10th Jun 2014 08:48
LONDON (Alliance News) - CML Microsystems PLC Tuesday raised its dividend for the year to end-March, as it expressed confidence in a return to revenue growth beyond this year,
However CML cautioned that revenue will continue to be hit by abnormalities in its supply chain in the current year.
Additionally, the semiconductor products company said that Finance Director Nigel Clark will be leaving his position "for personal reasons" by the end of the year. It has begun the process of seeking a replacement.
CML Microsystems posted a total dividend of 6.25 pence, up from 5.5 pence.
It posted a pretax profit of GBP5.8 million, up from GBP5.5 million in the previous year, as revenue declined slightly to GBP24.4 million from GBP24.7 million, but this was offset by improved margins. Gross margin improved to 73% from 70% following the company's exit from its loss-making equipment business during the first half.
The company saw additional income of GBP474,000 from its freehold of a number of commercial property assets, up from GBP296,000 in the previous year as rent-free periods expired.
Revenues were hit in the second half as a key customer decided to exit the embedded storage market, and merger and acquisition activity at customers disrupted the company's supply chain, alongside continued volatility in its wireless markets. CML Microsystems said this had created a headwind that also will impact the current year.
CML Microsystems said that its strong first half performance had allowed it to meet expectations and improve its profit, despite the issues in the second half.
In its storage business, revenues rose 2%, boosted by stronger growth in Europe which offset weakness in the Americas. The company began shipments of its first SATA controller for use alongside flash memory. It said that whilst customers began to adopt the technology, revenue recognition was slower than expected.
This combined with disruptions in its supply chain hit trading in the last few months of the year, although the company expects this to normalise during the year ahead.
In its wireless segment, revenues dropped to GBP9.1 million from GBP9.8 million, as markets remained volatile due to the reliance on government spending, and there was weaker demand for certain higher priced legacy products. The company established an office in Sheffield to bolster its engineering resources, which it said will allow it to focus on new product activities.
In telecoms, revenue rose to GBP2.9 million from GBP2.7 million due to a strong performance in Europe.
The company expressed caution over its short-term outlook, but said that beyond this year it is confident in seeing a return to revenue growth.
CML Microsystems stressed that its underlying strategy remained valid and noted that it had secured a number of design wins during the year which are expected to begin adding to revenues from 2015.
Shares in CML Microsystems were trading down 16% at 450.00 pence Tuesday morning, having touched an intraday bottom of 406.10p.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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