CML Microcircuits Regulatory News (CML)

14 Jun 2005 07:00

CML Microsystems PLC14 June 2005 CML MICROSYSTEMS Plc PRELIMINARY RESULTS Results in Line with Expectations; Confident Outlook CML Microsystems Plc ("CML"), which designs, manufactures and markets a broadrange of semiconductor products, primarily for the global communications market,announces its Preliminary Results for the year ending 31st March 2005. CML's semiconductor solutions serve customers in the wire-line telecom, wirelessdata, two-way radio, memory card controller and programmable platform markets.Operations are in the UK, Germany, the US, Singapore, China and Taiwan. Commenting on the results, George Gurry, Chairman said: "Achieved the further improvement in performance that had been anticipated.Turnover and operating profit both moved firmly ahead, despite pressures fromcurrency and marketplace issues mentioned at the interim stage and second half R& D expenditure materially higher than originally planned." Financial Highlights • Turnover up 43% to £23.46m (2004: £16.32m)• First full year contribution by Hyperstone, acquired July 2003• Operating profit before amortisation of goodwill up to £2.1m (£0.2m)• Pre-tax profit of £3k (2004: Loss £0.97m)• Earnings per share of 2.66p (2004: Loss 5.28p)• Net cash reserves increased to £4.07m (2004: £3.86m)• Annual dividend of 10.5p per share unchanged (2004: 10.5p per share), payable 5 August 2005• Research & development expenditure grew 27% to £3.57m (2004: £2.81m). Business Review • Increased sales volume and market presence for controller devices for memory card application produced best revenues; major European memory card producer secured; competitive margins.• Expected sales gains of radio and wireless communications market products, second best performing revenue producer up 10%; improved gross margins.• Sales into traditional wireline telecom markets, up 4%, after weak second half following strong first half.• Sales in Far East up around 48% on 2004 - gains in Taiwan and PRC sales.• Sales in Europe doubled on previous year - progress in Germany, Spain, Near-East territories.• Underlying device sales in the Americas up 18%.• New products / solutions for new sectors introduced second half, set for imminent release current fiscal year. Regarding Prospects, George Gurry, Chairman, said: "I am encouraged by the further progress during the year, and with thepositioning advantages in its marketplaces that the group is progressivelybeginning to achieve. I feel quite confident that the forward-lookingstrategies employed will produce the expected success. "Although the present trading year is at an early stage, my expectations arethat subject to unforeseen circumstances, your Company will continue to achievefirm progress in its markets this year and to secure the consequent benefits. Iremain confident in the successful future of your Company." ENDS Enquiries:CML Microsystems Plc www.cmlmicroplc.com Binns & Co PRNigel Clark, Financial Director 020 7786 9600 (today) Peter Binns, 020 7153 1485Chris Gurry, Business Development Director 01621 875500 (thereafter) Paul McManus, 020 7153 1485 Or 07980 541 893 CHAIRMAN'S STATEMENT PRELIMINARY RESULTS I am pleased to report on a year that saw your Company achieve the furtherimprovement in performance that had been anticipated. Turnover and operatingprofit both moved firmly ahead, despite pressures from the currency andmarketplace issues mentioned at the interim stage and R&D expenditure in thesecond half that proved materially higher than originally planned. I amparticularly pleased to report that Hyperstone's first full year contributionformed a healthy component in the Group's overall results. Group turnover for the year ending 31 March 2005 rose by 43% to £23.46M (2004:£16.32M), with a large proportion of this gain marked by the progress achievedwith increasing the sales volume and market presence for the Group's controllerdevices aimed towards Memory Card applications. A major European memory cardproducer is among customers contracted during the year. Expected gains were also posted in sales of Group products into radio andwireless communication markets, but sales for products into traditional wirelinetelecom market areas were only slightly higher on a full year basis, resultingfrom a weaker second half performance following the strong gains reported forthe opening half. Gross margins returned by products targeted at communications markets may varyquite widely according to the target market application, but are on averagehigher than the gross margins typical in the case of the high volume memory cardproducts that contributed materially to the sales increase reported. Although a simplistic direct connection would not be entirely