TIDMCYAN
RNS Number : 9501F
Cyan Holdings Plc
31 May 2013
Cyan Holdings plc
("Cyan or "the Company")
Preliminary Results
for the year ended 31 December 2012
Cyan Holdings plc (AIM: CYAN.L), the integrated system design
company delivering wireless solutions for lighting control, utility
metering and industrial telemetry announces its audited preliminary
results for the year ended 31 December 2012.
Key achievements
-- Significant progress on Tamil Nadu Electricity Board tender
-- Appointment of telecoms and smart metering expert John Cronin as Executive Chairman
-- Strategic partnership with Larsen & Toubro to provide
Indian utility customers with Advanced Metering Infrastructure
("AMI") solutions
-- Substantial metering order of over US$1M from Indian partner
-- Deployment of smart metering pilots with leading integrated
power company in Mumbai and for Power Grid Corporation of India in
Puducherry
-- Equity fund raisings during the year of GBP3.8M before
expenses (including GBP1.7M from the placing in December 2011 which
was concluded in January 2012)
Financial highlights
-- Decrease in revenue during 2012 to GBP315,194 (2011: GBP455,591)
-- Operating loss for the year reduced to GBP3,103,622 (2011 restated: GBP3,575,000)
-- Cash balance at end of year GBP1,618,574 (2011: GBP364,590)
Post period end highlights
-- Operations established in India to drive and support future
growth, including hire of Country Manager
-- Deployment of AMI pilot with large public utility in the north of India
-- Equity fund raising of GBP1M before expenses in April 2013 to
strengthen balance sheet and fund continued expansion of
operations
John Cronin, Executive Chairman of Cyan, commented:
"By the end of 2012, Cyan had successfully positioned itself as
a low cost, low power wireless solutions provider for the rapidly
growing Machine to Machine (M2M) markets. We have created many
smart metering opportunities in India through our eco-system
programme which includes strategic partners both at a meter
manufacturer and system integrator level, thus giving us first
mover advantage in deploying many pilots throughout the country.
This now offers Cyan an opportunity to deliver significant revenue
growth, both in India and other emerging markets worldwide."
Enquiries:
Cyan Holdings plc www.cyantechnology.com
John Cronin, Executive Chairman Tel: +44 (0) 1954 234 400
Cenkos Securities plc Tel: +44 (0)20 7397 8900
NOMAD and Joint Broker
Stephen Keys / Adrian Hargrave Tel: 044 (20) 7101 7070
XCAP Security plc
Joint Broker
Jon Belliss / Adrian Kirk
Walbrook PR (Financial PR) Tel: +44 (0)20 7933 8780
Bob Huxford/Paul Cornelius
Chairman's Statement
Operational Review
At the beginning of 2012, it was the Board's view that
shareholder interests were best served by focussing our limited
resources on doing everything possible to ensure our meter
manufacturer partners are awarded a significant share of the 1.5
million unit Tamil Nadu Electricity Board ("TNEB") tender, which is
the first part of an overall program to install/replace 18 million
meters. This opportunity continues to represent a potentially
significant turning point for the Company and will strengthen our
position to establish Cyan's Automated Meter Reading ("AMR") and
Advanced Metering Infrastructure ("AMI") solutions as the market
standard in India.
In February 2012, Cyan continued to strengthen its strategic
partnerships in the Indian energy market with the announcement that
it was entering into a Strategic Partnership Agreement with Larsen
& Toubro ("L&T"). L&T is a recognised leader in the
energy and utilities sector with proven products and a Tier 1
reputation. The alliance with Cyan was to enable L&T to offer
an 865MHz interoperable smart metering solution to a number of
projects identified in India and this has been the case.
In May 2012, we announced receipt of an order exceeding US$1M,
from a major metering customer in India. After the successful
integration of CyLec(R) products, the customer placed the order to
fulfil several projects across a range of utilities. Due to delays,
in particular with the TNEB tender process, we announced in
December that fulfilment of this order will now be in 2013.
