CML Microcircuits Regulatory News (CML)

13 Jun 2006 07:01

CML Microsystems PLC13 June 2006 CML MICROSYSTEMS Plc PRELIMINARY RESULTS Results well ahead of expectations; risks associated with current year growth 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 2006. 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: "I believe the results for the full year ending 31 March 2006 match quite wellwith market expectations that your Company would maintain the progress recordedduring the opening half." Financial Highlights • Turnover up 12% to £26.33m (2005: £23.46m)• Pre-tax profit up 51% to £3.49m (2005: £2.31m) - including £695,000 revaluation of investment properties• Earnings per share up 5.4% to 17.68p (2005: 16.77p)• Cash reserves remain at a satisfactory level• Annual dividend of 10.5p per share (2005: 10.5p), payable 4 August 2006• Research & development expenditure increased to £5m Business Review • Increased sales of memory card controllers to existing and new customers• Successful adoption of group products within professional and leisure wireless communications markets• Increased expenditure on product and market expansion and investment in operational resources• Firm sales growth due to improved sales for memory-card controllers and wirelsss communications products - despite weakness in Wireline Telecom products (esp. in China)• 7 June statement highlighted the possible impact of a slowdown in order intake from a significant customer Regarding prospects, George Gurry, Chairman said: "I am pleased with the further progress made this year and have confidence inthe future successful growth of your company. However, continuing short-termorder book visibility and customer dependency in one product area are notablerisks to achieving growth during this current year, as advised in myannouncement to the Stock Exchange on 7 June 2006." Enquiries: CML Microsystems Plc www.cmlmicroplc.comNigel Clark, Financial Director 020 7786 9600 (today)Chris Gurry, Business Development Director 01621 875500 (thereafter) Parkgreen Communications Ltd 020 7786 9600Paul McManus 07980 541 893Ben Knowles 07900 346 978 Chairman's Statement I believe the results for the full year ending 31 March 2006 match quite wellwith market expectations that your Company would maintain the progress recordedduring the opening half. Group revenues for the year ending 31 March 2006 show an increase of 12% to£26.33m (2005: £23.46m), reflecting increased shipments of memory cardcontrollers to both existing and new customers along with the successfuladoption of group products within professional and leisure wirelesscommunications markets. Gross profit improved by £1m to £15.86m but as a percentage of revenue, ismoderately down at 60% (2005: 63%). Year on year operating profits were notsimilarly improved however, consequent to an increase in expenditure relating toproduct and markets expansion activities, together with the costs associatedwith an increased level of investment in group operational resources. With no restructuring charge this year and reduced net finance costs, pre-taxprofits rose 21% to £2.8m. In addition, a significant gain on the revaluation ofthe group's investment properties, which now under IAS 40 have to go through theIncome Statement, further improved the pre-tax profit to £3.5m (2005: £2.3m)representing an effective pre-tax profit increase of 51%. During the latter half your Company paid down the performance-related finalpurchase sum to the former shareholders of Hyperstone AG. Also completed wasthe restructuring of the group's Taiwan facility from a Hyperstone AG branchoffice to a group operating company. The group's UK operations have historically maintained a defined benefitemployee pension scheme, which has posted a progressive deficit of assetsagainst actuarial liabilities during recent years. Steps taken over that timeto limit the deficit have had only slight effect, and further measures weretaken as the year closed which are actuarially predicted to eliminate thedeficit over a five to ten year period. George Bates, who has served with the board as Group Director of Engineeringsince May 1994, retired from his executive position effective from 31 March2006, but will continue to serve with the board as non-executive director. Fromthis position, he will contribute particularly to strategic considerationsconcerning technical and