TIDMCYAN
RNS Number : 6270I
CyanConnode Holdings PLC
15 December 2020
15 December 2020
CyanConnode Holdings plc
("CyanConnode" or the "Company")
Interim results for the six months ended 30 September 2020
CyanConnode (AIM: CYAN), a world leader in narrowband radio
frequency (RF) mesh networks, announces its interim results for the
six months ended 30 September 2020.
Financial and Operational Highlights
-- Revenue up 48% to GBP1.499m (H1 2019: GBP1.01m)
-- Gross profit up 74% to GBP831k (H1 2019: GBP477k)
-- LBITDA reduced by 55% to GBP1.317m (H1 2019: GBP2.909m)
-- GBP1.6 million cash received from customers during the period
-- Cash and cash equivalents at end of period GBP1m (H1 2019: GBP2.3m)
-- Order for 350,000 Omnimesh modules worth more than GBP6 million
-- Previously delayed Indian contract resumed worth INR 1
billion (c. GBP10.5m) with cash being received for the first 40,000
modules and a Letter of Credit securing remaining payments
-- Commencement of rollout of projects in India and Thailand
following easing of COVID-19 lockdowns
-- Continued rollout of Swedish projects
-- 92,000 modules shipped against current contracts during the period
Post-Period Highlights
-- The appointment of a new senior management team in India in December 2020
-- Significant increases of deliveries against existing
contracts in India and Thailand with the shipment of 121,000
modules since the end of September
-- Revenue in the eight months to the end of November 2020
exceeds revenue for the whole of the previous fifteen-month
financial period
-- Short-term working capital loan of GBP400,000 secured from
certain Directors in December 2020
John Cronin, CyanConnode Executive Chairman, commented:
"Despite most countries in which CyanConnode operates being in
lockdown for the first half of the period, between June and
September 2020 the Company saw a significant increase in the volume
of modules being shipped to customers and a significant increase in
cash collection as a result. The Board is very encouraged by the
success of all CyanConnode's deployments, and is especially pleased
to see the progress being made against contracts in India and
Thailand during the period.
"With the Government of India executing its plan to rollout 250
million meters in the next few years we were very pleased to
announce the appointment of a new senior management team, and look
forward to utilising their significant experience to take our
Indian business to the next stage of its development.
"The world continues to be affected by the COVID-19 pandemic and
the wellbeing and safety of our staff is paramount during these
unprecedented times. We continue to reassure our customers and
stakeholders that, as always, we are monitoring the situation and
working tirelessly to ensure that CyanConnode can continue to
deliver its products and services.
"Our teams continue to work closely with partners to demonstrate
the capability of our solution and to ensure that customers realise
the benefit of a fully automated smart metering system."
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation 596/2014
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
Sarah Hollins/ Annabel Atkins cyanconnode@yellowjerseypr.com
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 .
Chairman's Statement
Financial highlights
Key figures
Restated
H1 2020 H1 2019
GBP'000 GBP'000 % Change
Revenue 1,499 1,014 + 48%
========= ======== ==========
Gross profit 831 477 + 74%
========= ======== ==========
Operating costs (2,453) (3,621) -- 32%
========= ======== ==========
LBITDA * (1,317) (2,909) -- 55%
========= ======== ==========
Cash 952 2,288 -- 58%
========= ======== ==========
* Where "LBITDA" is Loss before Interest, Tax, Depreciation and
Amortisation. This is calculated by adding depreciation and
amortisation back to the Operating loss.