During the second quarter of 2012, we announced the submission
deadline for the TNEB tender for 1.5 million units and that five
meter manufacturers had submitted samples based on Cyan's CyLec(R)
solution. By June, four of the Cyan partners had been formally
authorised to advance to the next stage of the tender, installation
of 500 unit pilots in Trichy (Tiruchirappalli). Throughout
September and October, Cyan continued to support the partners
including working with them on the ground in Trichy as well as from
Cambridge to ensure the pilots were successfully installed. After
the pilots were installed and commissioned, TNEB began evaluations,
including on site meter readings. Cyan's technology performed
reliably, the technical field trials in Trichy are now complete and
we believe our solution is very well placed to result in orders for
our meter manufacturer partners. As TNEB is a public utility, it is
required to comply with the Indian government tendering regulations
to ensure that the decision is arrived at in a fully transparent
manner and given the substantial monies involved in this tender,
the tender attribution decision has been delayed. As Cyan is not
directly tendering to TNEB, we were asked by our meter manufacturer
partners in the second half of 2012 to limit the updates on the
tender process we put into the public domain (through RNS) in order
to protect their competitive positions and after taking local
advice we have endeavoured to comply with this request. The TNEB
tender document states that inter-operability is required (ie. TNEB
can buy meters from multiple suppliers and they will seamlessly
work together). Based upon the companies that have bid on the TNEB
tender and deployed pilots in Trichy, our view is that the Cyan
enabled meters are the only way to achieve the tender specification
regarding inter-operability.
In December 2012, we announced that another strategic meter
manufacturer partner had deployed Cyan's AMI solution as a pilot
for a leading integrated power company in Mumbai. The pilot
involved deploying single and three phase CyLec(R) enabled meters
in Mumbai for evaluation by the power company for three to six
months.
Since I joined Cyan in March 2012, the Company has made
significant progress on the TNEB tender and we believe our solution
is very well placed and should result in significant orders for our
meter manufacturer partners over the very near term. However, the
TNEB tender process has admittedly taken much longer than either
the Company, or our local meter manufacturer partners, had
projected. Furthermore, as our product development and sales
management efforts have been heavily focussed on supporting our
local partners on this tender, as well as developing the
electricity metering business overall in India, our lighting
revenues in China have inevitably declined. This is reflected in
revenues for the period of GBP315,194 versus GBP455,591 for the
corresponding period last year and I recognise that shareholders
might have expected further progress on this front.
Metering
Cyan's focus has been dominated by the Indian smart metering
market with its key strategy of building key strategic partnerships
and supporting its meter manufacturing partners on pilot projects.
The Indian market is undoubtedly a huge opportunity for the
Company, with an estimated 120-200 million meters that need to be
installed/replaced over the next 10 years as well as the Indian
utilities' pressing need to reduce losses due to theft of
electricity.
One of the obstacles the utilities face is collecting data from
millions of meters deployed in rapidly growing and typically
unplanned urban conditions. It is often problematic trying to
locate and gain physical access to the meters and the process is at
best slow or error prone. Cyan's AMR and AMI solutions address
these key issues by providing high quality and timely information
from each meter. Cyan's 865MHz based solution has been specifically
designed to cope with demanding specifications such as a
communication range of more than 60 meters and to be able to be
read through concrete walls in order to cope with the dense urban
conditions in India. In comparison, a 2.4GHz Zigbee solution has
been observed to struggle to achieve a reliable communication range
greater than 30 meters in the same challenging conditions.
India's transmission and distribution losses are among the
highest in the world. When non-technical losses such as energy
theft are included in the total, these losses increase to as high
as 65% in some Indian States against an overall average of 30%-40%.
The financial loss has been estimated at 1.7% of the national GDP.
To address the issue of Aggregate Transmission and Commercial
(AT&C) losses, the Government of India implemented an
Accelerated Power Development Reforms Programme (APDRP). Its key
objectives were to reduce AT&C losses, improve customer
satisfaction, introduce greater transparency and improve the
financial viability of the State Distribution Companies (SDCs). It
was against this backdrop that the Restructured APDRP (R-APDRP) was
conceived in September 2008 for the 11th Five Year Plan (2007-12).
