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).
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