-- Revenue The first half-year of 2020/21 was marked by the
COVID-19 pandemic. Despite the lockdowns in most countries around
the world, CyanConnode was pleased to see revenue growth of almost
50% in the first six months of the financial year compared with the
first six months of 2019
-- Operating costs reduced by 32% (GBP1.2m) for the first six
months compared to the first six months of 2019. This was largely
due to reduction in staff costs, and travel costs reduced due to
the Covid-19 pandemic
-- LBITDA reduced by 55% (GBP1.6m) for the first six months
compared to the first six months of 2019
-- Basic and diluted loss per share improved by 53% from 1.64p
to 0.78p compared to the first six months of 2019
-- Cash and cash equivalent decreased from GBP2.3m in 30 June
2019 to GBP1.0m as at 30 September 2020
-- Accounts receivables a total of GBP1.6m cash has been
collected from customers during the period, and GBP0.75m since
period end
Operational Review
India
During the period, CyanConnode saw the deployment of its largest
order to date (430,000 modules) resume, and also announced the
winning of its second largest order to date (350,000 modules). This
order was for smart metering communications for the Indian
state-owned utility "Madhya Pradesh Paschim Kshetra Vidyut Vitaran
Company Ltd" ("MPWZ"), for smart metering communications in the
towns of Ujjain, Dewas, Ratlam, Mhow and Khargone.
MPWZ serves more than 3 million consumers and we have previously
announced and deployed two orders for this utility, totalling
120,000 modules. This latest order, which is the third order for
MPWZ, will increase the total number of its Omnimesh enabled smart
meters to 470,000. This is the first Indian order where the
Omnimesh Head End Server, ("HES"), will be deployed to communicate
with both RF Mesh and Cellular enabled smart meters.
Most of the order is being paid for under a CapEx model with the
balance of the order being paid for under an OpEx model with
Equated Monthly Instalments ("EMI"), over a five-year period. The
smart meters, which are being supplied by existing partners, will
be deployed over thirty months, with initial deliveries commencing
in Q3 2020. Installations of gateways and meters for this project
are now underway.
The value of orders currently being deployed by CyanConnode in
India is approximately INR 1.8 billion (c. GBP19m) and an update to
our order book for modules is set out in the table below. The
majority of the revenue for these orders is expected to be
recognised over the next two years, with payments secured against
LoCs.
Modules on order
Balance
Project Ordered Delivered* remaining
----------------- ------- ---------- ----------
JVVNL(1) 281,782 68,000 213,782
JVVNL(2) 149,089 52,000 97,089
Tangedco 142,069 34,000 108,069
MPWZ 350,000 6,000 344,000
Total 922,940 160,000 762,940
----------------- ------- ---------- ----------
*These include deliveries to the 14(th) of December just prior
to release of these interim results
During the first half of the current financial year there has
been a significant increase in activity in the Indian market as the
Government of India moves forward with its plan to deploy 250
million smart meters. The Government of India has issued a
framework for Advanced Metering Infrastructure Service Providers
("AMI SPs") to be set up to roll out and manage large scale
tenders. Under this framework, Special Purpose Vehicles ("SPVs")
will be set up to fund and run the projects. It is anticipated that
these large-scale projects will use 'Opex' models, where utilities
will pay the SPVs on a per meter per month basis.
Smart meters will help India develop a smart grid, reduce
consumer power outages, address challenges evolving from the energy
mix and improve billing efficiency. The deployment of these smart
meters is also expected to improve consumer energy efficiency and
the quality of networks and services.
The COVID-19 pandemic has caused global turmoil in financial and
commodity markets. The energy sector was also hit hard, with demand
dipping sharply as nearly one-third of the global population stayed
indoors during the lockdown. While the world concurrently deals
with the continued pandemic and the complexities of climate change,
it needs to plan for a clean and resilient recovery of the energy
sector. Smart metering presents exciting new opportunities for
energy companies and consumers alike, and will play an important
role in growing a low carbon energy sector. Considering COVID-19
social distancing guidelines and government regulations, or those
caused by any natural calamity where physical access is disrupted,
it is important to understand that smart metering supports remote
meter reading. This provides energy suppliers with the option to
connect (or disconnect) remotely, thus avoiding potential personal
conflict between a consumer and the energy supplier. It also
reduces the operational expenditure of the energy supplier, due to
manual meter reading and associated inefficiencies or manipulations
and eliminates physical activities, thereby helping to reduce the
energy supplier's carbon footprint.
