MEMSCAP - Earnings for the 2017 Financial Year: Continuous Growth of the Net Cash Position

Net cash position at EUR 3 million as of December 31, 2017

Positive operating cash flow at EUR 0.5 million over the 2017 financial year

GRENOBLE, France & DURHAM, N.C.--()--Regulatory News:

MEMSCAP (NYSE Euronext: MEMS) (Paris:MEMS), the leading provider of innovative solutions based on MEMS (micro-electro-mechanical systems) technology, today announced its earnings for the 2017 financial year ending December 31, 2017.

Analysis of the consolidated income statement

In line with the previous quarterly press releases, MEMSCAP reported an audited revenue of EUR 11.7 million for FY 2017, a similar amount to FY 2016. Expressed in US dollar, consolidated sales for FY 2017 amounted to US$ 13.2 million against US$ 12.9 million for FY 2016. It is to be noted that sales made in US dollar represented approximately 84% of the Group's revenue in 2017 and 2016.

Consolidated revenue distribution by market segment, over FY 2017, is as follows:

Market segments / Revenue (In million euros)   FY 2017   %       FY 2016   %
Aerospace   6.2   53%       5.6   48%
Optical communications / Adaptive optics   2.6   22%       3.9   33%
Medical / Biomedical   2.0   17%       1.4   12%
Others   0.9   8%       0.8   7%
Total   11.7   100%       11.7   100%

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

MEMSCAP’s consolidated earnings for FY 2017 are given by the following table:

In million euros  

For the year ended
31 December 2017

 

 

For the year ended
31 December 2016

 

Revenue   11.7   11.7

Standard products*

Custom products

  8.0

3.7

  7.0

4.7

Cost of revenue   (8.3)   (7.9)
Gross margin   3.4   3.8
% of revenue   29%   32%
Operating expenses**   (4.0)   (3.8)
Operating profit / (loss)   (0.6)   0.0
Financial profit / (loss)   0.0   0.1
Income tax expense   (0.2)   0.0
Net profit / (loss)   (0.8)   0.1

(Financial data were subject to an audit by the Group’s statutory auditors who will issue their reports at a later date. On March 21st, 2018, the MEMSCAP’s board of directors authorized the release of the FY 2017 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.

* * *

The sales of the Standard Products division (+14% vs. FY 2016) benefited from the continued dynamism of the avionics business (+EUR 0.6 million vs. FY 2016) as well as from the recovery observed in the medical segment. Representing 53% of the consolidated sales (FY 2016: 48%) with an annual revenue of EUR 6.2 million, the avionics business remains the Group's leading market segment.

The sales of the Custom Products division were down by 22% compared to FY 2016 due to the temporary slowdown in demand on the optical communications / adaptive optics segment during the first three quarters of FY 2017. However, the last quarter of 2017 marked the return to similar levels of sales for this business compared to 2016.

The transformation of the Group's industrial organization, initiated during FY 2017 and in line with the previously announced strategy, impacted the consolidated margin rate at 29% of the consolidated sales compared to 32% for FY 2016. The consolidated gross margin amounted to EUR 3.4 million compared to EUR 3.8 million for FY 2016.

The consolidated operating expenses, net of research and development grants, amounted to EUR 4.0 million for FY 2017, an increase of EUR 0.2 million compared to the previous year. This trend is mainly due to the intensification of the Group's research and development programs in the avionics sector. For FY 2017, research and development expenses, net of grants, represented 11% of the consolidated sales (FY 2016: 9%). The total number of full-time equivalent employees in the Group went from 58 in 2016 to 56 in 2017, a decrease of 3%.

In 2017, the Group reported an operating loss of EUR 0.6 million compared to break-even operating earnings for FY 2016. The consolidated financial income for FY 2017, including foreign exchange losses of EUR 0.1 million, was at the break-even level. In 2016, the financial profit was EUR 0.1 million including foreign exchange gains of EUR 0.1 million. The tax expense recognized over FY 2017 amounted to EUR 0.2 million and corresponded to the change in deferred tax assets related to the Norwegian entity, without any impact on the Group's cash position.

