow
both organically and by other means. The Board's core strategy of
sustainable growth remains paramount and to that end we continue to
look at where we are, where we want to be and then assess what we
need to do to achieve our objectives. Over the last five years the
Group has grown organically and, although we are confident this
will continue to fuel significantly more growth, we are constantly
reviewing options for non-organic expansion that complement our
skills, market knowledge and geographical reach. In an
ever-changing environment your Board is very much aware of the need
to have multiple growth options.
Right now the Group is at a very exciting time in its
development and has a strong management team in place supported by
our dedicated employees. This last year has seen a firm foundation
put in place for the achievement of long term sustainable growth
over a multi-year period. Bearing this in mind I have confidence,
subject to unforeseen circumstances, that the Company should move
back to a positive growth path over this coming year and
beyond.
In closing I should like to point out that for the success of
any company it is vital for its employees to be talented,
committed, hardworking and enthusiastic. At CML we are very lucky
to have a team of loyal and dedicated employees fulfilling that
criteria and the Board wish to extend their thanks and appreciation
to each and every employee.
N. G. Clark
Non-Executive Chairman
OPERATING AND FINANCIAL REVIEW
Results
For the 2015 financial year, the Group delivered solid progress
against its medium-term growth objectives. Whilst revenue of
GBP21.80m was below the prior year (2014: GBP24.39m), it was
slightly ahead of earlier expectations. Sales in the second half
were 13% higher than the first half, serving to demonstrate that
the disruptive events of the previous year had less influence as
the year progressed.
Overall gross profit margin returned to a more typical level of
71% (2014: 73%). This was largely due to the combined effects of
product mix and lower levels of customer non-refundable engineering
(NRE) income as related engineering projects began the transition
to commercial product sales. Actual gross profit was GBP15.46m
(2014: GBP17.88m).
A rise in amortisation charges associated with increased
development spend contributed to higher distribution and
administration costs of GBP12.78m (2014: GBP12.47m). R&D costs
for the year were GBP5.21m (2014: GBP4.80m) with an amount of
GBP0.85m being written off through the income statement (2014:
GBP0.66m). The total increase would have been higher except for a
meaningful benefit on foreign exchange being recorded, totalling
GBP0.84m.
The Group received a total of GBP0.42m (2014: GBP0.47m) which
was classified as other income, with the majority contributors
being rents received from non-operational commercial property
assets along with EU grants received towards specific engineering
activities.
Profit from operations fell to GBP3.11m (2014: GBP5.89m)
however, the twin positive effects of finance income and a GBP0.10m
lift in the value of the Group's commercial property assets
outweighed share based payment charges leading to a profit before
tax of GBP3.18m (2014: GBP5.79m).
An income tax expense of GBP0.48m was recorded (2014: GBP1.02m)
which is below the standard UK rate, assisted by higher R&D tax
credits and a reduced deferred tax charge.
Profit after tax fell 44% to GBP2.70m (2014: GBP4.77m).
Despite strong levels of R&D investment, the Group once
again increased its cash balances. At the period end, following a
dividend payment of GBP1.01m (2014: GBP0.87m) in respect of the
previous year, cash reserves advanced by 16% to GBP13.19m (2014:
GBP11.37m). Included within this balance is a conditional customer
prepayment of GBP0.67m against a key new product development.
The end of year inventory level was higher at GBP1.76m (2014:
GBP1.13m) which is closer to the typical value expected for the
revenue levels being achieved through the end of the period.
The Group historically operated a defined benefit final salary
scheme in the UK that has been closed to new members and future
accruals for some years. The deficit for the year, calculated under
accounting rule IAS19, amounted to GBP3.62m (2014: GBP2.70m). The
deterioration in the funding position was primarily due to changes
in market conditions which determine the financial assumptions
used, predominantly lower discount rates due to lower corporate
bond yields. We continue to take professional advice targeted at
achieving the right balance between adequate scheme funding and the
Group's trading objectives.
In terms of customer dependency, the reduction in total sales
combined with the effect of a key customer exit during the prior
year moved one additional customer above the 10% contribution
threshold. Only two customers contributed greater than 10% to Group
revenue for the year, one at 14% and one at 11%.
