Trading Update and Notice of Results

RNS Number : 7802S

CML Microsystems PLC

19 March 2021

 

19 March 2021

CML Microsystems Plc

("CML", the "Company" or the "Group")

Trading Update and Notice of Results

CML Microsystems Plc, which develops mixed-signal, RF and microwave semiconductors for global communications markets, today issues the following trading update for the period 1 October 2020 to 18 March 2021.

Disposal of Storage Business and Proposed Capital Return

As part of the strategic decision made by the Board to exclusively focus on the global communications market, the Company announced on 5 February 2021 that it had successfully completed the sale of Hyperstone, the Group's storage division, for US$49 million. Net cash inflow from the sale, after transaction expenses, was just over £33 million.

Subsequently, the Board announced a proposed capital return of approximately £8.3 million to shareholders. This proposal was ratified at a General Meeting of the Company on 18 March 2021 and settlements will be made on or around 26 March 2021.

For the financial year to 31 March 2021, the Group's profitability will be overwhelmingly dominated by the exceptional profit arising from the sale of the Storage division and will also include a nine month contribution to Group profits by the division.

Continuing Core Business

At the time of the half year report, we announced that revenues from voice-centric wireless applications had been heavily impacted by the COVID-19 crisis and the situation across a wide range of data-centric IIoT customers was mixed. The Board is pleased to confirm that the order intake improvement seen during the final weeks of the first half period continued through the second half. On a constant currency basis, revenues slightly improved over the first half (H1 FY21: £6.17m), with new order intake markedly better.

Market intelligence suggests that conditions for voice applications should improve through the first half of the new financial year and, although the timing and extent of a full recovery is yet to be determined, the sentiment does give cause for cautious optimism. A general lengthening of lead times from raw material suppliers and third-party manufacturing service companies is currently in play across the semiconductor industry. The Company has navigated that well so far, supported by the prior decision to maintain higher levels of raw material inventory.

Subsequent to the return of capital, CML will start the new financial year on 1 April 2021 with a very strong balance sheet, including net cash in excess of £30 million, and a singular focus on the industrial global communications market, which represents a large and high growth market opportunity for the Company. The Group's significant cash balance also provides it with the financial flexibility to maximise its future growth potential.

Our recent strategy has been to significantly enhance the product portfolio including entry into microwave and millimetre-wave market applications. This has been achieved through a combination of resource blend and new customer engagements. Progress has been swift with the first products emanating from this improved capability on track to be launched in the early part of H1 FY22. Early sampling of selected lead customers has generated positive feedback.

Notice of Results

The Company currently expects to publish its results for the period ending 31 March 2021 on Tuesday 15 June 2021.

CML Microsystems Plc Chris Gurry, Group Managing Director Nigel Clark, Group Chairman and Financial Director	www.cmlmicroplc.com   Tel: [phone]
Shore Capital Advisory Edward Mansfield James Thomas Corporate Broking Fiona Conroy	Tel: [phone]
SP Angel Corporate Finance LLP Jeff Keating	Tel: [phone]
Alma PR Josh Royston Caroline Forde Robyn Fisher	Tel: [phone]

About CML Microsystems PLC

CML develops mixed-signal, RF and microwave semiconductors for global communications markets. The Group utilises a combination of outsourced manufacturing and in-house testing with trading operations in the UK, Asia and USA. CML targets sub-segments within Communication 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 commercial and industrial product manufacturers.

The spread of its customers and diversity of the product range 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 appetite for data to be transmitted faster and more securely, the upgrading of telecoms infrastructure around the world and the growing prevalence of private commercial wireless networks for voice and/or data communications linked to the industrial internet of things (IIoT).

The Group is cash-generative, has no debt and is dividend paying.

 

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