Final Results

CML Microsystems PLC
12 June 2007

                              CML MICROSYSTEMS Plc

                              PRELIMINARY RESULTS

                 Loss broadly in line with market expectations

CML Microsystems Plc ('CML'), which designs, manufactures and markets a range of
integrated circuits (ICs) for global industrial, professional and consumer
applications within the areas of wireless communication, wireline communication,
storage and networking, with operations based in the UK, Germany, the US,
Singapore, China and Taiwan announces its Preliminary Results for the year
ending 31st March 2007.

Commenting on the results, George Gurry, Chairman said:

'As foreshadowed when reporting on the interim results and the outlook for the
second half, the results for the full year ended 31 March 2007 reflect the
material losses posted for each of the six month trading periods ... the loss is
broadly in line with market expectations for the year.'

Financial Summary

•         Turnover of £17.77m (2006: £26.33m)
•         Loss before tax of £3.21m (2006: Profit before tax of £3.49m)
•         Loss per share of 17.53p (2006: Earnings per share of 17.68p)
•         Cash in bank and at hand of £3m
•         Dividend of 5p per share (2006: 10.5p), payable 3 August 2007


Regarding prospects, George Gurry, Chairman said:

'The opening months of the current year are generally on or slightly ahead of
operating targets, although firm progress will most likely not become evident
before the second half. Action to address the product availability delays of
last year will only begin to bite in coming months.

'I am disappointed with the full year results but encouraged that steps to
tackle issues under management control will bear effect.  I am confident,
subject to unforeseen circumstances, in expecting a firm improvement in
performance for this current year, including clear visibility of the point when
the Group will return to profitability.'

Enquiries:

CML Microsystems Plc                                                                         www.cmlmicroplc.com
Nigel Clark, Financial Director                                                            020 7479 7933 (today)
Chris Gurry, Business Development Director                                             01621 875500 (thereafter)

Parkgreen Communications Ltd                                                                       020 7479 7933
Paul McManus                                                                                       07980 541 893
Ben Knowles                                                                                        07900 346 978




Chairman's Statement

Introduction

As foreshadowed when reporting on the interim results and the outlook for the
second half, the results for the full year ended 31 March 2007 reflect the
material losses posted for each of the six month trading periods.

The losses at the operating level were much as had been forecast internally, and
arising from the product introduction delays and lost customer issues referred
to in my interim statement, but the overall reported loss is increased under the
new accounting and reporting standards.  Notwithstanding that, the loss is
broadly in line with market expectations for the year.

Results

Group revenues amounted to £17.77m (2006: £26.33m) for the year, the decline
attributable largely to the serious reduction in product shipments to a key
customer within the consumer storage market area.

A loss before taxation of £3.21m (2006: Profit before taxation £3.49m) was
recorded although it can be noted that a weaker dollar along with amortisation
and pensions adjustments were significant contributing factors.

The posted loss per share of 17.53p was better than market expectations although
down on the prior year (2006: earnings per share 17.68p).

Cash flow was negative during the year and cash balances reduced by £2.7m
following a £3.2m loss before taxation and the payment of a £1.6m dividend.

Dividend

Your directors have considered the material loss and negative cash flow recorded
for the year just ended, and the pressure that has been placed on cash reserves
and working capital, and they believe it is appropriate to ensure that resources
should be prioritised towards ensuring a return to profitability for your
Company.

The Board has confidence that your Company can achieve its planned progress in
this current year, and is recommending payment of a dividend of 5p per ordinary
share (2006: 10.5p per ordinary share) to be payable on 3rd August 2007 to
shareholders registered on 6th July 2007.

Prospects

The opening months of the current year are generally on or slightly ahead of
operating targets, although firm progress will most likely not become evident
before the second half. Action to address the product availability delays of
last year will only begin to bite in coming months.

I am disappointed with the full year results but encouraged that steps to tackle
issues under management control will bear effect.  I am confident, subject to
unforeseen circumstances, in expecting a firm improvement in performance for
this current year, including clear visibility of the point when the Group will
return to profitability.

The progress of any business is always dependent on the quality and dedication
of the people it employs. I am confident that our employees are motivated
towards the success of the Group and its return to profit and the Board wish to
thank the employees worldwide for their dedication and support through the year.

G W Gurry
Chairman
12th June 2007



Business Review

This year can be characterised by good progress with a number of the Company's
growth plans, coupled with certain disappointments that significantly impacted
financial improvement over the prior year.

On a market segmental basis, performance during the year was mixed:

Wireless

A significant reduction in revenues from products shipped into the very low cost
analogue leisure radio market was partially countered by growth in application
areas for voice privacy and digital radio markets. The Company benefited from
historic investments in this area and voice privacy IC shipments for military
digital radios along with revenues from wireless data IC's for telemetry systems
exceeded those that were planned.

