TIDMCML
RNS Number : 2788R
CML Microsystems PLC
05 July 2022
05 July 2022
CML Microsystems Plc
("CML", the "Company" or the "Group")
Full Year Results
CML Microsystems plc (AIM: CML), which develops mixed-signal, RF
and microwave semiconductors for global communications markets ,
announces its Full Year Results for the year ended 31 March
2022.
Financial Highlights
-- Revenue increase to GBP16.96m (2021: GBP13.10m) with growth
driven by a recovery in the voice-centric markets
-- Gross profit of GBP12.80m (2021: GBP9.46m) with a slightly
improved margin due to product mix delivered
-- Net cash of GBP25.04m (2021: GBP31.9m) after a GBP9.0m dividend to shareholders
-- Profit before tax of GBP1.74m (2021: GBP0.01m) after
accounting for share-based payments and net finance income
-- Recommended final dividend of 5p per ordinary 5p share
Operational Highlights
-- Recovery from existing markets
-- Expanded product range - increasing addressable market
-- Strong investment in research and development
-- Completed move from Main Market to AIM
Chris Gurry, Group Managing Director of CML Microsystems
commented on the results :
"This has been an encouraging year of growth for the business.
The strength and resilience of CML has been shown in the fact that
despite having to navigate a number of sector-wide headwinds, the
Company has delivered sustained levels of growth with key financial
metrics increasing year-on-year.
Operationally, the Group is well positioned to take advantage of
the opportunity in both the traditional wireless voice and data
market alongside wider higher-frequency semiconductor markets which
we have targeted as key future growth areas. Our continued
investment in research and development will drive future progress
and increase our addressable market through an expanded product
range. While the sector-wide challenges remain, we are very well
placed to continue executing on our growth strategy and to cement
our position as one of the first-choice semiconductor partners to
technology innovators across the globe."
Enquiries:
CML Microsystems Plc www.cmlmicroplc.com
Chris Gurry, Group Managing Director Tel: +44 (0) 1621 875 500
Nigel Clark, Executive Chairman
Shore Capital (Nominated Adviser Tel: +44 (0) 20 7408 4090
and Sole Broker)
Toby Gibbs
James Thomas
John More
Alma PR Tel: +44 (0) 20 3405 0212
Josh Royston
Andy Bryant
Matthew Young
About CML Microsystems PLC
CML develops mixed-signal, RF and microwave semiconductors for
global communications markets. The Group utilises a combination of
outsourced manufacturing and in-house testing with trading
operations in the UK, Asia and USA. CML targets sub-segments within
Communication markets with strong growth profiles and high barriers
to entry. It has secured a diverse, blue chip customer base,
including some of the world's leading commercial and industrial
product manufacturers.
The spread of its customers and diversity of the product range
largely protects the business from the cyclicality usually
associated with the semiconductor industry. Growth in its end
markets is being driven by factors such as the appetite for data to
be transmitted faster and more securely, the upgrading of telecoms
infrastructure around the world and the growing prevalence of
private commercial wireless networks for voice and/or data
communications linked to the industrial internet of things
(IIoT).
The Group is cash-generative, has no debt and is dividend
paying.
CHAIRMAN'S STATEMENT
Introduction
I must apologise for the delay in publishing this year's
results, but this was due to the Group's auditor, BDO LLP (BDO),
requesting additional time to finalise their audit process and
internal review procedures.
The world is clearly going through very unsettled times, with
geopolitical trade conditions persisting, the COVID-19 pandemic
still impacting supply chains and the conflict in Ukraine. Despite
this backdrop and understanding that we are not immune from these
factors, we have delivered robust growth this year. General
inflationary pressure, a significant rise in energy costs and
ongoing supply problems present all of us with challenging times to
navigate. Notwithstanding that, the recovery within our markets
continued throughout the year. In what has been our first full
financial year as a pure play semiconductor business focused solely
on the Communications Market, we also ended the year with another
record order book.
Last year was transformational for CML following the disposal of
the Storage Division and as a result we needed to address the
composition of the Group and its structure going forward. The move
to the AIM, completed in early September, was another important
change. Finally, we remain in the process of relocating certain
operating companies to more appropriate premises and are in a
recruitment phase that will continue through the current year.
To execute our strategy, we are focused on simultaneously
securing the existing markets addressed whilst additionally
identifying other areas within the global communications sector
where we see material potential. The traditional markets have
returned to growth and the newer markets, addressed in part by our
SuRF product range, are a step change larger, providing
opportunities of significant magnitude.
Results (1)
Despite the further substantial returns to shareholders and the
investment in new product development this year, we have ensured
the balance sheet has remained strong with relatively high levels
of cash.
The business is now fully focused on communications
semiconductor markets, although this year's results do contain an
element of rental income (classified under "Other income") which
will not be present in future years following the disposal of one
of the investment properties and the holding for sale of the other.
Additionally, this year, other income was bolstered by a COVID loan
subsequently forgiven in the USA, which is a one-off.
Revenues were GBP16.96m up 29% (2021: GBP13.10m), reflecting the
recovery in our existing end markets. The revenue increase, coupled
with tight cost control, yielded a considerable improvement in
profit from operations. Profit before tax grew to GBP1.74m (2021:
GBP0.01m) and a resulting tax charge of GBP0.50m delivered profit
after tax of GBP1.24m (2021: GBP0.80m). During the comparable
period, profit attributable to shareholders was substantially
boosted by the disposal of the Storage Division and so this has
consequently reduced to GBP1.24m (2021: GBP23.56m). Net cash, cash
equivalent and fixed term deposits levels reduced to GBP25.0m
(2021: GBP31.9m) after a final dividend payment of GBP8.3m in
August 2021 and an interim dividend of GBP0.7m paid in December
2021.
Property
Historically the Group has owned two investment properties from
which it previously traded. Changes in our business requirements
led to them becoming surplus to our operational needs and they were
commercially rented to third parties. At 31 March 2021, these
properties were professionally revalued and, with tenancies ending
through the year under review, were put on the market for sale. The
property located in Witham, Essex was sold in January 2022 and
although we expected to sell the Fareham, Hampshire based property
by the financial year end, the sale did not materialise.
Accordingly, the property is now shown in the balance sheet as held
for sale. The total rental income from these two investment
properties for the year to 31 March 2022 reduced to GBP0.22m (2021:
GBP0.34m) and will reduce to zero for the year ahead.
