RNS Number:8602Q
Cyan Holdings Plc
27 March 2008
Press Release 27 March 2008
Cyan Holdings Plc
("Cyan" or "the Group")
Final Results
Cyan Holdings Plc (AIM:CYAN.L), a fabless semiconductor company providing
configurable application software and production ready modules based on feature
rich, low power, microcontroller chips, announces its Final Results for the year
ended 31 December 2007.
Highlights
* First 6 months phase of reorganization complete on time
* Loss of �4.6m (2006: loss of �3.0m) after �1.0m of restructuring and
non-recurring costs
* Identification of new sales opportunities in China
* Identification of further partnership opportunities
Commenting on the results, Kenn Lamb, Chief Executive of Cyan, said: "As of the
year ended 31 December 2007, Cyan completed its restructuring program and
introduced new products in the European and Asian markets. The progress
achieved is ahead of our expectations and the new products have been well
received in each market. We look forward to reporting further evidence of
progress and growing sales traction over the next quarter. Feedback from
partners, sales channels and early prospects indicate that Cyan is now well
positioned to deliver the true potential of the business."
-Ends-
For further information, please contact:
Cyan Holdings plc
Kenn Lamb, CEO Tel: +44 (0) 1954 234 400
Andrew Lee, Finance Director
www.cyantechnology.com
Collins Stewart Europe Limited
Chris Howard/Oliver Quarmby Tel: +44 (0) 20 7523 8350
Corporate Finance
www.collinsstewart.com
Media enquiries:
Abchurch Communications
Heather Salmond / Franziska Boehnke Tel: +44 (0) 20 7398 7700
franziska.boehnke@abchurch-group.com www.abchurch-group.com
Chairman's Statement
2007 has been a year of change for Cyan. The Group entered the year with a new
range of products but without any notable sales traction. Since its inception
Cyan has established a good track record of creating quality products, but it
has struggled to match them with market needs. With this in mind the senior
management of Cyan has been thoroughly restructured during the year, most
significantly through the appointment of Kenn Lamb as CEO. The commercial
experience that Kenn has brought to Cyan has been critical to repositioning the
group so that it enters 2008 in a much stronger position.
Kenn identified two core problems with the Group's strategy. On the one hand
there was a dogged persistence to compete at a component level with industry
majors such as Texas Instruments and Renesas, while on the other, producing
product which was technically excellent, but could not be manufactured at a cost
customers were willing to pay for it.
Kenn has led the senior management of the Group in addressing these two core
weaknesses head on and is in the process of executing a new business strategy
that will offer the potential for the Group to enjoy sales penetration for the
first time.
Inevitably the results that follow do not reflect the outcome of that strategy
indeed the sales performance with a turnover of �33,000 (2006: �269,000) is
indicative of the lack of sales penetration effected by the former strategy. We
do however, expect to see the fruits of our restructuring efforts come through
in the first half of 2008. In the same way the cost burden of 2007 which
resulted in an operating loss of �4,648,000 (2006: �3,009,000) is inflated by a
number of one off restructuring costs, both in restructuring the management team
and re-engineering the company's product range. These costs, amounting to
�1,047,000 (2006: � nil) have been necessary in order to get the Group into a
position where it can deliver sales and market penetration at the earliest
possible opportunity.
We believe the Group has now faced up to the challenges that have held it back
and enters 2008 in a strong position to succeed.
Other matters
During the year Mike Hughes (in October), Paul Barwick (in March) and Paul
Johnson (in November) resigned from the board to pursue other interests. I would
like to take this opportunity to thank all of them for the contribution they
made to the Group and in particular for their contribution to the flotation of
the business in 2005. Following the board changes, the Group entered 2008
seeking to strengthen the non executive team and I am pleased to welcome David
Gutteridge to our board. David joined us with effect from 5 February 2008 and
we look forward to benefiting from his experience.
In the autumn, the new management team undertook a detailed review of progress
on the sale of tax terminals in China through Pinnacle. Although by this stage,
it is clear that the Chinese tax terminal project is well underway in a number
of provinces, with orders already having been placed, our conclusion is that
Pinnacle has failed to gain any significant market traction. Accordingly the
Group has written off the �157,780 debt due from Pinnacle in the accounts to 31
December 2007. We are aware that high expectations in previous years attached to
the success of this contract. The Company's new strategy was in part developed
in response to the lack of progress of the Tax Control opportunity, but the
success of the new strategy is in no way dependent upon the success of the Tax
Control opportunity. Management's view is that this write-off does not affect
the prospects for the future direction of the company, which have been defined
independent of the Tax Control market.