Revenues from shipments to professional analogue radio manufacturers continued
to grow and steady progress with customer design-in activity occurred. It is
noteworthy that growth continued in this historic analogue segment alongside
that seen within the newer digital radio markets where the Company is also well
placed and has been active for some years.

Adoption of products based upon the Company's proprietary FirmASIC technology
was encouraging and production volumes began shipping towards the year-end.
Time-to-market with products based upon this technology improved noticeably.

Wireline Telecom

Far-East data modem IC stocking issues were cleared and revenue levels moved
ahead as expected. Shipments of products to manufacturers within the wireless
local loop / fixed wireless terminal markets were particularly pleasing, despite
pricing pressure. It should be noted that business levels with certain customers
within this market sub-segment continue to exhibit uncertainty due to the bid
and tender process that is a pre-requisite to any significant contract awards.

As noted at the interim period, the Company achieved good progress with its
strategy of expanding product integration, reducing time to market and improving
commercial competitiveness.

Storage

In the consumer storage area, revenues were impacted by the decision of the
single largest Group customer to exit the flash memory card market. This
situation was unexpected as we began the year, and occurred whilst the customer
base in the storage segment was relatively low, and during a period where these
customers were in the process of designing-in Group products or in the early
production phase.

This event was unfortunate but has to be considered along with the fact that the
Company intends to become a major player in certain sub-sectors of the storage
market, and volatility can be experienced during the early stages of the growth
phase whilst customer concentration is high.

Outside of the consumer memory card markets, progress was on track and
penetration of the customer base for solid-state drives (SSD) was significant.
SSD storage devices offer a number of benefits over magnetic media for certain
applications such as faster access times, lower current consumption, higher
operating temperatures and improved reliability. The Company has extensive
experience, a strong patent and technology portfolio and world-class products in
this area that all contributed to a noteworthy revenue increase during the year.

Networking

Shipments of IC's into networking applications fell slightly year on year. This
is an area where R&D investment has been substantial and the reduction in
revenues masked the underlying progress that was made and reflected the typical
delay from new product introduction through to customer volume production phase.
Revenues from older, less integrated products fell whilst shipments of newer
technology IC's released to production at the beginning of the year began to
increase as the year-end approached. Investment in the development of support
tools for these new IC's along with reference designs for target market
applications continued.

In a year where revenues have reduced dramatically as a direct result of
unexpected issues associated with a single customer, it is appropriate to
reiterate that during the year the Group had no single customer who represented
more than ten percent of Group revenues and only one customer who represented
more than five percent of Group revenues.

Margins

Gross margins within the Group's historical markets of wireline telecom and
wireless were held at previous year levels and, with the reduction in revenues
experienced within the storage market, the overall gross profit margin improved
slightly to 62% (2006 - 60%). Product delays within consumer storage application
areas contributed to increased pricing pressure towards the year-end.

Overheads

During the year, the majority of customer transactions were in US dollars. The
Group had a partial natural hedge due to significant raw material purchases
being made in US dollars and no further hedging arrangements were entered into.
The weakening of the US dollar had an adverse effect on profits.

Tight control over the overheads was maintained whilst having appropriate regard
for the growth objectives of the business. Despite the increased control
measures, overheads increased and the main contributors to that were accounting
for pensions under IAS 19, the effects of amortisation and the weakening of the
US dollar.

Pensions

Over the last few years the Board, in conjunction with the pension schemes
trustees and actuary, have been working to reduce the scheme deficit in the
Group's defined benefit pension scheme and various measures have been put in
place with this objective in mind. These measures are agreed with the scheme
actuary who conducts a triennial valuation, as required by law. In addition, the
Group has to comply with IAS 19 for the accounting of this liability in the
consolidated financial statements. In arriving at the effect of IAS 19 for
retirement benefit obligations on the income statement, the scheme actuary
calculates the movements in the scheme deficit. It is not practical for the
Company to calculate this and then estimate the effect on internal forecasts, so
any non-recurring charge has the potential to alter results unexpectedly.

During the year, a new set of pension commutation factors were introduced which
had the effect of increasing the past service liabilities of the scheme. This
charge amounted to £587k (2006 - £nil) and has been confirmed as a one off cost.
The net of the current years service cost and the past service costs are added
to the administration cost and this resulted in a charge for the year of £993k
(2006 - £380k) reflecting a year-on-year negative variance of £613k.  The
financial income or cost is adjusted in a similar manner and this year's income
amounted to £227k (2006 - cost of £20k) posting a positive comparative variance
of £247k.

Pensions - continued

The net effect of IAS 19 on the income statement was to increase the loss before
taxation by £766k (2006 - decrease profit before tax by £400k). A further
actuarial gain was recorded of £1,063k (2006 - £222k) and this is posted through
the statement of recognised income and expenditure resulting in a scheme
deficit, before any deferred tax adjustment, of £2,289k (2006 - £3,135k).

