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Memscap

Earnings Release Aug 29, 2014

1516_iss_2014-08-29_3aed3c49-6aa4-4dfd-8c8b-7e58bbbbcddf.pdf

Earnings Release

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FIRST HALF 2014 EARNINGS: POSITIVE OPERATING CASH FLOW AT € 0.7 MILLION

Net earnings at break-even level and increase of the gross margin rate by 11 points

Grenoble, France and Durham, North Carolina, August 29, 2014 – MEMSCAP (NYSE Euronext: MEMS), the leading provider of innovative solutions based on MEMS (micro-electro-mechanical systems) technology, announced today its earnings for the first half of 2014, ending June 30, 2014.

Revenue and consolidated earnings for the first half of 2014

In accordance with the figures given in the first and second quarter press releases, consolidated revenue for the first half of 2014 amounted to € 6.5 million (US\$ 8.9 million) compared to € 7.6 million (US\$ 10.0 million) for the first half of 2013 and € 6.1 million (US\$ 8.1 million) for the second half of 2013.

Consolidated revenue distribution by market segment over the first half of 2014 is as follows:

Market Segments Revenue (M€) %
Aerospace 3.1 48%
Medical / Biomedical 1.4 21%
Mass Market / Other Applications 1.4 21%
Optical Communications / Adaptive Optics 0.7 10%
Total 6.5 100%

(Any apparent discrepancies in totals are due to rounding.)

MEMSCAP consolidated earnings for the first half of 2014 are given by the following table:

For the 6 months ended For the 6 months ended
(In million euros) 30 June 2014 30 June 2013
Revenue 6.5 7.6
- Standard products* 4.2 4.1
- Custom products 2.3 3.5
Gross Margin 2.0 1.5
Operating Expenses** (2.0) (2.2)
Operating Profit / (Loss) 0.0 (0.7)
Financial profit / (Loss) 0.0 0.0
Net Profit / (Loss) 0.0 (0.7)

(Financial data were subject to a limited review by the Group's statutory auditors. On August 28 th, 2014, the MEMSCAP board of directors authorized the release of the HY 2014 consolidated financial statements. Any apparent discrepancies in totals are due to rounding.)

* Including the royalties from the dermo-cosmetics segment.

** Net of research & development grants.

* * *

Significant increase of the gross margin leading to net earnings at break-even level

The consolidated gross margin for the first half of 2014 increased by € 0.5 million and amounted to € 2.0 million. The gross margin rate was 31% of the consolidated revenue for the first half of 2014 compared to 20% for the first half of 2013 showing a significant increase by 11 points.

The growth of the Group's gross margin and the control of the operating costs, which amounted to € 2.0 million (net of research & development grants) for the first half of 2014 compared to € 2.2 million for the first half of 2013, led to operating earnings at break-even level versus an operating loss of € (0.7) million for the first half of 2013.

Finally, the consolidated net earnings were at break-even level for the first half of 2014 versus a net consolidated loss of € (0.7) million for the first half of 2013.

Positive operating cash flow at € 0.7 million

The significant improvement in consolidated net earnings associated with the optimization of the working capital requirement of the Group resulted in a positive operating cash flow of € 0.7 million for the first half of 2014 versus a consumption of operating cash flow of € 0.7 million for the first half of 2013.

At June 30, 2014, the Group's available liquidities amounted to € 3.2 million (December 31, 2013: € 2.5 million) including cash investments (Corporate bonds) for € 1.3 million recorded under financial assets available for sale.

MEMSCAP shareholders' equity totaled € 17.2 million at June 30, 2014.

Analysis and perspectives

The first half of fiscal year 2014 validated the actions engaged to improve the operating margin and net earnings of the Company.

The Group relies on the sustained demand related to its avionics and medical / biomedical markets which represented more than 68% of the consolidated sales for the first half of 2014. As previously announced, the mass market segment initiated a gradual recovery during the first half of 2014.

At June 30, 2014, the Group benefits from a solid order backlog in avionics and medical market segments. The Company intends to continue its efforts focused on the improvement of its net earnings during the coming quarter.

Q3 2014 Earnings: October 24, 2014

About MEMSCAP

MEMSCAP is the leading provider of innovative micro-electro-mechanical systems (MEMS)-based solutions. MEMSCAP standard and custom products and solutions include components, component designs (IP), manufacturing and related services. MEMSCAP customers include Fortune 500 businesses, major research institutes and universities. The company's shares are traded on the Eurolist of NYSE Euronext Paris S.A (ISIN: FR0010298620-MEMS). More information on the company's products and services can be obtained at www.memscap.com.