The Group headquarters at Oval Park, Maldon (circa 28-acre site)
was acquired in 1993 and the business relocated from Witham to the
current facility during the year ended 31 March 2000. The Oval Park
site is designated employment land in the Maldon District Plan and
is excess to our trading requirements. Through the year, we have
worked to encourage other companies to join us here at Oval Park
and have signed sale contracts with two separate parties, subject
to them gaining appropriate planning permission for development on
approximately 13 acres of land. We anticipate submission of a
planning application in the coming weeks which will include an
outline planning application for a business park development on the
remaining excess land (circa 6 acres). This project is not without
cost, regardless of success or failure, and additionally will
involve an element of construction work around the Group's existing
buildings. However, if objectives are met, all excess land and
property will be disposed of during the financial year ahead.
Share Buyback Programme and Dividend
In April 2022, a GBP3.0m Share Buyback Programme was put in
place for the principal purpose of reducing the share capital of
the Company and returning funds to shareholders who sold their
ordinary shares in the Company. During April, the GBP3.0m was used
in its entirety to repurchase 748,188 ordinary shares and these
shares were taken into treasury.
The Board strives to maintain a progressive dividend policy,
with the dividend level debated and set by the Board twice yearly,
where all relevant factors such as cash needs for the business,
confidence in the future and overall cash levels can be
considered.
For the year-ended March 2020, following the onset of COVID-19,
the full year dividend was reduced to 4p (2019: 7.8p) as a measure
of caution. For the year ended March 2021, the Company returned
excess cash to shareholders following the sale of its Storage
Division. As well as a one-off repayment of capital of 50p,
shareholders then received a bumper final dividend of 50p, taking
the year's dividend total to 52p (interim 2p).
We have seen good progress this year and the confidence of the
Board was demonstrated at the half-year stage with a decision to
increase the interim dividend to 4p, which was subsequently paid in
December 2021. Clearly the years ended March 2020 and March 2021
were somewhat abnormal and current global issues dictate an element
of prudence, but the Board feels it should continue to reflect the
return of the Company to meaningful growth and its confidence in
the strategy being followed. After due consideration, the Board has
decided to recommend a 5p, final dividend taking the full year's
dividend to 9p. Subject to shareholder approval, the dividend will
be paid to shareholders on 19 August 2022 whose names appear on the
register at close of business on 5 August 2022, the shares will go
ex-dividend on 4 August 2022.
ESG
CML takes its responsibilities for the environment and the wider
stakeholder community very seriously. For some years we have
reviewed our greenhouse gas emissions with the long-term objective
of reducing them substantially by following a practical and
pragmatic approach, not simply a box-ticking route.
Through this year, apart from reviewing our consumption of
energy and considering what reductions in demand can be made by
changing working practices and methods, a number of initiatives
have been completed. We now have electric vehicle charging points
for employees to use and over 40% of Company-owned vehicles are
hybrid or electric. This is coupled with a vehicle replacement
policy to encourage a move away from fossil fuels. Solar panels
have been installed to the roof of our Global Headquarters in Essex
to provide renewable energy during daylight hours and, where
possible, lighting throughout the facility has been switched to LED
to reduce energy consumption.
CML has a diverse employee base from a multitude of
nationalities and ethnicities, and we actively promote the values
of diversity and inclusion. Incredibly important is employee
development and throughout the pandemic we have been especially
mindful of this. Additionally, CML's position in the local
community is and always has been key and today we provide work
experience placements and sponsor local sports clubs.
Currently CML has a well-balanced Board between Executives and
Independent Non-Executive Directors, thus ensuring objectivity in
decision-making. The Directors are committed to high standards of
corporate governance and following the decision to move to AIM
decided to apply the QCA Code, details of which are set out on our
website in the investor relations section.
Employees
The Board is very mindful that the success of any company is
down to its employees and at CML we have a team of talented and
hard-working staff. We have just finished another year of lockdowns
and adjusted work routines coupled with global travel restrictions
meaning a reduction in face-to-face meetings and efficiency, which
tests the resilience of everyone. The Board wishes to extend its
thanks to each and every employee for the dedication, enthusiasm
and loyalty shown through this year, it is much appreciated.
Outlook
Our foundation for sustainable growth, which has been a key
cornerstone of our strategy for years, continues. The sustainable
growth path needs not just be organic; selected acquisitions at the
right time and price could enhance and accelerate our growth along
with assisting the long-term sustainability of the business.
Potential opportunities fitting these criteria are constantly under
consideration and the ability to move quicky if opportunities
materialise is essential. To aid this, the substantial number of
shares in treasury, coupled with our relatively strong cash
balance, provides the flexibility needed to meet these goals.
The conflict in Ukraine, geopolitical instability, further
disruption from the pandemic, supply chain issues, inflation and
energy problems are all closely monitored and the Group's strategy
and operational execution demonstrates our resilience. These are
tough times to navigate, but CML has solid foundations and is
pursuing numerous growth opportunities. We have a well-established
global market reach and a growing product portfolio addressing RF,
Microwave and Millimetre-wave application areas coupled with a
strong product roadmap defining our direction of travel. I can only
reiterate what I said at the interim stage, which is that the
future has never been brighter for CML, and we are confident in
growth for both the full year ahead and in the longer term.
1. (2021 comparatives relate only to continuing operations)
Nigel Clark
Executive Chairman
OPERATIONAL AND FINANCIAL REVIEW
Introduction
For the year to 31 March 2022, the Group made tangible progress
with its growth strategy based around a singular focus on providing
our customers with class-leading semiconductor products for global
Communications markets.
Fiscally, we started the trading year in a strong position,
notwithstanding the major return to shareholders that had already
been made. The underlying feeling was one of opportunity and
optimism. The financial progress recorded at the halfway stage was
augmented by positive trading through the second six-month period
and, in terms of future growth prospects, the value and quality of
new business opportunities being actively managed improved.
The recovery of existing markets drove a strong new order
intake, assisted by new customer design-wins moving into the
production phase and concerns around supply chain constraints
within the semiconductor market generally.
The improvement demonstrated within these results follows a
multi-year period of enduring headwinds. During this time, the
Group has invested heavily in research and development activities
targeted at products and application areas that are expected to
drive growth over the coming years. The business optimisation that
took place prior to this year commencing, coupled with the enhanced
strategy now being followed, positions the Group well to deliver
significant, sustainable growth.
Global pandemic
The welfare and safety of our employees has been of paramount
importance throughout the pandemic and remains a priority. Our
operations remain fully functional, supported by prior IT
investments and the ongoing utilisation of partial work from home
practices, where applicable.
Travel restrictions persist in some regions and have affected
our ability to mobilise and physically meet with customers,
particularly where international travel is required. However, our
sales partners located within those regions have helped minimise
the impact on our customer base by continuing to offer a level of
domestic support. China's well publicised zero-COVID policy has
recently led to further lockdowns which has resulted in factory
closures and a reduced level of business activity.
