TIDMCYAN
RNS Number : 1912P
Cyan Holdings Plc
30 September 2013
Cyan Holdings plc
("Cyan" or "the Company")
Interim Results for the six months ended 30 June 2013
Cyan Holdings plc (AIM:CYAN.L), the integrated system and
software design company delivering mesh based flexible wireless
solutions for utility metering, lighting control and M2M
applications announces its Interim Results for the six months ended
30 June 2013.
Financial Highlights
-- Turnover of GBP51,512 (H1 2012: GBP192,923)
-- Operating loss reduced to GBP1,300,060 (H1 2012: GBP1,643,644)
-- Basic and Diluted Loss Per Share of 0.05p (H1 2012: 0.12p)
-- Cash and cash equivalents GBP1,725,948 (H1 2012: GBP700,536)
-- Placing completed to raise GBP1 million
-- Warrants exercised raising GBP427k during the period under
review (GBP768k in total during exercise period)
Operational Highlights
-- New deployment with a large public utility in the North of India (Haryana)
-- Further strengthening of operational team in India with new
country manager and technical team
-- Successful presentation at the 5(th) India Smart Grid Summit
Post period highlights
-- Strategic partnership agreement signed with Ilumatic Brazil
(including an order for $135,000)
-- Strategic partnership agreement with Nobre de la Torre, Brazil
-- Strengthening of the Board, management and advisory teams with the appointments of:
o Simon Smith as Chief Financial Officer
o Stephen Page as Chief Operating Officer (non-Board)
o Dr. Sean Cochrane as Product Director (non-Board)
o Heather Peacock as Company Secretary
o Stephen Newton as Non-Executive Director
o Carlos Ferreira as Special Advisor for Latin America
-- Meeting with India's Minister for Power at a Round Table
event organised by the UK department for Trade and Investment
-- Successful presentation at the 3rd World Smart Grid Conference, India
-- Application to become an 'International Member' of the India
Smart Grid Forum (ISGF) has been approved
John Cronin, Executive Chairman, commented: "The period under
review has proven challenging in that the Tamil Nadu Electricity
Board ("TNEB") tender has still not been awarded, despite the fact
that 2,000 Cyan enabled meters (deployed by four of our local meter
manufacturer partners) have been installed in Trichy and have
demonstrated that they meet the TNEB tender specification.
Post period end, we have taken the opportunity to strengthen the
board of directors, operational teams and advisory personnel within
Cyan. We expect to continue to build our execution and advisory
team to ensure we capture and execute the growing opportunities for
Cyan, across multiple territories around the world. I welcome them
to the Company and remain confident their combined experience and
knowledge will help accelerate our traction in emerging markets
across the globe.
The strengthened team and numerous opportunities around the
world for Cyan's technology and solutions, provide me with
significant confidence that the Company will deliver on
shareholders' expectations".
Enquiries:
Cyan Holdings plc www.cyantechnology.com
John Cronin, Chairman Tel: +44 (0) 1954 234 400
Allenby Capital Limited
Nominated Adviser and Joint
Broker
Jeremy Porter / Mark Connelly Tel: +44 (0) 20 3328 5656
XCAP Securities plc
Joint Broker
Jon Belliss / Adrian Kirk Tel: +44 (0) 20 7101 7070
Walbrook PR
Financial PR
Paul Cornelius / Bob Huxford Tel: +44(0) 20 7933 8780
CHAIRMAN'S STATEMENT
The six month period under review has proven to be both
challenging and rewarding for the Company. In particular, the
lodging of the TNEB tender announced just after the period end,
effectively putting the tender process on hold, was particularly
disappointing, given the amount of effort put in and progress made
by Cyan and its partners in developing the product and completing a
successful pilot in Trichy, India. A full update on the TNEB tender
is provided further on in this statement.
However, having now spoken with India's Minister for Power, I
remain convinced that India remains a significant commercial
opportunity for the Company. Below is a link to the Smart Grid
Vision and Roadmap for India as launched by the Minister in August
2013, which gives the full scale of opportunities in India.
http://indiasmartgrid.org/en/Lists/News/Attachments/154/India%20Smart%20Grid%20Forum%20Booklet.pdf
Cyan has in recent months taken measures to increase our
infrastructure in the country through the appointment of senior
personnel, who live and work within India as detailed below.
Our Country Manager for India, Shiv Kaushik, has more than 18
years of experience with leading IT companies and has a wealth of
experience in this sector selling software based solutions for
companies such as Oracle, Wipro and Ferranti. Importantly for Cyan,
we see our relationships with system integrators as being key to
our future success and Shiv has previously worked with several
system integrators and utilities to manage the deployment of the IT
based systems for the implementation of energy management
solutions.
