RNS Number:5990J
Cyan Holdings Plc
28 September 2006
Press Release 28 September 2006
Cyan Holdings Plc
("Cyan" or "the Group")
Interim Results
Cyan Holdings Plc (AIM: CYAN.L), the fabless semiconductor company specialising
in the development of low powered, configurable microcontroller chips, announces
its Interim Results for the six months ended 30 June 2006.
Business Highlights
* new 16 bit eCOG1X microcontroller product range released for production
* Tier One global brand name opportunity over 1 million units per annum
* 14 design wins already for eCOG1X estimated to generate 250,000 units per
annum
* 18 further opportunities for eCOG1X over 50,000 units per annum amounting
to 3.5 million units per annum
* P&L and cash reserves in line with forecasts
* Cyan Asia well established and generating significant opportunities
* Strong pipeline of business building
* Very strong position in the huge Chinese tax control terminal market with
potential for significant market share
Commenting on the results, Paul Johnson, Chief Executive, of Cyan, said: "We
have seen tremendous potential in China and are buoyed by our solid
relationships throughout the area. Our eCOG1X product range will generate
significant business in Europe and Asia as demonstrated by early stage design
wins and opportunities. We look forward to continued and increasing success in
Asia."
For further information:
Cyan Holdings plc
Paul Johnson, Chief Executive Officer Tel: +44 (0) 1954 234 400
www.cyantechnology.com
Collins Stewart Limited
Simon Atkinson, Corporate Finance Tel: +44 (0) 20 7523 8312
www.collins-stewart.com
Media enquiries:
Abchurch Communications
Heather Salmond / Franziska Boehnke Tel: +44 (0) 20 7398 7700
franziska.boehnke@abchurch-group.com www.abchurch-group.com
Interim Statement
The announcement at the end of August that our new 16 bit eCOG1X microcontroller
has been released into its production stage marks a sea change in the evolution
of the Company. For the first time we will be able to supply customers with a
full product range for 16 bit solutions and this has already been welcomed by
existing customers; even more importantly, it should have a positive impact with
those potential customers who wanted a larger and more flexible product range
available before committing to using Cyan chips. We can now deliver across a
significantly broader range of performance, power consumption and price points.
This increase in our product offerings, which now totals 32 versions, enables us
to compete in many more market areas, including motor control and
instrumentation, and we anticipate a significant contribution to revenues in
2007 resulting from design wins, opportunities and sales within this extended
market.
Not only are we confident that the launch of the eCOG1X will be very positive
for growth, we are seeing the benefits of being a PLC with greater access to
larger, well established companies. While we cannot be specific as to the
identity of these companies, because of issues of client confidentiality, we can
disclose that we are now in active dialogue with five of the World's largest and
best known consumer electronic companies of which four are based in Asia and the
other is in the United States.
eCOG1X will be available to customers in production quantities in early 2007
thereby allowing deliveries against normal lead times during the course of the
year. Pre-production chips and development kits will be available to customers
by the end of 2006 to support our existing eCOG1X design wins and opportunities
for the new product. Based on our current conversations with customers, we feel
that meaningful sales of eCOG1X could commence in the third quarter 2007, though
second quarter sales are not out of the question.
We currently have 14 design wins for eCOG1X which, when in full production, are
expected to generate 250,000 units of sales per annum. However, more
importantly, we are also in discussion (in some cases late stage discussions) on
a number of large opportunities from which we are confident of achieving
important design wins. To date we have identified 18 opportunities for more than
50,000 units per annum that amount in total to 3.5 million units per annum when
in full production. One of these opportunities is with a 'Tier One' global
player, with a market capitalisation well in excess of US$40 billion. The
product for which they wish to use the eCOG1X is already in volume production
using a different microcontroller plus other chips with per annum unit sales of
over 1 million units. Substituting the Cyan product would give the customer
annual savings of almost $20 million - a compelling reason to change. This
project is already in the late stages of development with working prototypes and
software and is a drop in replacement for the current solution. These cost
savings could well open new market opportunities for Cyan's customer generating
further high volume sales for Cyan.
eCOG1K addresses real market needs in the shape of lower cost, less complex
applications, particularly those needing ultra low power characteristics and
continues to find design wins and opportunities for its unique features. The
eCOG1K product family will see further additions in the future and these R&D
programs have commenced. We have now sold product to twelve separate companies,
one of which is high volume, although most of our early stage customers were in
lower volumes than recent design wins and opportunities. Design wins for the
eCOG1K represent about 1.7 million units per annum when all are in full
production and opportunities represent about 13 million units per annum.