The tender that Cyan's meter manufacturer partners are bidding for
in Tamil Nadu is funded under this R-APDRP program. Monies are
provided by the Indian Government as loans for the provision of
advanced metering solutions and once in place, the loans are
converted into grants.
With a number of the leading meter manufacturer partners in
India now offering CyLec(R) enabled smart meters, Cyan has a strong
foothold in the Indian market. In November, we announced that one
of our partners was participating in a high profile smart grid
project in Puducherry, India. The smart grid pilot project is being
led by the Power Grid Corporation of India Limited (PGCIL), a
government of India enterprise. The project was to install an AMI
solution in houses throughout Puducherry to support the electricity
department's objective to save power.
Cyan provides a platform product (CyLec(R)) to enable deployment
of AMI. AMI is an architecture for automated end-to-end two way
communications between a utility company and electricity meters
(smart meters). The CyLec(R) solution provides utilities with real
time data about power consumption and allows customers to make
informed choices about energy usage based on price at time of use.
The Cylec(R) solution includes hardware and software to enable this
communication and allows easy interfacing to existing meter data
management (MDMS), billing systems and other Smart Grid
infrastructure monitoring tools within the utility such as outage
detection and load management. Consumer meter tamper and
electricity theft detection features are included and this helps
utilities ensure they collect revenue for electricity that is used
by consumers. The CyLec(R) solution has been proven to be easy to
integrate to existing meters from various metering companies to
upgrade them to be AMI compatible smart meters.
Lighting
Cyan has continued to receive small lighting orders in China
during the year. As explained above, the Board determined in early
2012 that shareholders' interests were best served by focussing the
Company's limited resources on metering in India and therefore
progress on lighting has been disappointing, which has in turn
resulted in lower overall revenues for 2012.
Machine to Machine ("M2M")
Cyan's technology allows networked devices to exchange
information and perform actions without the manual assistance of
humans. This automated communication between devices comes under a
broad label of Machine to Machine ("M2M") or the 'Internet of
Things'. Our target markets, wireless metering and lighting
control, are two applications of this type of communication.
However, M2M is used in telemetry, data collection, remote control,
robotics, remote monitoring, status tracking, road traffic control,
offsite diagnostics and maintenance, security systems, logistic
services, fleet management, telemedicine, as well as smart metering
and lighting control.
Cyan provides technology and is a service provider delivering
the global, wireless mesh networks specifically designed for M2M
communications.
Financial Review
During 2012, Cyan announced its involvement in a number of pilot
projects which demonstrated significant progress towards the
adoption of our metering products in India. Our focus was to ensure
we had the products and resource to support our partners.
Furthermore, demand for AMI products required increased development
work to integrate Cyan's AMI solution into the high level
systems.
Despite this operational progress, commercial orders remained
below the level required to sustain the business. In 2012, the
company raised approximately GBP3.8 million before expenses, by way
of share placings (including GBP1.7M from the placing in December
2011 which was concluded in January 2012). In addition to the
placings the company received a total of GBP271k from the exercise
of warrants during the second half of the year. This income
provided the Company incremental financial resources for general
working capital, customer support activities in India and further
development to integrate Cyan's AMI solution into high level
enterprise software.
Revenue decreased from GBP455,591 in 2011 to GBP315,194 in 2012.
Operating loss for the year ended 31 December 2012 was GBP3,103,622
(2011 restated: GBP3,575,000) and net loss decreased to
GBP2,876,772 (2011 restated: GBP3,227,077). This was predominantly
due to decreased staff costs. Cash at year end was GBP1,618,574
(2011: GBP364,590).
In April 2013, the company announced that it had raised a
further GBP1 million before expenses. The Board felt that this
additional funding was crucial not only to support the expansion of
activities into India, but also to strengthen the balance sheet at
a key time in the tender process of TNEB. Included in this placing
was an issue of a further 74,444,444 warrants with an exercise
price of 0.65 pence per share, however shareholder approval of this
warrant issue will be sought at the Company's AGM in June 2013.
