Cyan Holdings plc (AIM: CYAN.L), the fabless semiconductor company providing wireless utility metering and lighting control products based on its feature rich, low power, microcontroller chips announces its preliminary results for the year ended 31 December 2009.
- Partnership with Future Electronics Inc, a global electronics distributor operating in 41 countries giving Cyan access to major distribution networks into the global lighting and smart metering market.
- A range of field trials completed and/or progressing with OEMs and systems suppliers.
- Increasing level of customer engagements across our three key target areas:
- Automated/smart metering market
- Street lamp control market
- Supply of gateways (data access points) to a wide range of industrial wireless networks
- Management has maintained a tight control of cost base
- Two equity placings during the year raised £3.2 million (gross) of new funds to provide additional working capital.
Commenting, Kenn Lamb, CEO of Cyan, said:
"Cyan's products have been designed into a range of established customers' meters and lighting systems. These products have been through or are currently undergoing field trials. Cyan expects that in 2010 a growing number of these customers will win tenders and commence production deployment, although we remain aware that the current economic climate means that it is not easy to predict precise timing."
For further information, please contact:
| Cyan Holdings plc | Tel: +44 (0) 1954 234 400 |
| John Read, Chairman | |
| Kenn Lamb, CEO |
|
| Cenkos Securities plc | Tel: +44 (0) 20 7397 8900 |
| Stephen Keys / Adrian Hargrave |
|
Media enquiries:
| Hansard Communications Ltd | Tel: +44 (0)20 7245 1100 |
| John Bick / Kirsty Corcoran | Tel: +44 (0) 7872 061007 |
During 2009, Cyan continued to make significant progress in the marketing of its wireless utility metering products. Our primary goal is the commercialisation of our market-leading products and throughout the period customer engagements increased significantly across our three key target areas, namely the automated/smart metering market, the global street lamp control market and supplier of gateways (access points) to a wide range of industrial wireless networks.
Cyan's strategic aim is to become a major supplier to each of these important global markets and progress was made during the year which included the sale of tens of thousands of microcontrollers, thousands of wireless gas meter controllers and hundreds of street light controllers for prototypes, pre-production and field trials. Cyan is engaged with a range of customers in China, India, Africa, Europe and the USA that have completed or undertaken trials during the year. Cyan also has contract manufacturing partners ready to support any rapid increase in orders of our solutions.
Cyan has successfully secured and maintained key partnerships, most recently with Future Electronics Inc, a top three worldwide electronic component distributor with divisions focussed on metering and lighting products. Future Electronics provides a global distribution network for all Cyan products.
The agreement announced in July with Future Electronics recognises the synergy between Cyan's products and the global markets in which Future is well established. Future supplies a substantial portion of the global in-building LED lighting market through its Future Lighting Solutions ('FLS') division. As a result of the relationship with Future, Cyan is currently working on wireless lighting control for incorporation into a new product expected to go into production during 2010, to be offered to current and prospective FLS customers.
As we have progressed through the year Cyan has continued to meet the demands of potential key customers in cost and performance and has received orders for field trials across a range of applications. In September 2009 Cyan demonstrated the first 470MHz version of its wireless meter, the required frequency specified for all future meters in China. Cyan's product is now able to address electricity metering opportunities in China in addition to gas and water meter opportunities across all Chinese provinces.
While undergoing trials with key customers, Cyan's technology has developed to incorporate features significantly improving the performance of Cyan's wireless metering solutions. We continue to work with potential customers, who incorporate our products into their own, to present new features to their target markets. The technical performance of Cyan's products continues to drive demand for field trials in different countries and across a number of potentially large scale applications.
For the year ended 31 December 2009 both operating costs and R&D costs were significantly reduced, resulting in an operating loss of £3,133,135 (2008: £4,557,917). Loss for the year was also reduced to £2,652,260 (2008: £3,999,326). Cash at year end sat at £1,968,072 (2008: £1,356,886).
The Company successfully completed two equity placings to new and existing investors during the period, raising a total of £3.0 million of new money (net of expenses) to fund working capital requirements to support customer trial orders and partnerships.
The Board is happy with the progress and contribution made to date from the two recent additions to the Company's management team in December 2009. Bijan Mohandes joined as Vice President of Worldwide Sales and Marketing and is working to expand Cyan's indirect sales channels and Paul Ruskin, who joined as COO, is managing and converging multiple customer projects into a set of products that Cyan can promote globally.
