Final Results
CML MICROSYSTEMS PLC
15 July 1999
CML Microsystems Plc
Preliminary Results for the Year ended 31st March 1999
CHAIRMAN'S STATEMENT
The widespread business downturn in the Far East, together with a
general reduction in the demand for semiconductor products seen in other
areas, combined to hold back the progress of the Group's semiconductor
businesses in the second half. A serious shortfall in performance by
the Group's traffic business was also encountered. The overall outcome
for the year remains, nevertheless, broadly in line with reported market
expectations.
For the twelve month trading period ending 31 March 1999, the pre-tax
profit of £1.329m is down by almost half on the figure for the
corresponding period (1998 £2.524m), on turnover virtually unchanged at
£20.62m (1998 £20.61m). A fall in turnover was recorded for the
semiconductor businesses.
Operating profit fell by 53% to £0.99m (1998 £2.126m), which includes an
operating loss of approximately £0.52m reported for the traffic
business.
Net interest earnings are down by 15% at £0.339 (1998 £0.398m),
resulting from the reduced cash available for investment and the lower
interest rates ruling in the market. Net cash stood at £4.4m at the
year end (1998 £8.0m), reflecting the high level of capital expenditure
during the trading period.
In addition to expenditure in the region of £2.94m on the new UK
semiconductor operating facility, the company purchased and cancelled 2m
of its shares through the market. The average price paid per share was
70.5p, for a total cost of £1.42m.
The balance sheet reflects the change due to these matters.
Your directors have considered the current results, along with their
opinion of future prospects, and they find no good reason to change the
recommended dividend for the year against the reported market
expectation. They are recommending the payment of a maintained dividend
of 7p per Ordinary share. Subject to shareholder approval, this
dividend will be payable to all shareholders on the register as on the
30th July 1999.
As I have indicated, the semiconductor operating businesses found
selling conditions very difficult in many of their markets. In the Far
East, a marked slowdown in business volume was apparent, coupled with
extreme pressure on component prices as equipment producers strove to
compete with lower cost economies in the area. A small rise in overall
sales was posted for the region.
A general slow down in demand was also seen in the European and USA
market territories, where turnover was down in each case. Some welcome
relief was found through a healthy increase in sales into other areas,
led by the developing markets in the South Americas.
Telecommunications again formed the strongest growth area for products,
supported by the increasing range of Group devices serving this market.
Products for digital wireless applications continued to make progress
with the steadily increasing demand for wireless data solutions.
Business opportunities in the Group's mainstream historic product area,
Private Mobile Radio (PMR), continued to show material decline.
Occupation of the new UK semiconductor operating facilities is assisting
the Group's plans to respond effectively to changing market needs in the
semiconductor business area. New management measures were taking place
at the US semiconductor operating company through the year-end, and
resources for the Singapore based sales operation are being expanded to
meet the opportunities in this region.
Steps to achieve the full-focus by IMS, the Group's advanced design
centre, toward group-centred products proceeded as planned. This
required the foregoing of cost-paid business in favour of the Group's
strategic product interests. This cost is included with the present
results and will continue to have bearing for the short term.
The results for Microsense Systems Limited, the Group's Traffic
business, were a great disappointment. An increase in sales,
principally into the UK traffic market, did not prevent this business
from incurring a very substantial loss for the period. Problems were
encountered with the successful execution of various contracts relating
to the provision of services and products, and indications of underlying
weakness in the control of some operational aspects of the business are
evident. Consideration of these and other matters are in hand at this
time of reporting to you.
Radio Data Technology recorded a healthy increase in turnover and profit
for the period. It found good demand for its growing range of wireless
data and wireless video end-user products, and has recently enlarged its
operating facilities to better accommodate their growth. RDT is gaining
increasing presence in the UK and European marketplace for high-
performance wireless data and video solutions.
