rnsitem
REG-CML Microsystems PLC Interim Results
Released: 25/11/2008
http://pdf.reuters.com/Regnews/regnews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20081125:RnsY8147I
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RNS Number : 8147I
CML Microsystems PLC
25 November 2008
25 November 2008
CML MICROSYSTEMS Plc
INTERIM RESULTS
CML Microsystems Plc ("CML"), which designs, manufactures and markets a broad
range of integrated circuits, primarily for global communication and data
storage markets, announces its Interim Results for the half year ended 30
September 2008. CML has operations in the UK, Germany, the US, Singapore, China
and Taiwan.
Commenting on the results, George Gurry, Chairman said:
"The results for the opening six-month period of the current trading year
reflect the unexpected downturn in demand that became evident across many Group
markets during closing months.
"My earlier expectations that the results for this period would provide clear
evidence of a continuing improvement in the Group's performance have been
negated by the constraints on expenditure and product investment adopted by
customers' following recent global financial concerns."
Financial Highlights
* Turnover of £8.23m (2007: £8.49m)
* Loss before tax of £1.3m (2007: Loss of £1.1m)
* Loss per share of 11.21p (2007: Loss of 8.90p)
* Cash in bank and at hand of £1.84m
Regarding prospects, George Gurry, Chairman said:
"Your board believes that the recent shortfall in expected sales and the broad
customer and financial situations that rule will make progress in the second
half difficult to achieve. Steps to reduce the Group's operating costs have
commenced but are not expected to show benefit to this year's results."
Enquiries:
CML Microsystems Plc www.cmlmicroplc.com
Nigel Clark, Financial Director 020 7479 7933(today)
Chris Gurry, Managing Director 01621 875500 (thereafter)
Parkgreen Communications Ltd 020 7479 7933
Paul McManus 07980 541 893
Chairman's Statement
The results for the opening six-month period of the current trading year reflect
the unexpected downturn in demand that became evident across many Group markets
during closing months.
My earlier expectations that the results for this period would provide clear
evidence of a continuing improvement in the Group's performance have been
negated by the constraints on expenditure and product investment adopted by
customers' following recent global financial concerns.
Your Directors have considered these circumstances and the appropriate actions
that might be taken.
Group revenues for the half-year trading period ending 30 September 2008 were
£8.226M, moderately down against £8.487M for the comparable period the year
earlier, and the operating loss before tax was increased as a consequence.
The Operating Review that follows this statement summarises financial and
trading information in further detail.
As is customary for your Company, the directors are not recommending payment of
an interim dividend.
The property market continues to experience declining values and the
non-operational properties that the Group had earlier decided to place on the
market are unlikely to receive satisfactory offers during this present trading
year.
Your board believes that the recent shortfall in expected sales and the broad
customer and financial situations that rule will make progress in the second
half difficult to achieve. Steps to reduce the Group's operating costs have
commenced but are not expected to show benefit to this year's results.
I regret that I cannot provide a more positive indication for your Company's
prospects in the short term, but feel certain it is sufficiently well placed to
weather present issues and to return to profit.
G. W. Gurry
Chairman
24 November 2008
Operating and Financial Review
Overview
During the period under review, we continued to execute our strategy to deliver
long-term sustainable growth by successfully developing and marketing
class-leading semiconductor products for the global communications and data
storage markets.
For the majority of the trading period, overall financial performance was in
line with management expectations for an increase in performance against the
prior financial year. However, towards the end of the half, weaker product
demand levels were experienced and trading was negatively impacted resulting in
the posting of an operating loss that was higher than anticipated.
Financial Results & Business Summary
Group revenues for the six-month period to 30 September were £8.23m (2007:
£8.49m) representing a 3% reduction on the comparable half. Semiconductor
shipments into the wireless and storage segments accounted for approximately 75%
of Group revenues with particularly strong growth being recorded from the
storage market. Revenues within the telecom market declined from European and
US-based customers largely as a result of weaker demand from the alarm panel
sub-market. Overall, the shortfall posted by the telecom segment eradicated
gains made in the storage market.
Gross profit margin fell to 67% (2008: 71%) reflecting the change in product mix
and an element of licensing revenue that was included within the comparable
period.