I expect the new team in India to complete the deployment of
smart meters with our new utility customer in Northern India and
further our relationships with other utilities and meter
manufacturers across the region.
Strengthening of the Management Team
Over the period under review I have met with Cyan's significant
customers and strategic partners in key countries. I have been
encouraged by their positive feedback on the strength of Cyan's
technology platform and their optimism for further commercial
opportunities. We therefore felt it necessary to strengthen the
senior advisory and management teams within Cyan to complement the
technical and commercial knowledge and experience we already have
within the Company as we move forward across multiple territories
with several key relations and partnerships.
We have today announced changes that will significantly
strengthen the Board and management team within Cyan. Firstly, from
1 October 2013, Simon Smith will move from his current position as
Non-Executive Director to an Executive Director role as Chief
Financial Officer, which will also include him focusing on investor
relations, identifying suitable acquisition targets and creating
value for shareholders of the Company.
Having recently qualified as a Company Secretary through ICSA,
Heather Peacock will be appointed to the role of Company Secretary
from 1 October 2013, in addition to her existing role of Financial
Controller, with responsibility for the corporate governance of the
Company.
In addition to the executive roles mentioned above, Cyan has
also recently taken the opportunity to strengthen its Board with
the appointment of Stephen Newton as Non-Executive Director and is
also seeking to add an additional Non-Executive to the Board before
the end of the year.
Cyan has also strengthened its executive management team with
the appointment of Stephen Page as Chief Operating Officer
(non-Board) responsible for product development and operations.
Stephen has successfully managed the development of CyLec and CyLux
products in recent years. The Board is confident Stephen has the
ability to continue to deliver product development and add any
additional operational capability they expect the Company will
require to capitalise on its emerging commercial opportunities. He
has recently overseen the successful qualification process by his
team of the two Tier 1 contract equipment manufacturers, who are
now fully qualified and able to manufacture and deliver substantial
volumes of product for Cyan customers in India.
In addition, Dr Sean Cochrane has been appointed Product
Director (non-Board) and will be responsible for refining the
Company's product roadmap and ensuring customer requirements are
defined and captured. Dr Cochrane has lead Cyan's technical field
support team for the last 5 years and played a large part in
ensuring the success of the pilots carried out in Trichy in 2012 as
part of the TNEB tender.
When I visited many of our key customers, prospects and partners
in early September there was an overwhelming request for more local
Cyan staff to be in-country to support them. Therefore, we have
strengthened our team in India to provide more continuity and be
closer to our customers. Shiv Kaushik continues in the role of
Country Manager for India and has recruited an additional Sales
Manager to deliver on local opportunities in Southern India. With
Shiv based in Northern India and two application engineers already
in the field, the India team now consists of four staff based close
to customer locations. As part of the management changes identified
above, Bijan Mohandes is no longer an employee of the Company.
Cyan has also recently announced the appointment of Carlos
Ferreira as Cyan's Special Advisor for Latin America, who has over
20 years' experience in various executive positions within power
companies across Brazil. I am sure his experience will prove
invaluable helping Cyan leverage its recent partnership agreement
with Nobre de la Torre, in Brazil.
TNEB Update
Sixteen local meter manufacturers originally bid on the 1.5
million unit TNEB metering tender, of which only six companies
chose to deploy pilots (at their own cost) of 500 meters in Trichy,
Tamil Nadu. Of the six, four contained Cyan's wireless module and
these were the only ones which met the TNEB tender specification as
to inter-operability and 60 meter range through concrete walls.
Cyan was notified by one of our meter manufacturer partners in
early July that they had received a notification from TNEB that the
tender was 'lodged' pending a decision from the TNEB Chairman on
the best way to proceed. We were also told that the lodging was
unrelated to the technical performance of Cyan's solution, but
rather concerned the choice of which of the four Cyan partners
would be awarded the business (expected to be 2-4 suppliers). At
the time of preparation of this report, there have been many
discussions internally at TNEB and with the meter manufacturer
bidders, but the status has not yet officially changed and
therefore we are not able to provide shareholders with a clear
outcome. We estimate that the total opportunity for the meter
manufacturers to supply the R-APDRP funded upgrade program of 18
million meters to TNEB is in the range of US$500M and therefore the
public tender procurement processes have to be strictly
followed.