Board Changes
"It was with great sorrow that the board learned of the death of
Kenn Lamb, formerly CEO of the company, on 5 July 2012 after a long
illness. Kenn had received successful treatment over a number of
years but in 2010 and 2011 needed further treatment, operations and
hospitalisation which increasingly affected his mobility and
ability to lead Cyan. As a result he gave notice of resignation and
stepped down at the beginning of 2012.
Kenn initially became involved with Cyan as a consultant in
October 2006 reviewing the strategy, products and sales
organisation. In March 2007 he was offered the position of CEO to
implement his proposals, and accepted. The initial micro-controller
focus of the company changed to supplying modules but it became
apparent that the real opportunity was as a supplier of bespoke
'smart' systems solutions. Building on the market knowledge gained
through presence in China an RF mesh solution for street lighting
was developed and deployed in several pilots. However further
commercial engagement was extremely slow and when interest was seen
for applications in smart metering the focus of product and market
development was changed and, along with this the company began to
develop a presence in India. This has now grown to implementation
of several major pilots and a leading position in bidding on supply
for a large utility in the SE of India. It is sad that Kenn will
not see the outcome of this major strategy evolution.
Kenn showed energy and compassion in his leadership. He was a
'larger than life' charismatic character and always a pleasure to
work with. He is much missed by the company and more so by his
wife, and young family. Our thoughts continue to be with them as
they grow up without him."
John Read, Former Chairman of Cyan
Outlook
At the time of preparation of this report to shareholders, I am
disappointed that we have not been able to announce the award of
the TNEB tender to Cyan's meter manufacturer partners. As noted
above, the tender is now at an advanced stage and all the technical
evaluations are complete. Based on Cyan's interoperable solution,
our meter manufacturer partners are very well placed to be awarded
this tender, which will then in turn give them a strong position
for the second and larger tender, that we understand will follow on
shortly afterwards.
The award of the TNEB tender to Cyan's partners will be
transformational in terms of our competitive position in the Indian
metering market as well as putting Cyan on a solid financial
foundation. The Cyan Board continues to believe that it's in
shareholders' interest to focus resources on the Indian metering
market and as I stated in my first report back in September 2012, I
appreciate the continued patience of shareholders and continue to
look forward to delivering them outstanding value.
John Cronin
Executive Chairman
30 May 2013
Consolidated income statement
For the year ended 31 December 2012 Note 2012 2011
-------------------------------------- ------ -------------- --------------
GBP GBP
(Restated)
(note
6)
-------------------------------------- ------ -------------- --------------
Continuing operations
-------------------------------------- ------ -------------- --------------
Revenue 315,194 455,591
-------------------------------------- ------ -------------- --------------
Cost of sales (203,654) (321,477)
-------------------------------------- ------ -------------- --------------
Gross profit 111,540 134,114
-------------------------------------- ------ -------------- --------------
Research and development costs (1,141,005) (1,865,982)
-------------------------------------- ------ -------------- --------------
Other operating costs (2,074,157) (1,843,132)
-------------------------------------- ------ -------------- --------------
Operating loss (3,103,622) (3,575,000)
-------------------------------------- ------ -------------- --------------
Investment revenue 4,091 2,146
-------------------------------------- ------
Finance costs (3) (7)
-------------------------------------- ------ -------------- --------------
Loss before tax (3,099,534) (3,572,861)
-------------------------------------- ------ -------------- --------------
Tax 222,762 345,784
-------------------------------------- ------ -------------- --------------
Loss for the year (2,876,772) (3,227,077)
-------------------------------------- ------ ============== ==============
Loss per share (pence)
-------------------------------------- ------
Basic 3 (0.1) (0.3)
-------------------------------------- ------ ============== ==============
Diluted 3 (0.1) (0.3)
-------------------------------------- ------ ============== ==============
Consolidated Statement of Comprehensive Income
For the year ended 31 December
2012 2012 2011
------------------------------------------ -------------- --------------
GBP GBP
(Restated)
(note
6)
----------------------------------------- -------------- --------------
Loss for the year (2,876,772) (3,227,077)
------------------------------------------ -------------- --------------