In March 2015 a planning application for residential development
on part of the site forming the Company's Oval Park headquarters
was refused at local council level. A subsequent appeal was lodged
post the financial year end.
Operational review
STORAGE
The shipment of semiconductors into solid state storage
applications accounted for 50% of Group revenues. To 31 March 2015,
sales fell 9% to GBP10.82m (2014: GBP11.80m) with the overall
reduction primarily due to prior year customer disruption that was
previously flagged. Revenue for the second six month period was
ahead on both a sequential and comparable basis serving to underpin
expectations for a return to growth.
We began the year with a product range weighted towards compact
flash card controller technology. Over recent years, research and
development has been targeted at adding SATA, SD, eMMC and USB
interface technology to our proprietary core architecture with the
vision of providing a full portfolio of interface options to our
customers. They in turn, need to offer a wide selection of storage
solutions to the demanding end-customer base. I am pleased to
report that we made good progress in that regard.
Shipments of SD controllers grew strongly year-on-year as full
production silicon became available and the year-end pipeline of
new design-in opportunities, with both existing and new customers,
was at a healthy stage. The high level of interest in our
industrial-class USB solution has already begun to translate into
design wins and should start to deliver revenue through the year
ahead.
Our engineering teams continue to innovate with the announcement
in February 2015, at Embedded World, Germany, of our ground
breaking hyMap(TM) technology. Amongst many other things, hyMap(TM)
enables our customers to utilise high capacity, cost-effective
flash memory technology within some of their application areas
while still meeting the stringent requirements of the industrial
end-markets. Other features offered by hyMap(TM) include extended
flash life, high-speed small-file transfer performance and improved
power-fail robustness - all without the cost of additional external
memory.
Ongoing product developments are focused on enhancing and
expanding the controller product range to ensure we are able to
either maintain or achieve a leadership position depending upon the
stage of development we are at in the particular end-market.
Significant progress with our various engineering and selling
related activities was made through the year as we continued
steering a course that is intended to widen the size and scope of
the markets open to us.
WIRELESS
Revenue from the sale of semiconductors into industrial and
professional wireless applications fell 10% to GBP8.28m (2014:
GBP9.12m). As communicated at the half year stage, and following on
from the prior year in which some end-market applications suffered
from a lack of government spend, order bookings and shipments
improved as the year progressed. Sales in the second six month
period were almost 20% ahead on a sequential basis.
For the wireless end-markets that we target, our product range
has been evolving over recent years. Coming from the position of
providing relatively simple function baseband processing,
signalling and low data-rate modem ICs, the transition is towards a
significantly expanded product portfolio. This includes baseband
processors with higher levels of protocol handling, sophisticated
and flexible wireless modem solutions coupled with class-leading RF
semiconductors for stringent global communications standards.
In the second half of the year under review we reached the
important strategic milestone of having a number of customers
commence manufacturing of their new wireless products containing
Group chip-set solutions. This underpins our expectations for
future growth and, with the continued expansion of the chip-set
customer base, six monthly revenue volatility is expected to give
way to sequential growth.
New product introductions during the year included a single
common platform product capable of delivering key functionality for
use in a number of digital radio standards, including DMR, NXDN,
dPMR and various country-specific equivalents, along with a
high-performance analogue front end (AFE) IC that bridges the gap
between a digital radio's RF section and the DSP/FPGA. Importantly,
the latter product meets the needs of Software Defined Radio (SDR)
architectures.
Existing wireless product developments are focused on growing
the functionality we can absorb within our customer's end-product,
raising the bar in terms of performance and widening our
addressable markets through the expanded resources and technical
capabilities that we now have in place.
The transition from legacy lower-function products to compelling
chip-set solutions started and was evidenced through higher second
half revenues. Our R&D activities continue to be directed at
cementing our position with continual roadmap developments whilst
also pushing into new areas that will bring incremental revenue
opportunities. Whilst the gestation period from customer engagement
to order shipment is sometimes frustrating, the pipeline of
meaningful opportunities is growing.
