Last checked at 19 Mar 2020 07:00
19 March 2020
CML Microsystems Plc
(The "Company" or the "Group")
Trading Update
Notice of Results
CML Microsystems Plc, which designs, manufactures and markets semiconductor solutions primarily for global communication and solid state storage markets, today issues the following trading update for the period from 1 October 2019 to 18 March 2020.
The Company's six-month report announced on 19 November 2019 stated that amidst challenging conditions, we were yet to see a meaningful uplift in order intake but had not experienced any further deterioration. The expectation at that time was for second half revenues to show a sequential improvement, with a favourable product mix and continued tight cost control.
Sales and order bookings were improving as we moved through the period under review although ongoing disruptive influences associated with the coronavirus outbreak have affected progress. It is not possible at this stage to quantify the precise impact this will have on full year financial expectations but, based upon the latest information available, the Board currently expects second half revenues to be similar to those recorded for the first six months. Gross margin as a percentage has continued to track above the prior full year.
At the half year stage, we conveyed that an assessment of the Group's global resources and capabilities was underway to make sure they are closely aligned with the direction of travel for the business. This activity has resulted in global operational changes that will improve our effectiveness and efficiency as we enter the next financial year and help accelerate delivery of the business strategy.
The Board has also supported the exploration of M&A opportunities in the period, one of which resulted in the acquisition of PRFI Ltd announced on 3 March 2020.
Most of the exceptional costs associated with these operational changes and corporate activities have been incurred during the period under review and, while the second half is expected to post a solid profit, it will not be at the same level obtained during the first six month period. Therefore, pre-tax profits for the full year will fall substantially short of market expectations.
Following the COVID-19 escalation back in January, it is pleasing to report that our China operations based in Wuxi and Shanghai returned to work during the last week of February and there were no fatalities amongst the workforce. Travel restrictions within China have not yet been fully lifted.
On a wider geographic view, the Company continues to take appropriate steps to safeguard employees and to maintain business continuity as much as practically possible. Supply chain disruptions to date are minimal and of a short-term nature.
Despite turbulent times, the Board maintains its belief that the medium to long term growth drivers for our products and services are strong and, underpinned by a strong balance sheet with no debt, continues to expect a firm uplift in the Group's performance as global negative influencers subside.
The Company currently expects to publish its results for the period ended 31 March 2020 on Tuesday 9 June 2020.
CML Microsystems Plc Chris Gurry, Group Managing DirectorNigel Clark, Group Chairman and Financial Director
| www.cmlmicroplc.comTel: +44(0)1621 875 500 |
Shore Capital Edward Mansfield James Thomas
| Tel: +44(0)20 7408 4090 |
SP Angel Corporate Finance LLP Jeff Keating
| Tel: +44(0)20 3463 2260 |
Alma PR Josh Royston Caroline Forde
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Tel: +44 (0)20 3405 0206
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About CML Microsystems PLC
CML designs and develops semiconductors for the industrial storage and communications markets. The Group has trading operations in Europe, the Far East and USA. CML targets niche 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 telecoms equipment providers and industrial product manufacturers.
The spread of its customers and products 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 ever increasing trend towards solid state storage devices in the commercial and industrial sectors, the upgrading of telecoms infrastructure around the world and the growing prevalence of private commercial communications networks for voice and/or data communications linked to the industrial internet of things (IIoT).
The Group is cash-generative, has a net cash position and is dividend paying.