Final Results

CML Microsystems PLC 14 June 2000 CML Microsystems Plc Preliminary Results for the Year ended 31st March 2000 CML Microsystems Plc, the group which designs, manufactures and markets a range of semiconductors for use in the communications industry, announces Preliminary results for the year ended 31 March 2000. * Turnover from continuing Businesses up 28% * Pre-tax profits from continuing Businesses up 80% * EPS up 115% * Dividend up 21% * Net cash reserves at year end increased to £6.85m * George Gurry, Chairman, said 'The opening months of the current year are proving encouraging for the Group. Trading indications point to a sustained market requirement for the Group's products in the foreseeable near term, and access to new opportunities are expected to result from the Group's active focus on developing its position in the markets that it can serve. * 'I feel that your Company is well placed to address its future with confidence. Subject, as always, to unforeseen circumstances, I believe that this current year will be marked by a further increase in its results.' For further information: Nigel Clark Lulu Bridges / Peter Willetts CML Microsystems Plc Tavistock Communications Tel: 01621 875 500 Tel: 020 7600 2288 Chairman's Statement The gains posted in the first half by the Group's semiconductor product businesses' saw further improvement in the second half, and the overall Group results for the full year have moved ahead in a satisfactory and encouraging manner. For your consideration of these results, I believe it may be helpful to have context for the events that took place during the early half. The Profit and Loss account states a division between discontinued and continuing activities on only the full year basis. As I reported at the interim stage, your Company has disposed recently of its interests in the Group's traffic business, which has contributed approximately £6.7m to the Group's turnover in the previous year, but only some £2m towards these present results by the time of disposal. As a result of the operating loss incurred by the traffic business, and the exceptional cost arising on its disposal, the Group recorded only a nominal pre- tax profit at the half-year (£61k). For the full 12-month trading period ending 31 March 2000, the Group recorded a 92% rise in operating profit to £1.906m (1999 £0.989m), and a 60% increase in pre-tax profit to £2.135m (1999 £1.328m). Group turnover amounted to £19.751m, some 4% down on the figure for the year earlier (1999 £20.617m), influenced by the material reduction in traffic sales. The Group's core continuing business achieved sales growth of 28% in the period. Interest earnings again formed a reduced element in arriving at the pre-tax figure, but cash available for investment showed improvement through the later months. The Group's net cash reserves had risen to £6.85m by the year-end (1999 £4.42m). Basic earnings per share shows a twofold increase to 10.73p (1999 4.96p) and retained earnings have returned to a positive figure. Following from the Group's investment in its UK scientific facilities it is seeing the benefit of more favourable UK taxation. Your Directors believe that these results represent a satisfactory outcome to the year for your Company, and they consider that it would be appropriate to recommend the payment of an increased dividend. They are recommending the payment of a dividend of 8.5p per ordinary share, an increase of 21.4% on the year earlier (1999 7p share). Subject to shareholder approval, this dividend will be payable to all shareholders on the register as on the 7th July 2000. The Group's semiconductor businesses' were successful in achieving increased sales for their products in the major market territories. In addition to the gains recorded in Western Europe and the Far East, an encouraging rate of growth was evident for sales into the North American marketplace. Over 90% of turnover for the Group's semiconductor companies came from customers outside the United Kingdom. Sales of product for Telecoms applications continued their rise, and displaced Private Mobile Radio (PMR) as the principal semiconductor product area by turnover. The Group's low-power wire-line embedded modems, signalling and interface devices proved popular with telecom equipment producers, and the prospects are encouraging for the emerging new ISDN products. A further slight fall was registered in sales of devices aimed at the world PMR markets. This area had yet to show material benefit from the Group's new digital system products, or the targeted benefit expected from 'consumer' versions of 2-way radios now in the market. A healthy increase in sales was recorded of products for handheld wireless data terminals, where the Group's wireless base-band engines are gaining best solution market status. The Group is actively joined with the development plans of the Network operators and terminal producers for a number of digital wireless services in operation in the Far East and elsewhere. Radio Data Technology, the Group business producing