Since the lodging of the tender, Shiv Kaushik remains in regular
contact with the Cyan meter manufacturer partners who bid on the
tender as well as with TNEB themselves. He visits key decision
makers at TNEB in Chennai regularly in order to assist them with
their procurement processes. Cyan also continues to support the
2,000 Cyan powered meters that were installed in Trichy and they
continue to demonstrate that they fully meet the tender
specification. Cyan has also supplied a written report to TNEB on
the technical performance of the meters from the four Cyan meter
manufacturer partners and this has also been provided to the
Minister of Power, following my meeting with him earlier this
month. Despite the extended delays, our recent discussions with
TNEB and our meter manufacturer partners, provide continued
indications that Cyan enabled wireless meters are likely to be
procured by TNEB through funding from the Indian Government's
R-APDRP program.
Financial Review
For the six months ended 30 June 2013 turnover was GBP51,512 (H1
2012: GBP192,923). This fall in revenue was largely expected due to
the strategic focus during the period on smart metering in India.
However, post period end, we signed a strategic agreement and
received an initial order from Ilumatic S/A of Brazil for $135,000
for street lighting applications.
I would like to draw your attention to Note 2 in the 'Notes to
the Accounts' regarding the issue of Going Concern, which the
Directors have discussed in detail and have satisfied themselves
that it is appropriate to present the financial statements on the
going concern basis.
Despite the fall in revenue, whilst maintaining our investment
in research and development, tight operating cost control within
the business resulted in the operating loss reducing to
GBP1,300,060 (H1 2012: GBP1,643,644).
During the six months to 30 June 2013, warrants which were
issued at the Company's General Meeting on 2 August 2012 were
exercised, raising a total of GBP427k during the period. The total
raised from exercise of these warrants between August 2012 and
August 2013 was GBP768k.
In addition, on 5 April 2013, Cyan announced that it had raised
an amount of GBP1,000,000 before expenses by way of a placing where
a total of 223,333,333 ordinary shares were issued at a price of
0.45 pence per share. In addition to this placing, 74,444,444
warrants were issued with an exercise price of 0.65 pence per
share, and 10,000,000 warrants with an exercise price of 0.63 pence
per share. All of these warrants have an exercise period of six
months from their approval date on 27 June 2013 at the company's
AGM, allowing the potential for raising a further GBP547k. Cash
balances at the period end were GBP1,725,948 (H1 2012:
GBP700,536).
I would like to take this opportunity to welcome the new
shareholders and thank our existing shareholders for their
support.
Outlook
Cyan continues to be involved in discussions at senior levels
around the world regarding smart metering and smart lighting
solutions. The recent meeting with India's Minister for Power
confirmed their ambition to supply electricity to all households by
2017 through smart grid technologies. This provides enormous
confidence that India remains an exciting and significant
opportunity for Cyan.
Cyan has also made significant progress in other emerging
countries, particularly in Brazil where it now has a strategic
agreement for smart meters and a significant order for smart
lighting solutions. With the addition of Carlos Ferreira as Special
Advisor for Latin America, I am confident this region will provide
further opportunities for Cyan to commercialise its technology.
We also expect to appoint an additional non-executive director
before the end of the current financial year who will provide the
Company with specific insight into the Systems Integrator industry,
which we now believe will be a key route to market for the
Company.
Therefore, the numerous opportunities around the world for
Cyan's technology and solutions provide me with significant
confidence that the Company will deliver on shareholders'
expectations.
John Cronin
Executive Chairman
30 September 2013
Consolidated Income Statement
Six months ended 30 June 2013
Unaudited
six months
ended Unaudited six Year ended
30 June months ended 31 December
2013 30 June 2012 2012
Notes GBP GBP GBP
Continuing operations
Revenue 51,512 192,923 315,194
Cost of sales (34,619) (117,933) (203,654)
Gross Profit 16,893 74,990 111,540
Research and development
costs (600,963) (584,431) (1,141,005)
Other operating costs (715,990) (1,134,203) (2,074,157)
Operating loss (1,300,060) (1,643,644) (3,103,622)
Investment revenue 2,311 1,691 4,091
Finance costs (10) - (3)
----------------------- ----------- --------- ------------ -------------- -------------
Loss before tax (1,297,759) (1,641,953) (3,099,534)
Tax 102,000 120,000 222,762
Loss for the period (1,195,759) (1,521,953) (2,876,772)
Loss per share (pence)
Basic 3 (0.05) (0.12) (0.13)
Diluted 3 (0.05) (0.12) (0.13)
Consolidated Statement of Comprehensive Income
Six months ended 30 June 2013
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2013 2012 2012
GBP GBP GBP
Loss for period (1,195,759) (1,521,953) (2,876,772)
Exchange differences on translation
of foreign operations (153,423) 18,936 113,540
-------------------------------------- ------------ ------------ -------------
Total comprehensive income for
the period (1,349,182) (1,503,017) (2,763,232)
-------------------------------------- ------------ ------------ -------------
Consolidated Balance Sheet
At 30 June 2013
Unaudited Unaudited 31 December
30 June 2013 30 June 2012 2012
GBP GBP GBP
Non-current assets
Intangible assets - - -
Property, plant and equipment 5,674 16,444 8,990
5,674 16,444 8,990
-------------- ------------- ------------------ -------------- ------------------------ --------------------
Current Assets
Inventories 1,080,431 979,921 1,024,241
Trade and other receivables 197,112 320,660 333,021
Cash and cash equivalents 1,725,948 700,536 1,618,574
