CML MICROSYSTEMS PLC CML Microsystems Plc
Half Yearly Report FY22
About us
We develop mixed-signal, RF and microwave semiconductors for global communications markets.
The first choice semiconductor partner to technology innovators,
Vision | together transforming how the |
world communicates. |
We are driven by our | Values | |
values and guiding | • | Trust |
principles; they steer our | • | Respect |
ways of working across | • | Communication |
our global operations and | • | Creativity |
empower a combined sense of purpose in every facet of our business.
Guiding principles
- Strong business ethics
- Culture of quality with a sense of urgency
- Live and breathe the customer experience
- A passion for excellence
- Inspire our people to innovate
Contents
Operational and financial review
Condensed consolidated income statement
Condensed consolidated statement of total comprehensive income
Financial highlights
8.00 | 0.97 | 4.87 | ||
Revenue | Pre-tax profit/(loss) | Basic earnings per share for profit/(loss) | ||
(£m) | - continuing operations | from continuing operations attributable | ||
(£m) | to the ordinary equity holders of | |||
the Company | ||||
(p) | ||||
+30% | +394% | +392% | ||
HY FY21: 6.14 | HY FY21: (0.33) | HY FY21: (1.67) | ||
2.12 | 1.01 | 4.87 | ||
Adjusted EBITDA1 | Pre-tax profit | Basic earnings per share for profit | ||
(£m) | - continuing and | attributable to the ordinary equity | ||
discontinued operations | holders of the Company | |||
(£m) | (p) | |||
+43% | +31% | +3% | ||
HY FY21: 1.48 | HY FY21: 0.77 | HY FY21: 4.74 | ||
- For definition and reconciliation see note 12.
- Net cash is the net of cash and cash equivalents, and bank loans and overdrafts, see notes 6 and 7.
Operational highlights
- Recovery in existing markets, driving growth
- New product releases show early signs of success
- Expanded product range targeting an increasing total addressable market
- Significant R&D investment
- Completed move from standard segment of Main Market to AIM
CML Microsystems Plc | Half Yearly Report FY22 | 01 |
Chairman's statement
Introduction
CML has enjoyed a strong start to the year. In my Annual Report back in June 2021, I highlighted that I had never before experienced a year with more challenges and opportunities. Whilst many of those challenges remain,
it is particularly pleasing to see recovery in the end‑markets that were most impacted by the pandemic. The improved trading witnessed in the second half of last year has continued and gathered pace. This is a testament to
the Group's multi-year strategic focus on R&D, acting as a partner to our global customer base, creating the products that help them achieve success.
Results and trading
The previously reported figures for the prior year first half included contributions from the Storage Division which was part of the Group throughout the first half of the last financial year (before being sold in February for $49m). For this set of results, we have restated the figures, in line with reporting requirements, but do believe this provides shareholders with a more meaningful picture of the Group's performance. The Communications Division is today
the sole operational focus of CML.
The financial performance for the six months to
30 September 2021 is ahead of management's expectations. Revenue for the six months increased by
30% to £8.00m compared to the prior year (H1 FY21: £6.14m).
Profit before taxation improved to £1.0m (H1 FY21: loss £0.3m), with adjusted EBITDA improving by 43% to £2.12m (H1 FY21: £1.48m) and diluted EPS showed a dramatic improvement to 4.87p (H1 FY21: loss of 1.67p). Cash balances at the period end stood at £22.59m
(31 March 2021: net cash of £31.91m) following a special dividend payment totalling £8.30m to shareholders in August 2021 after completion of the sale of the Storage Division. The Group has no debt.
The Board is recommending a half year dividend of
4.0p per share (H1 FY21: 2.0p per share), payable on
17 December 2021 to shareholders on the Register on
3 December 2021.
Move to AIM
In September this year CML completed its move from the standard segment of the Main Market to the AIM Market of the London Stock Exchange ("AIM"). As highlighted above, the Company enjoys very healthy cash balances and remains debt free. In addition, it has considerable value in a number of non-operational assets that the Board is continually evaluating to enable maximum shareholder value to be delivered. A number of opportunities are currently being actively explored and are at various stages of progression. The Group's addressable market stands at over $1bn annually and alongside our organic growth strategy, which is our core focus, our balance sheet strength gives
us the opportunity to seek and consider acquisitions which could help us further our strategic objectives. The move to AIM provides us with greater flexibility to take advantage of any opportunities as and when they are identified.