Taxation

The low taxation credit within the income statement reflects the large
adjustment to the taxation charge on the subsidiary Hyperstone GmbH. This
followed a revised determination by the German tax authority following a tax
inspection that took place on one of the previous owners. The basis on which
certain allowances were claimed in prior years was disallowed and resulted in a
further amount of £450k becoming payable. The whole of this amount was charged
to tax during the year.

Property

In addition to property from which operating subsidiaries trade, the Group owns
a number of investment properties that are stated within the balance sheet at
market value. The remaining property is stated at historical cost. The Board is
mindful of the significant value held in property within the balance sheet and
accordingly took moves during the year to ensure this area of the business
provides a better return for shareholders. The long leasehold premises at
Fareham, Hampshire which was previously held as an investment property was
placed on the market for sale prior to the year end and an investigation
commenced into the possibility of increased development of the Group
headquarters site in Essex.

Development costs

Steady new product progress was made in the wireless and wireline telecom
markets with eight new products being launched during the year. Development of
the networking and storage solutions products fell significantly behind
schedule, as reported at the interim stage. Overall spend on development was
slightly down on the previous year at £4.704m (2006 - £5.063m). The effects of
adopting IAS 38, as opposed to following historical policies under UK GAAP where
all development expenditure was written off during the year incurred, resulted
in a small negative effect on the income statement of approximately £85k.

Working capital and cash flow

With a significant reduction in revenues becoming apparent during the year, and
in keeping with management objectives, inventory levels reduced significantly
and tight financial control was exercised over cash flow.  The resulting effect
was that cash balances reduced by £2.7m following a £3.2m loss and the payment
of a £1.6m dividend.

CML Microsystems Plc
Consolidated Income Statement
                                                                     Unaudited                        Audited
                                                                 Year end 31st                  Year end 31st 
                                                                    March 2007                     March 2006
                                                                         £'000                          £'000

Revenue                                                                 17,768                         26,333
Cost of sales                                                          (6,729)                       (10,473)
Gross Profit                                                            11,039                         15,860

Distribution and administration costs                                 (14,985)                       (13,409)
                                                                       (3,946)                          2,451

Other operating income                                                     660                            472
Operating (loss)/profit before adjustments                             (3,286)                          2,923

Share based payments                                                      (76)                           (79)
Operating (loss)/profit after adjustments                              (3,362)                          2,844

Revaluation of investment properties                                         -                            695
Finance costs                                                            (228)                          (233)
Finance income                                                             381                            180
(Loss)/profit before taxation                                          (3,209)                          3,486

Income taxation                                                            591                          (853)

(Loss)/profit after taxation attributable to equity
shareholders                                                           (2,618)                          2,633

(Loss)/earnings per share
Basic                                                                 (17.53)p                         17.68p
Diluted                                                               (17.53)p                         17.66p




Statement of Recognised Income and Expense


                                                                     Unaudited                        Audited
                                                                 Year end 31st                  Year end 31st 
                                                                    March 2007                     March 2006
                                                                         £'000                          £'000

(Loss)/profit for the period                                           (2,618)                          2,633

Foreign exchange differences                                             (346)                            350
Actuarial gain                                                           1,063                            222
Income tax on actuarial gain                                             (319)                           (67)

Recognised (losses) and gains relating to the period                   (2,220)                          3,138


CML Microsystems Plc
Consolidated Balance Sheet

                                                                 Unaudited                   Audited
                                                           31st March 2007            31st March 2006
                                                                     £'000                      £'000
Assets
Non current assets
Tangible assets - Property, plant and equipment                      6,803                      7,256
Tangible assets - Investment property                                2,245                      3,845
Intangible assets - Development costs                                5,984                      6,133
Intangible assets - Goodwill on consolidation                        3,512                      3,512
Deferred tax asset                                                   1,717                      1,165
                                                                    20,261                     21,911
Current assets
Inventories                                                          1,595                      2,233
Trade receivables and prepayments                                    3,057                      4,899
Current tax assets                                                     419                        537
Cash and cash equivalents                                            3,000                      5,708
                                                                     8,071                     13,377
Non current assets classified as held for
sale - property                                                      1,600                          -
                                                                     9,671                     13,377

Total assets                                                        29,932                     35,288

Liabilities
Current liabilities
Bank loans and overdrafts                                            4,000                      4,000
Trade and other payables                                             2,248                      3,297
Current tax liabilities                                                761                        365
                                                                     7,009                      7,662

Non current liabilities
Deferred tax liabilities                                             3,128                      3,159
Provisions                                                              30                        147
Retirement benefit obligation                                        2,289                      3,135
                                                                     5,447                      6,441

Total liabilities                                                   12,456                     14,103