Exchange differences on translation
of foreign operations 113,540 (34,104)
------------------------------------------ -------------- --------------
Total comprehensive income for
the period (2,763,232) (3,261,181)
------------------------------------------ ============== ==============
Consolidated balance sheet
At 31 December 2012
Note 2012 2011
GBP GBP
(Restated)
(note 6)
---------------------------------------- ------ --- ------------- -------------
Non-current assets
Intangible assets - -
---------------------------------------- ------ ---
Property, plant and equipment 8,990 29,843
------------------------------------------------ --- ------------- -------------
8,990 29,843
----------------------------------------------- --- ------------- -------------
Current assets
---------------------------------------- ------ --- ------------- -------------
Inventories 1,024,241 973,577
------------------------------------------------ --- ------------- -------------
Trade and other receivables 333,022 562,182
------------------------------------------------ --- ------------- -------------
Cash and cash equivalents 1,618,574 364,590
------------------------------------------------ --- ------------- -------------
2,975,836 1,900,349
----------------------------------------------- --- ------------- -------------
Total assets 2,984,826 1,930,192
------------------------------------------------ --- ============= =============
Current liabilities
---------------------------------------- ------ --- ------------- -------------
Trade and other payables 287,772 349,126
------------------------------------------------ --- ------------- -------------
Total liabilities 287,772 349,126
------------------------------------------------ --- -------------
Net assets 2,697,054 1,581,066
------------------------------------------------ --- ============= =============
Equity
---------------------------------------- ------ --- ------------- -------------
Share capital 4 232,681 2,385,401
------------------------------------------------ --- ------------- -------------
Share premium account 27,779,215 21,654,936
------------------------------------------------ --- ------------- -------------
Own shares held (808,856) (690,191)
------------------------------------------------ --- ------------- -------------
Share option reserve 776,190 749,865
------------------------------------------------ --- ------------- -------------
Translation reserve (214,817) (328,358)
------------------------------------------------ --- ------------- -------------
Retained earnings (25,067,359) (22,190,587)
------------------------------------------------ --- ------------- -------------
Total equity being equity attributable
to owners of the Company 2,697,054 1,581,066
------------------------------------------------ --- ============= =============
Consolidated Statement of Changes in Equity
At 31 December 2012
Share
Share Share Own shares Option Retained Total
Capital Premium held Reserve TranslationReserve Losses Equity
Notes GBP GBP GBP GBP GBP GBP GBP
Balance at 31
December
2010 (as
previously
reported) 1,847,666 20,378,625 (690,191) 476,999 (294,254) (19,204,395) 2,514,450
Prior year
adjustment 6 - (310,713) - 69,828 - 240,885 -
----------------- ------------------------------------------ -------------------------- ------------- -------------------------- -------------- ------------
Balance at 31
December
2010 (restated) 1,847,666 20,067,912 (690,191) 546,827 (294,254) (18,963,510) 2,514,450
----------------- ------------------------------------------ -------------------------- ------------- -------------------------- -------------- ------------
Loss for the
year - - - - - (3,227,077) (3,227,077)
Other
comprehensive
income for the
year - - - - (34,104) - (34,104)
----------------- ------------------------------------------ -------------------------- ------------- -------------------------- -------------- ------------
Total
comprehensive
income for the
year - - - - (34,104) (3,227,077) (3,261,181)
----------------- ------------------------------------------ -------------------------- ------------- -------------------------- -------------- ------------
Issue of share
capital 537,735 1,587,024 - - - - 2,124,759
----------------- ------------------------------------------ -------------------------- ------------- -------------------------- -------------- ------------
Credit to equity
for share
options - - - 203,038 - - 203,038
Balance at 31
December
2011 (restated) 2,385,401 21,654,936 (690,191) 749,865 (328,358) (22,190,587) 1,581,066
----------------- ------------------------------------------ -------------------------- ------------- -------------------------- -------------- ------------
Balance at 31
December
2011 (as
previously
reported) 2,385,401 21,965,649 (690,191) 604,536 (328,358) (22,355,971) 1,581,066
Prior year
adjustment 6 - (310,713) - 145,329 - 165,384 -
Balance at 31
December
2011 as
restated 2,385,401 21,654,936 (690,191) 749,865 (328,358) (22,190,587) 1,581,066
