TIDMCYAN
RNS Number : 7298H
Cyan Holdings Plc
22 August 2016
Cyan Holdings plc
("CyanConnode" or the "Group")
Half yearly results for the six months ended 30 June 2016
CyanConnode (AIM:CYAN.L), the world leader in narrowband RF mesh
networks for Omni Internet of Things communications, announces its
half yearly results for the six months ended 30 June 2016.
Financial Highlights
-- Revenue of GBP1,029,526 (H1 2015: GBP157,328), which
represents a 554% increase over the same period last year
-- Operating loss of GBP2,858,715 (H1 2015: GBP2,289,524)
-- Basic and diluted loss per share of 0.04p (H1 2015: 0.05p)
-- Cash and cash equivalents at 30 June 2016 of GBP2,370,504 (H1 2015: GBP628,069)
Operational Highlights
-- Delivery against two contracts worth GBP1.5 million to Enzen Global Solutions
-- Transformational GBP10 million purchase order for smart metering in Iran
-- Follow on order for a further 5,000 meters from Larsen & Toubro for Tata Power in India
-- Agreement with JST Group to distribute smart metering technology in Thailand
Post Period Highlights
-- Completed the acquisition of Connode Holding AB ("Connode"), providing:
o a smart metering contract with potential revenues of up to
GBP37 million for the UK Smart Metering Implementation
Programme;
o a pipeline of commercial opportunities in Europe and Asia;
and
o a full standards (IPv6/6LoWPAN) technology platform already
developed
-- Additional working capital funding raised of GBP4.3 million
for the enlarged CyanConnode Group, supported by institutional
investors
-- Strategic partnership with Enzen in Ireland
John Cronin, Executive Chairman, commented: "This was a pivotal
period for the Group as we significantly enhanced our capabilities
and offering. Clearly the major developments were the purchase
order in Iran, the game-changing acquisition of Connode as well as
the increase in revenues. We are extremely excited by the potential
to build on relationships in place whilst breaking into new markets
on the back of our wider product offering.
"The deployment of meters for CESC and PVVNL highlights our
ability to service and deliver on contracts as well as converting
orders into both revenues and customer reference points. We have a
strong pipeline in place across multiple markets and very much look
forward to converting it into more orders in the coming months.
Furthermore, our end-to-end solutions provide increasing scope for
us to enter new territories whilst the Group is also benefiting
from increased visibility due to the nature of our software
licensing agreements. We very much look forward to updating the
market in due course and firmly believe our strong product offering
and relationships will deliver considerable value for our
shareholders."
Investor Presentation
An updated investor presentation is available at the following
link:
http://www.cyantechnology-ir.com/html/investors/presentations.asp
The information contained within this announcement is deemed by
the Group to constitute inside information as stipulated under the
Market Abuse Regulations (EU) No. 596/2014 ("MAR"). This inside
information is now considered to be in the public domain.
Enquiries:
Cyan Holdings plc Tel: +44 (0) 1954
234 400
John Cronin, Executive Chairman www.cyantechnology.com
Cantor Fitzgerald Europe - Tel: +44 (0) 20
Nomad and Broker 7894 7000
Andrew Craig / Richard Salmond
Beaufort Securities Limited Tel: +44 (0) 20
- Joint Broker 7382 8300
Jon Belliss
Walbrook PR - Financial PR Tel: +44 (0) 20
Paul Cornelius/Nick Rome 7933 8780
cyanconnode@walbrookpr.com
CHAIRMAN'S STATEMENT
This was an extremely busy period for the Group as we laid the
foundations for a step change in growth. Our financial performance
reflected the increasing maturity of our offering and
relationships. The comparatively strong revenue performance was due
to deployments in India, while our GBP10 million purchase order in
Iran highlighted our ability to move quickly into new territories.
Furthermore, the acquisition of Connode changed the dynamic of our
business by providing long-term visibility attributable to existing
contracts as well as standards-based software that opens up a wider
potential market place for our solutions.
Commercial Deployments
During the period, the Group made substantive deliveries against
two contracts worth in aggregate approximately GBP1.5 million to
Enzen Global Solutions Pvt Ltd ("Enzen"), which are being
implemented on behalf of Chamundeshwari Electricity Supply
Corporation Limited ("CESC") and Paschimanchal Vidyut Vitran Nigam
Limited ("PVVNL"). 19,000 CyLec enabled meters have now been
installed for CESC and PVVNL in consumer homes. Roll-out of the
remaining smart meters at these two key customers is expected to be
complete by the end of 2016. CyanConnode is managing the end to end
solution delivery for smart metering for CESC and PVVNL,
highlighting the strength and potential scalability of the Group's
offering.