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 December 2019, an order was received from its Agent and
Partner, The JST Group (JST), worth approximately GBP1.13 million.
The order included 33,000 Omnimesh RF Modules. The end customer is
Metropolitan Electricity Authority (MEA), a Thai state enterprise
under the Ministry of Interior. This order included an advance
payment of circa GBP0.3 million which was received in early January
2020. The purchase order relates to a smart metering deployment
which includes an Omnimesh Head End Server (HES). Under the
agreement CyanConnode is supplying hardware, HES and an Annual
Maintenance Contract (AMC). The AMC will deliver a recurring
revenue stream over an initial five-year period. Deliverables for
the integrated system, as well as hardware deliveries, commenced in
2020 and to the end of the period 15,000 modules had been shipped
to the customer. The remaining 18,000 modules have been shipped
since the end of the period. In total, an amount of USD [1.1
million] has been collected from the customer for the project.
In March 2020, a follow-on order from Thailand for 206,735
Omnimesh perpetual software licenses was received. The follow-on
order was place by Forth Corporation Public Company Limited (Forth)
with The JST Group (JST) acting as CyanConnode's Agent. The order
increased the total value of orders received for MEA to more than
USD 3 million. Under the contract, a payment of approximately USD
206,000, was made when the order was placed. The additional
Omnimesh software licenses will allow MEA to connect up to 240,000
smart meters to the Omnimesh HES, which will serve the Thai Smart
Metro Grid project. The order also includes an Annual Maintenance
Contract for the maintenance of the HES, providing a further
recurring revenue stream over an initial five-year period.
We are delighted to confirm that the project is progressing well
and our technology, (HES and Communications), is operating well
under Thai Radio Frequency ("RF") regulations. Installation in a
42-floor tower block is nearly complete and measurement of data
back to the Omnimesh HES is greater than 99% against the Service
Level Agreement.
Europe
In April 2019, a follow-on order worth GBP0.7m was received from
HM Power ("HMP"), for the smart metering of district heating and
power, which demonstrated the flexibility of CyanConnode's
standards-based Omnimesh products. The order also included the new
Omnimesh Long-Range RF Module that has a range of up to 12km, which
increases the resilience of the RF Smart Network in rural areas.
Delivery of the Omnimesh Long-Range RF Modules commenced in Q4 2019
and has continued throughout 2020 with more than 30,000 modules
(approximately one third of the contract) being delivered to the
customer during the period.
During 2019, the UK Government announced that it had extended
the deadline for the rollout of SMETS2 meters by four years to
2024. In early 2020 it extended this deadline by a further six
months because of the COVID-19 pandemic, which had stalled smart
meter installations due to lockdowns. The DCC aims to connect
around 53 million smart gas and electricity meters to its secure
network using SMETS2 meters and, in November 2020, it announced
that more than 5.9 million (circa 11% of the meter population) had
been connected, with October 2020 being its busiest month for
SMETS2 meter installations on record. The roll out of SMETS2 meters
commenced in Q4 2018 and, as previously announced, CyanConnode
believes that, for ease of rapid deployment, installers are
initially targeting installations of SMETS2 meters in densely
populated areas that have a reliable cellular signal. CyanConnode
believes that the installation of its RF technology will gain
momentum during later stages of the rollout.
Post period end developments
Since the end of September 2020, the Group has seen further
acceleration in the deployment of its projects, and is now shipping
larger numbers of modules than at any time in its history,
particularly in India against projects announced during the period.
A further 121,000 modules have been shipped since the end of
September, taking the total of modules shipped during the financial
year to 213,000. Revenue in the eight months to the end of November
has exceeded the revenue taken for the fifteen-month period ended
31 March 2020. Cash for these shipments is being collected either
by advance payment, or by LoCs.
In December 2020, the Company announced the appointment of a new
senior management team to head up its Indian operations.
