Final Results

RNS Number : 0117Y

CyanConnode Holdings PLC

04 September 2020

 

4 September 2020

CyanConnode Holdings plc

("CyanConnode" or "the Company")

Final Results for the Fifteen-Month Period Ended 31 March 2020

 

CyanConnode Holdings plc (AIM: CYAN), a world leader in Narrowband Radio Frequency (RF) Smart Mesh Networks, announces its audited results for the fifteen-month period ended 31 March 2020.

Financial and Operational Highlights

· Revenue of £2.5 million achieved for the fifteen months to March 2020 (2018 year: £4.5 million)

· Orders received during the period totalled £6.8 million, including

o  March 2020 - Follow-on order from Forth Corporation Public Company for a Thai Utility bringing the total value of Thai orders to more than £2.3 million

o  January 2020 - £3.3 million order for 142,000 modules from Genus Power Infrastructures Ltd ("Genus") secured by a Letter of Credit ("LOC")

o  December 2019 - £1.1 million order from JST Group for a Thai Utility

o  Follow-on orders from HM Power (April 2019), Larsen & Toubro ("L&T") (February 2019) and Toshiba (July 2019) totaling £1.3 million  

· £4.1 million of cash received from customers during the fifteen-month period (2018: £2.6 million)

· Launch of new Omnimesh Cellular products including Dual SIM Cellular Network Interface Card and In Meter Gateway for improved security and increased capacity

· Chris Jones and Peter Tyler appointed as Non-Executive Directors in March 2019

· Change of External Auditor to RSM UK Audit LLP

· Change of financial year end to 31 March

Post Year End Highlights

· Resumption of previously delayed INR 1 billion Indian contract. Inspection, dispatch and cash received for first 20,000 units. Cash received for a further 20,000 units and Letter of Credit secured for remaining deliveries

· Commencement of rollout of recently announced projects in India and Thailand following easing of COVID-19 lockdown, with more than 30,000 modules delivered against these projects since period end

· Continued rollout of Sweden projects with 34,000 modules delivered against these projects since period end

· A further 5,000 modules delivered to Larsen & Toubro for legacy projects

·   £1.3 million cash received from customers since the period end.   Current cash balance at the same level as end of December 2019 (£1.1 million)

John Cronin, Executive Chairman of CyanConnode, commented:

"In 2019 we were disappointed not to achieve the Board's expectations as a result of a delayed contract for the Indian Utility, Jaipur Vidyut Vitran Nigam Ltd ("JVVNL") . The positive news in the first half of 2020 is that this significant contract has resumed and we are receiving cash payments for the rollout. We are also encouraged to see demand for our products increasing.

"CyanConnode has adapted to working under COVID-19 conditions and continues to remain on track with its current development plans.  Nevertheless, the Company has encountered challenging circumstances in the markets in which it operates, which are reflected in these historical figures.

"During 2020, as existing contracts started to roll out, the Company began to utilise Letters of Credit to meet its working capital requirements, thereby mitigating the need to raise further funding.  The Company is focused on delivering significant volumes of its products to customers and we are pleased to report that we are at an advanced stage of agreeing a significant contract for a large number of units.

 "I would like to thank all employees for their hard work and commitment during this period, and all shareholders for their continued support."

- Ends -

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

Enquiries:

CyanConnode Holdings plc	Tel: [phone]
John Cronin, Executive Chairman	www.cyanconnode.com
Arden Partners plc (Nomad and Broker) Paul Shackleton / Dan Gee-Summons (Corporate Finance) Simon Johnson (Corporate Broking)	Tel: [phone]
Yellow Jersey PR (Financial PR)	Tel:  [phone]
Sarah Hollins/ Annabel Atkins	[e-mail]

 

Chairman's Statement

Operational Review

India

15 months to 31 March 2020 saw delays to the tendering process and to the rollout of existing contracts as a result of the Indian General Elections. In particular the rollout of a substantial order announced in September 2018 for the Indian Utility, Jaipur Vidyut Vitran Nigam Ltd ("JVVNL"), was delayed for most of 2019 and into 2020. This delay, relating to two projects worth over INR 1 billion in total, caused a significant shortfall in revenues for 2019. The local government re-approved the project in June 2020, and the roll-out is now progressing with cash being received from the customer.

