RNS Number:0976A
Cyan Holdings Plc
21 March 2006
Press Release 21 March 2006
Cyan Holdings Plc
("Cyan" or "the Group")
Preliminary results for the 12 months to 31 December 2005
Cyan Holdings Plc (AIM: CYAN.L), the fabless semiconductor company specialising
in the development of low powered, configurable microcontroller chips, announces
its preliminary results for the 12 months ended 31 December 2005.
Highlights
* Turnover of #29,899 (2004: #12,116)
* Gross profit is #24,933 (2004: #3,016)
* The milestone of 100 design wins was achieved by March 2006
* eCOG1k and CyanIDE established in the market place
* Significant product development on eCOG1X
* Strengthened distribution channels in Asia and Europe
* Expanded and reputable management, sales and engineering teams
* Successful AIM IPO which raised #6.1 million
Commenting on the results, Paul Johnson, Chief Executive, of Cyan, said: "I am
pleased to report Cyan's maiden results since listing on AIM in December 2005.
The Group has made significant progress since flotation. The flotation itself
enabled us to attract higher profile customers around the world and build on our
strategic plan of developing the eCOG product range. I am confident that the
combination of all of these key attributes will enable us to maintain our
competitive advantage."
For further information:
Cyan Holdings plc
Paul Johnson, Chief Executive Officer Tel: +44 (0) 1954 234 400
www.cyantechnology.com
Collins Stewart Limited
Stephen Keys, Corporate Finance Tel: +44 (0) 20 7523 8312
www.collins-stewart.com
Media enquiries:
Abchurch Communications
Heather Salmond / Dana Thomas Tel: +44 (0) 20 7398 7700
heather.salmond@abchurch-group.com www.abchurch-group.com
Chairman's Statement
2005 was a successful year for Cyan; over two thousand copies of CyanIDE were
downloaded by people in the industry, and design wins reached 89 by the year end
after the introduction of the 16 bit eCOG1k microcontroller into the market in
2004. Twelve customers moved into production, considerable progress was made on
the development of eCOG1X for launch in 2006, and the company was floated on AIM
on 7 December 2005. Thanks are due to all our talented colleagues who made this
possible.
Our flotation was especially important, not only because it provides the finance
for our growth, but also because it has increased our customers' confidence in
our future which, in turn, encourages them to trust that our microcontrollers
will be available to support their products over the long term. We would like
to thank our initial investors for their support and confidence in us, and to
welcome our new investors. The Board is committed to enhancing shareholder
value through growth, which will be driven by the expansion of our product
range, enhancing our customers' product ranges and their product development
processes, and providing a first class, one-stop-shop for customer support.
Proceeds from the float amounted to #6.1 million, #4 million being raised
directly from the market and #2.1 million from the exercise of warrants by
existing shareholders. Cash at the year end was #5.5 million. Proceeds will be
largely applied to continuation of the product development programme, an
increased sales effort, and the funding of working capital as customers'
production quantity orders are received during 2006 and 2007.
Cyan is now making rapid progress in its strategy of providing ultra low power
and low power, high performance, 16 and 32 bit microcontrollers supported by
what we believe to be unique integrated software development tools. Our
integrated approach to microcontroller development and software tools
development provides benefits in the performance of both, and allows
particularly effective customer support. It is a novel approach in our business
area.
Sales in the year were #29,899, with a Gross Profit of #24,933 and a Net Loss of
#2,086,863 arising out of the set-up stage of the Company and the nature of its
products. Microcontrollers are components of other people's products so their
own development time is followed by the development time of the customer's
product, which might typically take 12 to 18 months, before generating
production volume orders to Cyan. Longer term however, the advantage is a
stable business model as the incorporation of a Cyan microcontroller into a
customer's product produces a stream of orders over the lifetime of that
product. This stability is enhanced by the application of our microcontrollers
to diverse product sectors and widespread geographical areas.
At the time of the Company's flotation, Cyan's current largest customer had
committed to an initial order of 100,000 units of eCOG1k which the Company
originally estimated it would begin shipping in December 2005. Delays with the
roll-out of tax control POS terminal products in China have led to a
rescheduling of the drawdown on this order but we are pleased to say that the
initial order will now be dispatched over April, May and June 2006. Further
orders for this customer are expected for delivery in the second half of 2006
but the revised shipping schedules will mean that an estimated three months of
anticipated sales from 2006 will slip into 2007 potentially affecting 2006
budgeted sales. Nonetheless we are pleased to report that 2006 will be our first
year of volume sales.