Board Changes
I am delighted that Simon Smith has today been appointed as non-executive director. Simon is an experienced financial executive with over twenty years experience in the semiconductor and technology sectors. He is currently an independent advisor to both start-up and listed technology companies providing a range of assistance including fund raising, business planning and contract negotiation.
Prior to establishing himself as an independent advisor in 2007, Simon held the position of Chief Financial Officer/Director of Finance at multi-national businesses in both the UK and USA since 1997 and his experiences include multiple business acquisitions/disposals, fund raising, business planning, cash management and customer contract negotiation.
Finally, I would like to thank David Gutteridge for his contribution to the Board and the Company as non-executive director and we wish him well when he steps down from the Board at the Company's Annual General Meeting to be held on 21 April 2010.
John Read
Chairman
29th March 2010
Smart Meters, Smart Grid, and Automated Meter Reading: These are all terms which are seen more and more frequently in applications and referred to in the press. Each offers different benefits, but all require remote access to monitor and control utility meters.
The green agenda is the driving force behind these meter initiatives, each intended to be energy saving, primarily delivered by modifying consumer behaviour. Energy saving light bulbs are promoted for domestic use, but it is street lighting and commercial buildings where substantial energy savings can be made. To realise such savings individual lights must be monitored and controlled. It is analogous to the metering requirement and again, wireless communication is the dominant choice to provide that control.
Cyan provides that wireless communication and is: 'The Gateway to Intelligent Connectivity'.
Cyan has developed a comprehensive range of wireless control and monitoring products for these markets. The requirement sounds easy, but the successful implementation has required many years of development. As individuals, we carry mobile phones, and as a result are familiar with point-to-point wireless communication. Every time we connect wirelessly to the Internet we use point to multipoint. What is relatively new and a future requirement for these markets is a mesh connection, where communication is relayed between individual lights or meters from one or multiple access points. Communication percolates through the mesh, each meter or light is connected to more than one other meter or light, thus offering multiple communication routes and automatically building in communication redundancy. Range and, more importantly, penetration through reinforced concrete floors in tower blocks, is increased by taking multiple hops through only a few floors at a time while using no more than the transmit power achievable with batteries or limited by regulation.
Cyan has four specialised capabilities that we believe are not available from any other single supplier.
Cyan's microcontrollers minimise the components required for any meter or lighting product by utilising our own 16bit MCU device. This has processing power sufficient to handle both the wireless communication as well as the metering or lighting control functions. The alternative is to use two MCUs adding significantly to the cost.
Cyan's mesh networking protocol CyNet™ has been developed specifically for metering and lighting applications. This requires detailed knowledge and practical experience from multiple field trials to understand how to make systems that are:
- Self Forming, to simplify deployment
- Self Healing, to make them robust and automatically support additional meters or lights
- Low power, to enable battery operation for gas and water meters
- Low network overhead, to increase the maximum size of a single network.
Cyan's wireless products operate in all global sub 1GHz ISM bands. These are the frequency bands allocated for metering and lighting. Cyan has a single interchangeable product family that allows our customers to deploy their products anywhere in the world. The sub 1GHz frequencies are more difficult to use for wireless mesh networking, the data throughput is lower so tuning the protocol to the application is a critical requirement. These bands have significant advantages in range and penetration making them a preferred choice for these applications.
Cyan's products provide a complete solution. Wireless nodes for retrofitting as well as complete meter and lighting control electronics supplied as production ready modules. Access points using USB, Ethernet and GPRS allows connection wirelessly, from a PC, over the Internet or even via a mobile phone network. Concentrators actually process meter readings and present these via a web server. All these functions are managed by Cyan's 16bit MCU's offering significant cost savings compared to 32 bit alternatives. Significantly, through CyanIDE, a state of the art graphical development tool that we issue free of charge, all of these products are also user programmable.
This range of capabilities enables Cyan to offer a compelling solution for the metering and lighting markets. In recent months we have taken this one stage further and developed, for specific customers, products that provide wireless mesh capability plus all the electronics required for a meter including the display. These meter products are battery operated and demonstrate the low system cost and low power consumption that can be realised by using a single Cyan MCU.
Cyan has also developed, again for specific customers, lighting control products that combine wireless mesh capability with monitoring and control of the light intensity, again from a single Cyan MCU. Cyan is currently working with Future Lighting Solutions (a leading supplier to the global LED lighting market) to add wireless control to their lighting platform. All of these products are supported with software that customises Cyan's Gateway and Concentrator products, to provide a near complete wireless mesh solution ready to incorporate into the customer's product. In 2009 the Cyan team has continued to work hard to enhance its understanding of the requirements of our target markets, reinforcing our technology leadership.