In February 2019, a follow-on order was received from Larsen & Toubro ("L&T"), worth approximately £0.4 million. The follow-on order relates to an order announced in May 2018, worth £2.5 million, with the deployment of smart meters progressing rapidly and already showing the benefits of the Omnimesh solution to the utility. All the Omnimesh RF Modules ordered in the follow-on order 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. The utility now intends to add a further 350,000 units across 5 RAPDRP towns to this project due to the benefits being provided by Omnimesh. It is expected these units will be RF Mesh, and the tender is currently underway. Several state-owned utilities and government agencies have visited the project and intend to follow the same model for their respective projects.

In April 2019, an order was received from a new partner, an Indian state-owned Utility, for the deployment of 3,000 Omnimesh Modules, which utilise a hybrid radio frequency ("RF") Smart Mesh and Cellular communication network. All hardware was delivered, and revenue recognised in H1 2019.

In July 2019, a follow-on order from Genus Power Infrastructures Ltd ("Genus") was received for a further 4,050 smart metering units for the deployment at Uttar Gujarat Vij Company Ltd ("UGVCL"). The initial order of 23,000 Omnimesh RF Modules placed in July 2017, was the first order from India for the IPv6-6LoWPAN based technology, which was developed by Connode AB in Sweden, prior to its acquisition by CyanConnode.

Further follow-on orders were received during the financial year, including orders for the projects previously deployed at Chamundeshwari Electricity Supply Corporation ("CESC"), Singareni Collieries and Tata Power Mumbai, who recently placed an order to extend the Annual Maintenance Contract relating to an order received in 2014. These projects continue to perform well. A number of other small orders have been received including from Larsen & Toubro ("L&T") for CyanConnode' s legacy product taking the total orders received by L&T for this product to over 50,000 to date, including the orders specifically for Tata Power Mumbai in previous years.

In December 2019, a Letter of Intent ("LOI") for an order worth £3.3 million was received from Genus Power Infrastructures Ltd ("Genus"). The formal purchase order was placed in January 2020 and CyanConnode expects that revenue for 80% of the order will be recognised by mid-2021. Payments will be secured by a Letter of Credit.

 

Europe

In April 2019, a follow-on order worth £0.7 million was received from HM Power ("HMP") for the smart metering of district heating and power, which demonstrates 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 will continue throughout 2020.

In July 2019, a follow-on Nordic order worth €489,000 was received. The order was for legacy CyanConnode hardware and software from an existing Partner and the end customer is a Nordic Utility, who is expanding an existing smart metering deployment. All revenue relating to this order was recognised in 2019 and all cash has been received.

Additionally, a follow-on order from Toshiba worth approximately £0.2 million for service enhancements relating to the UK Smart Meter Implementation Program ("SMIP") was received in July 2019 and revenue recognised in H2 2019. CyanConnode's RF technology is embedded in the Toshiba SUK2 and SUK3 SMETS2 Communication Hubs ("RF Hubs"), which are installed when a meter is located in a spot that does not have a reliable cellular signal (known by mobile operators as "not-spots"). Toshiba Communications Hubs are being deployed under the Telefónica contract with The Smart DCC Ltd ("DCC") for the Central and Southern regions.

During 2019, the UK Government announced that it had extended the deadline for the rollout of SMETS2 meters by four years to 2024. The DCC aims to connect around 53 million smart gas and electricity meters to its secure network using SMETS2 meters and, in March 2020, it announced that 4.2 million (7.75% of the meter population) had been connected. The rollout of SMETS2 meters commenced in Q4 2018 and 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 RF Hubs will gain momentum during later stages of the rollout.

Under its SMIP contract, CyanConnode calculates that 2.3 million Toshiba RF Hubs will eventually connect to the DCC secure network, and it is now beginning to see a small amount of revenue from those connections. However, as CyanConnode's SMIP contract is still at a relatively early stage, it is still not possible for the Company to confirm whether its revenue forecasts from the SMIP contract are accurate.