On a global basis, there are several customers who are not yet
allowing face to face visits and ultimately, the conclusion drawn
is that the situation will remain fluid for some time.
The CML teams throughout the world continue to demonstrate a
resilience and dedication for which the Board are extremely
thankful. They have continued to work tirelessly under challenging
circumstances and their commitment both to CML and our customers
has not wavered. As we continue to face the challenges of COVID-19,
including the ongoing risk of further rolling lockdowns, we do so
with the support of a dedicated, talented team around the
world.
Russian conflict in Ukraine
Following Russia's invasion of Ukraine on 24 February 2022 and
the sanctions subsequently imposed, CML ceased sales into the
Russian market. The impact of that action resulted in an immaterial
bad debt being recorded for the first time in many years. The Group
continues to adhere to applicable UK government sanctions in force
at any one time and future business plans take those restrictions
into account.
Strategy
The Group's vision is to be the first-choice semiconductor
partner to technology innovators, together transforming how the
world communicates.
The focus is on our customers' success by delivering advantages
through the improved functionality and performance of class leading
IC solutions. R&D activity is targeted at developing the
product portfolio to support emerging and evolving customer
requirements for size, cost and performance whilst striving to
remain our customer's first choice supplier within their advanced
communication platforms.
During the prior financial year, our strategy evolved to include
the development and market launch of the SuRF product portfolio to
address higher frequency (microwave/millimetre wave) and wider
bandwidth wireless applications. Added to the existing elements of
the Group's expansion objectives, the growth strategy currently
consists of four key areas for R&D investment:
1. "Defend and grow" revenues in core CML markets.
2. Develop a portfolio of new products to expand the addressable
market (SuRF).
3. Selected "other" product initiatives to expand into new high
growth markets.
4. Internal research and innovation to maintain product
superiority and suitability.
In today's world, "connected everything" is propelling
exponential increases in data consumption, driving growth across
wireless communications markets globally. We are expanding our
total addressable market having enlarged our market focus to
include applications within the so-called mega trend areas of
Industrial Internet of Things (IIoT), 5G and Industry 4.0. This
complements the historic market areas of public safety, maritime
and mission critical wireless voice and data communications,
leveraging our systems knowledge, engineering capabilities and
routes to market.
Markets and operations
For the comparable period, revenues from voice-centric wireless
applications were heavily impacted by the pandemic, with the
situation across a wide range of data-centric customers somewhat
mixed. As the year progressed, conditions improved within the
Group's established end markets for both professional voice and
industrial data communications products, supported by initial
revenues from the introduction of the SuRF product range.
The Communications market is demonstrating a number of growth
areas including the transition to higher-capacity digital networks
within voice-centric markets and, in data-centric markets, the
increasing data throughput requirements from terrestrial and
satellite communications applications. The latter is required to
meet the needs of the growing machine -- to -- machine (M2M) and
IIoT sectors. Ancillary markets continue to develop which serves to
maintain the very fragmented nature of the Group's communications
markets. New product releases in recent years are expected to
capture a higher share of a growing market over time.
In addition to the traditional wireless voice and data market
areas served, our plan to significantly widen the product portfolio
and address broader application areas is being achieved through a
combination of resource blend and new customer engagements.
Under our established growth strategy, the addressable
semiconductor market includes a number of key future growth areas,
including critical infrastructure (public utilities, smart grid,
RFID), 5G (repeaters, small/pico cells, fixed wireless access) and
satellite communications (terminals, broadband access). The Group's
total addressable market (TAM) has recently expanded to a value
exceeding $1bn through an enlarged product portfolio.
Through the year under review, a number of new integrated
circuits (ICs) were released or priority sampled to market. As an
example, to deal with the future needs of 5G networks that will
operate on millimetre wave radio frequencies, the Group sampled a
suitable Power Amplifier solution to selected customers that
addresses the need to meet demanding technical specifications but
with better efficiency leading to reduced heat generation. The
higher frequencies that future 5G products will utilise offer
higher data rates, greater capacity, better quality and lower
latency.
For satellite communication applications in the form of
ground-based terminals and reception equipment, engineering
activities have been underway for some time that are expected to
lead to meaningful revenue generation in the years ahead. Aside
from technical performance and commercial competitiveness, the
focus on our customers' success and our inherent partnership
capabilities are key factors that are setting CML aside from our
competition and this bodes well for the future growth of the
business.
Customer adoption of the Group's products marketed under the
SuRF brand continues to gather pace. First orders received from
early-stage adopters were shipped during the second half of the
year, as planned and an acceleration in the number of new product
releases is expected as we move forward. In addition to the SuRF
product range, we continue to actively invest in new platform
technology and differentiated wireless/baseband products to gain
market share in a combination of existing and new end application
areas. These new releases build upon prior year investments and
product introductions that also serve to increase the number of
market opportunities we can service.
Operationally, it has been challenging to address the increased
demands placed upon the team through what is a rapid expansion of
the product range. It is once again essential to acknowledge the
efforts being expended in that regard and its importance towards
maximising our chances of success in the future. Following
corporate acquisition and disposal events over the last two years,
the Group has now rebalanced its internal design skills and
operational capabilities to be in tune with its current growth
strategy. One of our guiding principles is to foster a culture of
quality with a sense of urgency and that principle is key to future
success.
The Group continues to invest significant effort in ensuring
global sales channels are appropriate for the direction of travel
that the business is taking. Where possible, those channels are
being exploited to good effect as the release of new products
gathers pace, although the process is one of evolution and
refinement. As reported at the interim stage, customer reach has
been extended further through a widening of the existing agreement
with RFMW to become a global partner, along with the addition of
several new manufacturers' representatives in the Americas
region.
Extended delivery lead times from raw material suppliers and
third-party manufacturing services companies continue to be a
factor across the semiconductor industry. The Group has navigated
that situation comparatively well so far and we remain well placed
for this to continue, supported by the prior decision to maintain
higher levels of raw material inventory. Notwithstanding that, it
is important to recognise that our semiconductor solutions are a
sub-set of the electronic components that customers need in order
to successfully produce their own products. Their failure to secure
the other components required could have an impact on Group sales.
Capacity constraints in the supply chain could well continue beyond
the end of this calendar year.
Outlook
Financially, the current trading year has started well, backed
by a strong order book stretching beyond twelve months. The Group's
traditional voice markets have recovered nicely and demand from our
data-centric customer base is at a healthy level. The expansion
into wider markets through microwave/millimetre wave product
developments is well underway. Operationally, the efforts being
made towards capturing the growth opportunities already identified
are expected to bear fruit and the pipeline of opportunity
continues to grow.