Looking Forward
Cyan's products have been designed into a range of established customers' meters and lighting systems. These products have been through or are currently undergoing field trials. Cyan expects that in 2010 a growing number of these customers will win tenders and commence production deployment, although we remain aware that the current economic climate means that precise timing is not certain.
The Group's business plan for 2010 and beyond includes significant assumptions around the timing and value of future sales and the level of gross margins. It also identifies the need for additional financing within the next six months for working capital purposes. We draw your attention to the information in note 1 about the basis on which the Board has concluded that the Group is a going concern and the risks and uncertainties within the business plan. Those uncertainties include the level and timing of future sales, the level of gross margin achieved and the availability or otherwise of additional funding.
Once again I wish to acknowledge and thank Cyan employees for their enthusiasm and dedication, and acknowledge the continued support of the Company's shareholders for whom 2010 should finally reveal the potential of Cyan.
Kenn Lamb
Chief Executive Officer
29th March 2010
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2009
| 2009 | 2008 | ||
| £ | £ | ||
| Continuing operations | |||
| Revenue | 95,569 | 145,627 | |
| Cost of sales | (62,897) | (86,321) | |
| Gross profit | 32,672 | 59,306 | |
| Operating costs | (1,633,138) | (2,485,486) | |
| Research and development costs | (1,532,669) | (1,953,937) | |
| Restructuring costs | - | (177,800) | |
| Operating loss | (3,133,135) | (4,557,917) | |
| Investment revenue | 1,639 | 92,885 | |
| Finance costs | (11) | (1) | |
Loss before tax |
(3,131,507) | (4,465,033) | |
| Tax | 479,247 | 465,707 | |
| Loss for the year | (2,652,260) | (3,999,326) | |
| Loss per share (pence) | |||
| Basic | (0.5) | (1.7) | |
| Diluted | (0.5) | (1.7) |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2009
| 2009 | 2008 | ||
| £ | £ | ||
| Exchange differences on translation of foreign operations | 145,834 | (373,948) | |
| Loss for the year | (2,652,260) | (3,999,326) | |
| Total comprehensive income for the period | (2,506,426) | (4,373,274) |
CONSOLIDATED BALANCE SHEET
At 31 December 2009
| 2009 £ |
2008 £ |
||
| Non-current assets | |||
| Intangible assets | - | - | |
| Property, plant and equipment | 39,729 | 99,769 | |
| Current assets | |||
| Inventories | 893,087 | 847,351 | |
| Trade and other receivables | 569,601 | 617,636 | |
| Cash and cash equivalents | 1,968,072 | 1,356,886 | |
3,430,760 |
2,821,873 |
||
| Total assets | 3,470,489 |
2,921,642 |
|
| Current liabilities | |||
| Trade and other payables | 229,332 | 274,695 | |
| 229,332 | 274,695 | ||
| Non-current liabilities | - | - | |
| Total liabilities | 229,332 |
274,695 |
|
| Net assets | 3,241,157 |
2,646,947 |
|
| Equity | |||
| Share capital | 1,309,565 | 954,259 | |
| Share premium account | 19,026,290 | 16,391,994 | |
| Own shares held | (690,191) | (690,191) | |
| Share option reserve | 379,886 | 268,852 | |
| Translation reserve | (228,114) | (373,948) | |
| Retained earnings | (16,556,279) | (13,904,019) | |
| Total equity being equity attributable to equity holders of the parent |
3,241,157 | 2,646,947 | |
Consolidated statement of changes in equity
at 31 December 2009
| Share Capital | Share Premium | Own shares held | Share Option Reserve | Translation Reserve | Retained Losses | Total Equity | |
| Bal at 31 December 2007 | 279,252 | 13,600,291 | - | 209,398 | - | (9,904,693) | 4,184,248 |
| Loss for the year | - | - | - | - | - | (3,999,326) | (3,999,326) |
| Other comprehensive income for the year | - | - | - | - | (373,948) | - | (373,948) |
| Total comprehensive income for the year | - | - | - | - | (373,948) | (3,999,326) | (4,373,274) |
| Issue of share capital | 675,007 | 2,791,703 | (690,191) | - | - | - | 2,776,519 |
| Credit to equity for share options | - | - | - | 59,454 | - | - | 59,454 |
| Bal at 31 December 2008 | 954,259 | 16,391,994 | 690,191 | 268,852 | 373,948 | (13,904,019) | 2,646,947 |
| Loss for the year | - | - | - | - | - | (2,652,260) | (2,652,260) |
| Other comprehensive income for the year | - | - | - | - | 145,834 | - | 145,834 |
| Total comprehensive income for the year | 145,834 | (2,652,260) | (2,506,426) | ||||
| Issue of share capital | 355,306 | 2,634,296 | - | - | - | - | 2,989,602 |
| Credit to equity for share options | - | - | - | 111,034 | - | - | 111,034 |