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 2018, CyanConnode announced a licensing agreement with Beijing Jingybeifang Instrument Co. Ltd ("Beijing Instruments"), providing it with the right to use CyanConnode's reference designs to manufacture Omnimesh RF Modules and Gateways. During 2019 the Group has been working closely with Beijing Instruments on tenders that may require smart meters with Omnimesh RF Modules and Gateways that are manufactured under the licence agreement.

In December 2019, an order was received from its Agent and Partner, JST Group (JST), which included 33,000 Omnimesh RF Modules, worth approximately £1.13 million. The end customer is Metropolitan Electricity Authority (MEA), a Thai state enterprise under the Ministry of Interior. This order included an advance payment of c. £0.3 million which was received in early January 2020. Approximately £0.16 million of revenue was recognised during the period with the balance being deferred to the next financial year. The purchase order relates to a smart metering deployment which includes an Omnimesh Head End Server (HES). Under the agreement, CyanConnode will supply hardware, HES and an Annual Maintenance Contract (AMC). Deliverables for the integrated system, as well as hardware deliveries, commenced in 2020. The AMC will deliver a recurring revenue stream over an initial five-year period.

In March 2020, a follow-on order from Thailand for 206,735 Omnimesh perpetual software licences was received. The follow-on order was placed by Forth Corporation Public Company Limited (Forth) with JST acting as CyanConnode's Agent. The order increases the total value of orders received for MEA to more than $3 million. Under the contract, a payment of approximately $206,000 was paid as soon as the order was placed. The additional Omnimesh software licences will allow MEA to connect up to 240,000 smart meters to the Omnimesh Head End Server (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.

New Range of Omnimesh Products

During 2019 and into 2020, CyanConnode launched several exciting Omnimesh products. Omnimesh is an open standards platform which is currently being applied to the future-proofing of Advanced Metering Infrastructure (AMI) communications for Utilities. Omnimesh has offered market-leading RF Mesh Networks since its launch in June 2018. These new products include:

Omnimesh Long-Range RF Network Interface Card

The Omnimesh Long-Range RF Network Interface Card (LR-RFNIC) has a range of up to 12km and is designed to provide point-to-point communication in sparsely populated areas, providing resilient, cost-effective, RF Mesh Network coverage beyond the mainly urban rollouts deployed to date. The LR-RFNIC integrates into standard smart meters and enables long-range communication to be deployed alongside standard RF Mesh Networks built using the Omnimesh RF Network Interface Card (RFNIC).

Omnimesh Metering of District Heating

Omnimesh Smart Metering of District Heating has been designed to meter thermal energy consumption. District Heating is an environmentally friendly method of heating homes, schools and commercial premises from a central plant, which pumps heat to individual premises.

Omnimesh Dual SIM Cellular Network Interface Card

The new Omnimesh Dual SIM Cellular Network Interface Card (CNIC) delivers point-to-point Cellular connectivity and automatically selects the best available Cellular network. The CNIC integrates into standard smart meters, and enables Utilities to optimise their AMI programmes by choosing the right mix of RF Mesh and Cellular connectivity for their deployment environments and AMI requirements. A single Omnimesh Head End Server (HES) can simultaneously manage both CNIC and RF Mesh enabled smart meters. This cost-effective approach enables Utilities to collect meter data and control meters seamlessly through the integration of a single Omnimesh HES into a Meter Data Management System (MDMS).

Omnimesh Integrated Gateway with Cellular and RF Mesh Capability

The new Omnimesh Integrated Gateway (IGW) supports both Cellular and RF Mesh connectivity and acts as a gateway to the Omnimesh HES for a local population of smart meters. The IGW integrates into standard smart meters, which offers several advantages including: strengthened tamper-proofing, ease of integration, increased deployment efficiency, reduced total cost of ownership, and improved network coverage and resilience.

The new Omnimesh Cellular products deliver secure end-to-end communication across both public and private carrier networks. To meet a range of market requirements, the products are available in all cellular regions and bands, and support all the 2G, 3G, 4G, and emerging 5G standards, including NB-IoT and Cat-M1 IoT Cellular technologies.

Board 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.