Eco-system of Partners
We also further extended our growth potential in India with a
follow-on order for 5,000 meters from Larsen & Toubro
("L&T") to expand the deployment of our smart metering solution
at Tata Power Mumbai ("Tata Power"). It was pleasing that we built
on the existing relationship with L&T and we look forward to
seeing Tata Power deploy these meters as well as building on
further opportunities in the region with our eco-system of
partners.
A key development during the period was the GBP10 million
purchase order for smart metering from Micromodje in Iran - a new
territory for the Group. We were delighted to secure the order so
quickly following the lifting of sanctions while the size of the
contract, being ten times larger than any previous orders received
to date, highlights the increasing scalability of our offering. The
purchase order is for the supply of both CyanConnode's Advanced
Metering Infrastructure hardware solution and its proprietary
Head-End Software ("HES"). The 360,000 units will be installed for
high value, high demand customers that represent an estimated 25%
of total national power consumption of Iran. Over 50% of the total
order value consists of software license income meaning that the
recurring revenues from this purchase order will continue well
beyond the two-year hardware installation period. The software
licenses will be paid annually in advance and charged on a per
meter per year basis.
In May, the Group continued its expansion into emerging markets
via an agreement with the JST Group ("JST") to distribute the
Group's smart metering technology in Thailand. This relationship
was further strengthened with JST investing GBP2 million into the
Group as part of the GBP12.6 million placing and subscription
announced during the period.
Post period end we further strengthened our relationship with
Enzen, expanding our reach into Ireland. This agreement will
provide combined value to support Smart Energy, Smart Cities and
Internet of Things ("IoT") in the Irish market. Our communication
platform will enable Enzen to deliver Metering as a Service
("MaaS"), offering utilities an outsourced smart metering solution
and reduced costs.
Connode Acquisition
Significantly we further enhanced our geographic reach via the
GBP6.8m acquisition of Connode, a well-established supplier of
wireless communication solutions for smart metering and the IoT
with customers in the UK, Europe and Asia. Connode is a key
supplier of mesh technology to the UK Smart Metering Implementation
Programme ("SMIP"). The potential value of the SMIP rollout to
Connode is approximately GBP37 million in software license and
support fees over the rollout and support lifecycle. Another
benefit from the deal is that Connode has developed a product that
is compatible with IPv6/6LoWPAN, the latest version of internet
protocol and a standards based technology. This can now be deployed
across the enlarged Group and gives us the capability to offer both
technologies dependent upon the consumer's requirements and budget.
We would have had to invest GBP2.5 million and commit to 18 months'
development if we developed this standards based technology on its
own. Furthermore, the transaction also incorporated the acquisition
of Connode India, providing further scope for growth in a territory
where we have an established presence.
The integration of Connode is progressing well and we have
started to promote the Enlarged Group's offering to both Cyan and
Connode customers and prospects. The combined solution offering of
both the optimised Cyan product as well as the standards based
Connode solution has received very positive feedback from the
market and has already been included in tender responses we are
submitting with our eco-system partners.
Financial Review
For the six months ended 30 June 2016 revenue was GBP1,029,526
(H1 2015: GBP157,328), which represents a 554% increase over the
same period last year. This result was achieved during an already
busy period as the Group grew its geographic reach and strategic
partnership base, whilst also committing significant resources to
the Connode acquisition. The gross margin achieved during the
period was modest in percentage terms due to the fact that we
provided a complete solution for both CESC and PVVNL, which
includes a substantive element of third party manufactured smart
electricity meters. We expect our gross margins to improve going
forward as we focus on the provision of the narrowband RF mesh
communications elements for each tender, with local partners then
bringing together the complete end to end solution (including the
smart meters). Our gross margin will also further improve due to
Connode's focus on software in their business model, together with
the planned evolution to providing in-country partners with the
right to manufacture CyanConnode hardware locally under a license
fee/royalty model (similar to ARM Holdings plc).