The Group therefore reported a net loss of EUR 0.8 million for FY 2017 compared to a net profit at EUR 0.1 million for FY 2016.

Increase of the net cash position

The positive operating cash flow amounted to EUR 0.5 million for FY 2017 compared to EUR 1.2 million for FY 2016. At December 31, 2017, consolidated available cash was EUR 3.9 million including cash and short-term deposits as well as cash investments (Corporate bonds) recorded under financial assets available for sale. In addition to this amount, the available unused credit lines amounted to EUR 0.4 million at December 31, 2017.

At December 31, 2017, net cash was EUR 3.0 million increasing by EUR 0.2 million compared to the net cash position at December 31, 2016.

MEMSCAP shareholder’s equity totalled EUR 17.2 million at December 31, 2017.

Analysis and perspectives

As previously announced, MEMSCAP has initiated in 2017 the transformation of its industrial organization in order to increase significantly the flexibility of the Group's production capacities. This program is progressing according to the Company’s plans. In line with its strategy focused on the high-added-value segments of aerospace, medical and optical communications, the Group is continuing its disengagement from low-margin services in favour of the development of its activities backed by its own intellectual property.

Though this evolution has impacted the profitability of MEMSCAP over the 2017 financial year, it should enable the Group to benefit from a marked increase in its margin levels over the coming years.

* * *

Q1 2018 earnings: April 24, 2018

Annual meeting of shareholders: May 24, 2018

About MEMSCAP

MEMSCAP is the leading provider of innovative micro-electro-mechanical systems (MEMS)-based solutions.
MEMSCAP’s products and solutions include components, component designs (IP), manufacturing and related services.
For more information, visit our website at: www.memscap.com.

MEMSCAP is listed on Euronext Paris ™ - Segment C - ISIN: FR0010298620 - MEMS.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2017

  31 December
2017
  31 December
2016
€000 €000
Assets
Non-current assets
Property, plant and equipment 2 510 2 856
Goodwill and intangible assets 8 013 8 485
Available-for-sale financial assets 1 174 1 332
Other non-current financial assets 34 46
Employee benefit net asset -- 72
Deferred tax asset 864 1 162
12 595 13 953
Current assets
Inventories 2 500 2 926
Trade and other receivables 2 675 2 456
Prepayments 234 276
Other current financial assets 24 12
Cash and short-term deposits 2 760 2 824
8 193 8 494
   
Total assets 20 788 22 447
 
 
Equity and liabilities
Equity
Issued capital 1 812 1 782
Share premium 18 770 18 624
Treasury shares (126) (121)
Retained earnings (570) (29)
Foreign currency translation (2 703) (1 649)
17 183 18 607
Non-current liabilities
Interest-bearing loans and borrowings 677 732
Employee benefit liability 22 4
699 736
Current liabilities
Trade and other payables 2 539 2 384
Interest-bearing loans and borrowings 286 412
Other current financial liabilities 3 230
Provisions 78 78
2 906 3 104
 
Total liabilities 3 605 3 840
Total equity and liabilities 20 788 22 447

CONSOLIDATED STATEMENT OF INCOME
For the year ended 31 December 2017

  2017   2016
€000 €000
Continuing operations
 
Sales of goods and services 11 652 11 714
Revenue 11 652 11 714
 
Cost of sales (8 285) (7 938)
Gross profit 3 367 3 776
 
Other income 449 315
Research and development expenses (1 728) (1 387)
Selling and distribution costs (849) (808)
Administrative expenses (1 868) (1 882)
Operating profit / (loss) (629) 14

Finance costs

(95)

(62)

Finance income 108 156
Profit / (loss) for the year from continuing operations before tax (616) 108

Income tax expense

(208)