TELECOM
Shipments into wireline telecom markets were disappointing,
despite the end-application areas being viewed as somewhat of a
sunset market. Revenue of GBP2.28m was recorded (2014: GBP2.92m)
equating to 10% of total Group sales (2014: 12%).
The reduction was geographically broad based and across a number
of specific products reflecting a general weakness across the
existing customer base and delays in the expected uplift from more
recently secured design wins.
The current product range for traditional analogue telecom
markets continues to be competitive within the application areas
targeted.
In addition to the three main market areas already reviewed, the
Group received additional revenue from the sale of miscellaneous
semiconductor products and services derived from historic
operational activities. In the year under review, the sale of
products classified under this category amounted to GBP0.43m (2014:
GBP0.56m).
Summary and outlook
Despite record profits to March 2014, trading through the
opening months of the period under review was characterised by
revenue headwinds that emerged as a consequence of prior year
disturbances.
Management objectives over the twelve months were typically
multifaceted. Operationally, new product introductions that
generated good levels of design-in activity amongst the customer
base needed to convert into meaningful production orders. The
recent expansion and amalgamation of the Group's R&D resources
required appropriate focus to ensure that we continue to develop
market leading semiconductor solutions. Importantly, and
fundamentally, we needed to demonstrate our belief that the
volatility was temporary and our underlying growth strategy
remained valid.
With the benefit of hindsight, it is good to have the disruption
largely behind us and report that we were able to deliver against
those management objectives while at the same time making
satisfying progress with our medium term growth plans.
For the current financial year, a number of significant customer
end-products have entered the production phase and are expected to
ramp as the year progresses. To improve our success rate further
and to capitalise on the growing number of opportunities that the
expanded product range is enabling, we have decided to make
significant investments in our marketing, sales and support
resources.
Our R&D teams are working hard at developing innovative
products that should allow us to reach market leader status in our
chosen markets. In that respect, we will be maintaining the high
levels of R&D investment that have been a hallmark of recent
years.
The key end-markets for storage and wireless each continue to
exhibit exciting growth opportunities. Within storage, we start the
year with a flash memory controller range that includes the
majority of the major interface standards that are used within our
target markets and those controllers interoperate with state of the
art flash memory technologies from the major suppliers.
The trend for hard disk drives to migrate to solid state
technology in industrial and embedded application areas continues
and our alignment with a wide customer base through standard
semiconductor products is expected to see us strengthen our
position.
Our wireless semiconductor range now includes RF and baseband
processing silicon platform solutions for use within almost all of
the major professional and industrial standards that are expected
to achieve highest market share over time. Through the year ahead
another major standard will be added and new high performance RF
solutions are scheduled to be introduced that will increase the
addressable market size.
To continue being successful, the Group must define, develop and
deliver technically compelling, commercially viable semiconductor
products to market and offer levels of support that make us the
first choice key component supplier within our chosen end-markets.
This is our overriding objective.
The Board is confident that the Group will continue to be
prosperous and that a meaningful advance in revenue and
profitability is likely to be made over the coming year.
