CML Microsystems’ FY26 trading update: revenue up, profit aided by property gains
CML Microsystems has delivered a cleaner second half on revenue, but the operating line is still in the red. The headline is an expected statutory profit before tax of approximately £1.8m for FY26, flipping from a £0.7m statutory loss before tax in FY25. That swing is helped by property gains at Oval Park, while the underlying operations showed progress but not yet full profitability.
Here’s what stood out, why it matters, and what to watch into FY27.
Key takeaways at a glance
- H2 revenue rose circa 18% versus H1 FY26 and beat H2 FY25.
- Full-year revenue expected to exceed £20m.
- H2 saw an operating loss, but improved versus H1’s £0.98m operating loss (pre-exceptional).
- Statutory profit before tax for FY26 expected at approximately £1.8m, supported by property revaluation and disposal gains.
- Net cash around £11m at year end, including a £3m balancing payment from the Oval Park land sale.
- Key product shipments restored late in FY26, with fuller contribution expected in FY27.
- Preliminary results due Tuesday, 16 June 2026.
What drove the numbers in H2 and FY26
Revenue momentum arrived as hoped: H2 grew by about 18% versus H1 and topped the prior-year H2. That confirms demand is moving in the right direction after a slower first half. However, the Company notes the order intake phasing took longer than anticipated, which affected the mix of revenue.
Specifically, a larger share of lower-margin non-recurring engineering (NRE) income – largely tied to the GNSS contract announced in July 2025 – weighed on the second-half operating margin. NRE is one-off engineering work that funds development for a customer; it’s helpful cash flow but typically carries lower margins than product shipments.
On top of that, CML continued to invest in its Silicon Valley operations to boost capacity and efficiency. The combined effect of mix and investment spend meant H2 still posted an operating loss – though an improved one versus H1 FY26’s £0.98m operating loss (pre-exceptional gain on land sale).
Property gains tip FY26 into statutory profit
Despite the H2 operating loss, CML expects a statutory profit before tax of around £1.8m for FY26, a sharp improvement on last year’s £0.7m statutory loss. The catalyst was the completion of the final land disposal at Oval Park on 27 March 2026 and a revaluation gain on the remaining property. These gains were partially offset by an impairment of previously capitalised development costs.
Quick jargon check:
- Statutory profit before tax includes all items, such as property gains and impairments, under accounting rules.
- Impairment is a write-down of asset values when the recoverable amount is lower than the book value.
- Revaluation gain is an upward adjustment to the carrying value of property, reflecting current market value.
Cash, balance sheet and operational setup
Year-end net cash is guided at approximately £11m, which includes a £3m balancing payment from the land disposal. A healthy cash position gives CML room to keep investing through industry cycles.
Per the Company profile, CML is cash-generative, has no debt and is dividend paying. It develops mixed-signal, RF and microwave semiconductors for global communications markets, using outsourced manufacturing with in-house testing, and operates across the UK, Asia and the USA. It targets niche communication sub-segments with high barriers to entry and serves a blue-chip customer base.
FY27 outlook: mix to normalise, supply chain improving
Management expects the timing effects seen in H2 FY26 to unwind in FY27. Notably, shipments of a key product – previously affected by supply-chain issues – resumed in the closing months of FY26 and should contribute more fully this year. Across the industry, inventory overhangs and supply chain constraints are expected to ease further.
Internally, initiatives to optimise R&D and sharpen target market verticals have been completed, which should support better productivity and commercial efficiency. If the revenue mix shifts back towards higher-margin product shipments, operating profitability has a clearer path.
The good, the bad, and why it matters
Positives
- Sequential revenue acceleration: H2 up circa 18% vs H1 and ahead of H2 FY25 shows underlying demand traction.
- Balance sheet strength: about £11m net cash offers resilience and optionality.
- Operational groundwork: Silicon Valley investments and R&D optimisation set the stage for scaling.
- Industry tailwinds: easing supply chain issues and healthier inventory dynamics should support shipments.
Watch-outs
- Quality of earnings: FY26 statutory profit before tax is driven by property revaluation and disposal gains, while H2 operations still lost money.
- Revenue mix: heavier NRE reduces margins; the pace of shift back to product revenue is a key variable.
- Execution on restored shipments: the “when” and “how much” of that key product flow-through into FY27 margins will matter.
Key numbers from the trading update
| FY26 revenue | Expected to exceed £20m |
| H2 vs H1 FY26 revenue | Circa +18% |
| H2 FY26 vs H2 FY25 revenue | H2 FY26 ahead |
| H1 FY26 operating loss (pre-exceptional) | £0.98m |
| H2 FY26 operating result | Operating loss, improved vs H1 |
| FY26 statutory profit before tax | Approximately £1.8m |
| FY25 statutory loss before tax | £0.7m |
| Year-end net cash | c.£11m (includes £3m balancing payment) |
| Oval Park land disposal | Final plot completed 27 March 2026; revaluation gain on remaining property; partial offset from development cost impairment |
| Preliminary results date | Tuesday, 16 June 2026 |
What could move the shares next
- Confirmation of full-year figures on 16 June 2026, including the split between operating performance and property-related gains.
- Detail on FY27 guidance, especially product shipment cadence, margin outlook, and the scale of any NRE in the mix.
- Evidence that Silicon Valley investments are translating into higher throughput and better gross margins.
- Further commentary on industry inventory normalisation and lead times across suppliers.
My take: constructive, with a quality-of-earnings caveat
I like the direction of travel. Revenue momentum is back, cash is robust, and sector headwinds are easing. The investments in capacity and the R&D refocus feel timely. If the mix tilts away from NRE and toward higher-margin shipments, operating profitability should improve in FY27.
The caution is straightforward: FY26’s expected statutory profit before tax of about £1.8m leans on property gains, while H2 operations still lost money. That’s not uncommon during transitions, but it puts the onus on delivery in FY27. For now, this update reads as a credible step forward with the balance sheet to support execution – I’ll be looking to June’s prelims for margin detail and a clearer glide path to operating profit.