Net Assets                                                          17,476                     21,185

Equity
Share capital                                                          747                        745
Convertible warrants                                                     -                        120
Capital reserve                                                      4,148                      4,039
Share based payments reserve                                           238                        162
Foreign exchange reserve                                              (36)                        310
Accumulated profits                                                 12,379                     15,809
Shareholders' equity                                                17,476                     21,185



CML Microsystems Plc
Consolidated Cash Flow Statement


                                                                       Unaudited                    Audited
                                                                        Year end                   Year end
                                                                 31st March 2007            31st March 2006
                                                                           £'000                      £'000
Operating activities
Net (loss)/profit for the period before income taxes                     (3,209)                      3,486
Adjustments for:
Revaluation of investment properties                                           -                      (695)
Depreciation                                                                 706                        666
Amortisation of development costs                                          4,789                      4,005
Movement in pensions deficit                                                 217                      (147)
Share based payments                                                          76                         79
Exceptional restructuring costs                                            (117)                      (273)
Interest expense                                                             228                        233
Interest income                                                            (381)                      (180)
Increase/(decrease) in working capital                                     1,418                    (2,533)
Cash flows from operating activities                                       3,727                      4,641
Income tax refunded                                                          236                         69
Net cash flows from operating activities                                   3,963                      4,710

Investing activities
Purchase of tangible fixed assets                                          (369)                      (722)
Investment in intangible assets                                          (4,704)                    (5,063)
Disposals of tangible fixed assets                                            56                         19
Interest income                                                              381                        180
Net cash flows from investing activities                                 (4,636)                    (5,586)

Financing activities
Issue of ordinary shares                                                       -                         32
Repayment of bank loan                                                         -                      (377)
Dividends paid to group shareholders                                     (1,564)                    (1,564)
Interest expense                                                           (228)                      (233)
Net cash flows from financing activities                                 (1,792)                    (2,142)

Decrease in cash and cash equivalents                                    (2,465)                    (3,018)

Movement in cash and cash equivalents:
At start of period                                                         5,708                      8,449
Decrease                                                                 (2,465)                    (3,018)
Effects of exchange rate changes                                           (243)                        277
At end of period                                                           3,000                      5,708



CML Microsystems Plc
Consolidated Statement of Changes in Equity


                            Share  Convertible     Capital Share based       Foreign     Accumulated           Total
                          Capital     Warrants    reserves    payments       Exchange        profits
                                                                              reserve
                            £'000        £'000       £'000       £'000          £'000          £'000           £'000

At 1st April 2005             744          120       4,007          82           (40)         14,585          19,498
Audited
Shares issued                   1                       32                                                        33
Foreign Exchange
differences                                                                       350                            350
Net actuarial gains
recognised directly to
equity                                                                                           222             222
Deferred tax on
actuarial gains                                                                                 (67)            (67)
Dividends paid                                                                               (1,564)         (1,564)
Profit for period                                                                              2,633           2,633
Share based payments                                                80                                            80

At 1st April 2006             745          120       4,039         162            310         15,809          21,185
Unaudited
Warrants converted/
lapsed                          2        (120)         109                                         9               -
Foreign Exchange
differences                                                                     (346)                          (346)
Net actuarial gains
recognised directly to
equity                                                                                         1,063           1,063
Deferred tax on
actuarial gains                                                                                (320)           (320)
Dividends paid                                                                               (1,564)         (1,564)
Loss for period                                                                              (2,618)         (2,618)
Share based payments                                                76                                            76

At 31st March 2007            747            -       4,148         238           (36)         12,379          17,476




CML Microsystems Plc

Notes

1. Presentation of results

The directors approved this Preliminary announcement on 11th June 2007.

The results for the year have been prepared using International Financial
Reporting Standards and the accounting policies as set out the most recently
published financial statements along with the only new accounting policy
relating to non current assets held for sale which have been valued at the lower
of the carrying value or fair value less costs to sell. The reclassification to
current assets takes place when the assets are placed on the open market
available for sale.

The audited financial information for the year ended 31st March 2006 is based on
the statutory accounts for the financial year ended 31st March 2006 that have
been filed with the Registrar of Companies and on which the auditors gave an
unqualified audit opinion.

The financial information contained in this announcement does not constitute
statutory accounts as defined by Section 240 of the Companies Act 1985.

2. Dividend

A dividend of 5p per Ordinary Share (2006: 10.5p per Ordinary Share) is
recommended in respect of the year ended 31st March 2007 and will be paid on 3rd
August 2007 to shareholders on the register as at 6th July 2007.

3. Earnings per share

The calculation of basic and diluted (loss)/earnings per share is based on the
(loss)/profit attributable to shareholders, divided by the weighted average
number of shares in issue during the year.






                      This information is provided by RNS
            The company news service from the London Stock Exchange