The whole product range is supported by the unique CyanIDE software development
environment which is rapidly growing into an extremely powerful development
engineering support tool. To date Cyan has released major new versions of
CyanIDE, with enhanced features and functionality about every 6 months.
During the period the Company has further developed and enhanced the quality of
its sales network by signing up new distributors in both Germany and Korea. Both
distributors were impressed with the Cyan product range and CyanIDE development
tools and are well positioned to introduce the Company to significant new
accounts in their respective territories. We are currently in early stage talks
with a potential distributor for the Japanese market and have started the
process of broadening our representation in Europe, which is still a significant
user of microcontrollers.
Cyan has put everything in place, ready for launch with a significant customer
in China using the eCOG1K. This order represented a large part of our projected
2006 and 2007 turnover at the time of flotation. The balance of our initial
100,000 unit order was shipped in Q3 and we await the rollout of the project in
China. The delays are not of our own making, nor those of our customer, but
rather due to government delay in the rollout of the project, which had
initially been projected for Jan 05. All of our enquiries indicate that the
delay is administrative and that all back office IT systems are complete and
functioning. Our customer is already an established supplier to the Chinese
market with a reputed 20% market share and has after sales service and support
across the country and knows the Chinese ePOS market very well. They are also
very successful outside China having shipped over 1 million units to brand names
in Europe to date. (This is with an earlier generation product which does not
use a Cyan chip). Our customer's projections for the Chinese market exceed 50
million units by 2010 and they expect to be the market leader, to which end they
have already invested very heavily in products, production tooling and capacity.
Turnover for the period was #60,000. Costs have been kept tightly under control
during the period and the Company has earned interest of #102,000 from
investments in treasury deposits. Our six months' operating loss and our cash
balance remain in line with expectations at #1,400,000 and #4,298,000
respectively. The Company expects to maintain its steady progress during the
second half of 2006. We look forward to exploiting the potential of the new
product range over the course of the final quarter of 2006 and beyond.
Mike Hughes Dr Paul Johnson
Chairman Chief Executive Officer
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Results for the six months ended 30 June 2006
Note Six months Six months Year
ended 30 ended 30 ended 31
June June December
2006 2005 2005
Unaudited Unaudited Audited
As restated As restated
see note 7 see note 7
# # #
Turnover 60,458 20,453 29,899
Cost of sales (48,874) (2,837) (4,966)
Gross profit 11,584 17,616 24,933
Administrative expenses
Share option charges (84,286) (168) (13,673)
Other (1,327,312) (1,019,712) (2,228,526)
(1,411,598) (1,019,880) (2,242,199)
Operating loss (1,400,014) (1,002,264) (2,217,266)
Interest receivable and similar 107,180 20,458 61,970
income
Interest payable and similar charges (41,347) (3,608) (12,621)
Loss on ordinary activities (1,334,181) (985,414) (2,167,917)
before taxation
Tax on loss on ordinary activities - - 67,381
Loss for the financial period (1,334,181) (985,414) (2,100,536)
Loss per share - basic and diluted 2 (1.6) (2.0) (3.8)
(pence)
All activities derive from continuing operations.