Group operating costs reduced to £6.73m (2008: £7.14m), net finance costs
amounted to £197k (2008: £109k) and a corresponding loss before tax of £1.3m was
recorded (2008: £1.1m).
Given the extent of foreign currency movements since the Group's last reporting
period, it is appropriate to reiterate the Group's exposure. Through the opening
half year, the majority of customer transactions were in US dollars and, whilst
most raw material purchases were also in US dollars, our largest cost centres
are located in the UK and Germany resulting in some exposure to currency
fluctuations. The Group does not enter into hedging arrangements in this
respect.
Summary and Outlook
Performance during the opening six months was mixed. Good progress from the
storage and wireless markets was countered by a disappointing result from the
telecom segment.
Following the period end, trading has softened and the stance from all
addressable market segments is very cautious. Whilst operational costs have been
minimised, the Board is taking further steps to ensure the cost base is more
appropriately aligned with anticipated business levels. Whilst these steps will
likely result in an exceptional charge being recorded during the second half,
they are necessary actions to maximise our success going forward.
The current outlook remains uncertain and it is therefore difficult to predict
the timing of any recovery. Through this period, we will continue to focus on
achieving sustainable progress and a return to profitability as soon as
practically possible.
In closing I would like to thank our global employee base for their ongoing
commitment and reiterate the crucial role they continue to play in our future.
C.A. Gurry
Managing Director
24 November 2008
Consolidated Income Statement
6 Months End 30/09/08 6 Months End 30/09/07 12 Months End 31/03/08
£'000 £'000 £'000
Continuing Operations
Revenue 8,226 8,487 17,098
Cost of sales (2,755) (2,437) (5,393)
Gross Profit 5,471 6,050 11,705
Distribution and administration costs (6,728) (7,144) (13,671)
(1,257) (1,094) (1,966)
Other operating income 208 125 430
Operating loss before adjustments (1,049) (969) (1,536)
Share based payments (49) (18) (48)
Operating loss after adjustments (1,098) (987) (1,584)
Finance cost (210) (166) (334)
Finance income 13 57 190
Loss before taxation (1,295) (1,096) (1,728)
Income Tax (380) (107) 1,111
Loss for the period attributable to equity shareholders
(1,675) (1,203) (617)
Loss per share
Basic (11.21)p (8.05)p (4.13)p
Diluted (11.21)p (8.05)p (4.13)p
Statement of Recognised Income and Expense
6 Months End 30/09/08 6 Months End 30/09/07 12 Months End 31/03/08
£'000 £'000 £'000
Loss for the period (1,675) (1,203) (617)
Foreign exchange differences 210 (44) 82
Actuarial gain - - 1,934
Income tax on actuarial gain - - (580)
Recognised (losses)/gains relating to the period attributable
to equity holders of the Company (1,465) (1,247) 819
Consolidated Balance Sheet
30/09/08 30/09/07 31/03/08
£'000 £'000 £'000
Assets
Non current assets
Tangible assets - Property, plant and equipment 6,091 6,699 6,261
Investment property 415 2,245 415
Development costs 5,146 5,729 5,341
Goodwill 3,512 3,512 3,512
Deferred tax asset 1,295 1,715 1,290
16,459 19,900 16,819
Current assets
Inventories 1,720 1,963 1,745
Trade receivables and prepayments 2,290 3,005 2,535
Current tax assets 137 148 410
Cash and cash equivalents 1,841 1,816 1,891
5,988 6,932 6,581
Non current assets classified as held for
sale - property 3,807 1,600 3,770
9,795 8,532 10,351
Total assets 26,254 28,432 27,170
Liabilities
Current liabilities
Bank loans and overdrafts 5,211 4,659 5,075
Trade and other payables 2,315 2,434 2,320
Current tax liabilities 24 424 54
7,550 7,517 7,449
Non current liabilities
Deferred tax liabilities 2,524 3,126 2,125
Provisions - - -
Retirement benefit obligation - 2,289 -
2,524 5,415 2,125
Total liabilities 10,074 12,932 9,574
Net Assets 16,180 15,500 17,596
Equity
Share capital 747 747 747
Capital reserve 4,148 4,148 4,148
Share based payments reserve 99 19 50
Foreign exchange reserve 256 (80) 46
Accumulated profits 10,930 10,666 12,605
Shareholders' equity 16,180 15,500 17,596
Consolidated Cash Flow Statement
6 Months End 6 Months End 12 Months End