Loss for the
year - - - - - (2,876,772) (2,876,772)
----------------- ------------------------------------------ -------------------------- ------------- -------------------------- -------------- ------------
Other
comprehensive
income for the
year - - - - 113,541 - 113,541
----------------- ------------------------------------------ -------------------------- ------------- -------------------------- -------------- ------------
Total
comprehensive
income for the
year - - - - 113,541 (2,876,772) (2,763,231)
----------------- ------------------------------------------ -------------------------- ------------- -------------------------- -------------- ------------
Issue of share
capital 114,781 3,856,778 (118,665) - - - 3,852,894
----------------- ------------------------------------------ -------------------------- ------------- -------------------------- -------------- ------------
Capital
Restructure (2,267,501) 2,267,501 - - - - -
----------------- ------------------------------------------ -------------------------- ------------- -------------------------- -------------- ------------
Credit to equity
for share
options - - - 26,325 - - 26,325
----------------- ------------------------------------------ -------------------------- ------------- -------------------------- -------------- ------------
Balance at 31
December
2012 232,681 27,779,215 (808,856) 776,190 (214,817) (25,067,359) 2,697,054
----------------- ------------------------------------------ -------------------------- ------------- -------------------------- -------------- ------------
Consolidated cash flow statement
For the year ended 31 December 2012
Notes 2012 2011
-------------------------------------------- ------- ------------ ------------
GBP GBP
-------------------------------------------- ------- ------------ ------------
Net cash outflow from operating activities 5 (2,765,349) (3,177,846)
-------------------------------------------- ------- ------------ ------------
Investing activities
-------------------------------------------- ------- ------------ ------------
Interest received 4,091 2,146
-------------------------------------------- ------- ------------ ------------
Purchases of property, plant and equipment (4,919) (29,782)
-------------------------------------------- ------- ------------ ------------
Net cash used in investing activities (828) (27,636)
-------------------------------------------- ------- ------------ ------------
Financing activities
-------------------------------------------- ------- ------------ ------------
Interest paid (3) (7)
-------------------------------------------- ------- ------------ ------------
Proceeds on issue of shares 4,185,627 2,225,862
-------------------------------------------- ------- ------------ ------------
Share issue costs (296,094) (101,103)
-------------------------------------------- ------- ------------ ------------
Net cash from financing activities 3,889,530 2,124,752
-------------------------------------------- ------- ------------ ------------
Net increase / (decrease) in cash and
cash equivalents 1,123,353 (1,080,730)
-------------------------------------------- -------
Cash and cash equivalents at beginning
of year 364,590 1,484,437
-------------------------------------------- -------
Effect of foreign exchange rate changes 130,631 (39,117)
-------------------------------------------- ------- ------------ ------------
Cash and cash equivalents at end of
year 1,618,574 364,590
-------------------------------------------- ------- ============ ============
Notes to the Financial Information
For the year ended 31 December 2012
1. General information
Cyan Holdings plc is a Company incorporated in the England and
Wales under the Companies Act 2006. The address of the registered
office is Cyan Holdings plc, Buckingway Business Park, Swavesey
CB24 4UQ.
The preliminary announcement is based on the financial
statements which have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the EU.
The financial information set out above does not constitute the
company's statutory accounts for the years ended 31 December 2012
or 2011, but is derived from those accounts. Statutory accounts for
2011 have been delivered to the Registrar of Companies and those
for 2012 will be delivered following the company's annual general
meeting. The auditors have reported on those accounts: their
reports were unqualified and did not contain statements under s498
(2) or (3) Companies Act 2006 or equivalent preceding legislation
but did contain an emphasis of matter concerning the uncertainties
around the Group's ability to continue as a going concern. While
the financial information included in this preliminary announcement
has been prepared in accordance with the measurement and
recognition criteria of IFRS, this announcement itself does not
contain sufficient information to comply with IFRS. The company
expects to publish full financial statements that comply with IFRS,
as adopted by the EU, a copy of which will be posted to the
shareholders.