Employees
The improvement in our trading performance is undoubtedly a reflection of the sheer hard work and determination shown by our highly talented workforce. They have continued to tackle each challenge with vigour and enthusiasm and
on behalf of the Board. I offer them my sincere thanks.
Prospects and outlook
With a record order book, a growing product range targeting an increasing total addressable market and a strong balance sheet affording us strategic flexibility, the future for CML has never been brighter. We must remain conscious of the fact that many of the challenges which have been present over recent years are still active and could affect our customers' purchasing decisions
in the short term. However, we are confident in both the long‑term performance of the business and in meeting this year's expectations.
Nigel Clark
Executive Chairman
23 November 2021
02 | CML Microsystems Plc | Half Yearly Report FY22 |
Operational and financial review
Introduction
It is pleasing to report that the positive momentum seen within the business through the second half of the prior financial year has continued through the opening six-months of the current year, with a healthy trading improvement being recorded.
Revenues are ahead of management expectations at the halfway stage, with the associated benefits of operational leverage flowing through. New order intake has been strong, assisted by improving end market conditions and increased demand linked to customer concerns around supply chain constraints within the semiconductor market generally. Alongside the revenue growth achieved, the Group's order book at 30 September 2021 was once again at a record level with scheduled delivery visibility extending into the next financial year.
The progress demonstrated within these interim
results follows a multi-year period of enduring headwinds. During this time, the Group has invested heavily in research and development activities targeted at products and application areas that are expected to drive growth over the coming years. The business optimisation that took place prior to this year commencing, coupled with the enhanced strategy now being followed, positions the Group well to take advantage of the increasing number of opportunities being presented.
Strategy
The Group's vision is to be the first-choice semiconductor partner to technology innovators, together transforming how the world communicates.
We are focused on our customers' success by delivering advantages through the improved functionality and performance of class leading IC solutions. R&D activity is targeted at developing the product portfolio to support emerging and evolving customer requirements for size, cost and performance whilst striving to remain our customer's first choice supplier within their advanced communication platforms.
In today's world, 'connected everything' is propelling exponential increases in data consumption - driving growth across wireless communications markets globally. We are expanding our total addressable market having enlarged our market emphasis to include applications within the so‑called mega trend areas of Industrial Internet of Things ("IIoT"), 5G and Industry 4.0. This complements the existing markets of public safety, maritime and mission critical wireless voice and data communications, leveraging our systems knowledge, engineering capabilities and routes to market.
Markets and operations
For the comparable period, revenues from voice‑centric wireless applications were heavily impacted by the COVID-19 crisis, with the situation across a wide range of data-centric IIoT customers somewhat mixed. More recently, we communicated that customer and market intelligence suggested conditions for voice applications were expected to improve as the year progressed and it is pleasing to report that has proven to be the case.
The order intake from wireless voice product manufacturers has grown, with a significant recovery seen amongst the leading customers. Equally pleasing was the progress from data-centric customers who are producing proprietary wireless communications equipment for a wide range of industrial and mission critical applications including oil, gas, utilities, transport, telecom, enterprise, precision farming, land surveying, environmental monitoring and military applications areas.
The order intake situation is multidimensional.
As a complement to the improving market conditions, which was the main driver, growth was assisted by new design‑wins moving to the production phase along with increased order receipts associated with customer concerns over semiconductor part availability. Conversely, there is evidence of ordering restraint where customers cannot secure deliveries of more generic parts needed within their end products, such as microprocessors, from other semiconductor suppliers.
CML Microsystems Plc | Half Yearly Report FY22 | 03 |
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CML Microsystems plc published this content on 23 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 23 November 2021 07:28:09 UTC.