Ajoy Rajani was appointed as Managing Director and Chief
Executive Officer India. Ajoy Rajani is a highly experienced and
well-regarded business leader within the Indian Power Sector and
also has a wealth of expertise in the Telecoms and IT Sectors. He
has held various senior positions with Reliance Communications and
Reliance Energy for the last sixteen years, also having held the
position of Senior Executive Vice President of Adani Energy Mumbai,
where he has driven technological innovation to increase revenues
to circa USD 100m.
Ratna Garapati joined CyanConnode as Chief Operating Officer
India and has over 25 years' experience in product development and
management, IT business operations management and strategic
planning and digital transformation. Ratna most recently held the
position of Vice President at Trilliant India, where he was
responsible for business development, strategy, and operations. His
key achievements at Trilliant India includes the winning and
implementation of multiple smart grid pilots and actively
participating in the implementation of over 5 million Smart Meters,
of which 1.3 million have been commissioned. Prior to Trilliant,
Ratna was Chief Delivery Officer of Smart Energy and Smart Cities
for Fluentgrid India, where he customised and deployed the world's
largest Cloud Utility Billing Solution in Uttar Pradesh for 22
million consumers in 6 months and demonstrated the scalability of
Meter Data Management System, (MDMS), for 10 million smart meters.
In his role as Chief Operating Officer India, he will be
responsible for managing CyanConnode India's operations and
customer delivery functions.
In addition, Atin Srivastava was appointed as Sales Director for
India. Having worked with Feedback Infra, Tech Mahindra, Ericsson,
HCL Infosystem, he has a recognised proficiency in leading business
development activities and spearheading sales and marketing
operations. Atin has deep expertise in the Indian power and energy
distribution market . He has built strong relationships with
agencies of the Indian central government including the Minister of
Power and Rural Electrification Corporation and has achieved more
than USD 100m in revenue this year.
At a Group level, Allan Baig was promoted to Group Chief
Operating Officer which is a non-Board role. Allan joined
CyanConnode in June 2017 and has thirty years' experience in
management and engineering with leading technology companies. Prior
to joining CyanConnode, he held the position of Project Manager at
Landis + Gyr and led their UK Smart Meter Implementation Program,
(UKSMIP). Alan was responsible for project management across
engineering functions, including product development, systems
integration, and deployment, predominantly for UKSMIP. As Group
Chief Operating Officer at CyanConnode, he will lead all operations
and engineering disciplines across teams in the UK and India.
In December 2020, the Company was also pleased to announce that
it had secured a GBP400,000 working capital facility from certain
Directors for working capital to fund growth.
COVID-19 Update
At the time of writing this report, the United Kingdom is out of
the second lockdown but is in a restricted tier system. CyanConnode
has considered the impact of COVID-19 on its business, including
first and foremost the wellbeing of employees, as well as contract
deliverables to customers and the management of cashflow, to ensure
the progression of its projects. Following advice issued by
National Governments, the Company has implemented a 'Home Working'
policy and employees continue to operate productively from their
homes.
In the UK, all engineering staff were provided with the
necessary equipment and the remote working model allows the
continuation of the Company's standard processes, with access to
development and test environments. By using video conferencing and
other remote meeting tools, CyanConnode's Project Management teams
continue to support customer projects, so that they remain on
track. CyanConnode's Engineering teams have the necessary equipment
at home, including hardware rigs, to allow collaboration with their
colleagues in different territories, to ensure customer deadlines
are met. CyanConnode's Manufacturing and Operations teams have been
working to secure the supply chain.
The engineering team's development work remains on track, thus
keeping deliverables aligned to the original project timelines.
When customers return to normal working practices the Company
expects to be on track and is ready for field work.
COVID-19 poses significant worldwide uncertainty. CyanConnode
has been working hard to tackle the risks and has implemented
policies to mitigate them, and put in place the most appropriate
measures to protect its business. CyanConnode is confident that it
has been effectively managing the challenges that COVID-19
presents.