We appreciate that 2007 has been a difficult year for Cyan and a number of hard
decisions have been necessary. However the board believes that having
successfully completed the restructuring of the business, the Group enters 2008
in a much stronger position to succeed. I would like to finish by welcoming
those new shareholders who joined us at the Placing in July and thanking our
existing shareholders for their patience and support in 2007. I trust that we
will all see the benefits of a reinvigorated group in a successful 2008.
Dr John Read
Chairman
27 March 2008
Chief Executive's Review of Operations
When I joined the Group on 11 April last year, it was apparent that its future
success would depend on a major reappraisal of the business strategy and further
funds to implement that strategy. On completing that reappraisal, in July 2007
the group successfully closed a �5 million (net) fundraising so that it could
execute our new strategic business plan. At the time of the Placing, the Group
set out its goals and expectations, explaining that the plan would in total
require eighteen months to execute, divided into three phases.
The first six months post fundraising were allocated to a restructuring of the
Group to ensure that it possessed the skills, products, market position and
partners necessary to deliver the second and third phases of the plan. That six
month phase was up to 31 December 2007 and the board is pleased to report that
all the targeted restructuring activities have been completed either on time, or
ahead of expectations. Among the achievements of this first phase are:
* Establishing a completely new European sales team
* The creation and recruitment of an experienced operations team
* Expansion of the marketing team
* Significant investment in expanding the software development team
* A restructured Board of Directors.
Western Markets
For Western Markets, Cyan has positioned itself to offer clients "end
applications", not just MCUs. This means that Cyan now offers "user customisable
application solutions" and not simply components to be used by customers in
their designs. As we aim to compete at the application level, we look to work
with partners to develop application solutions incorporating our feature rich
configurable microcontrollers.
In consequence of this new strategy, Cyan has therefore concentrated on
developing new partnerships. In addition to its already announced partnership
with Adaptive Modules, a company active in the RF Module market, Cyan is moving
forward with four further partnerships, of which two are at an advanced stage of
negotiation, with a further two progressing well but at an earlier stage. These
partnerships are intended to establish mutually profitable relationships with
established companies operating in all three global geographies (USA, Europe and
Asia) who can offer Cyan a channel to market, and/or complementary technology.
Negotiations will be concluded during the first half of 2008.
Application solutions comprise production quality application software running
on production ready modules. Such modules are supplied by partners established
in the relevant market segments. A particularly exciting development is the
extension of CyanIDE so that it can offer system level design, rather than
simply configuring the Cyan MCU. This new capability will support end user
modification of the complete system, which in turn enables easy addition of
additional market specific features required for an individual customer's
products. The enhanced version of CyanIDE has been converted to a new open
standard. It is already in Beta testing and will be released to all customers
in Q2 08. The company is confident that the new feature rich CyanIDE software
is set to become dominant in the industry.
To emphasise this new application level capability, we have completely
overhauled our marketing and branding communications. The application solutions
are now marketed under the Cy-Solved brand and this is prominent on the
rebranded Cyan Technology web site which went live ahead of schedule in
December.
China and Asia
For Asian Markets, Cyan has a new entry level product which was released for new
designs in Asia earlier this month. This device, available today, is less than
half the cost of the previous lowest priced Cyan MCU and is pin and functionally
compatible with a completely new device, the first of a new entry level family
of MCUs, compatible with the existing eCOG1X family. These devices, which will
be manufactured by a new foundry partner, achieve lower cost through production
engineering techniques introduced by Cyan's new operations team. When released
in production volumes in 2H08, they will reduce end user costs to one third of
the lowest price previously available. Early indications are that Cyan now has
the ability to meet the price aspirations for high volume design opportunities
in China similar to those for which we have previously bid unsuccessfully.
Through new manufacturing partners in China, Cyan has reduced the end user cost
for a development system by a factor of twenty. The consequence of this
achievement is that for the first time, Cyan has its core development system
priced at a cost easily within the budget of the smallest Chinese design
business; management believes that this achievement has eliminated a significant
barrier to securing new customers.
