TIDMCML
RNS Number : 6814G
CML Microsystems PLC
24 November 2015
CML Microsystems Plc
INTERIM 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 Interim
Results for the six months ended 30 September 2015.
Financial Highlights
-- Group revenues up 8% to GBP11.00m (H1 2014: GBP10.21m)
-- Gross profit up 10% to GBP7.98m (H1 2014: GBP7.22m)
-- Underlying profit before tax up 22% to GBP1.51m (H1 2014: GBP1.24m)
-- Basic EPS up 30% to 7.69p (H1 2014: 5.92p)
-- Cash reserves of GBP12.26m (31 March 2015: GBP13.19m) - after GBP1.12m dividend payment
Operational Highlights
-- Release of two new RF ICs suitable for the global industrial wireless markets
-- SD and USB flash memory controller products continue to win "design-ins"
-- Strengthened marketing, sales and support resources
-- Higher investment in new product development
Chris Gurry, Group Managing Director of CML, said: "The first
six months of the current trading year produced a meaningful
advance in revenue and profitability against the comparable
period.
"Whilst the recent signals from some market areas necessitate an
air of caution, the Board's current expectations are for a
sequential revenue improvement and for a full year advance in
profitability."
CML Microsystems Plc www.cmlmicroplc.com
Chris Gurry, Group Managing Tel: 01621 875 500
Director
Neil Pritchard, Group Financial
Director
Cenkos Securities Plc Tel: 020 7397 8900
Jeremy Warner Allen (Sales)
Max Hartley (Corporate Finance)
SP Angel Corporate Finance Tel: 020 3463 2260
LLP
Jeff Keating
Walbrook PR Ltd Tel: 020 7933 8780 or cml@walbrookpr.com
Paul McManus Mob: 07980 541 893
Helen Cresswell Mob: 07841 917 679
Chairman's statement
I am pleased to state that as expected the Group has moved
forward, increasing both sales revenue and profitability when
compared to the same period last year. Results reported are broadly
in line with expectations despite current global market conditions
becoming more difficult.
In the first six month period to 30 September 2015, sales
revenues increased 8% to GBP11.00m (2014: GBP10.21m) and pre-tax
profits increased by 22% to GBP1.51m (2014: GBP1.24m). Cash at the
period end reduced compared to the March year end mainly as a
result of payment of the dividend, the planned increase in
development expenditure and the purchase of our own shares to be
held in treasury.
Recently, one or two of the market areas addressed are showing
signs of softness and a small number of customers have delayed the
launch of their new products, albeit only by a few months. This
appears to be a short-term problem that has reduced the Board's
expected growth rate for the second half. Despite this caveat, the
Board remains confident that the Group will move forward for the
financial year as a whole.
The Group's visible growth opportunities provide me with clear
evidence that the execution of the Board's strategy is driving
progress, regardless of the short-term headwinds in some market
areas. I am confident of a more significant improvement in the
results over the medium and longer term.
As always the progress of any business is dependent upon the
quality and dedication of its employees. The Board wishes to thank
its employees worldwide for the performance and commitment they
have shown throughout this period.
Nigel Clark
Group Non-Executive Chairman
24 November 2015
Group Managing Director's statement and operational and
financial review
Operational and Financial Review
The first six months of the current trading year produced a
meaningful advance in revenue and profitability against the
comparable period. Total sales reported to 30 September 2015 were
GBP11.00m representing an increase of 8% (2014: GBP10.21m).
The overall rise was a result of improved trading from each of
the three major market areas addressed; namely Storage, Wireless
and Wireline Telecoms. Geographically, shipments into the Far East
recorded the largest gain whilst across the customer base, the
majority of the Group's current top customers increased their
spend.
Gross margin remained robust and drove gross profit 10% higher
to GBP7.98m (2014: GBP7.22m). As previously communicated, the Group
continued to invest in marketing, sales and support resources
whilst simultaneously maintaining high levels of R&D
investment. Distribution and administration costs increased to
GBP6.62m (2014: GBP6.17m), delivering an operational profit (before
share-based payments and finance income) of GBP1.54m (2014:
GBP1.28m).
Other operating income, principally rental proceeds from
commercial properties and regional engineering development grants,
fell to GBP0.19m (2014: GBP0.22m).
Profit before taxation advanced by over 22% to GBP1.51m (2014:
GBP1.24m) delivering a diluted earnings per share of 7.65p (2014:
5.84p).