Change of Auditor and Year End

The Company announced in December 2019 that it was appointing RSM UK Audit LLP as its External Auditor due to the length of tenure of its previous External Auditor, Deloitte LLP. Deloitte confirmed that there were no matters connected with it ceasing to hold office which need to be brought to the attention of the members or creditors of the Company, for the purposes of section 519 of the Companies Act 2006. As part of continued operational efficiency and cost management, the Group also aligned its financial year end with its Indian subsidiary, CyanConnode Private Limited, to 31 March.

COVID-19 Update

In our interim results statement issued on 31 March 2020, we set out how the Group had adapted following the global outbreak of COVID-19 in early 2020. The Group has continued to work throughout the lockdowns in the countries in which it is rolling out contracts, and in which it operates, as well as adapting to a remote way of working where necessary. As also announced in March 2020, the wellbeing of our staff is paramount and a full risk assessment has been carried out in the Group's Headquarters to ensure a safe working environment.

Outlook

In early 2020, the Indian Government stated a target of replacing 250 million conventional electricity meters with pre-paid smart meters within three years. Finance Minister Nirmala Sitharaman has allocated Rs 22,000 crore (c. US$3 billion) for the power and renewable sector in the Union Budget 2020 and has urged state governments to implement smart meters in three years, which would give the consumers the right to choose suppliers and the rate.^[i]

https://economictimes.indiatimes.com/industry/energy/power/union-budget-rs-22000-crore-to-power-and-renewable-sector-consumers-to-get-choice-of-supplier/articleshow/73833750.cms

Since the end of the period, the Group has seen good progress on contracts and opportunities in the Indian market despite the COVID-19 lockdown. In June 2020, the Group announced that two projects relating to an order won in September 2018 had received the necessary approvals to resume. In addition, also in June 2020 CyanConnode announced that deployment of the order won in January 2020 had commenced. These two orders together are for approximately 570,000 modules and associated gateways, software and services and worth over £15 million. Deployment of these projects is moving forward in line with project requirements following some project delays as a result of COVID-19. Most customers are now back at work and fully operational.

Key focus will be on the delivery of these projects along with the projects in Thailand and Sweden, which are also progressing as expected, to convert these projects to revenue and cash.

Finally, I would like to thank all employees for their hard work and commitment during this difficult time.

John Cronin

Executive Chairman

FINANCIAL REVIEW

The fifteen months to March 2020 presented challenges to the Group as a result of restrictions put in place during the 2019 Indian elections, which caused delays both to the rollout of existing contracts and also to the awarding of new contracts. In addition, the final quarter of the period saw the outbreak of the COVID-19 pandemic which has had an impact globally. Despite these difficulties, the Group has adapted its working practices and is managing its cash and costs accordingly, and expects to meet its obligations as and when they fall due.

A summary of the key financial results for the fifteen-month period, and details relating to its financing position at period end are set out in the table below and discussed in this section.

	Mar 2020	Dec 2018	Dec 2017	Dec 2016
	£'000	£'000	£'000	£'000
Revenue	2,451	4,465	1,171	1,823
R&D expenditure (including staff costs)	2,381	2,466	4,148	2,913
Operating loss	(6,230)	(6,320)	(11,153)	(7,939)
Depreciation and amortisation	773	472	489	256
LBITDA	(5,457)	(5,848)	(10,664)	(7,683)
Stock impairment	4	578	55	96
Share-based compensation	267	445	689	2
Acquisition - related costs	-	-	-	1,564
Foreign exchange losses	267	16	52	48
Adjusted LBITDA[1]	(4,919)	(4,809)	(9,868)	(5,973)
Cash and cash equivalents	1,172	4,564	5,394	3,893
Average monthly operating cash outflow	(245)	(487)	(808)	(588)

	Mar 2020 FTE[2]	Dec 2018 FTE	Dec 2017 FTE	Dec 2016 FTE
Average employee headcount	50	52	44	31
Year-end headcount	48	61	52	31

Included within the table above are two alternative performance measures ("APMs"): LBITDA and adjusted LBITDA. These are additional measures which are not required under IFRS. These measures are consistent with those used internally and are considered important to understanding the financial performance and the financial health of the Group.