Clearly headwinds and risks remain, including potential pandemic
lockdowns, the current economic outlook and geopolitical
uncertainties. That said, relatively similar conditions have been
in place across each of the last two financial years and they are
again factored into growth expectations for the year ahead. The
Group is making good advances and has a well-seasoned team
navigating the business.
Subject to unforeseen circumstances, the Board remains confident
that the year ahead will deliver a firm improvement in results,
both financially and operationally.
Financial review (1)
The change in Auditor, ratified through the year under review,
has resulted in a restatement of some of the prior year's figures.
The changes include the treatment of other income and the movement
of share-based payments within the income statement, along with the
reclassification of certain cash balances that are on deposit and a
change to the capital redemption reserve within the consolidated
statement of financial position. The changes have no effect on the
profit before tax or the value of net assets previously
reported.
Group turnover for the year to 31 March 2022 was GBP16.96m
representing an increase of 29% against the prior full year period
(2021: GBP13.10m), with the second half slightly stronger than the
first. Revenue growth was driven by a recovery in the voice-centric
markets coupled with a strong contribution from those customers
active within M2M/IIoT market areas. Geographically, shipments
improved in each major region, namely Asia, Europe and the Americas
although it is important to note that annual revenue comparisons by
region can be misleading because customers can and do alter their
manufacturing locations periodically.
Higher sales and a slightly improved margin due to product mix
delivered a Gross Profit of GBP12.80m, representing an increase of
35% year-on-year (2021: GBP9.46m). This is a pleasing outcome given
the raw material price increases encountered over the past 18
months and the need to impose price increases across the Group's
product range on more than one occasion. The year ahead will
encounter higher inventory costs if the current strength of the US
dollar is maintained, and an element of allowance has been made
within the Group's growth expectations.
Customer dependency for the year reflected the strength in depth
of the very fragmented markets being addressed, with only one
customer accounting for between 10 and 15% of Group revenues and
only two customers in the 5% to 7% range.
Distribution and administration costs rose to GBP11.56m (2021:
GBP10.57m) with the majority of the increase attributable to a
number of non-recurring expenses. These included the move across to
an AIM listing from the standard segment of the Main Market,
property-related activities associated with a Planning application
on the Group's 28-acre Essex site and various legal costs
associated with an investment property sale and operating company
leases. These costs, when combined with an impairment and write off
of GBP0.39m following a review of engineering projects, exceeded
the overall increase in distribution and administration expenses
year-on-year.
Research and development expenditure for the year was steady at
GBP4.79m (2021: GBP4.90m). Of this amount, GBP1.26m was expensed
(2021: GBP0.93m) and GBP3.53m was capitalised under the Group's
research and development policy.
An expense of GBP0.10m was recognised for share-based payments
(2021: GBP0.14m).
Strong revenue growth coupled with a relatively stable cost base
led to a significant swing in operational profitability, moving
from a loss of GBP0.98m for FY21 to a profit of GBP1.21m for FY22.
This was a very pleasing outcome for what is a key performance
measurement.
Not to be confused with the previously referenced other
operating income, the Group also receives other income from the
rental of two commercial property assets that have been surplus to
operational requirements for some years. Rental income for the year
amounted to GBP0.22m in comparison with a prior year figure of
GBP0.34m. The reduction in rental income was due to one of the two
property assets being disposed of through the period, generating a
cash inflow of GBP1.75m. The remaining commercial property asset
has been reclassified as held for sale with a market valuation of
GBP1.98m.
In addition to rental income, the Group benefited from
forgiveness of a US government grant previously received under the
COVID-19 Paycheck Protection Program amounting to GBP0.29m. The
total sum recorded under other income was GBP0.50m (2021:
GBP0.37m).
Net finance income of GBP0.07m (2021: GBP0.04m) along with a
small loss of GBP0.05m upon sale of the investment property led to
profit before taxation advancing to GBP1.74m against what was
essentially a break-even year for the continuing business for the
previous financial year.
The Group continued to benefit from UK tax credits associated
with some of its research and development activities, albeit at a
lower level than the prior year. Additionally, the need to provide
for the expected increase in corporation tax from 19% to 25%
through to 2025 led to a deferred tax charge (non-cash) of GBP0.45m
(2021: GBP0.09m). Overall, an income tax charge of GBP0.50m was
recorded against a prior year credit of GBP0.79m.
Profit after tax amounted to GBP1.24m (2021: GBP0.80m), an
improvement of 54%, with basic EPS rising 55% to 7.45p (2021:
4.81p).
The Group's cash reserves as at 31 March 2022 stood at
GBP25.04m, representing a reduction of GBP7.86m when compared to
one year earlier (31 March 2021: GBP32.20m). The balance reported
arises after a research and development spend of GBP4.79m, dividend
payments totalling GBP8.96m and a GBP1.10m investment in plant and
equipment, including the ongoing expansion of the Group's
capabilities to incorporate the evaluation and testing of microwave
and millimetre wave semiconductor products and installation of
solar panels at the Group's headquarters in Essex. Cash inflows
included the sale of an investment property for GBP1.75m along with
early repayment of a GBP0.29m loan note associated with a potential
acquisition that did not materialise.
Inventory levels continue to be maintained at relatively high
levels, helping to reduce the impact of ongoing capacity issues
within the semiconductor market generally and also in support of an
expanding product range. At 31 March 2022, inventories were valued
at GBP2.26m (2021: GBP1.45m) with the increases attributable across
raw materials, work in progress and finished goods
collectively.
The Group has a historic final pension scheme that has been
closed to new members and future accrual for many years. Along with
the Company, the Trustees and their professional advisors have
worked diligently in recent years to achieve the right balance
between adequate scheme funding and business growth objectives. As
a result, the scheme funding position has improved and for the year
under review a deficit of GBP2.44m has been recorded under IAS 19
(2021: GBP5.57m).
Separately, the most recent actuarial report carried out by an
independent professionally qualified actuary, as at 31 March 2022,
resulted in a net pension surplus estimate of GBP1.09m (estimate 31
March 2021: GBP0.47m). The market value of the assets of the scheme
were sufficient to cover 105% of the benefits accrued to members,
after allowing for future increases in these benefits.
The GBP1.09m pension surplus calculated under the funding
valuation basis above is different to the accounting valuation
presented in the Group consolidated balance sheet, which shows a
net pension liability of GBP2.44m. Differences arise between the
funding valuation and accounting valuation, mainly due to the use
of different assumptions in valuing the liabilities in accordance
with the accounting standard IAS 19 Retirement Benefits.