Cash balances at 30 September 2015 stood at GBP12.26m which is a
reduction on the 31 March 2015 position of GBP13.19m due mainly to
the payment of a GBP1.12m dividend and the increased investment in
development costs.
Summary
The trading performance through the first half of the current
financial year was ahead of the comparable period and reflected the
Group's multifaceted approach to delivering growth.
Advances were made with strengthening our marketing, sales and
support resources and new product development activities continue
to receive high levels of investment.
In recent months, the Group has released two new RF ICs suitable
for global industrial wireless applications along with a focused
baseband processing solution for Digital Mobile Radio (DMR).
For the industrial storage markets, our SD and USB flash memory
controller products continue to gain acceptance at the design-in
and qualification level, although the sale of SATA interface
controllers has been slower than expected. Ongoing activities are
directed towards those market sub-segments that we believe will
deliver on our multi-year growth objectives.
Outlook
Despite the improvement in first half results, it is important
to convey that a number of the end markets the Group addresses are
going through technological change with respective Group customers
at varying stages of adoption, market introduction and
manufacturing ramp. Predicting the timing of some of these end
market transitions is challenging.
Whilst the recent signals from some market areas necessitate an
air of caution, the Board's current expectations are for a
sequential revenue improvement and for a full year advance in
profitability.
Chris Gurry
Group Managing Director
24 November 2015
Condensed consolidated income statement
for the six months ended 30 September 2015
Unaudited Unaudited Audited
6 months end 6 months end Year end
30/09/15 30/09/14 31/03/15
GBP'000 GBP'000 GBP'000
--------------------------------------------------- ------------ ------------ --------
Continuing operations
Revenue 11,003 10,209 21,804
Cost of sales (3,027) (2,986) (6,339)
--------------------------------------------------- ------------ ------------ --------
Gross profit 7,976 7,223 15,465
Distribution and administration costs (6,623) (6,168) (12,777)
--------------------------------------------------- ------------ ------------ --------
1,353 1,055 2,688
Other operating income 190 221 419
--------------------------------------------------- ------------ ------------ --------
Profit before share-based payments 1,543 1,276 3,107
Share-based payments (49) (61) (95)
--------------------------------------------------- ------------ ------------ --------
Profit after share-based payments 1,494 1,215 3,012
Revaluation of investment properties - - 100
Finance income 20 22 66
--------------------------------------------------- ------------ ------------ --------
Profit before taxation 1,514 1,237 3,178
Income tax expense (266) (281) (476)
--------------------------------------------------- ------------ ------------ --------
Profit after taxation from continuing operations 1,248 956 2,702
Profit for period attributable to equity owners of
the parent 1,248 956 2,702
--------------------------------------------------- ------------ ------------ --------
Basic earnings per share
From continuing operations 7.69p 5.92p 16.71p
--------------------------------------------------- ------------ ------------ --------
From profit for the year 7.69p 5.92p 16.71p
--------------------------------------------------- ------------ ------------ --------
Diluted earnings per share
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November 24, 2015 02:00 ET (07:00 GMT)
From continuing operations 7.65p 5.84p 16.51p
--------------------------------------------------- ------------ ------------ --------
From profit for the year 7.65p 5.84p 16.51p
--------------------------------------------------- ------------ ------------ --------
Condensed consolidated statement of comprehensive income
for the six months ended 30 September 2015
Unaudited Unaudited Audited
6 months end 6 months end Year end
30/09/15 30/09/14 31/03/15
GBP'000 GBP'000 GBP'000
-------------------------------------------------------------------------------- ------------ ------------ --------
Profit for the period 1,248 956 2,702
Other comprehensive income:
Foreign exchange differences 65 (258) (477)
Actuarial loss on retirement benefit obligations - - (1,133)
Deferred tax on actuarial loss - - 227
-------------------------------------------------------------------------------- ------------ ------------ --------
Other comprehensive income/(expense) for the period net of tax attributable to
equity holders
of the parent 65 (258) (1,383)
-------------------------------------------------------------------------------- ------------ ------------ --------
Total comprehensive income for the period net of tax attributable to equity
holders of the
parent 1,313 698 1,319
-------------------------------------------------------------------------------- ------------ ------------ --------
Condensed consolidated statement of financial position
as at 30 September 2015
Unaudited Unaudited Audited
30/09/15 30/09/14 31/03/15
GBP'000 GBP'000 GBP'000