wireless telemetry and wireless video end-user products, saw selling prices come under pressure in its principal UK/Europe marketplace, and an increase in products sold did not materially lift the turnover. Changes taking place to EU regulatory procedures are expected to increasingly benefit RDT's access to the markets in Europe for its new UHF products. The Group spent approximately £1.6m on R&D in the period, which saw new design projects progressing on several market development fronts. The new semiconductor facility constructed in the UK was fully occupied and operational in the third quarter, which contributed materially to the Group's ability to ship a record number of products to its customers worldwide. Good progress was evident with the Group's planned enhancement of its selling, distribution and customer support systems. The opening months of the current year are proving encouraging for the Group. Trading indications point to a sustained market requirement for the Group's products in the foreseeable near term, and access to new opportunities are expected to result from the Group's active focus on developing its position in the markets that it can serve. Your directors were pleased to welcome the appointment of Mr Christopher Gurry to the Board as the current year commenced. Chris Gurry will assist your Board with its objective of developing the opportunities before the business. I feel that your Company is well placed to address its future with confidence. Subject, as always, to unforeseen circumstances, I believe that this current year will be marked by a further increase in its results. The progress of a business will always be dependant on the quality and dedication of the people it employs. Your directors wish to record their thanks for the performance and commitment that the Group receives from its employees worldwide. G. W. Gurry Group Profit and Loss Account Discontinued Continued Unaudited Audited 2000 1999 £'000 £'000 £'000 £'000 Turnover 1,992 17,759 19,751 20,617 -------- -------- -------- -------- Operating Profit/(Loss) (689) 3,151 2,462 990 Exceptional item (556) - (556) - -------- -------- -------- -------- (1,245) 3,151 1,906 990 Interest receivable - 247 247 381 Interest payable (18) - (18) (42) -------- -------- -------- -------- Profit/(loss) on ordinary activities before taxation (1,263) 3,398 2,135 1,329 -------- -------- Taxation (617) (557) -------- -------- Profit on ordinary activities after taxation 1,518 772 Minority interests (14) 1 -------- -------- Profit for the financial year 1,504 773 Proposed dividend (1,217) (974) -------- -------- Retained profit/(loss) for the year 287 (201) -------- -------- Earnings per Share Basic 10.73p 4.96p -------- -------- Diluted 10.71p 4.94p -------- -------- Summary Group Balance Sheet Unaudited Audited 2000 1999 £'000 £'000 £'000 £'000 Fixed Assets Tangible assets 9,817 9,992 Current Assets Stocks 1,681 2,250 Debtors 3,014 5,219 Investments 3,893 2,114 Cash at bank and in hand 2,958 2,309 -------- -------- 11,546 11,892 Creditors: Amounts falling due within one year (3,856) (5,146) -------- -------- 7,690 6,746 -------- -------- 17,507 16,738 Provisions for liabilities and charges (6) (74) -------- -------- Net Assets 17,501 16,664 -------- -------- Capital and Reserves Called up share capital 716 696 Share premium account 2,802 2,349 Capital redemption reserve 255 255 Profit and loss account 13,704 13,355 -------- -------- Shareholder's funds 17,477 16,655 -------- -------- Minority interests 24 9 -------- -------- 17,501 16,664 -------- -------- Summary Group Cash Flow Statement Unaudited Audited 2000 1999 £'000 £'000 Net cash inflow from operating activities 3,782 2,782 Returns on investments and servicing of finance 229 357 Taxation (564) (747) Capital expenditure and financial investment (573) (3,542) Equity dividends paid (974) (1,114) -------- --------- Net cash inflow/(outflow) before financing 1,900 (2,264) Financing 473 (1,410) -------- -------- Increase/(Decreased) in cash 2,373 (3,674) -------- -------- Notes 1. The profit and loss account, balance sheet and cash flow statement are an abridge 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 8.5p per Ordinary Share (1999: 7p per Ordinary Share) is recommended in respect of the year ended 31st March 2000 and will be paid on 4th August 2000 to shareholders on the register as at 7th July 2000. 3. The effective tax rate is significantly reduced by a prior year corporation tax credit of £318,000 as a result of a claim for scientific research allowances on the new semiconductor operating facility at Langford, Essex. 4. The calculation of earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year. The calculation of diluted earnings per share is based on the basic earnings per share adjusted to allow for the issue of shares on the assumed conversion of all dilutive options. 5. The exceptional item is the net loss on the disposal of the Group's interest in Microsense Systems Limited, which was completed on 26th August 1999.

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