Interim Results

CML Microsystems PLC 22 November 2005 22 November 2005 CML MICROSYSTEMS Plc INTERIM RESULTS CML Microsystems Plc ('CML'), which designs, manufactures and markets a broad range of semiconductor products, primarily for the global communications market, announces its Interim Results for the six months ending 30 September 2005. CML's semiconductor solutions serve customers in the wire-line telecom, wireless data, 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: 'It is pleasing to report that your company has continued to achieve the firm progress in product sales that I had expected as the opening period began, led strongly by the healthy growth maintained in sales for memory card controllers.' Financial Highlights â€¢ Turnover up 24.5% to Â£14.240m (H1 '04: Â£11.440m) â€¢ Pre-tax profit up 4.7% to Â£1.416m (H1 '04: Â£1.352m) â€¢ Earnings per share up 17.6% to 7.83p (H1 '04: 6.66p) â€¢ Cash reserves remain at a satisfactory level â€¢ Introduction of IFRS Business Review â€¢ Good gains in sales of Memory Controller products â€¢ Increased product development expenditure to increase range and scope of new products for Hyperstone â€¢ Sales of Radio and Wireless Data applications ahead over comparative period â€¢ Sales of Wireline Telecom products into China remains weak â€¢ Products to market for marine communications and multi-standards land mobile voice and data markets â€¢ R&D expenditure to rise in H2 - strong new product portfolio underpins growth strategy Regarding prospects, George Gurry, Chairman said: 'Although I expect the weaknesses that have persisted in some historic market areas will continue to present difficulties through the months ahead, I feel quite sure that your company will continue to achieve its growth objectives.' Enquiries: CML Microsystems Plc www.cmlmicroplc.com Nigel Clark, Financial Director 020 7786 9600 (today) Chris Gurry, Business Development Director 01621 875500 (thereafter) Binns & Co PR Peter Binns 020 7153 1485 Paul McManus 07980 541 893 Chairman's Statement It is pleasing to report that your company has continued to achieve the firm progress in product sales that I had expected as the opening period began, led strongly by the healthy growth maintained in sales for memory card controllers. Collectively, turnover from products for other semiconductor market areas served by the group were ahead of the figures for the immediately preceding six months, but were lower than those recorded for the comparable half. Although the overall operating results for the opening period to 30 September 2005 are also viewed as a satisfactory outcome by your board, it is difficult to make direct comparisons with the results reported for earlier years due to the introduction of the mandatory new IFRS reporting standards. The IFRS reporting standards do not materially impact on figures for turnover in these results, for example, but they do introduce new rules for the treatment of R&D expenditure, amortisation, depreciation and other accounting issues, which can significantly alter the presentation of results compared with traditional UK GAAP reporting standards. As required from all companies with a full listing on the London Stock Exchange, a full description of the transition to International Financial Reporting Standards has been lodged with the LSE, and a copy can be viewed and downloaded from the group's website at www.cmlmicroplc.com Good gains were posted in sales of memory card controllers into the Far East, US and European territories, with Germany forming a notable component in the European figures. Steps taken to increase the range and scope of Hyperstone's new products portfolio are an ongoing feature of its operations, and product development expenditure is again expected to reach increased levels in this second half. Additional engineering staff are among the measures being taken. Sales for the group's radio communications and Wireless Data products were comfortably ahead over the comparative period, but the gains in sales of two way radio products in the Far East were more than offset by the weakened sales of Wireline Telecom products into China. The problems in this market area became evident during the second half of last year and have continued since. It is not likely that a material improvement in the situation will be seen before the year-end. New products introduced to market this year have included high performance devices aimed towards rapidly growing areas of the marine communications market and