30/09/08 30/09/07 31/03/08
£'000 £'000 £'000
Operating activities
Net loss for the period before income taxes (1,295) (1,096) (1,728)
Adjustments for:
Depreciation 224 324 579
Amortisation of development costs 1,997 2,205 4,684
Movement in pension deficit - - (355)
Share based payments 49 18 48
Interest expense 210 166 334
Interest income (13) (57) (190)
Decrease in working capital 263 500 440
Cash flows from operating activities 1,435 2,060 3,812
Income tax (paid)/refunded 257 (176) (747)
Net cash flows from operating activities 1,692 1,884 3,065
Investing activities
Purchase of tangible assets (52) (230) (358)
Investment in development costs (1,811) (1,919) (3,952)
Disposals of property, plant and equipment 6 - 13
Interest income 13 57 190
Net cash flows from investing activities (1,844) (2,092) (4,107)
Financing activities
Increase in bank loans 1,000 - -
(Decrease)/increase in short term borrowings (864) - 1,075
Dividends paid - (747) (747)
Interest expense (210) (166) (334)
Net cash flows from financing activities (74) (913) (6)
Decrease in cash and cash equivalents (226) (1,121) (1,048)
Movement in cash and cash equivalents:
At start of period 1,891 3,000 3,000
Decrease (226) (1,121) (1,048)
Effects of exchange rate changes 176 (63) (61)
At end of period 1,841 1,816 1,891
Consolidated Statement of Changes in Equity
Share capital Capital reserve Share based payments Foreign exchange reserve Accumulated profits Total
£'000 £'000 £'000 £'000 £'000 £'000
At 1 April 2007 747 4,148 238 (36) 12,379 17,476
Foreign exchange differences
(44) (44)
Loss for period (1,203) (1,203)
747 4,148 238 (80) 11,176 16,229
Dividend paid (747) (747)
Share based payments in period
18 18
Share based payments transferred on cancellation
(237) 237 -
At 30 September 2007 747 4,148 19 (80) 10,666 15,500
Foreign exchange differences
126 126
Net Actuarial gains recognised directly to equity
1,934 1,934
Deferred tax on actuarial gains
(580) (580)
Profit for period 585 585
747 4,148 19 46 12,605 17,565
Share based payments 31 31
At 31 March 2008 747 4,148 50 46 12,605 17,596
Foreign exchange differences
210 210
Loss for period (1,675) (1,675)
747 4,148 50 256 10,930 16,131
Share based payments 49 49
At 30 September 2008 747 4,148 99 256 10,930 16,180
Notes to the financial statements
1. Segmental Analysis
Primary - Business
Unaudited Unaudited Audited
6 Months End 6 Months End 12 Months End
30/09/08 30/09/07 31/03/08
Semi-conductor components Semi-conductor components Semi-conductor components
Equipment Group Equipment Group Equipment Group
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue
By origination 479 10,678 11,157 587 11,353 11,940 1,130 22,474 23,604
Inter-segmental revenue
- (2,931) (2,931) - (3,453) (3,453) - (6,506) (6,506)
Segmental revenue 479 7,747 8,226 587 7,900 8,487 1,130 15,968 17,098
(Loss)/Profit
Segmental result 55 (1,153) (1,098) 110 (1,097) (987) 178 (1,762) (1,584)
Net financial income/(expense)
(197) (109) (144)
Income tax (380) (107) 1,111
Loss after taxation (1,675) (1,203) (617)
Assets and Liabilities
Segmental assets 731 19,869 20,600 815 21,909 22,724 708 20,578 21,286
Unallocated corporate assets
Investment property 4,222 3,845 4,184
Deferred taxation 1,295 1,715 1,290
Current tax receivable 137 148 410
Consolidated total assets
26,254 28,432 27,170
Segmental liabilities 115 2,200 2,315 133 2,301 2,434 93 2,227 2,320
Unallocated corporate liabilities
Deferred taxation 2,524 3,126 2,125
Current tax liability 24 424 54
Bank loans and overdrafts 5,211 4,659 5,075
Retirement benefit obligation - 2,289 -
Consolidated total liabilities
10,074 12,932 9,574
Other segmental information
Property, plant and equipment additions
30 22 52 - 230 230 2 356 358
Development cost additions
35 1,776 1,811 34 1,885 1,919 72 3,880 3,952
Depreciation 9 215 224 8 316 324 16 563 579
Amortisation 31 1,966 1,997 32 2,173 2,205 73 4,611 4,684
2. Dividend paid and proposed
Declared and paid during the period
Unaudited Unaudited Audited
6 Months End 6 Months End 12 Months End
30/09/08 30/09/07 31/03/08
£'000 £'000 £'000
Equity dividends paid on 5p ordinary shares
5p per share dividend for year ended 31 March 2007
- 747 747
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.
