TIDMCYAN
RNS Number : 1193L
CyanConnode Holdings PLC
04 September 2019
CyanConnode Holdings plc
("CyanConnode" or the "Company")
Interim results for the six months ended 30 June 2019
CyanConnode (AIM: CYAN), a world leader in narrowband radio
frequency (RF) mesh networks, announces its interim results for the
six months ended 30 June 2019.
Financial Highlights
-- Revenue of GBP1.0 million (H1 2018 restated: GBP1.3 million)
-- Operating costs reduced by GBP1.1 million to GBP3.5 million (H1 2018: GBP4.6 million)
-- Operating losses reduced by 16% to GBP3.0 million (H1 2018 restated: GBP3.6 million)
-- Basic and diluted loss per share improved by 57% to 1.50p
from 3.50 p loss per share in H1 2018
-- Cash, cash equivalents and investments at 30 June 2019 was
GBP2.4 million (H1 2018: GBP2.8 million; FY 2018 GBP4.6 million).
R&D tax credits of GBP0.8 million to be received bringing total
cash available to GBP3.2 million
-- Approximately GBP2 million cash collected from debtors during the period
Operational Highlights
-- GBP0.7 million follow-on order secured from HM Power to supply several Swedish utilities
-- GBP0.4 million follow-on order from Larsen & Toubro
("L&T"), relating to the order announced in May 2018
-- New order from new strategic partner, an Indian state-owned
Utility for deployment of 3,000 smart meter modules, which utilise
a hybrid radio frequency ("RF") Smart Mesh and cellular
communication network
-- New long-range (up to 12 kms) RF module developed
-- UK Smart Metering programme ("UK SMIP") gaining momentum
-- Chris Jones and Peter Tyler appointed Non-Executive Directors in March 2019
Post Period Highlights
-- Follow-on order for 4,050 modules secured from Genus Power
Infrastructures Ltd ("Genus") for deployment to Uttar Gujarat Vij
Company Ltd ("UGVCL")
-- GBP0.2 million order from Toshiba Information Systems (UK)
Ltd ("Toshiba") for service enhancements relating to the UK SMIP
contract
-- Follow-on order received from existing partner for legacy
hardware and software for a Nordic Utility
-- Memorandum of Understanding signed with Hexing Electrical Co.
Ltd ("Hexing") to expand geographical reach and introduce products
and services to new customers
John Cronin, CyanConnode Executive Chairman, commented:
"Whilst we have made good progress during H1 2019, securing a
number of follow-on orders in India and Europe, the Indian General
Election had an impact upon the number of new tenders awarded
during the period owing to a prohibition on Government departments
awarding contracts during the elections. After the result was
announced in May 2019, business activity started to resume in India
and we expect to report significantly higher revenues for H2 2019,
than that reported for H1 2019. The demand from India remains
strong and to the extent that orders have been delayed, other
orders from the rest of the world, which had not been anticipated
at the beginning of the year, will be recognised in the period. We
are currently working on a large number of tenders which we believe
will result in substantial new contract wins for the Company by end
of October and accordingly we anticipate that the outcome for the
year will be in line with Market Expectations."
Enquiries:
CyanConnode Holdings plc Tel: +44 (0) 1223 225
060
John Cronin, Executive Chairman www.cyanconnode.com
Arden Partners Plc (Nomad and Broker) Tel: +44 (0) 20 7614
5900
Paul Shackleton / Dan Gee-Summons (Corporate
Finance)
Simon Johnson (Corporate Broking)
Yellow Jersey PR (Financial PR) Tel: +44(0) 20 3004 9512
Felicity Winkles / Sarah Hollins/ Annabel cyanconnode@yellowjerseypr.com
Atkins
About CyanConnode
CyanConnode (AIM:CYAN.L), is a world leader in Narrowband
Radio Frequency (RF) Smart Mesh Networks, which are used for
machine to machine (M2M) communication. As well as being self-forming
and self-healing, CyanConnode's RF Smart Mesh Networks are
designed for rapid deployment, whilst giving exceptional performance
and competitive total cost of ownership.
In June 2018, CyanConnode launched its award-winning Omnimesh
Advanced Metering Infrastructure (AMI) platform, which has
already gained considerable commercial traction, especially
in India which is a key market for the Company.
Through a Global partner eco-system, which is vendor agnostic,
CyanConnode has several routes to market, therefore it is
well positioned to capitalise upon increasing Global demand
for smart metering solutions.
For more information, please visit www.cyanconnode.com.
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation 596/2014.