multi-standards land mobile voice and data applications. Expenditure on product design and development is again set to rise through the second half, reflecting the strong new products portfolio that underpins the group's growth strategies. Additionally, the group increased senior level resources in sales and marketing positions in Europe and the Far East. Although I expect the weaknesses that have persisted in some historic market areas will continue to present difficulties through the months ahead, I feel quite sure that your company will continue to achieve its growth objectives. G. W. Gurry Chairman Consolidated Income Statement 6 Months End 6 months End 12 Months End 30/09/05 30/09/04 31/03/05 Restated Restated Â£'000 Â£'000 Â£'000 Revenue 14,240 11,440 23,457 Cost of sales (6,292) (4,435) (8,597) ----------- ---------- ----------- Gross Profit 7,948 7,005 14,860 Distribution and administration costs (6,632) (5,819) (12,507) ----------- ---------- ----------- 1,316 1,186 2,353 Other operating income 156 276 581 ----------- ---------- ----------- Operating profit before adjustments 1,472 1,462 2,934 Restructuring costs - - (420) Share based payment (40) (39) (79) ----------- ---------- ----------- Operating profit after adjustments 1,432 1,423 2,435 Finance cost (112) (118) (249) Finance income 96 47 119 ----------- ---------- ----------- Profit before tax 1,416 1,352 2,305 Taxation (250) (381) 181 ----------- ---------- ----------- Profit for the period attributable to equity shareholders 1,166 971 2,486 ----------- ---------- ----------- Earnings per share Basic 7.83p 6.66p 16.77p ----------- ---------- ----------- Diluted 7.77p 6.56p 16.64p ----------- ---------- ----------- Statement of Recognised Income and Expenditure 6 Months End 6 months End 12 Months End 30/09/05 30/09/04 31/03/05 Restated Restated Â£'000 Â£'000 Â£'000 Profit for the period attributable to equity shareholders 1,166 971 2,486 Foreign exchange differences 187 77 (40) Actuarial losses - - (493) Deferred tax - - 148 ----------- ---------- ----------- Recognised gains and losses relating to the period 1,353 1,048 2,101 ----------- ---------- ----------- CML Microsystems Plc Consolidated Balance Sheet 30/09/05 30/09/04 31/03/05 Restated Restated Â£'000 Â£'000 Â£'000 Assets Non current assets Property, plant and equipment 7,205 6,828 7,193 Investment properties 3,150 3,150 3,150 Intangible assets - Research & development 5,396 4,629 5,089 Intangible assets - Goodwill on consolidation 3,512 3,512 3,512 Deferred tax asset 1,583 1,066 1,573 ----------- ----------- --------- 20,846 19,185 20,517 ----------- ----------- --------- Current assets Inventories 1,944 1,991 1,723 Trade receivables and prepayments 5,310 3,837 4,093 Cash and cash equivalents 7,413 8,471 8,449 ----------- ----------- --------- 14,667 14,299 14,265 ----------- ----------- --------- Total assets 35,513 33,484 34,782 ----------- ----------- --------- Liabilities Current liabilities Bank loans and overdrafts 4,000 4,378 4,378 Trade and other liabilities 5,293 4,788 4,086 Current tax liabilities 413 418 272 ----------- ----------- --------- 9,706 9,584 8,736 ----------- ----------- --------- Non current liabilities Deferred tax liabilities 2,624 2,408 2,624 Provisions 319 - 420 Long term liabilities 3,504 3,093 3,504 ----------- ----------- --------- 6,447 5,501 6,548 ----------- ----------- --------- Total liabilities 16,153 15,085 15,284 ----------- ----------- --------- Net Assets 19,360 18,399 19,498 ----------- ----------- --------- Equity Share capital 745 741 744 Convertible warrants 120 240 120 Share premium 3,784 3,630 3,753 Share based payments 122 42 82 Capital Redemption Reserve 255 255 255 Foreign exchange differences 147 77 (40) Retained earnings 14,187 13,414 14,584 ----------- ----------- --------- Shareholders' equity 19,360 18,399 19,498 ----------- ----------- --------- CML Microsystems Plc Consolidated Cash Flow Statement 6 Months End 6 Months End 12 Months End 30/09/05 30/09/04 31/03/05 Restated Restated Â£'000 Â£'000 Â£'000 Operating activities Net profit for the period before income taxes 1,416 1,352 2,305 Adjustments for: Depreciation 295 289 663 Movement in pension deficit - - (82) Amortisation of research and development 1,730 1,301 3,354 Share based payments 40 39 79 Exceptional restructuring costs - - 420 Interest expense 112 118 235 Interest income (96) (47) (119) (Decrease)/Increase in working capital (537) 385 243 ---------- --------- --------- Cash flows from operating activities 2,960 3,437 7,098 