CyanConnode is managing cash and costs and it expects to meet
its obligations as and when they fall due and GBP0.75 million of
cash has been received from customers since the period end.
Consolidated Income Statement
Restated**
Unaudited Unaudited
Note 6 months 6 months to 15 Months to
to 30 June 31 March
30 2019 2020
September GBP000 GBP000
2020
GBP000
============================ ===== ========== ======================= =========================================
Continuing operations
Revenue 1,499 1,014 2,451
Cost of sales (668) (537) (1,081)
============================ ===== ========== ======================= =========================================
Gross profit 831 477 1,370
============================ ===== ========== ======================= =========================================
Other operating costs (2,148) (3,386) (6,827)
Amortisation / depreciation (305) (235) (773)
============================ ===== ========== ======================= =========================================
Total operating costs (2,453) (3,621) (7,600)
============================ ===== ========== ======================= =========================================
Operating loss (1,622) (3,144) (6,230)
Investment income 1 10 17
Finance costs (102) (2) (30)
============================ ===== ========== ======================= =========================================
Loss before tax (1,723) (3,136) (6,243)
Tax credit 377 300 576
---------------------------- ----- ---------- ----------------------- -----------------------------------------
Loss for the period (1,346) (2,836) (5,667)
============================ ===== ========== ======================= =========================================
Loss per share (pence)
Basic 3 (0.78) (1.64) (3.27)
Diluted 3 (0.78) (1.64) (3.27)
============================ ===== ========== ======================= =========================================
** The comparatives for the 6 months to 30 June 2019 have been
restated to include a share-based payment charge of GBP107,000.
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 15 months to
30 September 30 June 31 March
2020 2019 2020
GBP000 GBP000 GBP000
=============================================================== ============== ============ ==============
Loss for the period (1,346) (2,836) (5,667)
Items that may be reclassified subsequently to profit and loss
Exchange differences on translation of foreign operations 131 123 56
=============================================================== ============== ============ ==============
Total comprehensive income for the year (1,215) (2,713) (5,611)
=============================================================== ============== ============ ==============
Consolidated statement of Financial Position
As at Unaudited
30 September 31 March
2020 2020
GBP000 GBP000
======================================= ==================
Non-current assets
Intangible assets 4,365 4,558
Goodwill 1,930 1,930
Fixed asset investments 91 93
Property, plant and equipment 41 43
Right of use asset 196 274
--------------------------------------- ------------------ ----------
Total non-current assets 6,623 6,898
======================================= ================== ==========
Current assets
Inventories 304 308
Trade and other receivables 3,863 3,676
Cash and cash equivalents 952 1,172
======================================= ================== ==========
Total current assets 5,119 5,156
======================================= ================== ==========
Total assets 11,742 12,054
======================================= ================== ==========
Current liabilities
Short term borrowing (785) (560)
Trade and other payables (2,157) (1,491)
Lease liability (131) (121)
--------------------------------------- ------------------ ----------
Total current liabilities (3,073) (2,172)
======================================= ================== ==========
Net current assets 2,046 2,984
======================================= ================== ==========
Non-current liabilities
Lease liability (65) (153)
Deferred tax liability (853) (912)
--------------------------------------- ------------------ ----------
Total non-current liabilities (918) (1,065)
--------------------------------------- ------------------ ----------
Total liabilities (3,991) (3,237)
======================================= ================== ==========
Net assets 7,751 8,817
======================================= ================== ==========
Equity
Share capital 3,666 3,656
Share premium account 69,556 69,547
Own shares held (3,253) (3,253)
Share option reserve 2,158 2,028
Translation reserve 111 (20)
Retained losses (64,487) (63,141)
======================================= ================== ==========
Total equity being equity attributable
to
owners of the Company 7,751 8,817