LBITDA (Loss before Interest, Tax, Depreciation and Amortisation) is a measure of cash generated by operations before changes in working capital. Adjusted LBITDA is a measure of cash generated by operations before changes in working capital and after other items have been adjusted for as set out in the table above. It is used to achieve consistency and comparability between reporting periods.  

Notably from the table on the previous page:

• Revenue for the 15 months to March 2020 was £2 million lower than the 12 months to December 2018

• Operating loss for the 15 months to March 2020 was £0.1 million lower than for the previous 12-month period

• Cash at the end of March 2020 was £3.4 million lower than the end of December 2018

• Depreciation increased due to the implementation of IFRS16

• Share-based compensation charges reflect the fair value of share options granted to employees over the vesting period of these options.

Financial items of note during the period other than those set out above were:

· No cash has been raised from shareholders since October 2018

· Cash received from customers during the fifteen-month period was £4.1 million

· Trade and other receivables reduced by £1.2 million to £3.7 million at period end

· R&D tax credit at a similar level to 2018 (£0.8 million) however for a fifteen-month period against a one-year period due to reduced R&D costs during the period

· The implementation of IFRS 16 - Leases

· Change of auditor from Deloitte LLP to RSM UK Audit LLP

· Change of financial year end from 31 December to 31 March

During the period an advance against the R&D tax credit was received. This will be repaid out of the R&D tax credit funds when received from HMRC. In addition, letters of credit, invoice discounting and advance payments have been negotiated on recently won contracts to help with working capital requirements.

Key Performance Indicators (KPIs)

The financial key performance indicators for the Group are as set out in the key financial results table above. FY2020 revenues were 45% down on 2018 comparatives as a result of delays to contracts due to the Indian elections. Operating costs for the fifteen-month period reduced by 16% against twelve months for 2018, LBITDA by 7%, while adjusted LBITDA increased by 2% due to lower share-based compensation charges and stock provisions. The Group's average headcount reduced by 2.

The Group's long-term strategy is to deliver shareholder returns by generating revenue and moving into profitability. We seek to do this by focusing our investment on emerging but fast-growing markets where we believe we can reach a market leading position with our technology. Management use KPIs to track business performance, to understand general trends and to consider whether we are meeting our strategic objectives. As we grow, we intend to review these KPIs and adapt them as appropriate, in response to how our business and strategy evolves.

The Group's key focus for the financial year ending March 2021, continues to be streamlining its processes from order to delivery and continuing to close further orders. A further focus will be ensuring collection of cash from customers as Group revenues continue to grow. A number of avenues continue to be pursued to secure working capital facilities to help ease cash flows and mitigate against any unforeseen delays in deliveries or customer payments.

Going concern

To assess the ability of CyanConnode Holdings plc ("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 Letters of Credit which have been secured from customers against contracts recently won.

At 31 March 2020 the Group had cash reserves of £1.2 million (2018: £4.6m) and based on detailed cash flows 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 cost reduction and working capital facilities as ways to conserve cash within the business. The Company has offers for 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, the Group received an advance of £560,000 against its R&D tax credit in February 2020. This amount will be repaid out of the HMRC receipt which is expected to be received by October 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.

Dividends

The directors do not recommend the payment of a dividend (2018: £nil). The Group has no plans to adopt a dividend policy in the immediate future and all funds generated by the Group will be invested in the further development of the business, as is normal for its industry sector and stage of its development.

Heather Peacock

Chief Financial Officer

 

 

CyanConnode Holdings plc

Consolidated income statement

For the 15-month period ended 31 March 2020

	Note		15 months 31 Mar 2020		Year  31 Dec  2018
			£'000		£'000
Continuing operations
Revenue			2,451		4,465
Cost of sales			(1,081)		(1,724)
Gross profit			1,370		2,741
Other operating costs			(6,827)		(8,589)
Amortisation and depreciation			(773)		(472)
Total operating costs			(7,600)		(9,061)
Operating loss			(6,230)		(6,320)
Investment income			17		13
Finance costs			(30)		(2)
Loss before tax			(6,243)		(6,309)
Tax			576		927
Loss for the year			(5,667)		(5,382)
Loss per share (pence)
Basic	2		(3.27)		(4.60)
Diluted	2		(3.27)		(4.60)

 

CyanConnode Holdings plc

Consolidated Statement of Comprehensive Income

For the fifteen-month period ended 31 March 2020

Derived from continuing operations and attributable to the equity owners of the Company.