The financial statements were approved by the Board of Directors
on 30 May 2013 and authorised for issue. The Group's specific IFRS
accounting policies can be found in the 2011 annual report.
Going concern
The directors have prepared a business plan and cash flow
forecast for the period to 31 December 2014 which, together,
represent the directors' best estimate of the future development of
the Group. The forecast contains certain assumptions, the most
significant of which are the level and timing of sales and the
gross margin on those sales, together with the need to secure
additional finance in order to fund working capital within the next
twelve months.
At the time of the preparation of these financial statements,
the sales forecast includes a potential large contract with an
Indian utility customer (Tamil Nadu Electricity Board or TNEB). The
TNEB tender has been issued for 1.5M units and the directors
believe that the Group is well placed to be awarded contracts
(through local meter manufacturer partners) for the majority, or
possibly all of the tender. If successful, the directors believe
that delivery on the tender would commence in Q3 2013 and that this
contract would be transformational for the Group in terms of both
customer and shareholder perception. The directors' understanding
is that TNEB have plans to install/replace 18M meters over a
multi-year period and further tenders towards this goal will be
issued in the second half of 2013. However the variables are such
that there is a material uncertainty that forecast sales will be
achieved. The Group has other sales opportunities in the pipeline
(including multiple installed pilots in India) that are being
progressed in parallel.
The directors have recognised that the Group is trading
principally in two emerging country markets, namely India and
China. 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. The directors have
taken reasonable steps to satisfy themselves about the robustness
of sales forecasts but acknowledge that the timing of customer
orders in the Group's target markets is inherently uncertain. This
may impact both the Group's ability to generate positive cash flow
and to raise new finance. Consequently, there is a significant risk
that the level of sales achieved is materially lower than the
forecast or at materially lower margins. These constitute material
uncertainties.
At the Group's General Meeting held on 2 August 2012,
resolutions were passed to: (i) complete placings of GBP2.1 million
(before expenses) through the issue of 603 million new ordinary
shares; and (ii) issue 301 million warrants to the placees that
have an exercise price of 0.5p and a 12 month exercise window until
1 August 2013. If exercised in full, the warrants would provide the
Group with additional funding of GBP1.5 million (before expenses).
Given the commercial prospects at the time of the preparation of
this report (particularly TNEB described above), the directors
consider that the Group has a good opportunity to see the share
price remain above 0.5p before 1 August 2013 and therefore benefit
from the exercise of the warrants. At the time of writing this
report a total of 87 million of these warrants have been exercised,
raising a total of GBP433k of additional funds. In addition to this
in April 2013 the Board announced that it had raised GBP1 million
before expenses to support the expansion of operations in India and
strengthen the balance sheet.
If, however the share price is at or below 0.5p on 1 August
2013, it is likely that the remainder of the warrants will not be
exercised and the Group may need additional funding from another
source. There remains a significant risk that the required level of
funding will not be received in the necessary timescales or at all.
This constitutes a material uncertainty.
Notwithstanding the material uncertainties described above, the
directors have a reasonable expectation that the Group and Company
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. Accordingly, they have prepared these financial statements
on the going concern basis.
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 the Group ceased to be a going concern, the
adjustments would include writing down the carrying value of
assets, including inventories, to their recoverable amount and
providing for any further liabilities that might arise.
2. Dividends
The directors do not recommend the payment of a dividend (2011:
GBPnil). The Group has no plans to adopt a dividend policy in the
immediate future and all funds generated by the Group will be
invested in the further development of the business, as is normal
for a company operating in this industry sector and at this stage
of its development.
3. Earnings per share
The calculation of the basic and diluted earnings per share is
based on the following data:
Earnings
2012 2011
------------------------------------ ----- ------------ ----------
GBP GBP
------------------------------------ ----- ------------ ----------
Earnings for the purposes of basic
earnings per share being net loss
attributable to equity holders of
the parent 2,872,772 3,227,077
------------------------------------------ ============= ==========
Number of shares
2012 2011
------------------------------- ----------------- --------------- -------------
No. No.