Operating loss for the period was GBP2,858,715 (H1 2015
GBP2,289,524) and net loss after tax was GBP2,530,201 (H1 2015:
GBP2,019,774). Cash as at 30 June 2016 was GBP2,370,504 (H1 2015:
GBP628,069), with this amount including GBP2 million of investor
monies received in advance of completion of the
Placing/Subscription on 1 July 2016.
In June 2016, CyanConnode announced the GBP12.6 million placing
and subscription with existing and new investors to fund the
acquisition of Connode and to provide the Group with working
capital. JST invested GBP2 million, with Directors also subscribing
for GBP304,500 of Ordinary Shares. The new monies also provided
GBP4.3 million in working capital for the enlarged Group, enabling
it to continue its growth strategy, focused on exploiting global
opportunities provided by its enhanced product suite. Furthermore,
in order to support the Group's plans over the next 12 months, the
Directors and certain senior employees have agreed to receive their
existing contracted remuneration through the receipt of the Group's
shares on a periodic basis. Institutional investors supported the
funding round, and saw both Herald Investment Management and Legal
and General increasing their equity ownership positions.
I would like to take this opportunity to welcome the new
shareholders and thank our existing shareholders for their
continued support.
Outlook
This was a pivotal period for the Group as we significantly
enhanced our capabilities and offering. Clearly the major
developments were the purchase order in Iran, the game-changing
acquisition of Connode as well as the increase in revenues. We are
extremely excited by the potential to build on relationships in
place, while breaking into new markets on the back of our wider
product offering.
The deployment of meters for CESC and PVVNL highlights our
ability to service and deliver on contracts and proves a good
reference point for us. We have a strong pipeline in place and very
much look forward to converting more of these opportunities into
orders in the coming months. Buoyed by the acquisition of Connode,
which adds geographic reach and relevant standards to CyanConnode's
portfolio, we remain excited by the Group's growth prospects. We
continue to explore global opportunities and look forward to
integrating the Connode team and products, securing more repeat
orders and benefiting from increased levels of recurring revenues.
We expect trading during the second half to reflect our increasing
levels of commercialisation.
John Cronin
Executive Chairman
22 August 2016
Consolidated Income Statement
Six months ended 30 June 2016
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2016 2015 2015
Notes GBP GBP GBP
Continuing operations
Revenue 1,029,526 157,328 272,012
Cost of sales (903,292) (93,126) (161,959)
Gross profit 126,234 64,202 110,053
Operating costs (2,984,949) (2,353,726) (5,012,696)
Operating loss (2,858,715) (2,289,524) (4,902,643)
Investment
revenue 3,457 2,485 8,282
Finance costs (769) (657) (917)
------------------------ --- ------ ------------ ------------ -------------
Loss before tax (2,855,027) (2,287,696) (4,895,278)
Tax 325,826 267,922 579,585
Loss for the period (2,530,201) (2,019,774) (4,315,693)
Loss per share
(pence)
Basic 3 (0.04) (0.05) (0.08)
Diluted 3 (0.04) (0.05) (0.08)
Consolidated Statement of Comprehensive Income
Six months ended 30 June 2016
Unaudited Unaudited
six months six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP GBP GBP
Loss for period (2,530,201) (2,019,773) (4,315,693)
Exchange differences on
translation of foreign
operations (2,624) (3,316) 4,081
------------------------------ ------------ ------------ -------------
Total comprehensive income
for the period (2,532,825) (2,023,089) (4,311,612)
------------------------------ ------------ ------------ -------------
Consolidated Balance Sheet
At 30 June 2016
Unaudited Unaudited
30 June 30 June 31 December
2016 2015 2015
GBP GBP GBP
Non-current
assets
Leasehold Improvements - 7,669 -
Investments 36,393 - 26,308
Property, plant and
equipment 31,400 29,694 29,967
67,793 37,363 56,275
--- --- ----------------------------- ------------- ------------------------ --------------------
Current Assets
Inventories 386,841 528,298 587,484
Trade and other receivables 2,183,939 466,103 845,667
Cash and cash equivalents 2,370,504 628,069 2,461,057
--------------------------------------- ------------- ------------------------ --------------------
4,941,284 1,622,470 3,894,208
--- --- ----------------------------- ------------- ------------------------ --------------------
Total assets 5,009,077 1,659,833 3,950,483
---------------------------------- --- ------------- ------------------------ --------------------
Current liabilities
Trade and
other payables (3,779,732) (649,675) (747,933)
---------------------------------- --- ------------- ------------------------ --------------------
Total liabilities (3,779,732) (649,675) (747,933)
---------------------------------- --- ------------- ------------------------ --------------------
Net current
assets 1,161,551 972,795 3,146,275