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
Results for the six months ended 30 June 2006
Six months Six months Year
ended 30 ended 30 ended 31
June June December
2006 2005 2005
Unaudited Unaudited Audited
As restated- As restated-
see note 6 see note 6
# # #
Loss for the financial period (1,334,181) (985,414) (2,100,536)
Currency translation difference on
foreign currency net 19,027 - (5,400)
investments
Total recognised gains and losses (1,315,154) (985,414) (2,105,936)
relating to the period
CONSOLIDATED BALANCE SHEET
At 30 June 2006
Note As at 30 As at 30 As at 31
June June December
2006 2005 2005
Unaudited Unaudited Audited
as restated as restated
see note 7 see note 7
# # #
FIXED ASSETS
Intangible assets 2,000 6,000 4,000
Tangible assets 148,044 176,527 163,236
150,044 182,527 167,236
CURRENT ASSETS
Stocks 127,939 36,563 59,583
Debtors 78,525 101,903 182,560
Current investments 4,030,000 1,090,000 5,375,000
Cash at bank and in hand 267,870 153,589 192,680
4,504,334 1,382,055 5,809,823
CREDITORS: amounts falling due (230,451) (308,902) (338,105)
within one year
NET CURRENT ASSETS 4,273,883 1,073,153 5,471,718
TOTAL ASSETS LESS CURRENT 4,423,927 1,255,680 5,638,954
LIABILITIES, BEING NET ASSETS
CAPITAL AND RESERVES
Called up share capital 3 169,762 109,315 168,621
Share premium account 3 8,612,930 3,126,739 8,598,230
Other reserve - shares for issue - 40,506 -
Profit and loss account (4,456,724) (2,021,048) (3,141,570)
Share option reserve 97,959 168 13,673
EQUITY SHAREHOLDERS' FUNDS 6 4,423,927 1,255,680 5,638,954
CONSOLIDATED CASH FLOW STATEMENT
Results for the six months ended 30 June 2006
Note Six Six Year
months months ended 31
ended 30 ended 30 December
June June 2005
2006 2005 Audited
Unaudited Unaudited
# # #
Net cash outflow from operations 4 (1,331,873) (873,774) (2,015,849)
Returns on investments and servicing of finance
Interest received and similar income 107,180 20,458 61,970
Interest paid and similar charges (41,347) (3,608) (12,621)
Net cash inflow from returns on investments and
servicing of finance 65,833 16,850 49,349
Capital expenditure and financial investment
Purchase of tangible fixed assets (19,611) (46,590) (66,114)
Net cash outflow from capital expenditure and
financial investment (19,611) (46,590) (66,114)
Net cash outflow before management of liquid
resources and financing (1,285,651) (903,514) (2,032,614)
Management of liquid resources
Decrease/(increase) in short term deposits 1,345,000 (1,090,000) (5,375,000)
Net cash inflow/(outflow) from management of liquid 1,345,000 (1,090,000) (5,375,000)
resources
Financing
Issue of ordinary share capital (net of issue costs) 15,841 1,943,644 7,396,835
Net cash inflow from financing 15,841 1,943,644 7,396,835
Increase/(decrease) in cash 5 75,190 (49,870) (10,779)
NOTES TO THE FINANCIAL INFORMATION
1. Basis of preparation
The financial information has been prepared in accordance with the policies set
out in the statutory financial statements of Cyan Holdings plc for the year
ended 31 December 2005 with the exception of accounting for share options.
FRS20 "Share Based Payments" is applicable for the first time and has a prior
year impact which is detailed in note 7.
These interim financial statements do not constitute statutory financial
statements within the meaning of Section 240 of the Companies Act 1985. Results
for the six month periods ended 30 June 2006 and 30 June 2005 have not been
audited. The results for the year ended 31 December 2005 have been extracted
from the statutory financial statements of Cyan Holdings plc and restated where
appropriate as explained in note 7. The financial statements for the year ended
31 December 2005 have been filed with the Registrar of Companies and upon which
the auditors' report was not qualified and did not contain a statement under
Section 237(2) or (3) of the Companies Act 1985.
2. 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.
Six months Six months ended Year ended
ended 30 30 June 2005 31 December
June 2006 As restated - 2005
see note 6 As restated -
see note 6
Losses (#) (1,334,181) (985,414) (2,100,536)
Weighted average number of shares 84,670,828 48,665,598 54,823,213
FRS 22 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.