------------------------------------------------------ --------- --------- --------
Assets
Non-current assets
Property, plant and equipment 5,146 5,040 4,976
Investment properties 3,550 3,450 3,550
Development costs 8,289 7,258 6,984
Goodwill 3,512 3,512 3,512
Deferred tax asset 1,301 1,238 1,310
------------------------------------------------------ --------- --------- --------
21,798 20,498 20,332
------------------------------------------------------ --------- --------- --------
Current assets
Inventories 1,779 1,456 1,763
Trade receivables and prepayments 2,525 2,777 2,864
Current tax assets 767 191 628
Cash and cash equivalents 12,263 11,586 13,188
------------------------------------------------------ --------- --------- --------
17,334 16,010 18,443
------------------------------------------------------ --------- --------- --------
Total assets 39,132 36,508 38,775
------------------------------------------------------ --------- --------- --------
Liabilities
Current liabilities
Trade and other payables 3,583 2,845 3,471
Current tax liabilities 246 446 196
------------------------------------------------------ --------- --------- --------
3,829 3,291 3,667
------------------------------------------------------ --------- --------- --------
Non-current liabilities
Deferred tax liabilities 2,654 2,291 2,513
Retirement benefit obligation 3,624 2,698 3,624
------------------------------------------------------ --------- --------- --------
6,278 4,989 6,137
------------------------------------------------------ --------- --------- --------
Total liabilities 10,107 8,280 9,804
------------------------------------------------------ --------- --------- --------
Net assets 29,025 28,228 28,971
------------------------------------------------------ --------- --------- --------
Capital and reserves attributable to equity owners of
the parent
Share capital 813 811 813
Share premium 5,700 5,614 5,700
Treasury shares - own share reserve (190) - -
Share-based payments reserve 336 388 287
Foreign exchange reserve (201) (47) (266)
Accumulated profits 22,567 21,462 22,437
------------------------------------------------------ --------- --------- --------
Total shareholders' equity 29,025 28,228 28,971
------------------------------------------------------ --------- --------- --------
Condensed consolidated cash flow statement
for the six months ended 30 September 2015
Unaudited Unaudited Audited
6 months end 6 months end Year end
30/09/15 30/09/14 31/03/15
GBP'000 GBP'000 GBP'000
------------------------------------------------- ------------ ------------ --------
Operating activities
Net profit for the period before taxation 1,514 1,237 3,178
Adjustments for:
Depreciation 121 110 267
Amortisation of development costs 1,661 1,408 3,224
Revaluation of investment properties - - (100)
Movement in pension net costs - - (207)
Share-based payments 49 61 95
Profit on sale of plant and equipment - - (4)
Finance income (20) (22) (66)
Movement in working capital 435 608 852
------------------------------------------------- ------------ ------------ --------
Cash flows from operating activities 3,760 3,402 7,239
Income tax (paid)/refunded (174) 151 (270)
------------------------------------------------- ------------ ------------ --------
Net cash flows from operating activities 3,586 3,553 6,969
------------------------------------------------- ------------ ------------ --------
Investing activities
Purchase of property, plant and equipment (290) (256) (318)
Investment in development costs (2,905) (2,672) (4,363)
Disposals of property, plant and equipment - 52 12
Finance income 20 22 66
------------------------------------------------- ------------ ------------ --------
Net cash flows from investing activities (3,175) (2,854) (4,603)
------------------------------------------------- ------------ ------------ --------
Financing activities
Issue of ordinary shares - 557 645
Purchase of treasury shares (190) - -
Dividend paid to Group shareholders (1,118) (1,014) (1,013)
------------------------------------------------- ------------ ------------ --------
Net cash flows from financing activities (1,308) (457) (368)
------------------------------------------------- ------------ ------------ --------
(Decrease)/increase in cash and cash equivalents (897) 242 1,998
------------------------------------------------- ------------ ------------ --------
Movement in cash and cash equivalents:
At start of period/year 13,188 11,373 11,373
(Decrease)/increase in cash and cash equivalents (897) 242 1,998
Effects of exchange rate changes (28) (29) (183)
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------------------------------------------------- ------------ ------------ --------
At end of period/year 12,263 11,586 13,188
------------------------------------------------- ------------ ------------ --------
Condensed consolidated statement of changes in equity
for the six months ended 30 September 2015
Share Share Treasury Share-based Foreign exchange Accumulated
capital premium shares payments reserve profits Total
Unaudited GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
At 31 March 2014 798 5,070 - 327 211 21,520 27,926
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Profit for period 956 956
Other comprehensive income:
Foreign exchange differences (258) (258)