Subsequent to the year end, James Christopher Hayes has tendered his
resignation as a non-executive member of your board. Chris Hayes was
instrumental in establishing the profitable presence of the Group in the
US marketplace, and for many years guided this initial presence through
its growth into the important Group operation that it forms today. Your
board wishes to thank Chris for his contribution to the company, and to
extend their good wishes for his happy retirement to Scotland.
It is always difficult, at this point in any trading year, to offer much
certainty towards its outcome.
I am encouraged by recent trading evidence to believe that the market
situation for semiconductor products is improving in the Far East and
elsewhere. The take-up prospects for newer parts is also good. The
semiconductor businesses expect to move ahead. I have little doubt that
RDT will do likewise.
The Directors are actively reviewing the Group's traffic interests and
an announcement will be made as soon as the position clarifies itself.
Subject to unforeseen circumstances, I am optimistic that the results
for this current year will post an improvement.
The directors wish to record their thanks to the Group's employees for
their continuing commitment and support.
GW Gurry
Chairman
15 July 1999
CML Microsystems Plc
Preliminary Results for the
year ended 31st March 1999
Group Profit and Loss Account
Unaudited Audited
1999 1998
£'000 £'000
Turnover 20,617 20,611
-------- --------
Operating Profit 990 2,126
Interest Receivable 381 457
Interest Payable (42) (59)
-------- --------
Profit on Ordinary Activities before 1,329 2,524
Taxation
Taxation (557) (870)
-------- --------
772 1,654
Minority Interest 1 95
-------- --------
Profit Attributable to Shareholders 773 1,749
Proposed Dividend (974) (1,114)
-------- --------
Retained (loss)/Profit for year (201) 635
===== =====
Basic Earnings Per Share 4.96p 10.99p
-------- --------
CML Microsystems Plc
Preliminary Results
Summary Group Balance Sheet
as at 31st March 1999
Unaudited Audited
1999 1998
£'000 £'000
Fixed Assets
Tangible assets 9,992 7,177
===== =====
Current Assets
Stocks 2,250 2,414
Debtors 5,219 5,651
Investments 2,114 5,302
Cash at Bank & in hand 2,309 2,671
-------- --------
11,892 16,038
Creditors: Amounts falling due
within one year (5,146) (5,091)
-------- --------
Net Current Assets 6,746 10,947
-------- --------
Deferred Taxation (74) (3)
-------- --------
Net Assets 16,664 18,121
===== =====
Capital & Reserves
Called up share Capital 696 796
Share Premium Account 2,349 2,349
Capital Redemption Reserve 255 155
Profit & Loss Account 13,355 14,811
-------- --------
Shareholders Funds 16,655 18,111
Minority Interests 9 10
-------- --------
16,664 18,121
===== =====
CML Microsystems Plc
Preliminary Results for the
year ended 31st March 1999
Summary Group Cash Flow Statement
Unaudited Audited
1999 1998
£'000 £'000
Net cash inflow from operating activities 2,782 2,469
Returns on investments and servicing of 357 430
finance
Taxation (747) (952)
Capital expenditure and financial investment (3,542) (970)
Equity dividends paid (1,114) (971)
-------- --------
Net cash (out)/in flow before financing (2,264) 6
Financing (1,410) 2
-------- --------
(Decrease)/Increase in cash (3,674) 8
===== =====
Notes:
1. The profit and loss account, balance sheet and cash flow statement
are an abridged version of the Company's full accounts which have
not yet been filed with the Registrar of Companies and which have
not yet been reported on by the Company's auditors.
2. A dividend of 7p per Ordinary Share (1998: 7p per Ordinary Share)
is recommended in respect of the year ended 31st March 1999 and
will be paid on 1st September 1999 to shareholders on the register
as at 30th July 1999.
3. The calculation of Basic Earnings per share is on earnings of
£772,683 (1998: £1,748,679) and on a weighted average number of
shares of 15,585,485 shares (1998: 15,918,325 shares).