engineering elements of the group's product directions. Research and Development expenditure increased over the full year to £5m andequated to 19% of revenues. The focus for R&D activities was across all mainmarket areas and reflects the growth strategy referred to within my interimstatement in November 2005. Your Directors are again recommending an unchanged annual dividend of 10.5p perordinary share (2005: 10.5p per ordinary share) payable, if approved by theshareholders, on 4 August 2006 to shareholders registered on 7 July 2006. Despite the worsening of the markets for the group's Wireline Telecom products,particularly evident in the case of China, reasonably firm overall sales growthwas achieved on the back of improved sales for the group's memory-cardcontroller and wireless communication products. Geographically, sales into the Far East fell by 13% driven by lower sales intoTelecom markets in China and lower shipments of memory card products into Taiwanwhere competition is particularly prevalent. Positive factors within thisoutcome include healthy sales gains into 'Wireless Local Loop' applicationsalong with shipments for the group's newer devices used in voice-based wirelesscommunications products. Within the European markets area, sales posted a 47% increase on the back ofgood progress with memory card controllers. Otherwise, the European marketswere characterised by gains in some sectors largely offset by weakness inothers. In the Americas, local operations reported product sales up 25% reflecting thegood progress made with improving the group's penetration of the US customerbase. Increasing business within the Americas has been a long-term goal and theresults achieved are testament to the strategy in place. From a product area perspective, memory card controllers recorded the greatestgain in sales during the year. Sales of semiconductor product for two-way radioapplications posted a 19% rise, based encouragingly on the traction being gainedby products released during the previous two years. This improvement exceededinternal forecasts. Revenues from the sale of products for wireless data applications rose 6% overthe previous year, with professional and retail paging, marine safety andproprietary wireless data networks among the application areas. I am pleased with the further progress made this year and have confidence in thefuture successful growth of your company. However, continuing short-term orderbook visibility and customer dependency in one product area are notable risks toachieving growth during this current year, as advised in my announcement to theStock Exchange on 7 June 2006. The efforts by the Group's employees in achieving these results are recognisedand are paramount to our continued future success. I would like to join withthe board of Directors in thanking them all for their commitment. G W GurryChairman13 June 2006 CML Microsystems PlcConsolidated Income Statement Unaudited Audited Year end 31st March Year end 31st March 2006 2005 Restated £'000 £'000 Revenue 26,333 23,457Cost of sales (10,473) (8,597)Gross Profit 15,860 14,860 Distribution and administration costs (13,409) (12,507) 2,451 2,353 Other operating income 472 581Operating profit before adjustments 2,923 2,934 Restructuring costs - (420)Share based payments (79) (79)Operating profit after adjustments 2,844 2,435 Revaluation of investment properties 695 -Finance costs (233) (249)Finance income 180 119Profit before tax 3,486 2,305 Income taxation (853) 181 Profit for the period attributable to equityshareholders 2,633 2,486 Earnings per shareBasic 17.68p 16.77pDiluted 17.66p 16.64p Statement of Recognised Income and Expense Unaudited Audited Year end 31st March Year end 31st March 2006 2005 Restated £'000 £'000 Profit for the period attributable to equity 2,633 2,486shareholders Foreign exchange differences 350 (40)Actuarial profit/(loss) 222 (493)Income tax on actuarial (gains)/losses (67) 148 Recognised gains and losses relating to theperiod 3,138 2,101 CML Microsystems PlcConsolidated Balance Sheet Unaudited Audited 31st March 2006 31st March 2005 Restated £'000 £'000AssetsNon current assetsProperty, plant and equipment 7,256 7,193Investment properties 3,845 3,150Intangible assets - Research & development 6,133 5,089Intangible assets - Goodwill on consolidation 3,512 3,512Deferred tax asset 1,165 1,573 21,911 20,517Current assetsInventories 