C. A. Gurry
Managing Director
Consolidated income statement for the year ended 31 March
2015
Unaudited Audited
2015 2014
GBP GBP
----------------------------------------- ------------- -------------
Continuing operations
Revenue 21,803,713 24,393,659
Cost of sales (6,338,749) (6,511,437)
------------------------------------------ ------------- -------------
Gross profit 15,464,964 17,882,222
Distribution and administration costs (12,776,694) (12,469,963)
------------------------------------------ ------------- -------------
2,688,270 5,412,259
Other operating income 418,989 473,613
------------------------------------------ ------------- -------------
Profit from operations 3,107,259 5,885,872
Share-based payments (95,405) (155,931)
------------------------------------------ ------------- -------------
Profit after share-based payments 3,011,854 5,729,941
Revaluation of investment properties 100,000 -
Finance income 65,651 61,764
------------------------------------------ ------------- -------------
Profit before taxation from continuing
operations 3,177,505 5,791,705
Income tax expense (475,724) (1,023,069)
------------------------------------------ ------------- -------------
Profit after taxation from continuing
operations 2,701,781 4,768,636
Profit after taxation from discontinued
operations - 2
------------------------------------------ ------------- -------------
Profit after taxation attributable
to equity owners of the parent 2,701,781 4,768,638
------------------------------------------ ------------- -------------
Basic earnings per share
From continuing operations 16.71p 29.96p
------------------------------------------ ------------- -------------
From profit for year 16.71p 29.96p
------------------------------------------ ------------- -------------
From discontinued operations - - -
----------------------------------------- ------------- -------------
Diluted earnings per share
From continuing operations 16.51p 29.20p
------------------------------------------ ------------- -------------
From profit for year 16.51p 29.20p
------------------------------------------ ------------- -------------
From discontinued operations - -
------------------------------------------ ------------- -------------
Consolidated statement of total comprehensive income for the
year ended 31 March 2015
Unaudited Unaudited Audited Audited
2015 2015 2014 2014
GBP GBP GBP GBP
-------------------------------------- -------------- -------------------- ------------ ---------- ----------
Profit for the year 2,701,781 4,768,638
------------------------------------------------------- --- -------------- ------------ ---------- ----------
Other comprehensive income, net of tax
------------------------------------------------------- --- -------------- ------------ ---------- ----------
Items that will not be reclassified subsequently to
profit or loss
Actuarial (loss)/profit on retirement benefit
obligations (1,133,000) 3,393,000
Deferred tax on actuarial losses/(profits) 226,600 (678,600)
------------------------------------------------------- --- -------------- ------------ ---------- ----------
Items reclassified subsequently to profit or loss upon
derecognition
Foreign exchange differences (477,497) (301,900)
------------------------------------------------------- --- -------------- ------------ ---------- ----------
Other comprehensive (expense)/income for the year net
of taxation attributable to equity owners
of the parent (1,383,897) 2,412,500
------------------------------------------------------- --- -------------- ------------ ---------- ----------
Total comprehensive income for the year attributable
to the equity holders of the parent 1,317,884 7,181,138
------------------------------------------------------- --- -------------- ------------ ---------- ----------
Consolidated statement of financial position as at 31 March
2015
Unaudited Unaudited Audited Audited
2015 2015 2014 2014
GBP GBP GBP GBP
------------------------------- ---- ----------- ----------- ---------- ------------
Assets
Non-current assets
Property, plant and equipment 4,975,835 4,936,710
Investment properties 3,550,000 3,450,000
Development costs 6,983,619 6,188,255
Goodwill 3,512,305 3,512,305
Deferred tax asset 1,310,289 1,270,976
------------------------------------- ----------- ----------- ----------- -----------
20,332,048 19,358,246
Current assets
Inventories 1,762,845 1,129,051
Trade receivables and
prepayments 2,864,534 3,388,003
Current tax assets 628,006 282,667
Cash and cash equivalents 13,187,718 11,373,483
------------------------------------- ----------- ----------- ----------- -----------
18,443,103 16,173,204
Non-current assets classified
as held for sale properties - 100,168
------------------------------------- ----------- ----------- ----------- -----------
Total assets 38,775,151 35,631,618
------------------------------------- ----------- ----------- ----------- -----------
Liabilities
Current liabilities
Trade and other payables 3,471,194 2,508,599