3. Share capital and share premium account
As at As at As at
30 June 30 June 31
2006 2005 December
2005
# # #
Authorised:
150,000,000 (June 2005: 100,000,000, December 2005: 300,000 200,000 300,000
150,000,000) ordinary shares of #0.002 each
Called up, allotted and fully paid
84,881,140 (June 2005: 54,657,675, December 2005: 84,310,515) 169,762 109,315 168,621
ordinary shares of #0.002 each
Share Premium Account
As at As at As at
30 June 30 June 31
2006 2005 December
2005
# # #
At start of period 8,598,230 1,121,634 1,121,634
Premium on share issues 14,700 2,005,105 7,476,596
At end of period 8,612,930 3,126,739 8,598,230
4. Reconciliation of operating loss to operating cash outflow
Six Six months Year ended 31
months ended 30 December
ended 30 June 2005 2005
June As restated As restated -
2006 - see note 7 see note 7
# # #
Operating loss (1,400,014) (1,002,264) (2,217,266)
Currency translation difference 19,027 - (5,400)
Depreciation and amortisation 36,803 27,864 62,679
FRS 20 share option charge 84,286 168 13,673
Increase in stocks (68,356) (1,167) (24,187)
Decrease/(increase) in debtors 104,035 (42,543) (93,719)
(Decrease)/increase in creditors (107,654) 144,168 248,371
(1,331,873) (873,774) (2,015,849)
5. Analysis and reconciliation of net funds
31 Cash 30
December flow June
2005 2006
# # #
Cash at bank and in hand 192,680 75,190 267,870
Current asset investments 5,375,000 (1,345,000) 4,030,000
Net funds 5,567,680 (1,269,810) 4,297,870
6. Reconciliation of movements in group shareholders' funds
Six Six Year
months months ended 31
ended 30 ended 30 December
June June 2005
2006 2005
# # #
Loss for the financial period (as restated, see note 7) (1,334,181) (985,414) (2,100,536)
Other recognised gains and losses 19,027 - (5,400)
(1,315,154) (985,414) (2,105,936)
New shares issued (net of expenses) 15,841 2,033,238 7,396,835
Movement in share option reserve (as restated, see note 7) 84,286 (126,526) 13,673
Net (decrease)/increase in shareholders' funds (1,215,027) 921,298 5,304,572
Opening shareholders' funds 5,638,954 334,382 334,382
Closing shareholders' funds 4,423,927 1,255,680 5,638,954
7. Prior year restatement - Implementation of FRS 20 "Share-based payment"
Accounting policy change
The Group has applied the requirements of FRS 20 Share-based payments. In
accordance with the transitional provisions, FRS 20 has been applied to all
grants of equity instruments after 7 November 2002 that were unvested as of 1
January 2005.
The Group issues equity-settled share-based payments to certain employees and
directors. Equity-settled share-based payments are measured at fair value at the
date of grant. The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the vesting
period, based on the group's estimate of shares that will eventually vest.
Fair value is measured by use of a Black-Scholes model. The expected life used
in the model has been adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions, and behavioural
considerations.
A liability equal to the portion of the goods or services received is recognised
at the current fair value determined at each balance sheet date for cash-settled
share-based payments.
Impact of restatement
The impact of implementing FRS 20 "Share-based payment" has had the following
impact on the financial statements.
PROFIT AND LOSS ACCOUNT Six Year
months ended 31
ended 30 December
June 2005
2005
# #
Administrative expenses as previously stated 1,019,712 2,228,526
FRS 20 "Share-based payment" charge 168 13,673
Administrative expenses as restated 1,019,880 2,242,199
Loss per share - basic and diluted (pence) as previously 2.0 3.8
stated
FRS 20 "Share-based payment" charge - -
Loss per share - basic and diluted (pence) as restated 2.0 3.8
8. Prior year restatement - Implementation of FRS 20 "Share-based payment"
(continued)
BALANCE SHEET As at 30 As at 31
June December
2005 2005
# #
Profit and loss account as previously stated (2,020,880) (3,127,897)
FRS 20 "Share-based payment" charge (168) (13,673)
Profit and loss account as restated (2,021,048) (3,141,570)
Share option reserve as previously stated - -
FRS 20 "Share-based payment" charge 168 13,673
Share option reserve as restated 168 13,673
The impact on the current period has been to increase administrative expenses by
#84,286 and to increase the share option reserve by #84,286.
INDEPENDENT REVIEW REPORT TO CYAN HOLDINGS PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2006 which comprises the profit and loss account,
the statement of total recognised gains and losses, the balance sheet, the cash
flow statement and related notes 1 to 7. We have read the other information
contained in the interim report and considered whether it contains any apparent
misstatements or material inconsistencies with the financial information.
This report is made solely to the company, in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are also responsible for ensuring that the accounting policies and presentation
applied to the interim figures are consistent with those applied in preparing
the preceding annual accounts except where any changes, and the reasons for
them, are disclosed.
Review work performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly, we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2006.
Deloitte & Touche LLP
Chartered Accountants
Cambridge
Notes: A review does not provide assurance on the maintenance and integrity of
the website, including controls used to achieve this, and in particular on
whether any changes may have occurred to the financial information since first
published. These matters are the responsibility of the directors but no control
procedures can provide absolute assurance in this area.
Legislation in the United Kingdom governing the preparation and dissemination of
financial information differs from legislation in other jurisdictions.
-Ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
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