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Total comprehensive income for the
period - - - - (258) 956 698
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Transactions with owners in their
capacity as owners:
Dividend paid (1,014) (1,014)
Issue of ordinary shares 13 544 557
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Total of transactions with owners
in their capacity as owners: 13 544 - - - (1,014) (457)
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Share-based payments 61 61
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
At 30 September 2014 811 5,614 - 388 (47) 21,462 28,228
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Profit for period 1,746 1,746
Other comprehensive income:
Foreign exchange differences (219) (219)
Actuarial loss on retirement
benefit obligation (1,133) (1,133)
Deferred tax on actuarial losses 227 227
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Total comprehensive income for the
period - - - - (219) 840 621
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Transactions with owners in their
capacity as owners:
Issue of ordinary shares 2 86 88
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Total of transactions with owners
in their capacity as owners: 2 86 - - - - 88
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Share-based payments 34 34
Cancellation/transfer of
share-based payments (135) 135 -
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
At 31 March 2015 813 5,700 - 287 (266) 22,437 28,971
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Profit for period 1,248 1,248
Other comprehensive income:
Foreign exchange differences 65 65
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Total comprehensive income for the
period - - - - 65 1,248 1,313
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Transactions with owners in their
capacity as owners:
Dividend paid (1,118) (1,118)
Purchase of treasury shares (190) (190)
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Total of transactions with owners
in their capacity as owners: - - (190) - - (1,118) (1,308)
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Share-based payments 49 49
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
At 30 September 2015 813 5,700 (190) 336 (201) 22,567 29,025
---------------------------------- ------- ------- -------- ----------- ---------------- -------------- -------
Notes to the condensed consolidated financial statements
for the six months ended 30 September 2015
1 Segmental analysis
Business segment
Unaudited Unaudited Audited
6 months end 6 months end Year end
30/09/15 30/09/14 31/03/15
---------- ------- ---------- ------- ---------- --------
Semi- Semi- Semi-
conductor conductor conductor
components Group components Group components Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- ---------- ------- ---------- ------- ---------- --------
Revenue
By origination 17,423 17,423 15,842 15,842 34,031 34,031
Inter-segmental revenue (6,420) (6,420) (5,633) (5,633) (12,227) (12,227)
------------------------------------- ---------- ------- ---------- ------- ---------- --------
Segmental revenue 11,003 11,003 10,209 10,209 21,804 21,804
------------------------------------- ---------- ------- ---------- ------- ---------- --------
Profit/(loss)
Segmental result 1,494 1,494 1,215 1,215 3,012 3,012
------------------------------------- ---------- ---------- ----------
Revaluation of investment properties - - 100
Net financial income 20 22 66
Income tax (266) (281) (476)
------- ------- --------
Profit after taxation 1,248 956 2,702
------- ------- --------
Assets and liabilities
Segmental assets 33,514 33,514 31,629 31,629 33,287 33,287
------------------------------------- ---------- ---------- ----------
Unallocated corporate assets
Investment properties 3,550 3,450 3,550
Deferred tax assets 1,301 1,238 1,310
Current tax receivable 767 191 628
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------- ------- --------
Consolidated total assets 39,132 36,508 38,775
------- ------- --------
Segmental liabilities 3,583 3,583 2,845 2,845 3,471 3,471
------------------------------------- ---------- ---------- ----------
Unallocated corporate
liabilities
Deferred tax liabilities 2,654 2,291 2,513
Current tax liabilities 246 446 196
Retirement benefit obligation 3,624 2,698 3,624
------- ------- --------
Consolidated total liabilities 10,107 8,280 9,804
------- ------- --------
Other segmental information
Property, plant and equipment
additions 290 290 256 256 318 318
------------------------------------- ---------- ------- ---------- ------- ---------- --------
Development cost additions 2,905 2,905 2,672 2,672 4,363 4,363
------------------------------------- ---------- ------- ---------- ------- ---------- --------
Depreciation 121 121 110 110 267 267
------------------------------------- ---------- ------- ---------- ------- ---------- --------
Amortisation 1,661 1,661 1,408 1,408 3,224 3,224
------------------------------------- ---------- ------- ---------- ------- ---------- --------
Other significant non-cash income - - - - 307 307
------------------------------------- ---------- ------- ---- ---------- ------- ----- ---------- --------
Geographical segments