All administrative expenses of running the pension scheme are
met directly by the scheme along with pension protection fund
levies.
1. (2021 comparatives relate only to continuing operations)
Chris Gurry
Group Managing Director
Consolidated income statement for the year ended 31 March
2022
2021
2022 Restated
Notes GBP'000 GBP'000
--------------------------------------------- ----- -------- ---------
Continuing operations
Revenue 1,2 16,964 13,101
Cost of sales (4,169) (3,646)
--------------------------------------------- ----- -------- ---------
Gross profit 12,795 9,455
Distribution and administration costs (11,562) (10,567)
Share -- based payments (98) (143)
--------------------------------------------- ----- -------- ---------
1,135 (1,255)
Other operating income 79 278
--------------------------------------------- ----- -------- ---------
Profit / (Loss) from operations 1,214 (977)
Other income 500 370
Revaluation of investment properties 8 - 579
Loss on sale of investment properties (50) -
Finance income 106 75
Finance expense (33) (37)
Profit before taxation 1,737 10
Income tax (charge) / credit 4 (499) 792
--------------------------------------------- ----- -------- ---------
Profit from continuing operations 1,238 802
Profit from discontinued operations 7 - 22,762
--------------------------------------------- ----- -------- ---------
Profit after taxation attributable to equity
owners of the parent 1,238 23,564
--------------------------------------------- ----- -------- ---------
The Consolidated Income Statement has been restated for year
ended 31 March 2021. See note 12 for further details.
Earnings per share for profit from continuing
operations attributable to the ordinary
equity holders of the Company:
Basic earnings per share 57.45p 4.81p
Diluted earnings per share 57.35p 4.79p
Earnings per share for profit attributable
to the ordinary equity holders of the Company:
Basic earnings per share 57.45p 141.13p
Diluted earnings per share 57.35p 140.56p
The following measure is considered an alternative performance
measure not a generally accepted accounting principle. This ratio
is useful to ensure that the level of borrowings in the business
can be supported by the cashflow in the business. For definition
and reconciliation see note 6.
Adjusted EBITDA 64,308 2,731
Consolidated statement of total comprehensive income for the
year ended 31 March 2022
2022 2022 2021 2021
GBP'000 GBP'000 GBP'000 GBP'000
---------------------------------------- ------- ------- ------- -------
Profit for the year 1,238 23,564
Other comprehensive (expense)/income:
Items that will not be reclassified
subsequently to profit or loss:
Re-measurement of defined benefit
obligation 3,307 (897)
Deferred tax on actuarial loss (827) 170
Change in deferred tax rate on
defined benefit obligation 345 -
----------------------------------------- ------- ------- ------- -------
Items reclassified subsequently
to profit or loss upon derecognition:
Foreign exchange differences 880 (312)
Reclassification of foreign exchange
differences on discontinued operations - (1,100)
----------------------------------------- ------- ------- ------- -------
Other comprehensive expense for
the year net of taxation attributable
to equity owners of the parent 3,705 (2,139)
----------------------------------------- ------- ------- ------- -------
Total comprehensive income for
the year attributable to the equity
owners of the parent 4,943 21,425
----------------------------------------- ------- ------- ------- -------
Total comprehensive income
for the year attributable to
the equity owners of the parent
Continuing operations 4,943 (237)
Discontinued operations - 21,662
----------------------------------- ----- ------
4,943 21,425
--------------------------------- ----- ------
Consolidated statement of financial position as at 31 March
2022
2021 2021
2022 2022 Restated Restated
GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- -------- ------- --------- ---------
Assets
Non -- current assets
Goodwill 7,531 7,072
Other intangible assets 1,119 1,276
Development costs 11,197 9,191
Property, plant and equipment 5,593 4,864
Right-of-use assets 458 409
Investment properties - 3,775
Deferred tax assets 1,550 1,531
--------------------------------------- -------- ------- --------- ---------
27,448 28,118
Current assets
Investment properties - held
for sale 1,975 -
Inventories 2,258 1,450
Trade receivables and prepayments 2,199 2,434
Current tax assets 409 1,046
Cash and cash equivalents 19,084 22,046
Short term cash deposits 5,958 10,150
--------------------------------------- -------- ------- --------- ---------
31,883 37,126
-------------------------------------- -------- ------- --------- ---------
Total assets 59,331 65,244
--------------------------------------- -------- ------- --------- ---------
Liabilities
Current liabilities
Bank loans and overdrafts - 282
Trade and other payables 2,827 3,081
Lease liabilities 230 183
Current tax liabilities 42 80
--------------------------------------- -------- ------- --------- ---------
3,099 3,626
-------------------------------------- -------- ------- --------- ---------
Non -- current liabilities
Deferred tax liabilities 3,702 2,339
Lease liabilities 238 262
Retirement benefit obligation 2,439 5,570
--------------------------------------- -------- ------- --------- ---------
6,379 8,171
-------------------------------------- -------- ------- --------- ---------
Total liabilities 9,478 11,797
--------------------------------------- -------- ------- --------- ---------
Net assets 49,853 53,447
--------------------------------------- -------- ------- --------- ---------
Capital and reserves attributable to equity owners
of the parent
Share capital 865 859
Share premium 1,362 1,039
Capital redemption reserve 8,285 8,285
Treasury shares - own share
reserve (1,670) (1,670)
Share -- based payments reserve 490 570
Foreign exchange reserve 1,182 302
Accumulated profits reserve 39,339 44,062
--------------------------------------- -------- ------- --------- ---------
Total shareholders' equity 49,853 53,447
--------------------------------------- -------- ------- --------- ---------
The Consolidated Statement of Financial Position has been
restated for year ended 31 March 2021. See note 12 for further
details.