appropriate to thecurrent Group results, the bias towards including higher volume but lower marginproduct strategies has bearing on the overall gross margin achieved, which showsa 5% reduction to 58% (2004: 63%). Research and Development expenditure grew by 27% to £3.57M against £2.81Mreported the year earlier, and reflects the strong investment by the Group insupport of its product development strategies. Products announced during thesecond half or progressing towards imminent release include solutions for newmarket areas, as well as a range of new and uniquely flexible programmableplatform devices. These latter products offer exceptional advantages inminimising both the cost and time to market of devices for both standard andcustom market applications. In addition to increased R&D investment during the year, the Group effected thetransfer of the entire operations of Integrated Micro Systems from its locationat Rochester, Kent to the Group's main UK operating centre at Maldon, Essex. A £420k charge has been taken against the exceptional restructuring costs thatare expected to arise during the current trading year as the result of thatrelocation. Operating profit before amortisation of goodwill is increased to £2.1M (2004:£0.2M), reducing to £0.54M after amortisation is taken to account (2004: £0.98Mloss). The goodwill in question is the goodwill charge arising through theacquisition of Hyperstone, which is being written off over a three-year period. A nominally positive pre-tax outcome of £3k is reported (2004: £0.97M loss)which, with the benefit of a positive tax charge, translates to earnings of2.66p per ordinary share (2004: 5.28p loss per ordinary share). Net cashreserves at the year-end were slightly increased at £4.07M (2004: £3.86M). Your Directors are recommending payment of an unchanged annual dividend of 10.5pper ordinary share (2004: 10.5p per ordinary share) payable, if approved by theshareholders, on 5th August 2005 to shareholders registered on 8th July 2005. On a geographic basis, sales into the Far East were increased by approximately48% over the year earlier, with Taiwan and PRC sales recording particularlypleasing gains. European sales, although lower in total, were more thandoubled when compared with the year earlier on the back of good progress inGermany, Spain and near-east territories. Underlying device sales into the Americas posted an 18% rise, although thefigures quoted under "geographical classification" in the full accounts do notsupport that increase. This results from the treatment of royalty incomewithin the full accounts figures due to an arrangement inherited with theacquisition of Hyperstone. I have referred to this in an earlier Report, andits effect can be expected to diminish in future years. In product terms, memory card controller sales led with highest growth rate andhighest total revenue, while radio and wireless category devices were a closesecond in combined revenue, albeit posting a more modest 10% growth rate.Turnover from products aimed at Wireline telecom applications achieved only a 4%overall rise, with second half sales into Far East markets failing to match thefirst half strength as foreseen. I am encouraged by the further progress your company has demonstrated during theyear just ended, and with the positioning advantages in its marketplaces thatthe group is progressively beginning to achieve. I feel quite confident thatthe forward-looking strategies with which it has been particularly engaged willproduce the expected success. Although the present trading year is at an early stage, my expectations are thatsubject to unforeseen circumstances, your Company will continue to achieve firmprogress in its markets this year and to secure the consequent benefits. Iremain confident in the successful future of your Company. I would like to close by joining with your Directors in thanking all of theGroup's employees for their efforts and commitment towards the Companythroughout the year, without which its continuing growth would not have beenachieved. G. W. GurryChairman SUMMARY GROUP PROFIT AND LOSS ACCOUNTfor the year ended 31st March 2005PRELIMINARY RESULTS Notes Unaudited 2005 Audited 2004 £ £ £ £ Turnover 23,458,744 16,321,691Cost of sales (9,685,131) (5,998,681) Gross Profit 13,773,613 10,323,010 Amortisation of goodwill 3 (1,561,024) (1,170,768)Other distribution costs and administrative (12,255,207) (10,389,572)expensesOther operating income 583,102 253,583 Operating profit before amortisation of goodwill 2,101,508 187,021Amortisation of goodwill (1,561,024) (1,170,768) Operating Profit/(Loss) 540,484 (983,747) Exceptional restructuring costs 4 (420,000) - 120,484 (983,747)Interest receivable 118,210 125,677Interest payable (235,495) (121,196) Profit/(Loss) on Ordinary Activities before Taxation 3,199 (979,266) Tax on loss on ordinary activities 415,974 208,595 Profit/(Loss) on Ordinary Activities after TaxationParent Company (75,958) 143,779Subsidiary undertakings 495,131 (914,450) 419,173 (770,671)Minority interests (24,046) (4,169) Profit/(Loss) for the Financial Year 395,127 (774,840)Proposed dividend 2 (1,564,310) (1,554,143) Retained Loss for the Year (1,169,183) (2,328,983) Earnings/(Loss) per shareBasic 5 2.66p (5.28)p Diluted 5 2.64p (5.28)p Statement of Total Recognised Gains and LossesProfit/(Loss) for the financial year 395,127 (774,840)Currency translation differences on foreigncurrency net investments (62,765) (1,017,390) Total gains and losses recognised since lastReportand Accounts 332,362 (1,792,230) SUMMARY GROUP BALANCE SHEETat 31st March 2005PRELIMINARY RESULTS Unaudited 2005 Audited 2004 £ £ £ £Fixed AssetsIntangible assets 1,951,281 3,512,305Tangible assets 10,345,139 9,671,475 12,296,420 13,183,780Current AssetsStocks 1,723,106 1,784,261Debtors 4,093,607 3,387,498Investments 5,388,449 6,933,510Cash at bank and in hand 3,060,263 1,479,599 14,265,425 13,584,868Creditors: Amounts falling due within one year (10,298,782) (9,484,710) Net Current Assets 3,966,643 4,100,158 Total Assets less Current Liabilities 16,263,063 17,283,938 Provisions for liabilities and charges (724,920) (584,574) Net Assets 15,538,143 16,699,364 Capital and ReservesCalled up share capital 744,048 740,068Convertible warrants 120,230 240,433Share premium account 3,752,510 3,589,606Capital redemption reserve 254,730 254,730Revaluation reserve 985,604 985,604Profit and loss account 9,649,761 10,881,709 Shareholders' Funds 15,506,883 16,692,150 Minority interests 31,260 7,214 15,538,143 16,699,364 SUMMARY GROUP CASH FLOW STATEMENTfor the year ended 31st March 2005PRELIMINARY RESULTS Unaudited Audited 2005 2004 £'000 £'000 Net cash inflow/(outflow) from operating activities 3,009 (596)Returns on investments and servicing of finance (117) 4Taxation 142 329Capital expenditure and financial investment (1,252) (166)Acquisition of Hyperstone AG - (3,228)Equity dividends paid (1,556) (1,535) Net cash inflow/(outflow) before financing 226 (5,192)Financing 46 4,735 Increase/(decrease) in cash 272 (457) Reconciliation of Operating Profit to Net Cash Inflow/(Outflow) from Operating Activities Operating profit/(loss) 540 (984)Depreciation 666 575Amortisation of goodwill 1,561 1,171(Profit)/loss on sale of fixed assets (81) 4Decrease/(increase) in stocks 61 (138)(Increase)/decrease in debtors (691) 1,266Increase/(decrease) in creditors 953 (2,490) 3,009 (596)Reconciliation of Movement of FundsFunds at start of period 3,868 9,599Translation difference (69) (896)Increase/(decrease) in cash 272 (457)Cash inflow from increase in loans - (4,378) Funds at close of period 4,071 3,868 Analysis of FundsCash at bank and in hand 3,060 1,480Current asset investments 5,389 6,934Bank overdrafts - (168) 8,449 8,246Bank loans due within one year (4,378) (4,378) Funds at close of period 4,071 3,868 NOTES 1. Presentation of results This Preliminary Statement was approved by the directors on 13th June 2005. The results have been prepared using accounting policies and practicesconsistent with those adopted in the 2004 Report and Accounts but have not beenaudited. The audited results for the year ended 31st March 2004 are an abridged versionof the Company's Report and Accounts which have been filed with the Registrar ofCompanies and on which the auditors gave an unqualified audit option. The financial information contained in this Preliminary Statement does notconstitute statutory accounts as defined by section 240 of the Companies Act1985 2. Dividends A dividend of 10.5p per Ordinary Share (2004: 10.5p per Ordinary Share) isrecommended in respect of the year ended 31st March 2005 and will be paid on 5thAugust 2005 to shareholders on the register as at 8th July 2005 3. Exceptional goodwill written off Goodwill arising on the acquisition of Hyperstone AG is being amortised over aperiod of 36 months from 2nd July 2003. 4. Exceptional restructuring costs Exceptional restructuring costs represents anticipated costs of expenditure thatare expected to be incurred during the next financial year in closing down theGroup's operation in Rocester, Kent and relocating the business to thepurpose-built facility in Maldon, Essex. 5. Basic and diluted earnings/(loss) per share The calculation of the basic and diluted earnings/(loss) per share is based onthe earnings/(loss) attributable to ordinary shareholders, divided by theweighted average number of shares in issue during the year. This information is provided by RNS The company news service from the London Stock Exchange