---------------------------------- --- ------------- ------------------------ --------------------
Net assets 1,229,345 1,010,158 3,202,550
---------------------------------- --- ------------- ------------------------ --------------------
Equity
Share capital 711,831 447,662 680,320
Share premium account 38,613,736 33,935,138 38,085,627
Own shares
held (808,856) (808,856) (808,856)
Share option
reserve 624,411 522,562 624,411
Translation
reserve (148,285) (153,058) (145,661)
Retained loss (37,763,492) (32,933,290) (35,233,291)
--------------------------------------- ------------- ------------------------ --------------------
Total equity being
attributable to
owners of the Group 1,229,345 1,010,158 3,202,550
----------------------------------- ------------- ------------------------ --------------------
Consolidated Statement of Changes in Equity
At 30 June 2016
Own Share
Share Share shares Option Translation Retained Total
Capital Premium held Reserve Reserve Losses Equity
GBP GBP GBP GBP GBP GBP GBP
Balance at
30 June 2015 447,662 33,935,138 (808,856) 522,562 (153,058) (32,933,290) 1,010,158
-------- ----------- -------------------------- -------- ---------------- ------------- ------------
Loss for the
period - - - - - (2,300,001) (2,300,001)
Other
comprehensive
income for
the period - - - - 7,397 - 7,397
-------- ----------- -------------------------- -------- ---------------- ------------- ------------
Total
comprehensive
income for
the period - - - - 7,397 (2,300,001) (2,292,604)
Issue of share
capital 232,658 4,150,489 - - - - 4,383,147
Debit to equity
for share
options - - - 101,849 - - 101,849
-------- ----------- -------------------------- -------- ---------------- ------------- ------------
Balance at
31 December
2015 680,320 38,085,627 (808,856) 624,411 (145,661) (35,233,291) 3,202,550
-------- ----------- -------------------------- -------- ---------------- ------------- ------------
Loss for the
period - - - - - (2,530,201) (2,530,201)
Other
comprehensive
income for
the period - - - - (2,624) - (2,624)
-------- ----------- -------------------------- -------- ---------------- ------------- ------------
Total
comprehensive
income for
the period - - - - (2,624) (2,530,200) (2,532,825)
Issue of share
capital 31,511 528,109 - - - - 559,620
Balance at
30 June 2016 711,831 38,613,736 (808,856) 624,411 (148,285) (37,763,492) 1,229,345
-------- ----------- -------------------------- -------- ---------------- ------------- ------------
Consolidated Cash Flow Statement
Six months ended 30 June 2016
Notes Unaudited Unaudited Year
six months six months ended
ended ended 31 December
30 June 30 June 2015
2016 2015
------------------------------------ -------- ------------- ------------- --------------
GBP GBP GBP
------------------------------------ -------- ------------- ------------- --------------
Net cash outflow from operating
activities 4 (624,649) (1,716,147) (4,236,638)
------------------------------------ -------- ------------- ------------- --------------
Investing activities
------------------------------------ -------- ------------- ------------- --------------
Interest received 3,457 2,485 8,281
------------------------------------ --------
Purchases of property, plant
and equipment (15,503) (23,330) (35,541)
------------------------------------ --------
Purchases of bank securities (10,086) - (26,308)
------------------------------------ -------- ------------- ------------- --------------
Net cash used in investing
activities (22,132) (20,845) (53,568)
------------------------------------ -------- ------------- ------------- --------------
Financing activities
------------------------------------ -------- ------------- ------------- --------------
Interest paid (769) (657) (918)
------------------------------------ -------- ------------- ------------- --------------
Proceeds on issue of shares 559,619 32,340 4,678,103
------------------------------------ -------- ------------- ------------- --------------
Share issue costs - (7,650) (270,266)
------------------------------------ -------- ------------- ------------- --------------
Net cash from financing activities 558,850 24,033 4,406,919
------------------------------------ -------- ------------- ------------- --------------
Net (decrease) / increase
in cash and cash equivalents (87,931) (1,712,959) 116,713
------------------------------------ --------
Cash and cash equivalents
at beginning of period 2,461,057 2,344,344 2,344,344
------------------------------------ --------
Effect of foreign exchange
rate changes (2,624) (3,316) -
------------------------------------ -------- ------------- ------------- --------------
Cash and cash equivalents
at end of period 2,370,502 628,069 2,461,057
------------------------------------ -------- ============= ============= ==============
Notes to the Accounts
Six months ended 30 June 2016
1. Basis of Preparation
The interim financial information has been prepared in
accordance with the IFRS accounting policies used in the statutory
financial statements for the year ended 31 December 2015.