The Company is delighted to advise that it has reached a milestone in exceeding
100 design wins in March 2006, an increase of some 30 design wins since IPO.
Particularly pleasing is the quality of customers and potential volumes
involved. A design win is when a customer has entered into a relationship with
Cyan whereby the customer has purchased a development board and initial silicon
from the Company and is actively working on developing an end product for volume
production. There is of course no guarantee that any design win will result in a
significant order but Cyan believes that the quantity and quality of the design
wins within its portfolio means that such an eventuality is likely.
Cyan achieved a great deal in 2004 and 2005 - a strong management, sales, and
engineering team was established, distribution channels were put in place in
Asia and Europe, and the first product was introduced to the market. We now
look forward to our initial growth period in 2006 and 2007.
Professor Michael Hughes
Chairman
21 March 2006
Chief Executive's review
The successful AIM IPO in December 2005 was important for two reasons. Not only
did it provide the resources to take the Company forward but it gave the Company
added credibility among its suppliers and customers, effectively removing the '
start-up' label. The Company is now better placed to win substantial new
business from many more customers.
Two new revisions of CyanIDE were released last year and a third is currently in
beta release with key customers. We prototyped a test chip for our new eCOG1X
and eCOG2 product families. The eCOG1X design is currently being prepared for
production whilst the test chip is being put through its paces. Preliminary
test results are very encouraging. All the major new technology blocks are
functioning correctly and there should be a low risk in moving to final
production versions. During 2005 some customers received advance information on
eCOG1X under non-disclosure agreements. At the Embedded Systems Show in
Nuremberg during February 2006 Cyan released preliminary data to the trade.
There was great interest in the eCOG1X and we already have design wins. At the
International IC exhibition in Shenzhen, China we had our own, well positioned
stand which was manned by our own staff and staff from our distributors. About
300 design engineers registered their details and great interest was shown in
both the eCOG1k and the eCOG1X.
Cyan has performed a great deal of work on the upcoming 32 bit microcontroller
and we have the basics of the CyanIDE toolset completed. Cyan is now able to
compile customers' software programs on the 32 bit tools and compare with the
most memory efficient processor cores available today, and we are seeing
improvements in memory efficiency. This is important as memory in most 32 bit
applications is the largest part of the chip, and chip size directly relates to
cost.
Cyan is now moving into the production phase of its business and we are setting
up the manufacturing operations group. Production orders for silicon wafers
have been placed with Taiwan Semiconductor Manufacturing Company (TSMC), our
silicon wafer manufacturing partner, to satisfy production orders from our
customers.
Strategy
Cyan's approach to the microcontroller market is novel in that it has developed
and provides free-of-charge the most advanced software development tools -
CyanIDE - in the industry, whilst competitors rely on generic, third party
tools. The software makes chip integration into customer's products vastly more
simple, quick, reliable and hence less expensive, while dramatically reducing
development time. The Company also provides, as a result of extensive
experience in semiconductors and computers, a broad range of microcontrollers to
the market with minimal R&D and tooling costs. These microcontrollers are of
great importance to battery powered applications and techniques that require
ultra low power
Markets
The market for microcontrollers has steadily grown at around 10% per annum for
many years. The total market size in 2005 is estimated to be about US$14
billion, with about 7 billion units shipped. Over the next 4 years the market
is expected to grow to over US$20 billion, with the fastest growth coming from
16 and 32 bit microcontrollers, the areas on which the Company focuses. Cyan
has identified Europe and South East Asia as the largest markets for its
products and aims to have 1% of the microcontroller market within 5 years.
Customers
Cyan raised its first round of funding in early 2004 and has since been steadily
achieving design wins. These design wins are in diverse applications from asset
trackers, taxi meters, data loggers, security systems, point-of-sale terminals
to small computers for skydivers. Design wins are now starting to translate into
production. Cyan monitors the take-up of this technology and tracks website
registrations for CyanIDE downloads, and design wins. There is a strong
correlation between the two. By the end of 2005, over 2000 people in the
industry had downloaded CyanIDE.