======================================= ================== ==========
Consolidated statement of changes in equity
Share Own Shares Restated
Premium Held Share
Share Account GBP000 Option Translation Retained Total
Capital GBP000 Reserve Reserve Losses Equity
GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ --------- ---------- ------------- ----------- -------------------- --------- --------
Balance at 1 January
2019 3,648 69,515 (3,253) 1,761 (76) (57,474) 14,121
------------------------ --------- ---------- ------------- ----------- -------------------- --------- --------
Loss for the period - - - - - (2,836) (2,836)
Other comprehensive
income for the
period - - - - 123 - 123
------------------------ --------- ---------- ------------- ----------- -------------------- --------- --------
Total comprehensive
income for
The period - - - - 123 (2,836) (2,713)
------------------------ --------- ---------- ------------- ----------- -------------------- --------- --------
Issue of share capital - - - - - - -
Credit to equity for
share options - - - 107 - - 107
------------------------ --------- ---------- ------------- ----------- -------------------- --------- --------
Total transactions
with owners - - - 107 - - 107
------------------------ --------- ---------- ------------- ----------- -------------------- --------- --------
Balance at 30 June
2019 3,648 69,515 (3,253) 1,868 47 (60,310) 11,515
------------------------ --------- ---------- ------------- ----------- -------------------- --------- --------
Loss for the period - - - - - (2,831) (2,831)
Other comprehensive
income for the period - - - - (67) - (67)
------------------------ --------- ---------- ------------- ----------- -------------------- --------- --------
Total comprehensive
income for the period - - - - (67) (2,831) (2,898)
Issue of share capital 8 32 - - - - 40
Credit to equity for
share options - - - 160 - - 160
------------------------ --------- ---------- ------------- ----------- -------------------- --------- --------
Total transactions
with owners 8 32 - 160 - - 200
---------
Balance at 31 March
2020 3,656 69,547 (3,253) 2,028 (20) (63,141) 8,817
------------------------ --------- ---------- ------------- ----------- -------------------- --------- --------
Loss for the period - - - - - (1,346) (1,346)
Other comprehensive
income for the period - - - - 131 - 131
------------------------ --------- ---------- ------------- ----------- -------------------- --------- --------
Total comprehensive
income for the period - - - - 131 (1,346) (1,215)
Issue of share capital 10 9 - - - - 19
Credit to equity for
share options - - - 130 - - 130
------------------------ --------- ---------- ------------- ----------- -------------------- --------- --------
Total transactions
with owners 10 9 - 130 - - 149
---------
Balance at 30 September
2020 3,666 69,556 (3,253) 2,158 111 (64,487) 7,751
------------------------ --------- ---------- ------------- ----------- -------------------- --------- --------
Consolidated cash flow statement
Unaudited Unaudited
6 months to 6 months to 15 months to
30 September 30 June 31 March
2020 2019 2020
GBP000 GBP000 GBP000
----------------------------------------------------- --------------- -------------- ---------------
Net cash outflow from operating activities (Note 4) (375) (2,211) (3,677)
----------------------------------------------------- --------------- -------------- ---------------
Investing activities
Interest received 1 10 17
Purchases of property, plant and equipment (11) (18) (20)
Capitalisation of software development (20) - (36)
Disposal of investments - (55) (49)
----------------------------------------------------- --------------- -------------- ---------------
Net cash used in investing activities (30) (63) (88)
----------------------------------------------------- --------------- -------------- ---------------
Financing activities
Interest paid (24) (2) (4)
Capital repayments of lease liability (33) - (197)
Cash inflow from borrowing 225 - 560
Interest paid on lease liabilities (3) - (26)
Proceeds on issue of shares 20 - 40
----------------------------------------------------- --------------- -------------- ---------------
Net cash from financing activities 185 (2) 373
----------------------------------------------------- --------------- -------------- ---------------
Net decrease in cash and cash equivalents (220) (2,276) (3,392)
Cash and cash equivalents at beginning of period 1,172 4,564 4,564
----------------------------------------------------- --------------- -------------- ---------------
Cash and cash equivalents at end of period 952 2,288 1,172
----------------------------------------------------- --------------- -------------- ---------------
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 period ended 31 March 2020.