For more information, please contact:

Yann Cousinet CFO Ph: +33 4 76 92 85 00 Email: [email protected]

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

30 June
2014
31 December
2013
€000 €000
Assets
Non-current assets
Property, plant and equipment 3 345 3 318
Goodwill and intangible assets 8 912 9 017
Available-for-sale financial assets 1 288 1 141
Deferred tax asset 1 097 1 121
14 642 14 597
Current assets
Inventories 3 309 3 733
Trade and other receivables 2 046 2 291
Prepayments 279 155
Cash and short-term deposits 1 885 1 382
7 519 7 561
Total assets 22 161 22 158
Equity and liabilities
Equity
Issued capital 1 772 1 736
Share premium 18 773 20 383
Treasury shares (128) (123)
Retained earnings (1 357) (3 074)
Foreign currency translation (1 841) (1 842)
17 219 17 080
Non-current liabilities
Interest-bearing loans and borrowings 1 514 1 517
Employee benefit liability 130 131
1 644 1 648
Current liabilities
Trade and other payables 2 138 2 336
Interest-bearing loans and borrowings 1 082 1 015
Other current financial liabilities -- 1
Provisions 78 78
3 298 3 430
Total liabilities 4 942 5 078
Total equity and liabilities 22 161 22 158

CONSOLIDATED STATEMENT OF INCOME

For the six months ended 30 June
2014 2013
€000 €000
Continuing operations
Sales of goods and services 6 463 7 645
Revenue 6 463 7 645
Cost of sales (4 472) (6 109)
Gross profit 1 991 1 536
Other income 283 --
Research and development expenses (1 120) (899)
Selling and distribution costs (332) (374)
Administrative expenses (870) (962)
Operating profit / (loss) (48) (699)
Finance costs (54) (95)
Finance income 80 72
Profit / (loss) for the period from continuing operations before tax (22) (722)
Income tax expense -- --
Profit / (loss) for the period from continuing operations (22) (722)
Profit / (loss) for the period (22) (722)
Earnings per share:
-
Basic, for profit / (loss) for the period attributable to ordinary equity
holders of the parent (in euros)
-
Diluted, for profit / (loss) for the period attributable to ordinary equity
€ (0.003) € (0.119)
holders of the parent (in euros) € (0.003) € (0.118)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June
2014 2013
€000 €000
Profit / (loss) for the period (22) (722)
Items that will not be reclassified subsequently to profit or loss
Actuarial gains / (losses) -- (5)
Income tax on items that will not be reclassified to profit or loss -- --
Total items that will not be reclassified to profit or loss -- (5)
Items that may be reclassified subsequently to profit or loss
Net gain / (loss) on available-for-sale financial assets 20 (14)
Exchange differences on translation of foreign operations 1 (680)
Income tax on items that may be reclassified to profit or loss -- --
Total items that may be reclassified to profit or loss 21 (694)
Other comprehensive income for the period, net of tax 21 (699)
Total comprehensive income for the period, net of tax (1) (1 421)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(In thousands euros, except for
number of shares)
Number
of shares
Issued
capital
Share
premium
Treasury
shares
Retained
earnings
Foreign
currency
translation
Total
shareholders'
equity
€000 €000 €000 €000 €000 €000
At 1 January 2013
6
071
011
1
518
19
419
(132) (1
741)
(455) 18
609
Loss for the period
-- -- -- -- (722) -- (722)
Other comprehensive income for the period, net of tax
-- -- -- -- (19) (680) (699)
Total comprehensive income
-- -- -- -- (741) (680) (1
421)
Treasury shares -- -- -- 1 -- -- 1
Share-based payment
-- -- -- -- 47 -- 47
At 30 June 2013
6
071
011
1
518
19
419
(131) (2
435)
(1
135)
17
236
At 1 January 2014
6
943
718
1
736
20
383
(123) (3
074)
(1
842)
17
080
Loss for the period
-- -- -- -- (22) -- (22)
Other comprehensive
income for the period, net of tax
-- -- -- -- 20 1 21
Total comprehensive income
-- -- -- -- (2) 1 (1)
Capital increase
145
497
36 103 -- (14) -- 125
Retained earnings offset with share premium -- -- (1
713)
-- 1
713
-- --
Treasury shares -- -- -- (5) -- -- (5)
Share-based payment
-- -- -- -- 20 -- 20
At 30 June 2014
7
089
215
1
772
18
773
(128) (1
357)
(1
841)
17
219

CONSOLIDATED CASH FLOW STATEMENT

For the six months ended 30 June
2014 2013
€000 €000
Cash flows from operating activities:
Net profit / (loss) for the period (22) (722)
Non-cash items written back:
Amortization and depreciation394 435
Capital gain or loss on disposal of fixed assets(19) (3)
Other non-financial activities 46 47
Accounts receivable285 (471)
Inventories426 (593)
Other debtors (77) 55
Accounts payable (372) 541
Other liabilities57 (7)
Total net cash flows from operating activities 718 (718)
Cash flows from investing activities:
Purchase of fixed assets (112) (277)
Proceeds from sale / (purchase) of financial assets (107) (43)
Total net cash flows from investing activities (219) (320)
Cash flows from financing activities:
Repayment of borrowings (280) (305)
Payment of finance lease liabilities(59) (56)
Sale / (purchase) of treasury shares (5) 1
Proceeds from issue of shares125 --
Total net cash flows from financing activities (219) (360)
Net foreign exchange difference 24 23
Increase / (decrease) in net cash and cash equivalents304 (1 375)
Opening cash and cash equivalents balance 1 175 2 069
Closing cash and cash equivalents balance 1479 694

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