UK Rest of Europe Americas Far East Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------- ------- -------------- -------- -------- --------
Unaudited
Six months ended 30 September 2015
Revenue by origination 5,101 5,577 2,562 4,183 17,423
Inter-segmental revenue (2,518) (3,902) - - (6,420)
----------------------------------- ------- -------------- -------- -------- --------
Revenue to third parties 2,583 1,675 2,562 4,183 11,003
----------------------------------- ------- -------------- -------- -------- --------
Property, plant and equipment 5,022 97 11 16 5,146
----------------------------------- ------- -------------- -------- -------- --------
Investment properties 3,550 - - - 3,550
----------------------------------- ------- -------------- -------- -------- --------
Goodwill - 3,512 - - 3,512
----------------------------------- ------- -------------- -------- -------- --------
Development costs 2,906 5,383 - - 8,289
----------------------------------- ------- -------------- -------- -------- --------
Total assets 25,538 10,162 1,325 2,107 39,132
----------------------------------- ------- -------------- -------- -------- --------
Unaudited
Six months ended 30 September 2014
Revenue by origination 4,865 5,282 2,001 3,694 15,842
Inter-segmental revenue (2,170) (3,463) - - (5,633)
----------------------------------- ------- -------------- -------- -------- --------
Revenue to third parties 2,695 1,819 2,001 3,694 10,209
----------------------------------- ------- -------------- -------- -------- --------
Property, plant and equipment 4,909 114 14 3 5,040
----------------------------------- ------- -------------- -------- -------- --------
Investment properties 3,450 - - - 3,450
----------------------------------- ------- -------------- -------- -------- --------
Goodwill - 3,512 - - 3,512
----------------------------------- ------- -------------- -------- -------- --------
Development costs 2,655 4,603 - - 7,258
----------------------------------- ------- -------------- -------- -------- --------
Total assets 24,991 8,131 1,473 1,913 36,508
----------------------------------- ------- -------------- -------- -------- --------
Audited
Year ended 31 March 2015
Revenue by origination 10,134 10,627 4,688 8,582 34,031
Inter-segmental revenue (5,036) (7,190) - (1) (12,227)
----------------------------------- ------- -------------- -------- -------- --------
Revenue to third parties 5,098 3,437 4,688 8,581 21,804
----------------------------------- ------- -------------- -------- -------- --------
Property, plant and equipment 4,849 104 14 9 4,976
----------------------------------- ------- -------------- -------- -------- --------
Investment properties 3,550 - - - 3,550
----------------------------------- ------- -------------- -------- -------- --------
Goodwill - 3,512 - - 3,512
----------------------------------- ------- -------------- -------- -------- --------
Development costs 2,440 4,544 - - 6,984
----------------------------------- ------- -------------- -------- -------- --------
Total assets 27,060 8,388 1,370 1,957 38,775
----------------------------------- ------- -------------- -------- -------- --------
Segmental reporting is in accordance with IFRS 8, is based on
internal management reporting information that is regularly
reviewed by the chief operating decision maker. The measurement
policies the Group uses for segmental reporting under IFRS 8 are
the same as those used in its full year financial statements.
Revenue
The geographical classification of business turnover (by
destination) is as follows:
Unaudited Unaudited Audited
6 months 6 months
end end Year end
30/9/15 30/9/14 31/3/15
GBP'000 GBP'000 GBP'000
---------------- ---------- ---------- ---------
United Kingdom 495 473 853
Rest of Europe 2,379 2,640 5,220
Far East 5,205 4,538 10,438
Americas 2,745 2,336 4,804
Other 179 222 489
---------------- ---------- ---------- ---------
11,003 10,209 21,804
---------------- ---------- ---------- ---------
2 Dividend paid and proposed
A dividend of 6.9p per 5p ordinary share in respect of the year
ended 31 March 2015 was paid on 3 August 2015 (2014: 6.25p per
ordinary share of 5p in respect of the year ended 31 March 2014).
No dividend is proposed in respect of the six months period ended
30 September 2015 (2014: GBPNil per ordinary share of 5p in respect
of the period ended 30 September 2014).
3 Income tax
The Directors consider that tax will be payable at varying rates
according to the country of incorporation of its subsidiary
undertakings and have provided on that basis.
Unaudited Unaudited Audited
6 months end 6 months end Year end
30/09/15 30/09/14 31/03/15
GBP'000 GBP'000 GBP'000
---------------------------------- ------------ ------------ --------
UK income tax credit (167) (160) (598)
Overseas income tax charge 283 285 430
---------------------------------- ------------ ------------ --------
Total current tax charge/(credit) 116 125 (168)
Deferred tax charge 150 156 644
---------------------------------- ------------ ------------ --------
Reported income tax charge 266 281 476
---------------------------------- ------------ ------------ --------
4 Earnings per share
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November 24, 2015 02:00 ET (07:00 GMT)
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