--

   
Profit / (loss) for the year from continuing operations (824) 108
   
Profit / (loss) for the year (824) 108
 
Earnings per share:
 

- Basic, for profit / (loss) for the year attributable to ordinary equity holders of the
parent (in euros)

€ (0.12)

€ 0.02

- Diluted, for profit / (loss) for the year attributable to ordinary equity holders of
the parent (in euros)

€ (0.11)

€ 0.01

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2017

  2017   2016
€000 €000
   
Profit / (loss) for the year (824) 108
 
Items that will not be reclassified subsequently to profit or loss
Actuarial gains / (losses) (128) 115
Income tax on items that will not be reclassified to profit or loss -- --
Total items that will not be reclassified to profit or loss (128) 115
 
Items that may be reclassified subsequently to profit or loss
Net gain / (loss) on available-for-sale financial assets 26 33
Hedging instruments 184 (124)
Exchange differences on translation of foreign operations (1 054) 519
Income tax on items that may be reclassified to profit or loss -- --
Total items that may be reclassified to profit or loss (844) 428
   
Other comprehensive income for the year, net of tax (972) 543
   
Total comprehensive income for the year, net of tax (1 796) 651

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2017

       

(In thousands of 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 2016 7 128 686 1 782 18 675 (133) (394) (2 168) 17 762

Profit for the year

--

--

--

--

108

--

108

Other comprehensive income for the period, net of tax -- -- -- -- 24 519 543
Total comprehensive income -- -- -- -- 132 519 651
 
Transfer to the reserves not available for distribution -- -- (51) -- 52 -- 1
Treasury shares -- -- -- 12 -- -- 12
Share-based payment -- -- -- -- 181 -- 181
 
At 31 December 2016 7 128 686 1 782 18 624 (121) (29) (1 649) 18 607
 
At 1 January 2017 7 128 686 1 782 18 624 (121) (29) (1 649) 18 607

Loss for the year

--

--

--

--

(824)

--

(824)

Other comprehensive income for the period, net of tax -- -- -- -- 82 (1 054) (972)
Total comprehensive income -- -- -- -- (742) (1 054) (1 796)
 
Capital increase 117 504 30 146 -- -- -- 176
Treasury shares -- -- -- (5) -- -- (5)
Share-based payment -- -- -- -- 201 -- 201
 
At 31 December 2017 7 246 190 1 812 18 770 (126) (570) (2 703) 17 183

CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2017

  2017   2016
€000 €000
Cash flows from operating activities:    
Net profit / (loss) for the year (824) 108
Non-cash items written back:
Amortization and depreciation 959 935
Loss / (capital gain) on disposal of fixed assets (35) 23
Other non-financial activities 333 162
Accounts receivable (524) (217)
Inventories 157 11
Other debtors (12) (46)
Accounts payable 413 123
Other liabilities 82 114
Total net cash flows from operating activities 549 1 213
 

Cash flows from investing activities:

Purchase of fixed assets (468) (416)
Proceeds from sale / (purchase) of financial assets 228 (46)
Total net cash flows from investing activities (240) (462)
 

Cash flows from financing activities:

Proceeds from borrowings -- 290
Repayment of borrowings (262) (622)
Payment of finance lease liabilities (178) (146)
Sale / (purchase) of treasury shares (4) 11
Proceeds from issue of shares 176 --
Change in restricted cash -- (58)
Total net cash flows from financing activities (268) (525)
 

Net foreign exchange difference

(123)

(38)

 
Increase / (decrease) in net cash and cash equivalents (82) 188
Opening cash and cash equivalents balance 2 824 2 636
Closing cash and cash equivalents balance 2 742 2 824

Contacts

MEMSCAP
Yann Cousinet, Ph.: +33 (0) 4 76 92 85 00
Chief Financial Officer
yann.cousinet@memscap.com

Contacts

MEMSCAP
Yann Cousinet, Ph.: +33 (0) 4 76 92 85 00
Chief Financial Officer
yann.cousinet@memscap.com