Current tax liabilities 195,888 274,129
------------------------------------- ----------- ----------- ----------- -----------
3,667,082 2,782,728
Non-current liabilities
Deferred tax liabilities 2,512,736 2,224,517
Retirement benefit obligation 3,624,000 2,698,000
------------------------------------- ----------- ----------- ----------- -----------
6,136,736 4,922,517
------------------------------------ ----------- ----------- ----------- -----------
Total liabilities 9,803,818 7,705,245
------------------------------------- ----------- ----------- ----------- -----------
Net assets 28,971,333 27,926,373
------------------------------------- ----------- ----------- ----------- -----------
Capital and reserves
attributable to equity
owners of the parent
Share capital 812,827 798,046
Share premium 5,700,344 5,069,921
Share-based payments
reserve 287,366 327,130
Foreign exchange reserve (265,865) 211,632
Accumulated profits 22,436,661 21,519,644
------------------------------------- ----------- ----------- ----------- -----------
Total shareholders' equity 28,971,333 27,926,373
------------------------------------- ----------- ----------- ----------- -----------
Consolidated cash flow statement for the year ended 31 March
2015
Unaudited Audited
2015 2014
GBP GBP
------------------------------- ------------ ------------
Operating activities
Net profit before taxation
(continuing operations) 3,177,505 5,791,705
Net profit before taxation
(discontinued operations) - - 2,787
------------ ------------
Net profit for the year
before taxation 3,177,505 5,794,492
Adjustments for:
Depreciation 266,638 255,358
Amortisation of development
costs 3,223,983 2,588,063
Revaluation of investment
properties (100,000) -
Movement in pensions net
costs (207,000) 31,000
Share-based payments 95,405 155,931
Profit on sale of plant
and equipment (3,770) (7,770)
Finance income (65,651) (61,773)
Movement in working capital 852,270 (1,101,969)
-------------------------------- ------------ ------------
Cash flows from operating
activities 7,239,380 7,653,332
Income tax paid (270,376) (204,593)
-------------------------------- ------------ ------------
Net cash flows from operating
activities 6,969,004 7,448,739
-------------------------------- ------------ ------------
Investing activities
Purchase of property, plant
and equipment (317,602) (102,995)
Investment in development
costs (4,362,929) (4,139,040)
Disposal of property, plant
and equipment 12,083 5,990
Finance income 65,651 61,773
-------------------------------- ------------ ------------
Net cash flows from investing
activities (4,602,797) (4,174,272)
-------------------------------- ------------ ------------
Financing activities
Issue of ordinary shares 645,204 96,806
Dividend paid to shareholders (1,013,533) (873,394)
Decrease in bank loans
and short-term borrowings - (338,267)
-------------------------------- ------------ ------------
Net cash flows from financing
activities (368,329) (1,114,855)
-------------------------------- ------------ ------------
Increase in cash and cash
equivalents 1,997,878 2,159,612
-------------------------------- ------------ ------------
Movement in cash and cash
equivalents:
At start of year 11,373,483 9,322,957
Increase in cash and cash
equivalents 1,997,878 2,159,612
Effects of exchange rate
changes (183,643) (109,086)
-------------------------------- ------------ ------------
At end of year 13,187,718 11,373,483
-------------------------------- ------------ ------------
Consolidated statement of changes in equity for the year ended
31 March 2015
Foreign
Share Share Share-based exchange Accumulated
capital premium payments reserve profits Total
GBP GBP GBP GBP GBP GBP
-------------------------- ------- --------- ----------- ---------- ----------- -----------
At 31 March 2013
- Audited 793,630 4,977,531 171,199 513,532 14,910,000 21,365,892
-------------------------- ------- --------- ----------- ---------- ----------- -----------
Profit for year 4,768,638 4,768,638
Other comprehensive
income net of taxes
Foreign exchange
differences (301,900) (301,900)
Net actuarial gain
recognised directly
to equity 3,393,000 3,393,000
Deferred tax on actuarial
gain (678,600) (678,600)
-------------------------- ------- --------- ----------- ---------- ----------- -----------
Total comprehensive
income for year - - - (301,900) 7,483,038 7,181,138
-------------------------- ------- --------- ----------- ---------- ----------- -----------
793,630 4,977,531 171,199 211,632 22,393,038 28,547,030
Transactions with
owners in their capacity
as owners
Issue of ordinary
shares 4,416 92,390 96,806
Dividend paid (873,394) (873,394)
-------------------------- ------- --------- ----------- ---------- ----------- -----------
Total transactions
with owners in their
capacity as owners 4,416 92,390 - - (873,394) (776,588)
-------------------------- ------- --------- ----------- ---------- ----------- -----------
Share-based payments
in year 155,931 155,931
At 31 March 2014