Operational Review
India
In February 2019, CyanConnode announced a follow-on order from
Larsen & Toubro ("L&T"), worth approximately GBP0.4m. The
follow-on order relates to the order announced in May 2018, worth
GBP2.5m. Deployment has progressed rapidly and already showing
benefits of the Omnimesh solution to the Utility. All the modules
were delivered in H1 2019 and revenue recognised during the period.
The full contract is being rolled out over a period of up to two
years, followed by a five-year support and maintenance period.
In April 2019, CyanConnode announced an order from a new
partner, an Indian state-owned Utility, for the deployment of 3,000
smart meter modules, which utilise a hybrid RF Smart Mesh and
cellular communication network. All hardware was delivered to the
new end customer, an Indian State-owned Utility, and revenue
recognised in H1 2019.
In July 2019, a follow-on order for 4,050 modules was secured
from Genus for deployment to UGVCL.
Europe
In April 2019, CyanConnode announced a GBP0.7m follow-on order
from HM Power ("HMP") to several Swedish Utilities. The order
leverages the functionality of CyanConnode's standards-based
Omnimesh Advanced Metering Infrastructure ("AMI") platform, for the
smart metering of district heating, as well as electricity. The
Company is also supplying HMP with a new product, long-range RF
communication modules, (modules with a range of up to 12km), to
increase the resilience of the RF Smart Network in rural areas.
Delivery of these modules is expected to commence in Q4 2019.
In July 2019 CyanConnode received a follow-on order from Toshiba
worth approximately GBP0.2 million for service enhancements
relating to the UK SMIP, which it expects to recognise as revenue
in H2 2019.
Additionally, in July 2019, CyanConnode secured a follow-on
Nordic order worth EUR489,000. The order, for legacy CyanConnode
hardware and software, is from an existing Partner and the end
customer is a Nordic Utility, who is expanding an existing smart
metering deployment. The Company expects to recognise 50% of the
revenues for this follow-on order in 2019 and 50% in 2020.
In September 2019 the DCC confirmed that more than 1.8 million
SMETS2 meters were connected to its secure network. CyanConnode
believes that its UK Smart Metering Implementation Programme ("UK
SMIP") contract will ultimately deliver revenue of circa GBP25.7m.
CyanConnode believes that the UK SMIP rollout will start to deliver
revenues in 2020.
APAC and Middle East
The smart metering market in the APAC and Middle East continues
to mature and presents a significant opportunity for
CyanConnode.
In January 2019, members of the Company's engineering team
visited Beijing Jingyibeifang Instruments Co Ltd ("Beijing
Instruments"), a Chinese partner with a license to manufacture
CyanConnode's RF modules and gateways. The team, led by Allan Baig
(VP Engineering & Operations), visited Beijing Instruments to
develop the project plan, establish peer-to-peer relationships and
provide the hardware design and manufacturing information to enable
Beijing Instruments to set up the production line for manufacturing
in H2 2019. We are at the Firmware testing stage, the stage after
will see Beijing Instruments find customer projects.
In August 2019, the Company signed a Memorandum of Understanding
(MoU) with Hexing Electrical Co. Ltd ("Hexing") to explore the
possibilities of collaborating and delivering smart metering
solutions in certain territories. It is expected that as part of
the collaboration, Hexing will integrate CyanConnode's RF Modules
with its meters and CyanConnode's Omnimesh Advanced Metering
Infrastructure (AMI) platform with Hexing's Meter Data Management
System (MDMS), to create a cost-effective turnkey solution.
Due to geopolitical factors, which have accelerated in recent
months, the Company has removed from its order pipeline an Iranian
order from Micromodje, for a smart metering contract that was
announced in February 2016. The customer has not cancelled this
contract, however the Company felt it prudent to remove the order
as a result of the political tensions.
Capital
Whilst there are currently no plans to raise further capital
from investors, several avenues are being pursued to secure working
capital facilities, should it become necessary to ease cash flows
and or mitigate against any unforeseen delays in deliveries or
customer payments.
Board and senior management changes
Harry Berry and Paul Ratcliff stepped down from the Board during
the period, and two new Non-Executive Directors, Chris Jones and
Peter Tyler, were appointed.
There were also changes to senior management with the promotion
of Heather Peacock to Chief Financial Officer, Anil Daulani to
Chief Executive Officer & Managing Director of India, and Allan
Baig to Vice President Engineering & Operations.