Deferred taxation is not reassessed at the interim stage.
Unaudited Unaudited Audited
6 Months End 6 Months End 12 Months End
30/09/08 30/09/07 31/03/08
£'000 £'000 £'000
UK income tax (175) (144) (364)
Overseas income tax 161 251 329
Total current tax charge/(credit) (14) 107 (35)
Deferred tax 394 - (1,076)
Reported income tax charge/(credit) 380 107 (1,111)
The deferred tax charge is the result of Industrial Building Allowance being
withdrawn. Though proposed by the UK government at 31 March 2008 this change had
not been enacted and accordingly not accounted for in the Report and Accounts
for the year-end 31 March 2008. Details of this were included in the notes as a
subsequent event.
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:
Ordinary 5p shares
Weighted Average Number Diluted
Number
6 months ended 30 September 2008 14,947,626 14,947,626
6 months ended 30 September 2007 14,947,626 14,947,626
12 months ended 31 March 2008 14,947,626 14,947,626
5. Retirement benefit obligations
The directors have not obtained an actuarial report in respect of the defined
benefit pension scheme for the purpose of this Half Yearly Report.
6. Tangible assets - Investment Property/property held for sale
Investment properties are re-valued at each discreet period end by the directors
and every third year by independent Chartered Surveyors on an existing use open
market basis. No depreciation is provided on freehold properties or on leasehold
investment properties where the un-expired lease term exceeds 20 years. In
accordance with IAS 40, gains and losses arising on revaluation of investment
properties are shown in the income statement. The directors are of the opinion
that there has been no material change of the total carrying value of the
investment properties and the property held for sale.
7. General
Other than already stated within the Chairman's statement and the operating and
financial review there have been no important events during the first six months
of the financial year that have impacted this Half Yearly Report.
There have been no related party transactions or changes in related party
transactions described in the latest annual report that could have a material
effect on the financial position or performance of the Group in the first six
months of the financial year.
The principal risks and uncertainties within the business are contained in the
operating and financial review on page 2 of this Half Yearly Report.
In the Segmental Analysis (note 1 on page 7) inter-segmental transfers or
transactions are entered into under commercial terms and conditions appropriate
to the location of the entity whilst considering that the parties are related.
This interim management report includes a fair review of the information
required by DTR 4.2.7 (indication of important events and their impact, and
description of principal risks and uncertainties for the remaining six months of
the financial year).
This Half Yearly Report has been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting". This Half Yearly Report
does not include all the information and disclosures required in the Annual
Financial Statements, and should be read in conjunction with the consolidated
Annual Financial Statements for the year ended 31 March 2008.
The financial information contained in this Half Yearly Report has been prepared
using International Financial Reporting Standards as adopted by the European
Union. The accounting policies used in preparation of the Half Yearly Report are
the same accounting policies set out in the year ended 31 March 2008 financial
statements. This Half Yearly Report does not constitute statutory accounts as
defined by Section 240 of the Companies Act 1985. The financial information for
the year ended 31 March 2008 is based on the statutory accounts for the
financial year ended 31 March 2008 that have been filed with the Registrar of
Companies and on which the auditors gave an unqualified audit opinion. The
auditors report on those accounts did not contain a statement under section
237(2) or (3) of the Companies Act 1985. This Half Yearly Report has not been
audited or reviewed by the Group Auditors.
A copy of this Half Yearly Report can be viewed on the company website
http://www.cmlmicroplc.com.
8. Approval of results
The directors approved this Half Yearly Report on 24 November 2008.
ENDS
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