Income tax refunded 99 284 142 ---------- --------- --------- Net cash flows from operating activities 3,059 3,721 7,240 ---------- --------- --------- Investing activities Purchase tangible fixed assets (305) (593) (1,351) Investment in intangible assets (2,049) (1,579) (4,093) Disposals of tangible fixed assets 4 53 99 Interest income 96 47 119 ---------- --------- --------- Net cash flows from investing activities (2,254) (2,072) (5,226) ---------- --------- --------- Financing activities Issue of ordinary shares 32 41 47 Repayment of bank loan (378) - - Dividends paid to group shareholders (1,563) (1,556) (1,556) Interest expense (112) (118) (235) ---------- --------- --------- Net cash flows from financing activities (2,021) (1,633) (1,744) ---------- --------- --------- (Decrease)/Increase in cash and cash equivalents (1,216) 16 270 ---------- --------- --------- Movement in cash and cash equivalents: At start of period 8,449 8,245 8,245 (Decrease)/Increase (1,216) 16 270 Effects of exchange rate changes 180 210 (66) ---------- --------- --------- At end of period 7,413 8,471 8,449 ---------- --------- --------- CML Microsystems Plc Consolidated Statement of Changes in Equity Share Capital Convertible Share Premium Share based Capital Foreign Retained Total Warrants payments redemption Exchange earnings reserve differences Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 At 1st April 740 240 3,590 3 255 - 13,999 18,827 2004 Shares 1 40 41 issued Foreign Exchange differences 77 77 Dividends (1,556) (1,556) paid Profit for period 971 971 Share based payments 39 39 ------ -------- ------- ------- -------- -------- ------- ------ At 30th September 741 240 3,630 42 255 77 13,414 18,399 2004 Shares 3 123 126 issued Warrants converted (120) (120) Foreign Exchange differences (117) (117) Net actuarial losses recognised directly to (493) (493) equity Profit for period 1,515 1,515 Share based payments 40 40 Deferred 148 148 tax ------ -------- ------- ------- -------- -------- ------- ------ At 31st March 744 120 3,753 82 255 (40) 14,584 19,498 2005 Shares 1 31 32 issued Foreign Exchange differences 187 187 Dividends (1,563) (1,563) paid Profit for period 1,166 1,166 Share based payments 40 40 ------ -------- ------- ------- -------- -------- ------- ------ At 30th September 745 120 3,784 122 255 147 14,187 19,360 2005 ------ -------- ------- ------- -------- -------- ------- ------ CML Microsystems Plc Notes 1. Presentation of results The directors approved this Interim Statement on 21st November 2005. The results for the current period have been prepared using International Financial Reporting Standards. Comparative information previously published under UK Generally Accepted Accounting Practice has been restated under International Financial Reporting Standards. Reconciliation's of this restatement may be found in the announcement dated 15th November 2005. The financial information contained in this Interim Statement does not constitute statutory accounts as defined by Section 240 of the Companies Act 1985. The financial information for the year ended 31st March 2005 is based on the statutory accounts for the financial year ended 31st March 2005 that have been filed with the Registrar of Companies and on which the auditors gave an unqualified audit opinion. All shareholders will be sent a copy of this Interim Statement which can also be obtained from the company's registered office at Oval Park, Maldon, Essex CM9 6WG, England. 2. Dividend The directors do not recommend the payment of an interim dividend. 3. Income tax The directors consider that tax will be payable at varying rates according to the country of incorporation of a subsidiary and have provided on that basis. 4. Earnings per share The calculation of basic earnings per share is based on the profit attributable to shareholders for the period and on the following weighted average number of shares in issue: No of Ordinary 5p shares 6 months ended 30th September 2005 14,891,212 6 months ended 30th September 2004 14,810,378 12 months ended 31st March 2005 14,829,848 The calculation for diluted earnings per share takes into consideration 778,855 of shares under option at 30th September 2005. 5. Employee benefits The directors have not obtained an actuarial report in respect of the defined benefit pension scheme for the purpose of this Interim Statement. This information is provided by RNS The company news service from the London Stock Exchange

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