Financial Review
Revenue for the six months ended 30 June 2019 was GBP1.0 million
(H1 2018 restated: GBP1.3 million). This decrease in revenue,
compared to the same period in the prior year, was expected as the
General Election in India delayed the roll-out of one of the
Group's major projects with Genus, and the General Election also
caused delays in awarding of new contracts during the period. The
reason for the restating of the H1 2018 revenue was as a result of
the adjustment made to revenue during the 2018 audit and related to
software revenue to be spread over the period of the contract
rather than recognised up front.
The operating loss for the period was GBP3.0 million (H1 2018
restated: GBP3.6 million) and net loss after tax was GBP2.7 million
(H1 2018: GBP3.4 million). Staff costs (including contractors) were
GBP2.3 million (H1 2018: GBP3.1 million) with headcount remaining
stable at December 2018 levels.
In the first six months of 2019 cash used by operations was
GBP2.2 million (H1 2018: GBP4.1 million) (see note 4). Cash
received from debtors during H1 2019 was GBP2.0 million (H1 2018:
GBP0.9 million). Net cash, cash equivalents and investment as at 30
June 2019 was GBP2.4 million (H1 2018: GBP2.8 million) with GBP0.8
million expected from HMRC for R&D tax credits during Q3 2019.
Investments within the GBP2.4 million totalled GBP0.1 million.
Outlook
Following the re-election of Narendra Modi as Indian Prime
Minister as a result of the recent Indian General Election,
CyanConnode expects to see a material acceleration of the Indian
Smart Meters National Programme. The Company is working on several
large tenders, both in India and the rest of the world, which the
Board believes will result in significant new orders in H2 2019
which the Company hope to announce before the end of October
2019.
Consolidated income statement
Restated*
Unaudited Unaudited
6 months to 6 months to 12 months to
Note 30 June 30 June 31 December
2019 2018 2018
GBP000 GBP000 GBP000
============================ ====== ============= ============ ==============
Continuing operations
Revenue 3 1,014 1,344 4,465
Cost of sales (537) (342) (1,724)
============================ ====== ============= ============ ==============
Gross profit 477 1,002 2,741
============================ ====== ============= ============ ==============
Other operating costs (3,279) (4,373) (8,589)
Amortisation / depreciation (235) (238) (472)
============================ ====== ============= ============ ==============
Total operating costs (3,514) (4,611) (9,061)
============================ ====== ============= ============ ==============
Operating loss (3,037) (3,609) (6,320)
Investment income 10 6 13
Finance costs (2) (1) (2)
============================ ====== ============= ============ ==============
Loss before tax (3,029) (3,604) (6,309)
Tax credit 300 250 927
============================ ====== ============= ============ ==============
Loss for the period (2,729) (3,354) (5,382)
============================ ====== ============= ============ ==============
Loss per share (pence)
Basic 4 (1.50) (3.50) (4.26)
Diluted 4 (1.50) (3.50) (4.26)
============================ ====== ============= ============ ==============
* Results for the six months ended 30 June 2018 have been
restated. Please see Note 3 for further information.
Consolidated statement of comprehensive income
Derived from continuing operations and attributable to the
equity owners of the Company
Restated
Unaudited Unaudited
6 months to 6 months to 12 months to
30 June 30 June 31 December
2019 2018 2018
GBP000 GBP000 GBP000
=============================================================== ============= ============ ==============
Loss for the period (2,729) (3,354) (5,382)
Items that may be reclassified subsequently to profit and loss
Exchange differences on translation of foreign operations 123 - 54
=============================================================== ============= ============ ==============
Total comprehensive income for the period (2,606) (3,354) (5,328)
=============================================================== ============= ============ ==============
* Results for the six months ended 30 June 2018 have been
restated. Please see Note 3 for further information.