---------------------------------------------- -------------- ------------------------ --------------------
3,003,491 2,001,117 2,975,836
-------------- ------------- ------------------ -------------- ------------------------ --------------------
Total assets 3,009,165 2,017,561 2,984,826
------------------------------- ------------- -------------- ------------------------ --------------------
Current liabilities
Trade and other
payables (262,794) (328,424) (287,772)
------------------------------- ------------- -------------- ------------------------ --------------------
Total liabilities (262,794) (328,424) (287,772)
------------------------------- ------------- -------------- ------------------------ --------------------
Net current assets 2,740,697 1,672,693 2,688,064
------------------------------- ------------- -------------- ------------------------ --------------------
Net assets 2,746,371 1,689,137 2,697,054
------------------------------- ------------- -------------- ------------------------ --------------------
Equity
Share capital 264,210 165,709 232,681
Share premium account 29,146,185 25,790,896 27,779,215
Own shares held (808,856) (690,191) (808,856)
Share option reserve 776,190 604,536 776,190
Translation reserve (368,240) (303,889) (214,817)
Retained loss (26,263,118) (23,877,924) (25,067,359)
---------------------------------------------- -------------- ------------------------ --------------------
Total equity being attributable
to owners of the Company 2,746,371 1,689,137 2,697,054
------------------------------------------ ----- -------------- ------------------------ --------------------
Consolidated statement of changes in equity
At 30 June 2013
Share
Share Share Own shares Option Translation Retained Total
Capital Premium held Reserve Reserve Losses Equity
GBP GBP GBP GBP GBP GBP GBP
Balance at 30
June 2012 165,709 25,790,896 (690,191) 604,536 (303,889) (23,877,924) 1,689,137
--------------- ------------ -------------------------- ------------- ---------------- ------------- ------------
Loss for the
period - - - - - (1,189,435) (1,189,435)
Other
comprehensive
income for the
period - - - - 89,072 - 89,072
--------------- ------------ -------------------------- ------------- ---------------- ------------- ------------
Total
comprehensive
income for the
period - - - - 89,072 (1,189,435) (1,100,363)
Issue of share
capital 66,972 1,988,319 (118,665) - - - 1,936,626
Credit to
equity
for share
options - - - 171,654 - - 171,654
--------------- ------------ -------------------------- ------------- ---------------- ------------- ------------
Balance at 31
December 2012 232,681 27,779,215 (808,856) 776,190 (214,817) (25,067,359) 2,697,054
--------------- ------------ -------------------------- ------------- ---------------- ------------- ------------
Loss for the
period - - - - - (1,195,759) (1,195,759)
Other
comprehensive
income for the
period - - - - (153,423) - (153,423)
--------------- ------------ -------------------------- ------------- ---------------- ------------- ------------
Total
comprehensive
income for the
period (153,423) (1,195,759) (1,349,182)
Issue of share
capital 31,529 1,366,970 - - - - 1,398,499
Balance at 30
June 2013 264,210 29,146,185 (808,856) 776,190 (368,240) (26,263,118) 2,746,371
--------------- ------------ -------------------------- ------------- ---------------- ------------- ------------
Consolidated Cash Flow Statement
Six months ended 30 June 2013
Notes Unaudited Unaudited Year ended
six months six months 31 December
ended ended 2012
30 June 30 June
2013 2012
-------------------------------------------- -------- ------------- ------------- --------------
GBP GBP GBP
-------------------------------------------- -------- ------------- ------------- --------------
Net cash outflow from operating activities 4 (1,086,195) (1,217,236) (2,765,349)
-------------------------------------------- -------- ------------- ------------- --------------
Investing activities
-------------------------------------------- -------- ------------- ------------- --------------
Interest received 2,311 1,691 4,091
-------------------------------------------- -------- ------------- ------------- --------------
Purchases of property, plant and
equipment (2,854) (46,958) (4,919)
-------------------------------------------- -------- ------------- ------------- --------------
Net cash used in investing activities (543) (45,267) (828)
-------------------------------------------- -------- ------------- ------------- --------------
Financing activities
-------------------------------------------- -------- ------------- ------------- --------------
Interest paid (10) - (3)
-------------------------------------------- -------- ------------- ------------- --------------
Proceeds on issue of shares 1,465,817 1,759,990 4,185,627
-------------------------------------------- -------- ------------- ------------- --------------
Share issue costs (67,318) (154,434) (296,094)
-------------------------------------------- -------- ------------- ------------- --------------
Net cash from financing activities 1,398,489 1,605,556 3,889,530
-------------------------------------------- -------- ------------- ------------- --------------
Net increase in cash and cash equivalents 311,751 343,053 1,123,353
-------------------------------------------- --------
Cash and cash equivalents at beginning
of period 1,618,574 364,590 364,590
-------------------------------------------- --------
Effect of foreign exchange rate changes (204,377) (7,107) 130,631
-------------------------------------------- -------- ------------- ------------- --------------
Cash and cash equivalents at end
of period 1,725,948 700,536 1,618,574
-------------------------------------------- -------- ============= ============= ==============
Notes to the Accounts
Six months ended 30 June 2013
1. Basis of preparation
The interim financial information has been prepared in
accordance with the IFRS accounting policies used in the statutory
financial statements for the year ended 31 December 2012.