These interim financial statements do not constitute statutory
financial statements within the meaning of section 435 of the
Companies Act 2006. Results for the six month periods ended 30 June
2016 and 30 June 2015 have not been audited. The results for the
year ended 31 December 2015 have been extracted from the statutory
financial statements of Cyan Holdings plc.
Statutory financial statements for the year ended 31 December
2015 are available on the Group's website www.cyantechnology.com
and have been filed with the Registrar of Companies. The Group's
auditor issued a report on those financial statements that was
unqualified and did not contain a statement under section 498(2) or
section 498(3) of the Companies Act 2006; however the auditor's
report was modified to emphasise the uncertainty around the Group's
ability to continue as a going concern.
2. Going Concern
Since the end of the period being reported, the Group has raised
a further GBP4.3 million (gross) from an equity placing. As a
result of this, the Directors believe that the Group will be able
to meet their liabilities as they fall due for at least 12 months,
however they have highlighted the risks that the company continues
to face below.
The Directors have recognised that the Group is trading
principally in five emerging markets, namely India, Brazil, China,
Sub-Saharan Africa and Iran. These markets have an inherent level
of uncertainty associated with them and this may result in the
predicted level of sales not being achieved and/or the timing of
orders being delayed, as has been the case for the Group in the
past. This may impact both the Group's ability to generate positive
cashflow and to raise new finance should it be required in the
future.
The financial statements do not include the adjustments that
would result if the Group was unable to continue as a going
concern. In the event that the company ceased to be a going
concern, the adjustments would include writing down the carrying
value of assets, including stocks, to their recoverable amount and
providing for any further liabilities that might arise.
Notwithstanding the material uncertainties described above,
because of the additional funding raised in July 2016, the
Directors have a reasonable expectation that the Group can continue
to meet their liabilities as they fall due, for a period of at
least 12 months from the date of approval of this report.
3. Loss per Share
Basic and diluted loss per ordinary share has been calculated by
dividing the loss after taxation for the periods as shown in the
table below.
Unaudited Unaudited
six months six months Year Ended
ended ended 31
30 June 30 June December
2016 2015 2015
Losses (GBP) 2,530,201 2,019,773 4,315,693
Weighted average number
of shares 6,955,337,610 4,481,721,997 5,631,383,257
------------------------- -------------- -------------- --------------
IAS33 "Earnings per share" requires presentation
of diluted EPS when a company could be called
upon to issue shares that would decrease net
profit or increase net loss per share. For
a loss making company with outstanding share
options, net loss per share would only be increased
by the exercise of out of the money options.
Since it seems inappropriate to assume that
option holders would act irrationally and there
are no other diluting future share issues,
diluted EPS equals basic EPS.
-------------------------------------------------------------------------
4. Reconciliation of Operating Loss to Operating Cash Flows
Unaudited Unaudited
six months six months Year
ended ended ended
30 June 30 June 31 December
2016 2015 2015
GBP GBP GBP
Operating loss
for the period (2,858,715) (2,289,523) (4,902,643)
Adjustments
for:
Depreciation of property,
plant and equipment 14,069 9,694 29,300
Share-based payment expense - - 101,849
------------------------------------- ------------ ------------ -------------
Operating cash flows before
movements in working capital (2,844,646) (2,279,829) (4,771,494)
Decrease / (Increase) in
inventories 200,643 46,203 (12,954)
Dcrease) / (Increase) in
receivables (1,592,031) (25,267) (93,167)
Increase in payables 3,031,800 141,412 239,643
--------------------------------- --- ------------ ------------ -------------
Cash reduced by operations (1,204,234) (2,117,481) (4,637,972)
Income taxes received 579,585 401,334 401,334
Net cash outflow from
operating activities (624,649) (1,716,147) (4,236,638)
--------------------------------- --- ------------ ------------ -------------
5. Interim Results
The Group's Interim Results are available for download on the
Group's website. The report will not be posted to shareholders.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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