Consolidated statement of Financial Position
Restated
As at Unaudited Unaudited
30 June 30 June 31 December
2019 2018 2018
GBP000 GBP000 GBP000
========================================== ===========
Non-current assets
Intangible assets 4,846 5,259 5,048
Goodwill 1,930 1,930 1,930
Investments 99 43 44
Property, plant and equipment 66 57 73
========================================== =========== ========== =============
Total non-current assets 6,941 7,289 7,095
Current assets
Inventories 294 1,138 319
Trade and other receivables (Note 3) 4,187 2,358 4,827
Cash and cash equivalents 2,288 2,753 4,564
========================================== =========== ========== =============
Total current assets 6,769 6,249 9,710
========================================== =========== ========== =============
Total assets 13,710 13,538 16,805
========================================== =========== ========== =============
Current liabilities
Trade and other payables (1,505) (1,984) (1,994)
========================================== =========== ========== =============
Total current liabilities (1,505) (1,984) (1,994)
========================================== =========== ========== =============
Net current assets 5,264 4,265 7,716
========================================== =========== ========== =============
Non-current liabilities
Deferred tax liability (690) (859) (690)
========================================== =========== ========== =============
Total non-current liabilities (690) (859) (690)
Total liabilities (2,195) (2,843) (2,684)
========================================== =========== ========== =============
Net assets 11,515 10,695 14,121
========================================== =========== ========== =============
Equity
Share capital 3,648 2,571 3,648
Share premium account 69,515 65,637 69,515
Own shares held (3,253) (3,253) (3,253)
Share option reserve 1,761 1,316 1,761
Translation reserve 47 (130) (76)
Retained losses (60,203) (55,446) (57,474)
========================================== =========== ========== =============
Total equity being equity attributable to
owners of the Company 11,515 10,695 14,121
========================================== =========== ========== =============
* Results for the six months ended 30 June 2018 have been
restated. Please see Note 3 for further information.
Consolidated statement of changes in equity
Own Share Restated* Restated*
Share Share Shares Option Translation Retained Total
Capital Premium Held Reserve Reserve Losses Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
--------------------- --------- --------- -------- --------- ------------ ---------- ----------
Balance at
30 June 2018 2,571 65,637 (3,253) 1,316 (130) (55,446) 10,695
--------------------- --------- --------- -------- --------- ------------ ---------- ----------
Restated
loss for
the period - - - - - (2,028) (2,028)
Other comprehensive
income for
the period - - - - 54 - 54
--------------------- --------- --------- -------- --------- ------------ ---------- ----------
Total comprehensive
income for
the year - - - - 54 (2,028) (1,974)
Issue of
share capital 1,077 3,878 - - - - 4,955
Credit to
equity for
share options - - - 445 - - 445
--------------------- --------- --------- -------- --------- ------------ ---------- ----------
Balance at
31 December
2018 3,648 69,515 (3,253) 1,761 (76) (57,474) 14,121
--------------------- --------- --------- -------- --------- ------------ ---------- ----------
Loss for
the period - - - - - (2,729) (2,729)
Other comprehensive
income for
the period - - - - 123 - 123
--------------------- --------- --------- -------- --------- ------------ ---------- ----------
Total comprehensive
income for
the period - - - - 123 (2,729) (2,606)
Balance at
30 June
2019 3,648 69,515 (3,253) 1,761 47 (60,203) 11,515
--------------------- --------- --------- -------- --------- ------------ ---------- ----------
* Results for the six months ended 30 June 2018 have been
restated. Please see Note 3 for further information.
Consolidated cashflow statement
Unaudited Unaudited
6 months to 6 months to 12 months to
30 June 30 June 31 December
2019 2018 2018
GBP000 GBP000 GBP000
===================================================== ============
Net cash outflow from operating activities (Note 4) (2,211) (2,734) (5,843)
Investing activities
Interest received 10 7 13
Purchases or property, plant and equipment (18) (2) (41)
Disposal/(purchase) of investments (55) 5 4
===================================================== ============ ============ ==============
Net cash used in investing activities (63) 10 (24)
===================================================== ============ ============ ==============
Financing activities
Interest paid (2) (1) (2)
Proceed on issue of shares - 84 5,467
Share issue costs - - (428)
===================================================== ============ ============ ==============
Net cash from financing activities (2) 83 5,037
===================================================== ============ ============ ==============
Net (decrease)/increase in cash and cash equivalents (2,276) (2,641) (830)
Cash and cash equivalents at beginning of period 4,564 5,394 5,394
===================================================== ============ ============ ==============
Cash and cash equivalents at end of period 2,288 2,753 4,564
===================================================== ============ ============ ==============
Notes to the Accounts
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 2018.
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
2019 and 30 June 2018 have not been audited. The results for the
year ended 31 December 2018 have been extracted from the statutory
financial statements of CyanConnode Holdings plc.
Statutory financial statements for the year ended 31 December
2018 are available on the Group's website www.cyanconnode.com and
have been filed with the Registrar of Companies. The Group'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 emphasised the uncertainty around the Group's ability to
continue as a going concern.
2. Going Concern
To assess the ability of the Group to continue as a going
concern, the Directors have prepared a business plan and cash flow
forecast for the period to 31 December 2020 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 customer receipts.
The Directors believe that the Group will be able to meet their
liabilities as they fall due for at least 12 months and that no
equity funding will be required in the Company, however they have
highlighted the risks that the Group continues to face below.