Consolidated cash flow statement for the year ended 31 March
2022
2021
2022 Restated
GBP'000 GBP'000
------------------------------------------ -------------------- ----------
Operating activities
Profit for the year before taxation
- continuing operations 1,737 10
Profit for the year after taxation
- discontinued operations - 22,762
Adjustments for:
Depreciation - on property, plant
and equipment 375 370
Depreciation - on right-of-use assets 258 438
Impairment of development costs 123 701
Amortisation of development costs 1,507 3,789
Amortisation of intangibles recognised
on acquisition and purchased 283 212
Profit on disposal of property, plant
and equipment - 16
Loss on disposal of investment properties 50 -
Revaluation of investment properties - (579)
Gain on disposal of discontinued
operations - (21,740)
Rental income (215) (344)
Forgiveness US PPP loan (284) -
Movement in non-cash items (Retirement
benefit obligation) 176 201
Share -- based payments 98 143
Finance income (106) (75)
Finance expense 33 37
Movement in working capital (1,025) 1,388
------------------------------------------ -------------------- ----------
Cash flows from operating activities 3,010 7,329
Income tax received 905 494
------------------------------------------ -------------------- ----------
Net cash flows from operating activities 3,915 7,823
------------------------------------------ -------------------- ----------
Investing activities
Disposal of business (net of expenses) - 33,261
Acquisition of subsidiary, net of
cash acquired - (100)
Proceeds from sale of investment 1,750 -
Purchase of property, plant and equipment (1,105) (390)
Investment in development costs (3,532) (7,270)
Repayment / (Investment) in fixed
term deposits 4,192 (10,150)
Repayment of Investment loan note 293 -
Investment in intangibles - 25
Rental income 215 344
Finance income 106 75
Net cash flows from / (used in)
investing activities 1,919 15,795
------------------------------------------ -------------------- ----------
Financing activities
Lease liability repayments (287) (556)
Proceeds from borrowings - 282
Issue of ordinary shares 329 29
Purchase of own shares for treasury - (1,590)
Dividends paid to shareholders (8,964) (674)
Share capital redemption - (8,276)
Finance expense - (15)
------------------------------------------ -------------------- ----------
Net cash flows used in financing
activities (8,922) (10,800)
------------------------------------------ -------------------- ----------
Increase / (decrease) in cash and
cash equivalents (3,088) 12,818
------------------------------------------ -------------------- ----------
Movement in cash, cash equivalents
and fixed term deposits:
At start of year 22,046 8,479
(Decrease) / increase in cash, cash
equivalents and fixed term deposits (3,088) 12,818
Effects of exchange rate changes 126 749
------------------------------------------ -------------------- ----------
At end of year 19,084 22,046
------------------------------------------ -------------------- ----------
The Consolidated and Company cash flow statements have been
restated for year ended 31 March 2021. See note 12 for further
details
Cash flows presented exclude sales taxes.
Consolidated statement of changes in equity for the year ended
31 March 2022
Share- Foreign
Share Share Redemption Treasury based exchange Retained
capital premium reserve shares payments reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ------- ------- ---------- --------- -------- -------- --------- ----------
At 31 March 2020 859 9,286 9 (80) 582 1,714 30,020 42,390
---------------------- ------- ------- ---------- --------- -------- -------- --------- ----------
Profit for year 23,564 23,564
Other comprehensive
income
Foreign exchange
differences (312) (312)
Foreign exchange
differences
discontinued
operations (1,100) (1,100)
Net actuarial gain
recognised directly
to equity on
retirement benefit
obligations (897) (897)
Deferred tax on
actuarial gain 170 170
---------------------- ------- ------- ---------- --------- -------- -------- --------- ----------
Total comprehensive
income for year
capacity as owners - - - - - (1,412) 22,837 21,425
---------------------- ------- ------- ---------- --------- -------- -------- --------- ----------
859 9,286 9 (80) 582 302 52,857 63,815
Transactions with
owners in their
capacity as owners
Issue of ordinary
shares 29 29
Purchase of own shares
- treasury (1,590) (1,590)
Issue of B shares 8,276 (8,276) -
Share capital
redemption (8,276) 8,276 (8,276) (8,276)
Dividend paid (674) (674)
Total transactions
with owners in their
capacity as owners - (8,247) 8,276 (1,590) - - (8,950) (10,511)
---------------------- ------- ------- ---------- --------- -------- -------- --------- ----------
Share -- based
payments in year 143 143
Cancellation/transfer
of share -- based
payments (155) 155 -
---------------------- ------- ------- ---------- --------- -------- -------- --------- ----------
At 31 March 2021
(restated) 859 1,039 8,285 (1,670) 570 302 44,062 53,447
---------------------- ------- ------- ---------- --------- -------- -------- --------- ----------
Profit for year 1,238 1,238
Other comprehensive
income
Foreign exchange
differences 880 880
Net actuarial gain
recognised directly
to equity on
retirement benefit
obligations 3,307 3,307
Deferred tax on
actuarial gain (827) (827)
Change in deferred tax
rate on defined
benefit obligation 345 345
---------------------- ------- ------- ---------- --------- -------- -------- --------- ----------
Total comprehensive
income for year
capacity as owners - - - - - 880 4,063 4,943
Transactions with
owners
in their capacity as
owners 859 1,039 8,285 (1,670) 570 1,182 48,125 58,390
Issue of ordinary
shares - exercise of
share options 6 323 329
Dividend paid (8,964) (8,964)
Total transactions
with owners in their
capacity as owners 6 323 - - - - (8,964) (8,635)
---------------------- ------- ------- ---------- --------- -------- -------- --------- ----------
Share -- based payment
charge - - - - 98 98
Cancellation/transfer
of share -- based
payments - - - - (178) 178 --
---------------------- ------- ------- ---------- --------- -------- -------- --------- ----------
At 31 March 2022 865 1,362 8,285 (1,670) 490 1,182 39,339 49,853
---------------------- ------- ------- ---------- --------- -------- -------- --------- ----------
The Consolidated Statement of Changes in Equity has been
restated for year ended 31 March 2021. See note 12 for further
details
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.
The Group is focused for management purposes on one operating
segment, which is reported as the semiconductor segment, with
similar economic characteristics, risks and returns, and the
Directors therefore consider there to be one single segment, being
semiconductor components for the communications industry.