- Audited 798,046 5,069,921 327,130 211,632 21,519,644 27,926,373
-------------------------- ------- --------- ----------- ---------- ----------- -----------
Profit for year 2,701,781 2,701,781
Other comprehensive
income net of taxes
Foreign exchange
differences (477,497) (477,497)
Net actuarial loss
recognised directly
to equity (1,133,000) (1,133,000)
Deferred tax on actuarial
loss 226,600 226,600
-------------------------- ------- --------- ----------- ---------- ----------- -----------
Total comprehensive
income for year - - - (477,497) 1,795,381 1,317,884
-------------------------- ------- --------- ----------- ---------- ----------- -----------
798,046 5,069,921 327,130 (265,865) 23,315,125 29,244,257
Transactions with
owners in their capacity
as owners
Issue of ordinary
shares 14,781 630,423 645,204
Dividend paid (1,013,533) (1,013,533)
-------------------------- ------- --------- ----------- ---------- ----------- -----------
Total transactions
with owners in their
capacity as owners 14,781 630,423 - - (1,013,533) (368,329)
Share-based payments
in year 95,405 95,405
Cancellation/transfer
of share-based payments (135,169) 135,169 -
-------------------------- ------- --------- ----------- ---------- ----------- -----------
At 31 March 2015-
Unaudited 812,827 5,700,344 287,366 (265,865) 22,436,661 28,971,333
-------------------------- ------- --------- ----------- ---------- ----------- -----------
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 2015 Audited 2014
------------------------------ ----------------------------------------
Semi- conductor Semi-conductor
components Group Equipment components Group
GBP GBP GBP GBP GBP
-------------------------- --------------- ------------ --------- -------------- -------------
Revenue
By origin 34,031,382 34,031,382 282,275 39,757,907 40,040,182
Inter-segmental revenue (12,227,669) (12,227,669) - (15,364,248) (15,364,248)
--------------------------- --------------- ------------ --------- -------------- -------------
Total segmental revenue 21,803,713 21,803,713 282,275 24,393,659 24,675,934
--------------------------- --------------- ------------ --------- -------------- -------------
Segmental result 3,011,854 3,011,854 2,778 5,729,941 5,732,719
--------------- --------- --------------
Revaluation of investment
properties 100,000 -
Finance income 65,651 61,773
Income tax expense (475,724) (1,025,854)
--------------------------- --------------- ------------ --------- -------------- -------------
Profit after taxation 2,701,781 4,768,638
--------------------------- --------------- ------------ --------- -------------- -------------
Assets and liabilities
Segmental assets 33,286,856 33,286,856 - 30,527,807 30,527,807
--------------- --------- --------------
Unallocated corporate
assets
Investment properties 3,550,000 3,450,000
Properties held for
sale - 100,168
Deferred tax asset 1,310,289 1,270,976
Current tax assets 628,006 282,667
--------------------------- --------------- ------------ --------- -------------- -------------
Consolidated total
assets 38,775,151 35,631,618
--------------------------- --------------- ------------ --------- -------------- -------------
Segmental liabilities 3,471,194 3,471,194 - 2,508,599 2,508,599
--------------- --------- --------------
Unallocated corporate
liabilities
Deferred tax liabilities 2,512,736 2,224,517
Current tax liabilities 195,888 274,129
Retirement benefit
obligation 3,624,000 2,698,000
--------------------------- --------------- ------------ --------- -------------- -------------
Consolidated total
liabilities 9,803,818 7,705,245
--------------------------- --------------- ------------ --------- -------------- -------------
Other segmental information:
Unaudited 2015 Audited 2014
--------------------------- --------------------------------------
Semiconductor Semiconductor
components Group Equipment components Group
GBP GBP GBP GBP GBP
----------------- -------------- ---------- ---------- -------------- ----------
Property, plant
and equipment
additions 317,602 317,602 - 102,995 102,995
------------------ -------------- ---------- ---------- -------------- ----------
Development
cost additions 4,362,929 4,362,929 - 4,139,040 4,139,040
------------------ -------------- ---------- ---------- -------------- ----------
Depreciation 266,638 266,638 254 255,104 255,358
------------------ -------------- ---------- ---------- -------------- ----------
Amortisation 3,223,983 3,223,983 - 2,588,063 2,588,063
------------------ -------------- ---------- ---------- -------------- ----------
Other non-cash
income 307,000 307,000 - 31,000 31,000
------------------ -------------- ---------- ---------- -------------- ----------
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. On
13 August 2013 Radio Data Technology Limited which represented 100%
of the equipment segment (shown in the year ended 31 March 2014
comparative period) went into voluntary liquidation and
consequently after that date the Group had only one segment,
semiconductor components.