We have been successful in winning customers in Europe and China but the biggest
potential for volume sales in 2006 and 2007 will be in China. Our largest
customer in China has included Cyan's eCOG1k in 7 of its tax control Point of
Sale (POS) terminal designs. The total available market for these products is
estimated to be in excess of 50 million units over the next few years and our
customer is tendering for some 6 million units of near term demand. We are
currently working with this customer on the second generation of tax control POS
terminals using eCOG1X.
Looking ahead
2006 will see the launch of the eCOG1X product range which will be extensive and
include more industry standard peripheral interfaces, which means an even wider
range of potential customers. We will be engaging with more distributors as we
continue to develop from a one product start-up into a listed company with an
extensive product range. Our 32 bit microcontroller (eCOG2) development will
continue and we should complete the design of the Linux operating system to run
on it.
Linux is becoming increasingly important particularly in China and India. It is
an operating system that can, in most cases, replace Microsoft Windows and has
the compelling feature of being completely free, hence the interest from China
and India. Linux is generally regarded by software professionals as being
faster and more reliable than Windows. The availability of Linux will further
increase the market for Cyan products and will make it very attractive for use
in portable entertainment products which are becoming very popular in China as
well as the rest of the world.
Dr Paul Johnson
Chief Executive Officer
21 March 2006
Consolidated Profit and Loss Account
Year ended 31 December 2005
Note 2005 2004
# #
TURNOVER: continuing operations 29,899 12,116
Cost of sales (4,966) (9,100)
Gross profit 24,933 3,016
Administrative expenses (2,228,526) (1,022,033)
OPERATING LOSS: continuing operations (2,203,593) (1,019,017)
Interest receivable and similar income 61,970 12,750
Interest payable and similar charges (12,621) (10)
LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (2,154,244) (1,006,277)
Tax on loss on ordinary activities 67,381 -
RETAINED LOSS FOR THE FINANCIAL YEAR BEING LOSS
ATTRIBUTABLE TO EQUITY HOLDERS (2,086,863) (1,006,277)
LOSS PER SHARE (pence)
Basic and diluted 2 (3.8) (2.5)
Consolidated Balance Sheet
31 December 2005
2005 2004
# #
FIXED ASSETS
Intangible assets 4,000 8,000
Tangible assets 163,236 155,801
167,236 163,801
CURRENT ASSETS
Stocks 59,583 35,396
Debtors 182,560 21,460
Investments - short term deposits 5,375,000 -
Cash at bank and in hand 192,680 203,459
5,809,823 260,315
CREDITORS: amounts falling due within one year (338,105) (89,734)
NET CURRENT ASSETS 5,471,718 170,581
TOTAL ASSETS LESS CURRENT LIABILITIES, BEING NET ASSETS 5,638,954 334,382
CAPITAL AND RESERVES
Called up share capital 168,621 81,182
Share premium account 8,598,230 1,121,634
Other reserve - shares for issue - 167,200
Profit and loss account (3,127,897) (1,035,634)
EQUITY SHAREHOLDERS' FUNDS 5,638,954 334,382
Consolidated Cash Flow Statement
31 December 2005
2005 2004
# #
Net cash outflow from operating activities (2,015,849) (931,442)
Returns on investments and servicing of finance 49,349 12,740
Taxation - -
Capital expenditure and financial investment (66,114) (57,515)
Cash outflow before management of liquid resources and
financing (2,032,614) (976,217)
Management of liquid resources (5,375,000) -
Financing 7,396,835 1,036,016
Decrease in cash in the year (10,779) 59,799
Analysis and Reconciliation of Net Funds
At 1 January 31
Cash December
2005 flow 2005
# # #
Cash at bank and in hand 203,459 (10,779) 192,680
Current asset investments - 5,375,000 5,375,000
Net funds 203,459 5,364,221 5,567,680
2005 2004
# #
(Decrease) increase in cash in the year (10,779) 59,799
Cash outflow from increase in liquid resources 5,375,000 -
Change in net funds resulting from cash flows 5,364,221 59,799
Movement in net funds in year 5,364,221 59,799
Net funds at 1 January 203,459 143,660
Net funds at 31 December 5,567,680 203,459
Consolidated Statement of Changes In Equity
Year ended 31 December 2005
Share
premium Shares for
Share capital account issue Retained loss Total
# # # # #
At 31 December 2004 81,182 1,121,634 167,200 (1,035,634) 334,382
Loss for the year - - - (2,086,863) (2,086,863)
New issue 87,439 8,317,001 (167,200) - 8,237,240
Expenses of share issue - (840,405) - - (840,405)
Currency translation difference on
foreign currency net investments - - - (5,400) (5,400)
At 31 December 2005 168,621 8,598,230 - (3,127,897) 5,638,954
During the year 43,719,762 ordinary shares were issued for #8,404,440. Share
issue costs amounted to #840,405. The resultant premium of #7,476,596 has been
credited to the share premium account.