------------------------------- ----------------- --------------- -------------
Weighted average number of
ordinary shares for the purposes
of basic and diluted earnings
per share 2,297,507,867 1,021,124,228
-------------------------------------- ----------- ============== ================
4. Share capital
2012 2011
---------------------------------------
GBP GBP
---------------------------------------
Issued and fully paid:
---------------------------------------
2,326,805,503 ordinary shares of
0.01 pence each (2011: 1,192,700,288
ordinary shares of 0.2 pence each) 232,681 2,385,401
--------------------------------------- ======== ==========
5. Notes to the consolidated cash flow statement
2012 2011
--- ------------------------------------------ ---- -------------- ------------
GBP GBP
(Restated)
(note 6)
----------------------------------------------- ---- -------------- ------------
Operating loss for the year (3,103,622) (3,575,000)
------------------------------------------------ -------------- ------------
Adjustments for:
----------------------------------------------- ---- -------------- ------------
Depreciation of property, plant and
equipment 24,993 28,690
------------------------------------------------ -------------- ------------
Share-based payment expense (10,314) 203,038
------------------------------------------------ --------------
Operating cash flows before movements
in working capital (3,088,943) (3,343,272)
----------------------------------------------- ---- -------------- ------------
Increase in inventories (50,664) (100,654)
------------------------------------------------ -------------- ------------
Decrease / (increase) in receivables 98,436 (116,848)
------------------------------------------------
(Decrease)/increase in payables (61,355) 65,255
------------------------------------------------ -------------- ------------
Cash reduced by operations (3,102,526) (3,495,519)
----------------------------------------------- ---- -------------- ------------
Income taxes received 337,177 317,673
------------------------------------------------
Net cash outflow from operating activities (2,765,349) (3,177,846)
----------------------------------------------- ---- -------------- ------------
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. Restatement of prior periods
The financial statements include a prior period restatement in
relation to the treatment of warrants issued in prior periods. In
prior periods, these warrants were accounted for in accordance with
IFRS 2 Share based payments.
In the restated financial statements, these warrants have been
accounted for based on the agreement in place as follows:
-- For warrants issued to placees as part of an equity fund
raising where no service has been, or will be provided to Cyan,
these are outside the scope of IFRS2, and no charge is recorded in
the income statement; and
-- For warrants issued to service providers as part of the
consideration payable to them, these are within the scope of IFRS2,
and the total fair value of the warrants is spread over the related
service period, or expensed immediately if the service has already
been received. For service provided in connection with share
issues, the expenses are recorded against share premium.
Consolidated income statement (extracts)
2011 2011 2011
GBP GBP GBP
as reported adjustment restated
Other operating costs 1,767,631 75,501 1,843,132
-------------- ------------- -------------
Operating loss 3,499,499 75,501 3,575,000
Loss before tax 3,497,360 75,501 3,572,861
Loss for the year 3,151,576 75,501 3,227,077
------------------------------------------- -------------- ------------- -------------
Consolidated statement of comprehensive income
(extracts)
2011 2011 2011
GBP GBP GBP
as reported adjustment restated
Loss for the year 3,151,576 75,501 3,227,077
Total comprehensive income for
the period 3,185,680 75,501 3,261,181
Consolidated balance sheet (extracts)
2011 2011 2011
GBP GBP GBP
as reported adjustment restated
Equity
Share premium account 21,965,649 (310,713) 21,654,936
Share option reserve 604,536 145,329 749,865
Retained earnings 22,355,971 (165,384) 22,190,587
Company balance sheet (extracts)
2011 2011 2011
GBP GBP GBP
as reported adjustment restated
Non-current assets
Investment in subsidiaries 607,858 (240,885) 366,973
Equity
Share premium account 21,965,649 (310,713) 21,654,936
Share option reserve 604,536 145,329 749,865
Retained earnings 23,984,988 75,501 24,060,489
This information is provided by RNS
The company news service from the London Stock Exchange
END
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