Geographical information:
Rest of
UK Europe Americas Far East Total
GBP GBP GBP GBP GBP
------------------------ ------------ ------------ ----------- ----------- -------------
Year ended 31 March
2015 - Unaudited
Revenue by origination 10,134,538 10,626,884 4,688,222 8,581,738 34,031,382
Inter-segmental
revenue (5,036,496) (7,190,229) - (944) (12,227,669)
------------------------ ------------ ------------ ----------- ----------- -------------
Revenue to third
parties 5,098,042 3,436,655 4,688,222 8,580,794 21,803,713
------------------------ ------------ ------------ ----------- ----------- -------------
Property, plant
and equipment 4,848,669 104,203 14,343 8,620 4,975,835
------------------------ ------------ ------------ ----------- ----------- -------------
Investment properties 3,550,000 - - - 3,550,000
------------------------ ------------ ------------ ----------- ----------- -------------
Development costs 2,439,356 4,544,263 - - 6,983,619
------------------------ ------------ ------------ ----------- ----------- -------------
Goodwill 3,512,305 - - - 3,512,305
------------------------ ------------ ------------ ----------- ----------- -------------
Total assets 27,060,374 8,387,547 1,369,988 1,957,242 38,775,151
------------------------ ------------ ------------ ----------- ----------- -------------
Year ended 31 March
2014 - Audited
Revenue by origination 12,573,992 11,929,768 5,856,202 9,680,220 40,040,182
Inter-segmental
revenue (5,826,088) (9,538,160) - - (15,364,248)
------------------------ ------------ ------------ ----------- ----------- -------------
Revenue to third
parties 6,747,904 2,391,608 5,856,202 9,680,220 24,675,934
------------------------ ------------ ------------ ----------- ----------- -------------
Property, plant
and equipment 4,751,764 67,876 114,550 2,520 4,936,710
------------------------ ------------ ------------ ----------- ----------- -------------
Investment properties 3,450,000 - - - 3,450,000
------------------------ ------------ ------------ ----------- ----------- -------------
Property held for
sale - - 100,168 - 100,168
------------------------ ------------ ------------ ----------- ----------- -------------
Development costs 2,376,561 3,811,694 - - 6,188,255
------------------------ ------------ ------------ ----------- ----------- -------------
Goodwill - 3,512,305 - - 3,512,305
------------------------ ------------ ------------ ----------- ----------- -------------
Total assets 25,273,155 6,926,066 1,491,191 1,941,206 35,631,618
------------------------ ------------ ------------ ----------- ----------- -------------
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. Revenue
Unaudited Audited
2015 2014
Continuing business: GBP GBP
----------------------------------------- ----------- -----------
Geographical classification of turnover
(by destination):
United Kingdom 852,603 823,860
Rest of Europe 5,219,983 4,325,112
Far East 10,438,093 12,386,107
Americas 4,803,780 6,263,037
Other 489,254 595,543
----------------------------------------- ----------- -----------
21,803,713 24,393,659
----------------------------------------- ----------- -----------
3. Dividend - paid and proposed
It is proposed to pay a dividend of 6.9p per ordinary share of
5p in respect of the year ended 31 March 2015. During the year a
dividend of 6.25p per ordinary share of 5p was paid in respect of
the year ended 31 March 2014.