The Group trades in emerging country markets. Such 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 customer receipts being delayed. The Directors have
taken reasonable steps to satisfy themselves about the robustness
of their forecasts but acknowledge that the collection of customer
receipts in the Group's target markets can take longer than
expected. This may impact the timing of the Group's ability to
generate positive cash flow. There is also a risk that the level of
sales achieved is lower than the forecast or may be delayed.
There is a level of uncertainty related to the assumptions
described above which may cast doubt on the Group and 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 or Company was
unable to continue as a going concern. In the event the Group and
Company ceased to be a going concern, the adjustments would include
writing down the carrying value of assets, including stocks, to
their recoverable amount and providing for any further liabilities
that might arise.
Notwithstanding the uncertainties described above, on the basis
of sensitivities applied to the cash flow forecast, of contracted
sales orders which are currently being delivered to customers on
further orders which the Group expects to win, the Directors have a
reasonable expectation that the Company and Group can continue to
meet its liabilities as they fall due, for a period of at least
twelve months from the date of approval of this report.
3. Restatement of prior year
The Company's initial assessment of a contract under IFRS 15 as
at 30 June 2018 resulted in GBP293,000 of revenue being recognised
for software licenses in its prior year interim accounts. However,
the Company's subsequent reassessment of the adoption of this new
standard resulted in this revenue being reversed out in its full
year results to 31 December 2018. In order to allow a like-for-like
comparison, the Company has restated its prior year interim results
to exclude this anomaly.
Previously
Restated reported
unaudited unaudited
6 months to 6 months to
30 June 30 June
2018 2018
=======================================
Revenue GBP000 1,344 1,637
======================================== ============= =============
Operating Loss GBP000 3,609 3,316
======================================== ============= =============
Loss for the period GBP000 3,354 3,061
======================================== ============= =============
Trade and other receivables GBP000 2,358 2,651
======================================== ============= =============
Retained losses at 30 June 2018 GBP000 55,446 55,153
======================================== ============= =============
Loss per share (pence) (3.50) (3.19)
======================================== ============= =============
4. Loss per Share
The calculation of the basic and diluted loss per share is based
on the following data:
Restated*
Unaudited Unaudited
6 months to 6 months to 12 months to
30 June 30 June 31 December
2019 2018 2018
========================================================================= =============
Loss for the purposes of basic loss per share being net loss attributable
to equity holders
of the parent (GBP000) (2,729) (3,354) (5,382)
========================================================================= ============= ============ ==============
Weighted average number of ordinary shares for the purposes of basic and
diluted loss per
share 182,398,523 95,907,867 126,443,036
========================================================================= ============= ============ ==============
Loss per share (pence) (1.50) (3.50) (4.26)
========================================================================= ============= ============ ==============
* Results for the six months ended 30 June 2018 have been
restated. Please see Note 3 for further information.
The denominations used are the same as those detailed above for
both basic and diluted earnings per share from continuing
operations. However, in accordance with IAS 33 "Earnings Per
Share", potential ordinary shares are only considered dilutive when
their conversion would decrease the profit per share or increase
the loss per share from continuing operations attributable to the
equity shareholders.
5. Reconciliation of Operating Loss to Operating Cash Flows
Restated*
Unaudited Unaudited
6 months to 6 months to 12 months to
30 June 30 June 31 December
2019 2018 2018
GBP000 GBP000 GBP000
========================================================= ============= ============ ==============
Operating loss for the period: (3,037) (3,609) (6,320)
Adjustments for:
Depreciation of property, plant and equipment 25 27 51
Amortisation of Intangible assets 210 210 421
Impairment of stock 4 - 578
Provision for expected credit losses (27) - 64
Foreign exchange 115 - 55
Share-option payment expense - - 445
--------------------------------------------------------- ------------- ------------ --------------
Operating cash flows before movements in working capital (2,710) (3,372) (4,706)
Decrease/(increase) in inventories 21 (10) 231
Decrease/(increase) in receivables 967 (410) (2,441)
(Decrease)/increase in payables (489) (264) (253)
--------------------------------------------------------- ------------- ------------ --------------
Cash reduced by operations (2,211) (4,056) (7,169)
Income taxes received - 1,322 1,326
========================================================= ============= ============ ==============
Net cash outflow from operating activities (2,211) (2,734) (5,843)
========================================================= ============= ============ ==============
* Results for the six months ended 30 June 2018 have been
restated. Please see Note 3 for further information.
6. Interim Results
The Group's Interim Results report is available for download on
the Group's website. The report will not be posted to
shareholders.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR DBGDCXXGBGCX
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