Geographical information (by origin)
UK Americas Far East Total
GBP'000 GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ -------- --------- ---------
Year ended 31 March 2022
------------------------------------------- -------- -------- --------- ---------
Revenue to third parties - by
origin 4,569 2,572 9,823 16,964
------------------------------------------- -------- -------- --------- ---------
Property, plant and equipment 5,504 12 77 5,593
------------------------------------------- -------- -------- --------- ---------
Right-of-use assets 227 60 171 458
------------------------------------------- -------- -------- --------- ---------
Investment properties - - - -
------------------------------------------- -------- -------- --------- ---------
Investment properties - held
for sale 1,975 - - 1,975
------------------------------------------- -------- -------- --------- ---------
Development costs 9,714 - 1,483 11,197
------------------------------------------- -------- -------- --------- ---------
Intangibles - software and intellectual
property 243 - 96 339
------------------------------------------- -------- -------- --------- ---------
Goodwill 1,531 - 6,000 7,531
------------------------------------------- -------- -------- --------- ---------
Other intangible assets arising
on acquisition 184 - 596 780
------------------------------------------- -------- -------- --------- ---------
Total assets 46,024 1,163 12,144 59,331
------------------------------------------- -------- -------- --------- ---------
Year ended 31 March 2021
Revenue to third parties - by
origin (restated) 5,867 1,624 5,610 13,101
------------------------------------------- -------- -------- --------- ---------
Property, plant and equipment 4,753 22 89 4,864
------------------------------------------- -------- -------- --------- ---------
Right-of-use assets 90 255 64 409
------------------------------------------- -------- -------- --------- ---------
Investment properties 3,775 - - 3,775
------------------------------------------- -------- -------- --------- ---------
Development costs 7,942 - 1,249 9,191
------------------------------------------- -------- -------- --------- ---------
Intangibles - software and intellectual
property 264 - 101 365
------------------------------------------- -------- -------- --------- ---------
Goodwill 1,531 - 5,541 7,072
------------------------------------------- -------- -------- --------- ---------
Other intangible assets arising
on acquisition 210 - 701 911
------------------------------------------- -------- -------- --------- ---------
Total assets 52,228 2,467 10,549 65,244
------------------------------------------- -------- -------- --------- ---------
2 Revenue
The geographical classification of business turnover
(by destination) is as follows:
2021
2022 Restated
Continuing business GBP'000 GBP'000
-------------------------------------------------- ---------- ---------
Europe 3,705 2,996
Far East 9,603 7,636
Americas 2,901 2,000
Others 755 469
-------------------------------------------------- ---------- ---------
16,964 13,101
-------------------------------------------------- ---------- ---------
3 Dividend - paid and proposed
During the year a final special dividend of 50.0p per ordinary
share of 5p was paid in respect of the year ended 31 March 2021. An
interim dividend of 4.0p per ordinary share was paid on 17 December
2021 to shareholders on the Register on 3 December 2021.
It is proposed to pay a final dividend of 5.0p per ordinary
share of 5p, taking the total dividend amount in respect of the
year ended 31 March 2022 to 9.0p. It is proposed to pay the final
dividend of 5.0p, if approved, on 19 August 2022 to shareholders
registered on 5 August 2022 (2021: paid 13 August 2021 to
shareholders registered on 30 July 2021).
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.
2022 2021
GBP'000 GBP'000
-------------------------------------------------------- -------- -------
Current tax
UK corporation tax on results of the year (415) (1,089)
Adjustment in respect of previous years (6) (37)
-------------------------------------------------------- -------- -------
(421) (1,126)
Foreign tax on results of the year 121 248
Total current tax (300) (878)
-------------------------------------------------------- -------- -------
Deferred tax
Deferred tax - Origination and reversal of temporary
differences 6 91
Change in deferred tax rate 833 -
Adjustments to deferred tax charge in respect of
previous years (40) (5)
-------------------------------------------------------- -------- -------
Total deferred tax 799 86
-------------------------------------------------------- -------- -------
Tax expense / (income) on profit on ordinary activities 499 (792)
-------------------------------------------------------- -------- -------
5 Earnings per share
2022 2021
----------------------------------------------------------- ----- -----
Earnings per share for profit from continuing operations
attributable to the ordinary equity holders of the
Company:
Basic earnings per share 7.45p 4.81p
Diluted earnings per share 7.35p 4.79p
The calculation of basic and diluted earnings per share is based
on the profit from continuing operations attributable to ordinary
shareholders, divided by the weighted average number of shares in
issue during the year, as shown below:
2022 2021
--------------------------------- -----------------------------------
Weighted Weighted
average average
number of Earnings number of Earnings
Profit shares per share Profit shares per share
Basic earnings per share GBP'000 Number p GBP'000 Number p
---------------------------- ------- ------------ ---------- ------- ------------ ------------
Basic earnings per share
- from profit for year 1,238 16,628,301 7.45 802 16,696,060 4.81
---------------------------- ------- ------------ ---------- ------- ------------ ------------
Diluted earnings per
share
---------------------------- ------- ------------ ---------- ------- ------------ ------------
Basic earnings per share 1,238 16,628,301 7.45 802 16,696,060 4.81
Dilutive effect of share
options - 219,951 (0.10) - 67,886 (0.02)
---------------------------- ------- ------------ ---------- ------- ------------ ------------
Diluted earnings per
share
* from profit for year 1,238 16,848,252 7.35 802 16,763,946 4.79
---------------------------- ------- ------------ ---------- ------- ------------ ------------
2022 2021
-------------------------------------------------- ----- -------
Earnings per share for profit attributable to the
ordinary equity holders of the Company:
Basic earnings per share 7.45p 141.13p
Diluted earnings per share 7.35p 140.56p
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, as
shown below:
2022 2021
--------------------------------- ------------------------------------
Weighted Weighted
average average
number of Earnings number of Earnings
Profit shares per share Profit shares per share
Basic earnings per share GBP'000 Number p GBP'000 Number p
---------------------------- ------- ------------ ---------- -------- ------------ ------------
Basic earnings per share
- from profit for year 1,238 16,628,301 7.45 23,564 16,696,060 141.13
---------------------------- ------- ------------ ---------- -------- ------------ ------------
Diluted earnings per
share
---------------------------- ------- ------------ ---------- -------- ------------ ------------
Basic earnings per share 1,238 16,628,301 7.45 23,564 16,696,060 141.13
Dilutive effect of share
options - 219,951 (0.10) - 67,886 (0.57)
---------------------------- ------- ------------ ---------- -------- ------------ ------------
Diluted earnings per
share
* from profit for year 1,238 16,848,252 7.35 23,564 16,763,946 140.56
---------------------------- ------- ------------ ---------- -------- ------------ ------------
6 Adjusted EBITDA
Adjusted earnings before interest, tax, depreciation and
amortisation ('Adjusted EBITDA') is defined as profit from
operations before all interest, tax, depreciation and amortisation
charges and before share-based payments. The following is a
reconciliation of the Adjusted EBITDA for the years presented:
2022 2021
GBP'000 GBP'000
--------------------------------------------------- ------- -------
Profit before taxation (earnings) 1,737 10
Adjustments for:
Finance income (106) (75)
Finance expense 33 37
Depreciation 375 310
Depreciation - right-of-use assets 258 202
Impairment of development costs 123 701
Amortisation of development costs 1,507 1,191
Amortisation of acquired and purchased intangibles
recognised on acquisition 283 212
Share-based payments 98 143
--------------------------------------------------- ------- -------
Adjusted EBITDA 4,308 2,731
--------------------------------------------------- ------- -------
7 Cash, cash equivalents and fixed term deposits
2021
2022 Restated
GBP'000 GBP'000
-------------------------------------------------- ---------- ---------
Cash on deposit 10,275 10,288
Cash at bank 8,809 11,758
-------------------------------------------------- ---------- ---------
19,084 22,046
Short term cash deposits 5,958 10,150
-------------------------------------------------- ---------- ---------
25,042 32,196
-------------------------------------------------- ---------- ---------
8 Discontinued Operations
On 10 December 2020, the Group announced it had entered into a
definitive agreement to divest its Storage Division,
Hyperstone.