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
This announcement is prepared on the basis of the accounting policies stated in
the previous year's financial statements.
The financial statements are prepared in accordance with applicable United
Kingdom accounting standards. The company has adopted FRS 21 "Events after the
balance sheet date", FRS 22 "Earnings per share", the presentation aspects of
FRS 25 "Financial instruments: disclosure and presentation", and FRS 28 "
Corresponding amounts". No restatement of the comparatives was necessary.
The particular accounting policies adopted are described below.
Accounting convention
The financial statements are prepared under the historical cost convention.
Basic of consolidation
The group financial statements consolidate the financial statements of the
company and its subsidiary undertakings drawn up to 31 December each year. The
results of subsidiaries acquired or sold are consolidated for the periods from
or to the date on which control passed. Acquisitions are accounted for under
the acquisition method.
Intangible fixed assets
The intellectual property is amortised in equal annual amounts over a period of
three years. The amortisation started in January 2004 when the exploitation of
the intellectual property commenced.
Tangible fixed assets
Depreciation is provided on cost in equal annual instalments over the estimated
useful lives of the assets. The rates of depreciation are as follows:
Leasehold property improvements 20% straight line basis
Office equipment 50% straight line basis
Plant and machinery, tools and equipment 20-25% straight line basis
Fixtures and fittings 25% straight line basis
Stocks
Stocks are stated at the lower of cost and net realisable value.
Research and development
Research and development expenditure is written off to the profit and loss
account as incurred.
Foreign exchange
Transactions denominated in foreign currencies are translated into sterling at
the rates ruling at the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies at the balance sheet date are
translated at the rates ruling at that date. Translation differences arising
are dealt with in the profit and loss account.
Investments
Investments held as fixed assets are stated at cost less provision for any
impairment in value.
Taxation
Current, including UK corporation tax and foreign tax, is provided at amounts
expected to be paid (or recovered) using the tax rates and laws that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is provided in full on timing differences, which result in an
obligation at the balance sheet date to pay more tax, or a right to pay less
tax, at a future date, at rates expected to apply when they crystallise based on
current tax rates and law. Timing differences arise from the inclusion of items
of income and expenditure in taxation computations in periods different from
those in which they are included in financial statements. Deferred tax assets
are recognised to the extent that it is regarded as more likely than not that
they will be recovered. Deferred tax assets and liabilities are not discounted.
Leases
Rentals under operating leases are charged on a straight-line basis over the
lease term, even if the payments are not made on such a basis.
Turnover
Turnover is principally derived from the sale of integrated circuits and is
stated net of trade discounts and value added tax. Revenue is recognised on
despatch, which is deemed to be the point at which the risks and rewards of
ownership are transferred.
2. Loss per share
The calculations or earnings per share are based on the following losses and
numbers of shares.
Basic and diluted
2005 2004
# #
Loss for the financial year (2,086,863) (1,006,277)
2005 2004
No No
Weighted average number of shares:
For basic and diluted loss per share 54,823,213 39,567,067
The financial information set out in the announcement does not constitute the
company's statutory accounts for the years ended 31 December 2005 or 2004. The
financial information for the year ended 31 December 2004 is derived from the
statutory accounts for that year which have been delivered to the Registrar of
Companies. The auditors reported on those accounts; their report was unqualified
and did not contain a statement under s. 237(2) or (3) Companies Act 1985. The
statutory accounts for the year ended 31 December 2005 will be finalised on the
basis of the financial information presented by the directors in this
preliminary announcement and will be delivered to the Registrar of Companies
following the company's annual general meeting.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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