These interim financial statements do not constitute statutory
financial statements within the meaning of section 435 of the
Companies Act 2006. Results for the six month periods ended 30 June
2013 and 30 June 2012 have not been audited. The results for the
year ended 31 December 2012 have been extracted from the statutory
financial statements of Cyan Holdings plc.
Statutory financial statements for the year ended 31 December
2012 are available on the Company's website www.cyantechnology.com
and have been filed with the Registrar of Companies. The Company's
auditor issued a report on those financial statements that was
unqualified and did not contain a statement under section 498(2) or
section 498(3) of the Companies Act 2006; however the auditor's
report was modified to emphasise the uncertainty around the
Company's ability to continue as a going concern.
2. Going Concern
The directors have prepared a business plan and cash flow
forecast for the period to 31 December 2014. The forecast contains
certain assumptions about the level of future sales and the level
of gross margins. The directors acknowledge that the Group is
trading in emerging markets that are relatively new to the Group.
This may impact both the Group's ability to generate positive
cash-flow and to raise new finance. There is a risk that the level
of sales achieved is materially lower than the level forecast or at
materially lower margins. The directors have taken 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. The directors are of the opinion that this
business plan is achievable. As a result, the directors have
prepared the financial statements on the going concern basis.
There is however, material uncertainty related to the
assumptions described above which may cast significant doubt on the
Company'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. 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 to their recoverable amount and providing
for any further liabilities that might arise.
3. Loss per share
Basic and diluted loss per ordinary share has been calculated by
dividing the loss after taxation for the periods as shown in the
table below.
Unaudited Unaudited
six months six months
ended ended
30 June 30 June Year ended
2013 2012 31 December 2012
GBP GBP GBP
Losses (GBP) 1,195,759 1,521,953 2,876,772
Weighted average number
of shares 2,418,355,380 1,293,298,323 2,297,507,867
IAS33 "Earnings per share" requires presentation of diluted EPS when a company
could be called upon to issue shares that would decrease net profit or increase
net loss per share. For a loss making company with outstanding share options,
net loss per share would only be increased by the exercise of out of the
money options. Since it seems inappropriate to assume that option holders
would act irrationally and there are no other diluting future share issues,
diluted EPS equals basic EPS.
4. Reconciliation of operating loss to operating cash flows
Unaudited Unaudited
six months six months
ended ended Year ended
30 June 30 June 31 December
2013 2012 2012
GBP GBP GBP
Operating loss
for the period (1,300,060) (1,643,644) (3,103,622)
Adjustments for:
Depreciation of property, plant
and equipment 7,167 14,784 24,993
Share-based payment expense - - (10,314)
------------------------------------------------ ------------ ------------ -------------
Operating cash flows before movements
in working capital (1,292,893) (1,628,860) (3,088,943)
Increase in inventories (56,190) (6,344) (50,664)
Decrease in receivables 567 105,300 98,436
Increase / (decrease) in payables 24,978 (20,702) (61,355)
----------------------------------------- --------- ------------ ------------ -------------
Cash reduced by operations (1,323,538) (1,550,606) (3,102,526)
Income taxes received 237,343 333,370 337,177
Net cash outflow from operating
activities (1,086,195) (1,217,236) (2,765,349)
----------------------------------------- --------- ------------ ------------ -------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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