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 period ended 30
September 2020 have not been audited. The results for the financial
period ended 31 March 2020 have been extracted from the statutory
financial statements of CyanConnode Holdings plc.
Statutory financial statements for the period ended 31 March
2020 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 March 2022 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
timing of customer payments. These detailed cashflow scenarios
include LoCs which have been secured from the customers against
contracts recently won. Cash has been received regularly against
these LoCs.
At 30 September 2020 the Group had cash reserves of GBP1 million
(31 March 2020: GBP1.1 million) and based on the detailed cash flow
provided to the Board within the FY2021/22 budget, there is
sufficient cash to see the Group through to profitability based on
its standard operating model. If a more pessimistic scenario were
taken and an assumption were taken that no cash is received within
the next twelve months from any new orders not currently
contracted, and that there were significant delays to receipts from
customers, there is a material uncertainty relating to the Group's
ability to continue as a going concern. Should the Group experience
such downside sensitivities the directors would first continue to
look at measures such as further cost reduction and working capital
facilities as ways to conserve cash within the business. The
Company has offers of convertible and secured loans which it could
accept should such a requirement arise.
In addition, during 2020 the COVID-19 pandemic has affected the
global economy and businesses around the world, particularly during
the lockdowns in each country. At the time of writing this report,
the effects continue to be seen.
To assist with working capital during this period of growth, the
Company accepted a loan of GBP400,000 from certain Directors in
December 2020.
Notwithstanding the material uncertainties described above, on
the basis of sensitivities applied to the cash flow forecast, the
directors have a reasonable expectation that the company can
continue to meet its liabilities as they fall due, for a period of
at least 12 months from the date of approval of this report.
3. 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 15 months to
30 September 30 June 31 March
2020 2019 2020
======================================================================= ==============
Loss for the purposes of basic loss per share being net loss
attributable to equity holders
of the parent (GBP000) (1,346) (2,836) (5,667)
======================================================================= ============== ============= ==============
Weighted average number of ordinary shares for the purposes of basic
and diluted loss per
share 173,548,480 172,931,267 173,047,934
======================================================================= ============== ============= ==============
Loss per share (pence)*** (0.78) (1.64) (3.27)
======================================================================= ============== ============= ==============
The weighted average number of shares and the loss for the
period for the purposes of calculating diluted loss per share are
the same as for the basic loss per share calculation. This is
because the outstanding share options would have the effect of
reducing the loss per share and would not, therefore, be dilutive
under the terms of IAS 33.
*** Loss per share for the unaudited 6 months to 30 June 2019
has been restated to exclude own shares held.
4. Reconciliation of Operating Loss to Operating Cash Flows
Restated
Unaudited Unaudited
6 months 6 months to 15 months to
30 September 2020 30 June 31 March
GBP000 2019 2020
GBP000 GBP000
--------------------------------- ---------------------------- ------------------------------------ ---------------
Operating loss for the period: (1,622) (3,144) (6,230)
Adjustments for:
Depreciation of property, plant
and equipment 95 25 247
Amortisation of Intangible
assets 210 210 526
Foreign exchange 71 115 59
Share-option payment expense 130 107 267
--------------------------------- ---------------------------- ------------------------------------ ---------------
Operating cash flows before
movements in working capital (1,116) (2,687) (5,131)
Decrease/(increase) in
inventories 4 25 11
(Increase)/decrease in
receivables (79) 940 (1,124)
Increase/(decrease) in payables 666 (489) (503)
--------------------------------- ---------------------------- ------------------------------------ ---------------
Cash reduced by operations (525) (2,211) (4,499)
Income taxes received 150 - 822
--------------------------------- ---------------------------- ------------------------------------ ---------------
Net cash outflow from operating
activities (375) (2,211) (3,677)
--------------------------------- ---------------------------- ------------------------------------ ---------------
5. 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.
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END
IR FZLLFBLLEFBL
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