	15 months 31 Mar 2020		Year 31 Dec 2018
	£'000		£'000
Loss for the period	(5,667)		(5,382)
Exchange differences on translation of foreign operations	56		54
Total comprehensive income for the year	(5,611)		(5,328)

 

CyanConnode Holdings plc

Consolidated statement of financial position

As at 31 March 2020

	Note		31 Mar 2020 £'000		31 Dec 2018 £'000
Non-current assets
Intangible assets			4,558		5,048
Goodwill			1,930		1,930
Investments			93		44
Property, plant and equipment			43		73
Right of use asset			274		-
			6,898		7,095
Current assets
Inventories			308		319
Trade and other receivables			3,676		4,827
Cash and cash equivalents			1,172		4,564
			5,156		9,710
Total assets			12,054		16,805
Current liabilities
Trade and other payables			(1,491)		(1,994)
Short-term borrowings			(560)		-
Lease liabilities			(121)		-
Total current liabilities			(2,172)		(1,994)
Net current assets			2,984		7,716
Non-current liabilities
Lease liability			(153)		-
Deferred tax liability			(912)		(690)
Total non-current liabilities			(1,065)		(690)
Total liabilities			(3,237)		(2,684)
Net assets			8,817		14,121
Equity
Share capital	3		3,656		3,648
Share premium account			69,547		69,515
Own shares held			(3,253)		(3,253)
Share option reserve			2,028		1,761
Translation reserve			(20)		(76)
Retained losses			(63,141)		(57,474)
Total equity being equity attributable to owners of the Company			8,817		14,121

 

CyanConnode Holdings plc

C onsolidated Statement of Changes in Equity

For the 15-month period ended 31 March 2020

		Share Capital	Share Premium	Own shares held	Share Option Reserve	Translation Reserve	Retained Losses	Total Equity
		£'000	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 31 December 2017		2,559	65,565	(3,253)	1,316	(130)	(52,092)	13,965
Loss for the year		-	-	-	-	-	(5,382)	(5,382)
Other comprehensive income for the year		-	-	-	-	54	-	54
Total comprehensive income for the year		-	-	-	-	54	(5,382)	(5,328)
Issue of share capital		1,089	3,950	-	-	-	-	5,039
Credit to equity for share options		-	-	-	445	-	-	445
Total transactions with owners		1,089	3,950	-	445	-	-	5,484
Balance at 31 December 2018		3,648	69,515	(3,253)	1,761	(76)	(57,474)	14,121
Loss for the period		-	-	-	-	-	(5,667)	(5,667)
Other comprehensive income for the period		-	-	-	-	56	-	56
Total comprehensive income for the period		-	-	-	-	56	(5,667)	(5,611)
Issue of share capital		8	32	-	-	-	-	40
Credit to equity for share options		-	-	-	267	-	-	267
Total transactions with owners		8	32	-	267	-	-	307
Balance at 31 March 2020		3,656	69,547	(3,253)	2,028	(20)	(63,141)	8,817

 

CyanConnode Holdings plc

C onsolidated cash flow statement

For the 15-month period ended 31 March 2020

 

	Notes	15 months 31 Mar 2020		Year 31 Dec 2018
		£'000		£'000
Net cash outflow from operating activities	4	(3,677)		(5,843)
Investing activities
Interest received		17		13
Purchases of property, plant and equipment		(20)		(41)
Capitalisation of research and development costs		(36)		-
(Purchase) / disposal of investments		(49)		4
Net cash used in investing activities		(88)		(24)
Financing activities
Interest paid		(4)		(2)
Cash inflow from borrowing		560		-
Capital repayments of lease liabilities		(197)		-
Interest paid on lease liabilities		(26)		-
Proceeds on issue of shares		40		5,467
Share issue costs		-		(428)
Net cash from financing activities		373		5,037
Net decrease in cash and cash equivalents		(3,392)		(830)
Cash and cash equivalents at beginning of period		4,564		5,394
Cash and cash equivalents at end of period		1,172		4,564

 

Notes to the Financial Statements

For the fifteen-month period ended 31 March 2020

1.  General information

CyanConnode Holdings plc, (Company Registered No. 04554942), is a company limited by shares, incorporated in the United Kingdom under the Companies Act 2006.  The address of the registered office is Merlin Place, Milton Road, Cambridge CB4 0DP.