Hyperstone was sold on 4 February 2021 and is reported in the
prior year as a discontinued operation. The discontinued operations
generated a profit GBP22,762,000 and a total cash inflow of
GBP33,554,000 with a gain on sale after income tax of
GBP21,740,000. Full details can be found in the statutory accounts
for the year ended 31 March 2021 available at
www.cmlmicroplc.com.
9 Investment properties
During the year an investment property was sold with proceeds of
GBP1,750,000. This sale generated a loss on disposal of GBP50,000.
The remaining investment property has been reclassified and is now
held for sale.
Investment properties were measured at current market valuation.
No depreciation is provided on freehold investment properties or on
long leasehold investment properties. In accordance with IAS 40,
gains and losses arising on revaluation of investment properties
are shown in the income statement. The open market valuation value
of the investment properties recognised is GBPNil (2021:
GBP3,775,000).
The investment property was reclassified on 31 March 2022 as
held for sale as the property became vacant with no prospective
tenant in place and is held based upon the current market valuation
methodology. The property is currently expected to sell within the
next twelve months. Investment properties held for sale
GBP1,975,000 (2021: GBPNil).
10 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
sectors, 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.
COVID-19
Following the effect of the COVID-19 pandemic, the Group
followed the guidance of the World Health Organization and other
government health agencies in safeguarding the health and wellbeing
of its employees and continue to operate a hybrid working policy.
The Group did not make use of the government's staff retention
schemes in the UK, nor make any redundancies. In the United States,
the government provided support in the form of a loan under the
Paycheck Protection Program ($388,400) which was forgiven on 23 May
2021.
There continues to be localised COIVID outbreaks, and the Board
closely monitors the impact taking prudent steps to mitigate any
potential impacts to our employees, customers, suppliers and other
stakeholders. The Group remains prepared to implement appropriate
mitigating strategies to minimise any potential business
disruption.
Given the nature of the markets we operate within, we anticipate
our end customers being insulated from a consumer downturn to some
extent, although the roll-out of some of the new products may be
delayed, dampening demand for our semiconductors. Even in these
difficult times, we still maintain the belief that the Group is
well placed to move positively forward in the medium to long term.
This belief is underpinned by a strong balance sheet and no debt,
along with a product portfolio that addresses markets that have a
positive outlook.
Russia and Ukraine conflict
Following Russia's invasion of Ukraine, the Group took the
decision to cease all supplies to customers based in Russia,
resulting in the non-payment of a debt totalling GBP16,000
($20,000) which has been fully provided for.
Key risks of a non -- financial nature
The Group is a small player operating in a highly competitive
global market that 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, raw material availabilities,
manufacturing capabilities and employment of qualified personnel
will be key in the achievement of its objectives. The Group's
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 (including
the UK's withdrawal from the European Union, or "Brexit"),
political risk, the enforceability of laws and contracts, changes
in the tax laws, terrorist activities, natural disasters or health
epidemics.
11 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 2022 financial statements
12 Prior year restatement
The financial statements for year ending 31 March 2021 have been
restated as follows:
The Consolidated Statement of Comprehensive Income
Third-party product re-sales have been reclassified from other
operating income to revenue and presented on a gross basis to
correctly reflect the group's role as principal in a revenue
arrangement. In the prior year, Revenue of GBP631,000 and Cost of
sales of GBP449,000 were presented net as other operating income.
This has now been correctly classified as Revenue and Cost of sales
respectively on a gross basis in the restated statement of
comprehensive income. The reclassification of these items has had
no effect on the profit before taxation or net assets.
Rental income and government grants have been reclassified as
other income to be excluded from profit / (loss) from operations,
having previously been incorrectly classified as other operating
income before profit / (loss) from operations. The reclassification
has resulted in an increase in the loss on operations of
GBP370,000.
Share-based payment expense was incorrectly presented below
profit/(loss) from operations. They have been reclassified to be
included within profit/(loss) from operations to properly reflect
the nature of the expense. This has resulted in an increase in the
loss from operations of GBP143,000.
The reclassification of the rental income, government grants
income and share based payment expenditure provides a better
measure of operating profit/(loss) in the consolidated statement of
comprehensive income. The reclassification of these items has had
no effect on the profit before taxation or net assets.
The Consolidated statement of financial position
An omission of a transfer within the statement of changes in
equity in relation to the B shares that were issued, redeemed, and
subsequently cancelled has been corrected. The adjustment
recognises a transfer of GBP8,276,000 from retained earnings to the
capital redemption reserve as required by the Companies Act 2006
and has had no effect on the profit before taxation or net
assets.
Short term cash deposits with initial maturity of more than 3
months were incorrectly included within cash and cash equivalents.
Therefore, the short term cash deposits of GBP10,150,000 have been
reclassified as financial assets.
The Consolidated cash flow statements
Short term cash deposits totalling GBP10,150,000 with initial
maturity of more than 3 months were incorrectly included within
cash and cash equivalents. Cash flows from investing activities
have therefore been corrected to reflect the movements in the short
term cash deposits instead of reflecting these in cash and cash
equivalents. Cash flows from rental income have been reclassified
as investing activities from operating activities. The
reclassification of these items has had no effect on the profit
before taxation or net assets.
The Consolidated statement of changes in equity
An omission of a transfer within the statement of changes in
equity in relation to the B shares that were issued, redeemed, and
subsequently cancelled has been corrected. The adjustment
recognises a transfer of GBP8,276,000 from retained earnings to the
capital redemption reserve as required by the Companies Act 2006
and has had no effect on the profit before taxation or net
assets.
13 General
These Condensed Consolidated Financial Statements have been
prepared in accordance with UK adopted International Accounting
Standards and are in conformity with the requirements of the
Companies Act 2006. They do not include all of the information
required for full annual statements and should be read in
conjunction with the 2022 Annual Report.
The comparative figures for the financial year 31 March 2021
have been extracted from the Group's statutory accounts for that
financial year. The statutory accounts for the year ended 31 March
2021 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 2022 were
approved by the Board of Directors on 4 July 2022 and will be
delivered to the Registrar of Companies following the Company's
Annual General Meeting on 10 August 2022.
The financial information contained in this announcement does
not constitute statutory accounts for the year ended 31 March 2022
or 2021 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 .
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