Looking Forward
The group enters 2008 with a range of new products, some of which have already
been released and with others still in development. All such products have been
costed to allow pricing that enables manufacture and sale in China at prices
that are competitive in the Chinese market. As a direct result of this strategy
change Cyan has already identified three separate opportunities each in excess
of one million pieces. While initial margins will be lower than plan, we expect
significant margin growth throughout the second half of 2008 as the full impact
of our cost reduction strategy comes on stream.
In summary, the Group is pleased to announce that the first phase of the
turn-around plan has been completed on schedule. The company therefore enters
2008 having already started on the the plan's second phase, in which we expect
to announce new product launches and to see early stage sales for product
already released to the market.
The new strategy is showing early and positive signs of traction and management
remain confident in their ability to deliver on this strategy.
2007 has been a year of transition for the Group which has meant a large number
of substantial changes. These changes have been enthusiastically embraced by our
staff and by my colleagues on the board. I want to finish by acknowledging the
hard work of the Cyan team in bringing about the change in direction and the
wholehearted support they have given me and the board in implementing our
strategy.
Kenn Lamb
Chief Executive Officer
27 March 2008
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2007
2007 2006
� �
Continuing Operations
Revenue 32,596 269,333
Cost of sales (26,934) (205,776)
Gross profit 5,662 63,557
Administrative expenses (3,728,792) (3,080,863)
Other operating expenses (21,903) (173,529)
Restructuring and non recurring costs (1,047,267) -
Operating loss (4,792,300) (3,190,835)
Investment revenues 144,795 182,216
Finance costs (121) (227)
Loss before tax (4,647,626) (3,008,846)
Tax 360,000 475,557
Loss for the period attributable to equity (4,287,626) (2,533,289)
holders of the parent
Loss per share (pence)
Basic (4.0) (3.0)
Diluted (4.0) (3.0)
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
For the year ended 31 December 2007
2007 2006
� �
Exchange differences on translation of foreign operations 31,876 26,209
Net income recognised directly in equity 31,876 26,209
Loss for the period (4,287,626) (2,533,289)
Total recognised income and expense for the period (4,255,750) (2,507,080)
attributable to equity holders of the parent
CONSOLIDATED BALANCE SHEET
At 31 December 2007
2007 2006
� �
Non-current assets
Intangible assets 28,792 57,586
Property, plant and equipment 96,680 78,663
125,472 136,249
Current assets
Inventories 180,240 107,922
Trade and other receivables 503,225 520,942
Cash and cash equivalents 4,079,534 2,820,801
4,762,999 3,449,665
Total assets 4,888,471 3,585,914
Current liabilities
Trade and other payables 704,223 249,662
Current tax liabilities - -
Provisions - -
704,223 249,662
Non-current liabilities - -
Total liabilities 704,223 249,662
Net assets 4,184,248 3,336,252
EQUITY
Share capital 279,252 170,070
Share premium account 13,600,291 8,627,630
Share option reserves 209,398 187,495
Own shares - -
Retained earnings (9,904,693) (5,648,943)
Total equity being equity attributable to equity 4,184,248 3,336,252
holders of the parent
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2007
2007 2006
� �
Net cash from operating activities (3,927,362) (2,939,992)
Investing activities
Interest received 144,795 182,216
Purchases of property, plant and equipment (73,426) (48,542)
Net cash used in investing activities 71,369 133,674
Financing activities
Interest paid (121) (227)
Proceeds on issue of shares 5,081,843 30,849
Net cash from financing activities 5,081,722 30,622
Net increase/(decrease) in cash and cash 1,225,729 (2,775,696)
equivalents
Cash and cash equivalents at beginning of 2,820,801 5,567,680
year
Effect of foreign exchange rate changes 33,004 28,817
Cash and cash equivalents at end of year 4,079,534 2,820,801
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 December 2007
1. Basis of Preparation
The financial information set out in this announcement has been based on the
company's financial statements which are prepared in accordance with
International Financial Reporting Standards as adopted for use in the EU. The
Company's specific IFRS accounting policies are available on the Company's
website www.cyantechnology.com. The financial information does not constitute
statutory financial statements within the meaning of section 240 of the
Companies Act 1985.