The final results announcement is based on the financial statements which have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union. The financial information has been prepared in accordance with the accounting policies used in the statutory financial statements for the year ended 31 December 2018, with the exception to the adoption of IFRS 16 "Leases". The Group has used the modified retrospective transition approach on adoption of IFRS 16 Leases, where the initial right of use asset values recognised on property leases of £471,000 are equal to the present value of the future lease payments of £471,000 as at the date of transition (1 January 2019).

The financial information set out in the announcement does not constitute the company's statutory accounts for the periods ended 31 December 2018 or 31 March 2020 within the meaning of section 434 of the Companies Act 2006 but is derived from those audited financial statements. The auditor's report on the consolidated financial statements for the year ended 31 December 2018 and the 15 month period ended 31 March 2020 is unqualified, does not contain statements under s498(2) or (3) of the Companies Act 2006 but referred to a material uncertainty regarding the Group's ability to continue as a going concern.

Going concern

To assess the ability of CyanConnode Holdings plc ("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 Letters of Credit which have been secured from customers against contracts recently won.

At 31 March 2020 the Group had cash reserves of £1.2 million (2018: £4.6m) and based on detailed cash flows 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 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, the Group received an advance of £560,000 against its R&D tax credit in February 2020. This amount will be repaid out of the HMRC receipt which is expected to be received by October 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.

The 2020 statutory financial statements were approved by the Board of Directors on 3 September 2020 and will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

2.  Loss per share

The calculation of the basic and diluted loss per share is based on the following data:

	2020		2018
	£'000		£'000
Loss for the purposes of basic loss per share being net loss attributable to equity holders of the parent
	(5,667)			(5,382)

Number of shares

		2020		2018
		No.		No.
Weighted average number of ordinary shares for the purposes of basic and diluted loss per share (including own shares held)		173,047,934		116,975,780

The weighted average number of shares and the loss for the year 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.

3.  Share capital

		2020		2018
		£'000		£'000
Issued and fully paid:
182,798,523 ordinary shares of 2.0 pence each (2018: 182,398,523 ordinary shares of 2.0 pence each)		3,656		3,648

4.  Reconciliation of operating loss to net cash outflow from operating activities

			2020	2018
			£'000	£'000
	Operating loss for the period		(6,230)	(6,320)
Adjustments for:
	Depreciation of property, plant and equipment		247	51
	Amortisation of intangible assets		526	421
	Foreign exchange		59	55
	Share-based payment expense		267	445
Operating cash flows before movements in working capital			(5,131)	(5,348)
	Decrease in inventories		11	809
	Decrease / (increase) in receivables		1,124	(2,377)
	Decrease in payables		(503)	(253)
Cash reduction from operating activities			(4,499)	(7,169)
	Income taxes received		822	1,326
Net cash outflow from operating activities			(3,677)	(5,843)

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.

5.  Annual Report and Accounts and Notice of Annual General Meeting

The Notice of AGM and Proxy Form will be sent to shareholders on 4 September 2020 and made available on the Company's website shortly thereafter. The full colour Annual Report and accounts will be sent to shareholders by 8 September 2020 and made available on the Company's website shortly thereafter. The AGM will be held on 30 September 2020 at 4.00 p.m. at the Company's Registered office at Merlin Place, Milton Road, Cambridge, CB4 0DP. In light of the COVID-19 pandemic and the United Kingdom's measures to restrict travel and public gatherings currently in force, please note that it will not be possible to hold the Company's 2020 Annual General Meeting in its usual format and that, in particular, physical attendance in person by shareholders of the Company will not be possible. Further information regarding the meeting and voting, which is recommended to be by proxy, will be included in the Notice of the AGM. 

 

 

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[1] Where Adjusted LBITDA is LBITDA after stock impairment, share-based compensation, acquisition-related costs and foreign exchange losses

[2] Where FTE is the number of full-time equivalents

 

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