2,233 1,723Trade receivables and prepayments 5,436 4,093Cash and cash equivalents 5,708 8,449 13,377 14,265 Total assets 35,288 34,782 LiabilitiesCurrent liabilitiesBank loans and overdrafts 4,000 4,378Trade and other payables 3,297 4,086Current tax liabilities 365 272 7,662 8,736 Non current liabilitiesDeferred tax liabilities 3,159 2,624Provisions 147 420Retirement benefit obligation 3,135 3,504 6,441 6,548 Total liabilities 14,103 15,284 Net Assets 21,185 19,498 EquityShare capital 745 744Convertible warrants 120 120Capital reserves 4,039 4,007Share based payments 162 82Foreign exchange differences 310 (40)Accumulated profits 15,809 14,585Shareholders' equity 21,185 19,498 CML Microsystems PlcConsolidated Cash Flow Statement Unaudited Audited Year end Year end 31st March 2006 31st March 2005 Restated £'000 £'000Operating activitiesNet profit for the period before income taxes 3,486 2,305Adjustments for:Revaluation of investment properties (695) -Depreciation 666 663Amortisation of research and development 4,005 3,354Movement in pension deficit (147) (82)Share based payments 79 79Exceptional restructuring costs (273) 420Interest expense 233 249Interest income (180) (119)(Decrease)/Increase in working capital (2,533) 243Cash flows from operating activities 4,641 7,112Income tax refunded 69 142Net cash flows from operating activities 4,710 7,254 Investing activitiesPurchase of tangible fixed assets (722) (1,351)Investment in intangible assets (5,063) (4,093)Disposals of tangible fixed assets 19 99Interest income 180 119Net cash flows from investing activities (5,586) (5,226) Financing activitiesIssue of ordinary shares 32 47Repayment of bank loan (378) -Dividends paid to group shareholders (1,563) (1,556)Interest expense (233) (249)Net cash flows from financing activities (2,142) (1,758) (Decrease)/Increase in cash and cash equivalents (3,018) 270 Movement in cash and cash equivalents:At start of period 8,449 8,245(Decrease)/Increase (3,018) 270Effects of exchange rate changes 277 (66)At end of period 5,708 8,449 CML Microsystems PlcConsolidated Statement of Changes in Equity Share Convertible Capital Share based Foreign Accumulated Total Capital Warrants reserves payments Exchange profits differences £'000 £'000 £'000 £'000 £'000 £'000 £'000AuditedAt 1st April 2004 740 240 3,844 3 - 14,000 18,827Shares issued 4 163 167Warrants converted (120) (120)Foreign Exchangedifferences (40) (40)Net actuarial lossesrecognised directly toequity (493) (493)Deferred tax on actuarial 148 148lossesDividends paid (1,556) (1,556)Profit for period 2,486 2,486Share based payments 79 79At 1st April 2005 744 120 4,007 82 (40) 14,585 19,498UnauditedShares issued 1 32 33Foreign Exchangedifferences 350 350Net actuarial gains 222recognised directly to 222equityDeferred tax on actuarial (67) (67)gainsDividends paid (1,564) (1,564)Profit for period 2,633 2,633Share based payments 80 80 At 31st March 2006 745 120 4,039 162 310 15,809 21,185 CML Microsystems Plc Notes 1. Presentation of results The directors approved this Preliminary announcement on 12th June 2006. The results for the year have been prepared using International FinancialReporting Standards. Comparative information previously published under UKGenerally Accepted Accounting Practice has been restated under InternationalFinancial Reporting Standards. Reconciliation's of this restatement may be foundin the announcement dated 15th November 2005. The audited financial information for the year ended 31st March 2005 is based onthe statutory accounts for the financial year ended 31st March 2005 (restated asreferred to above) that have been filed with the Registrar of Companies and onwhich the auditors gave an unqualified audit opinion. The financial information contained in this announcement does not constitutestatutory accounts as defined by Section 240 of the Companies Act 1985. 2. Dividend A dividend of 10.5p per Ordinary Share (2005: 10.5p per Ordinary Share) isrecommended in respect of the year ended 31st March 2006 and will be paid on 4thAugust 2006 to shareholders on the register as at 7th July 2006. 3. Earnings per share The calculation of basic and diluted earnings per share is based on the profitattributable to shareholders, divided by the weighted average number of sharesin issue during the year. This information is provided by RNS The company news service from the London Stock Exchange