4. Income tax expense
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
2015 2014
GBP GBP
------------------------------------------------- ---------- ----------
Current tax
UK corporation tax on results of the period (596,710) (255,646)
Adjustment in respect of previous periods (1,295) (44,945)
------------------------------------------------- ---------- ----------
(598,005) (300,591)
------------------------------------------------- ---------- ----------
Foreign tax on results of the period 430,247 369,860
Foreign tax - adjustment in respect of previous
periods (128) (6,372)
------------------------------------------------- ---------- ----------
Total current tax (167,886) 62,897
------------------------------------------------- ---------- ----------
Deferred tax
Current period movement 651,846 965,352
Adjustments to deferred tax charge in respect
of previous periods (8,236) (5,180)
------------------------------------------------- ---------- ----------
Total deferred tax 643,610 960,172
------------------------------------------------- ---------- ----------
Tax charge on profit on ordinary activities 475,724 1,023,069
------------------------------------------------- ---------- ----------
5. Earnings 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.
Unaudited 2015 Audited 2014
---------------------------------- ----------------------------------
Weighted Weighted
average Earnings average Earnings
Number per Number per
Profit of shares share Profit of shares share
GBP Number p GBP Number p
------------------- ---------- ----------- --------- ---------- ----------- ---------
Basic earnings
per share 2,701,781 16,167,635 16.71 4,768,638 15,917,895 29.96
------------------- ---------- ----------- --------- ---------- ----------- ---------
Diluted earnings
per share
Basic earnings
per share 2,701,781 16,167,635 16.71 4,768,638 15,917,895 29.96
Dilutive effect
of share options - 200,100 (0.20) - 414,692 (0.76)
------------------- ---------- ----------- --------- ---------- ----------- ---------
Diluted earnings
per share 2,701,781 16,367,735 16.51 4,768,638 16,332,587 29.20
------------------- ---------- ----------- --------- ---------- ----------- ---------
6. 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. Everett Newlyn, Chartered Surveyors and Commercial
Property Consultants professionally valued the investment
properties on the basis of open market value as at 31 March 2015,
for which a valuation of GBP3,550,000 has been advised.
7. Analysis of cash flow movement in net cash
The cash flow below is a combination of the actual cash flow and
the exchange movement:
Audited Unaudited
Net cash Net cash
at Exchange at
1 April 31 March
2014 Cash flow movement 2015
GBP GBP GBP GBP
--------------------------- ----------- ---------- ---------- -----------
Cash and cash equivalents 11,373,483 1,997,878 (183,643) 13,187,718
11,373,483 1,997,878 (183,643) 13,187,718
--------------------------- ----------- ---------- ---------- -----------
8. 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.
9. Directors' statement pursuant to the disclosure and
transparency rules
The directors confirm that, to the best of their knowledge:
a. the 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 of the company and the
undertakings included in the consolidation taken as a whole;
and
b. the Chairman's Statement and Managing Director's 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.
10. 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 2014 financial statements.
11. Discontinued operations
On 13 August 2013 Radio Data Technology Ltd went into voluntary
liquidation and consequently qualified as a discontinued operation.
The results of the discontinued operation which have been included
in the consolidated income statement for the comparative period are
presented below:
Audited
2014
GBP
-------------------------------------- ---------
Revenue 282,275
Cost of sales (171,239)
-------------------------------------- ---------
Gross profit 111,036
Distribution and administration costs (113,978)
-------------------------------------- ---------
(2,942)
Other income 5,720
-------------------------------------- ---------
2,778
Finance Income 9
-------------------------------------- ---------
Profit before taxation 2,787
Taxation (2,785)
-------------------------------------- ---------
Profit from discontinued operations 2
-------------------------------------- ---------
12. 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
2014 is based on the statutory accounts for the financial year
ended 31 March 2014 that has 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 2015 are
expected to be finalised and signed following approval by the board
of directors on 19 June 2015 and delivered to the Registrar of
Companies following the Company's annual general meeting on 29 July
2015.
The financial information contained in this announcement does
not constitute statutory accounts for the year ended 31 March 2015
or 2014 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.
13. Approval
The Directors approved this annual results announcement on 09
June 2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR EAKKPEDPSEFF
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