The results for the year ended 31 December 2006 have been extracted from the
statutory financial statements of Cyan Holdings plc and restated in accordance
with the accounting principles applied by the Company. Statutory financial
statements for the year ended 31 December 2006 are available on the Company's
website and have been filed with the Registrar of Companies. The Company's
auditors issued a report on those financial statements that was unqualified and
did not contain a statement under section 237(2) or section 237(3) of the
Companies Act 1985; however the auditor's report was modified to emphasise the
uncertainty over the timing and quantum of amounts which may be recovered from
one of the Group's customers.
The statutory accounts for the year ended 31 December 2007 have been finalized
on the basis of the financial information presented by the directors in this
announcement and will be delivered to the Registrar of Companies shortly. The
audit report for the year ended 31 December 2007 was unqualified and did not
contain a statement under section 237(2) or section 237(3) of the Companies Act
1985; however the auditor's report has been modified to reflect uncertainty
around the Company's ability to continue as a going concern.
2. Restructuring and non-recurring costs
During the latter half of 2007 the group undertook a radical restructuring of
its senior management and product portfolio. As a result the Group has incurred
a number of restructuring and other non-recurring costs as itemised below
Restructuring
2007 2006
� �
Impairment loss recognised in respect of assets 147,090 -
Compensation for loss of office 350,619 -
Cost of senior management time in respect of restructuring 104,000
Costs to commercialise product range 287,778 -
889,487 -
Non recurring costs
Write off of a bad debt 157,780 -
1,047,267 -
3. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Earnings
2007 2006
� �
Earnings for the purposes of basic earnings per share being
net loss attributable to equity holders of the parent 4,287,626 2,533,289
Number of shares
2007 2006
Weighted average number of ordinary shares for the purposes
of basic and diluted earnings per share 107,962,482 84,814,709
4. Share capital
2007 2006
number number
Authorised:
Ordinary shares of 0.2 pence each 200,000,000 150,000,000
2007 2006
� �
Issued and fully paid:
139,626,314 (2006: 85,034,814) ordinary shares of 0.2 pence
each 279,252 170,070
On 24th August 2007 the company completed a placing as a result of which
53,300,000 ordinary shares of 0.2 pence each were issued at a price of 10 pence
per share to raise �5 m after expenses. The funds were raised to develop and
execute on the group's new strategy. A further 1,291,500 shares (2006: 724,065)
were issued as a result of the exercise of share options.
5. Notes to the consolidated cash flow statement
2007 2006
� �
Operating loss for the year (4,792,300) (3,190,835)
Adjustments for:
Depreciation of property, plant and equipment 54,282 44,129
Amortisation of intangible assets 28,794 32,792
Share-based payment expense 21,903 173,529
Operating cash flows before movements in working capital (4,687,321) (2,940,385)
Increase in inventories (72,318) (48,339)
Decrease/(increase) in receivables 17,716 (338,382)
Increase/(decrease) in payables 454,561 108,370
Cash generated by operations (4,287,362) (3,218,736)
Income taxes paid 360,000 278,744
Interest paid - -
NET CASH FROM OPERATING ACTIVITIES (3,927,362) (2,939,992)
Cash and cash equivalents (which are presented as a single class of assets on
the face of the balance sheet) comprise cash at bank and other short-term highly
liquid investments with maturity of three months or less.
6. Going Concern
The directors have prepared a business plan which has formed the basis on which
they are satisfied that the Group has adequate financial resources to continue
to operate for the next twelve months. This business plan assumes a certain
level of sales, which the directors believe to be both achievable and the best
estimate of the Group's future activities. However there is a risk that the
actual level of sales achieved may be significantly lower than is assumed in
that business plan. There is a risk that new and existing partnerships may not
lead to significant sales and that new iterations of the product range may not
be received well by the market.
Having taken into account the above material uncertainties, the directors
consider it is appropriate that the financial statements should be prepared on a
going concern basis. The conditions facing the Group nevertheless give rise to
material uncertainties related to events or conditions which may cast
significant doubt on the Group's ability to continue as a going concern and
therefore it may be unable to realise its assets and discharge its liabilities
in the normal course of business.
7. Annual Report and Accounts
A copy of the Annual Report and Accounts will be sent to all shareholders
shortly and will also be available from the Company's registered office: Cyan
Holdings plc, Buckingway Business Park, Swavesey,Cambridge, CB24 4UQ.
The Annual Report and Accounts will also be published on the Company's website
www.cyantechnology.com
-Ends-
This information is provided by RNS
The company news service from the London Stock Exchange
END
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