| Bal at 31 December 2009 | 1,309,565 | 19,026,290 | (690,191) | 379,886 | (228,114) | (16,556,279) | 3,241,157 |
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2009
| 2009 | 2008 | ||
| £ | £ | ||
| Net cash from operating activities | (2,400,080) | (5,609,327) | |
| Investing activities | |||
| Interest received | 1,639 | 92,885 | |
| Purchases of property, plant and equipment | (10,927) | (30,008) | |
| Net cash from investing activities | (9,288) | 62,877 | |
| Financing activities | |||
| Interest paid | (11) | (1) | |
| Proceeds on issue of shares | 2,989,602 | 2,776,519 | |
| Net cash from financing activities | 2,989,591 | 2,776,518 | |
| Net (decrease)/increase in cash and cash equivalents | 580,223 | (2,769,932) | |
| Cash and cash equivalents at beginning of year | 1,356,886 | 4,079,534 | |
| Effect of foreign exchange rate changes | 30,963 | 47,284 | |
| Cash and cash equivalents at end of year | 1,968,072 |
1,356,886 |
NOTES TO THE FINANCIAL INFORMATION
For the year ended 31 December 2009
1. General information
Cyan Holdings plc is a company incorporated in the United Kingdom under the Companies Act 2006. The address of the registered office is Cyan Holdings plc, Buckingway Business Park, Swavesey CB24 4UQ.
The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2009 or 2008, but is derived from those accounts. Statutory accounts for 2008 have been delivered to the Registrar of Companies and those for 2009 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 computed in accordance with International Financial Accounting Standards (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, a copy of which will be posted to the shareholders.
The financial statements were approved by the Board of Directors on 26 March 2010. The Group’s specific IFRS accounting policies can be found in the 2008 annual report.
Going concern
The directors have prepared a business plan and cash flow forecast for the period to 30 June 2011. The forecast contains certain assumptions about the level of future sales and the level of gross margins and also identified the need within the next six months for additional finance to fund working capital.
The directors acknowledge that the Group is trading in a difficult economic environment and in markets that are new to the Group. This may impact both the Group’s ability to generate positive cashflow 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. In addition, the directors have reason to believe that additional funding could be obtained from potential investors, including current shareholders, upon evidence of firm sales orders. There does remain significant risk, however, that the required level of funding will not be received in the necessary timescale or at all. The directors are of the opinion that this business plan is achievable. On this basis, the directors have assumed that the company is a going concern.
There is a 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.
2. Earnings per share
The calculation of the basic and diluted earnings per share is based on the following data:
Earnings
| 2009 | 2008 | ||
| £ | £ | ||
| Earnings for the purposes of basic earnings per share being net loss attributable to equity holders of the parent | |||
| 2,652,260 | 3,999,326 |
Number of shares
| 2009 |
2008 |
||
| No. | No. | ||
| Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share | 528,453,250 | 239,626,314 | |
3. Share capital
| 2009 | 2008 | ||
| number | number | ||
| Authorised: | |||
| Ordinary shares of 0.2 pence each | 800,000,000 | 600,000,000 | |
| 2009 | 2008 | ||
| £ | £ | ||
| Issued and fully paid: | |||
| 654,782,659 (2008: 477,129,314) ordinary shares of 0.2 pence each | 1,309,565 | 954,259 |
4. Notes to the consolidated cash flow statement
| 2009 | 2008 | |||
| £ | £ | |||
| Operating loss for the year | (3,133,135) |
(4,557,917) | ||
Adjustments for: |
||||
| Depreciation of property, plant and equipment | 62,232 | 67,100 | ||
| Amortisation of intangible assets | - | 28,793 | ||
| Share-based payment expense | 111,034 | 59,454 | ||
Operating cash flows before movements in working capital |
(2,959,869) |
(4,402,570) | ||
| Increase in inventories | (45,734) | (667,111) | ||
| Decrease/(increase) in receivables | 48,035 | (114,411) | ||
| Increase/(decrease) in payables | (45,363) | (429,528) | ||
Cash reduced by operations |
(3,002,931) |
(5,613,620) | ||
| Income taxes received | 602,851 | 4,293 | ||
Net cash outflow from operating activities |
(2,400,080) | (5,609,327) | ||
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.