Final Results

RNS Number : 6904D

Cyan Holdings Plc

28 March 2011

 



28 March 2011

Cyan Holdings plc

("Cyan or "the Company")

Preliminary Results

for the year ended 31 December 2010

Cyan Holdings plc (AIM: Cyan.L), the integrated system design company delivering mesh based flexible wireless solutions for lighting control, utility metering and industrial telemetry announces its full year results for the twelve months ended 31^st December 2010.

Summary of key achievements

·     Substantial progress in adoption of Cyan lighting control products made in Q4 of 2010

·     Initial order received for 10,000 units for our wireless monitoring and control system for outdoor public lighting from India

·     An initial order from China for 10,000 units for our wireless monitoring and control system for outdoor public lighting, with an initial project requirement of up to 200,000 units over the course of the next 18 months

·     Memorandum of Understanding entered into to establish a partnership with a large Indian business whose lighting division has a contract to replace up to 375,000 street lights in one City

·     Equity fundraisings of £2.7 million net demonstrating significant investor confidence

Kenn Lamb, CEO of Cyan, commented:

"I am delighted with the progress that Cyan made in the final quarter of 2010 and we have seen substantial momentum and upswing in order enquiries in the first quarter of 2011. Despite a difficult two years for the Group, I am now convinced that 2011 will be a major turning point for us. Our order book for lighting control products is growing strongly, in particular from China and India where we are increasingly well positioned with Utility Companies and Government Departments considering our electricity metering solutions.

For the first time in Cyan's trading history it is both mine and the board's view that now is the right time and that we have the right products and are engaged in the right markets. With each new customer and with multiple new prospects engaging we are confident that Cyan is now well positioned to deliver substantial shareholder value."                

www.cyantechnology.com

Enquiries:

Cyan Holdings plc Kenn Lamb, CEO Cyan Holdings plc John Read, Chairman	Tel: [phone] Tel: [phone]
Cenkos Securities plc Stephen Keys / Adrian Hargrave	Tel: [phone]
Hansard Communications Ltd Adam Reynolds / Nicholas Nelson	Tel: [phone]

Chairman's Statement

At the time of the last Annual Report, Cyan laid out its strategic aim to become a major supplier of solutions for lighting control, utility metering and industrial telemetry; and I am pleased to report the company has taken great steps towards reaching this goal in the first two of these markets in 2010. 

Since that time the Company has shipped tens of thousands of units to wireless utility metering customers around the world. Most of these units were installed into large-scale trials. In the second half of 2010 a number of customers indicated to the Company that they were bidding for tenders of substantial quantity, and already in 2011 Cyan is aware of two new tenders for wireless electricity meters in excess of one million units each.

Cyan has developed technology and products that deliver cost effective ready-to-deploy solutions. These allow established lighting and utility metering manufacturers to easily enhance their products to support remotely managed wireless networks of street-lights or utility-meters. There is substantial growing global demand for such wireless management networks and in recent years Cyan has made significant investment and has gained extensive expertise in designing, manufacturing and deploying such networks.

Cyan has now evolved from developing and supplying just the wireless communication components, to providing complete system solutions, so much so that the Company is now better described as an integrated system design company.

Cyan has recently succeeded in initiating a program of direct engagement with a number of utility companies and government departments, who are working to define the requirements for their next generation wireless electricity meters. Cyan is supported in this by a number of established meter manufacturers in that region who have already committed to incorporate Cyan products into their next generation wireless electricity meters, and wish to see Cyan's mesh technology incorporated into any new national standard.

At the start of 2010 Cyan was well positioned having design-in programs with a number of lighting manufacturers in several countries. Now, at the beginning of 2011, we believe that Cyan's position is considerably stronger with a number of leading organisations specifying Cyan wireless lighting technology for pilot programmes and production installations due in 2011. This is in part the result of becoming a fully integrated system design business and the efforts and increased reputation of the Company within these regions.

The company announced an important initial order for wireless monitoring and control of outdoor public lighting in China.  The initial order is for 10,000 modules, and installation has begun in Q1 2011. The customer's initial project requires the eventual replacement of 200,000 street lights in a single city and the installation rate is expected to exceed 10,000 units per month by Q4 2011. This customer is a large established Chinese lighting manufacturer who has informed Cyan's management that it has already won, or expects to win, contracts in three further cities.

Following this contract win and the satisfactory results of the trial, the customer now plans to market Cyan controlled HID (High Intensity Discharge) products across the whole of China through its network of over 2,000 agents. Cyan is currently in negotiation with the customer to further develop their HID lighting product by tightening the integration between Cyan lighting control and the other elements of the HID light to create a highly integrated and lower total cost HID lighting solution.

As previously announced, the Company has also entered into a partnership with a large lighting manufacturer in India, to replace 375,000 street lights. The partnership agreement gives the customer access to Cyan server technology on condition of use of Cyan lighting control products and the active marketing of the combined solution to other cities.  An initial order of 1,000 units has been received to set up a demonstration facility of the combined lighting control system. Cyan is also engaged with a range of other customers primarily in India and China but also in Africa, Europe and the USA that have completed or undertaken further trials during the year.

Cyan is building on its key partnerships, particularly 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. During the year we have jointly participated in a number of exhibitions and trade shows and Cyan has trained many of their sales people with our products.

 The board believes that the company is now well positioned to capitalise on its focus in lighting and metering markets and that 2011 will see a significant upturn in order intake, which will result in a substantial increase in revenues.

In September, the company successfully raised £1.8m net at 0.75p per share to provide working capital in this time of strategic positioning. In addition to this, since year end, in January 2011 the Company raised a further £895,000 net at 1.25p per share for the same purpose.

 For the year ended 31 December 2010 both operating costs and R&D Costs were kept at a low level resulting in an operating loss of £2, 954,055 (2009: £3,133, 135). The loss for the year also remained constant at £2,648,116 (2009: £2, 652, 260). Cash at year end was £1,484,437 (2009: £1,968,072).

John Read

Chairman

28^th March 2011

Chief Executive's Statement

Kenn Lamb, CEO of Cyan, commented:

I am delighted with the progress that Cyan made in the final quarter of 2010 and we have seen substantial momentum and upswing in order enquiries in the first quarter of 2011. Despite a difficult two years for the Group, I am now convinced that 2011 will be a major turning point for us.

Our business has two principal product groups:

·     Lighting control and monitoring

·     Utility meter monitoring and control

Lighting control and monitoring (CyLux)

Cyan has developed a fully integrated wireless end-to-end system for public lighting such as; street lights, tunnels, highways, industrial parks and public locations, which is capable of dimming three different types of light; HPS, HID and LED. We are confident that the combination of features in our system makes a unique system solution, and we already have manufacturers of the electronic drivers for these lights producing prototype versions incorporating Cyan wireless control; 'Cyan Inside'. CyLux allows city authorities to remotely set lighting profiles: turning on / off and dimming at preset times for optimised lighting intensity through evening, late night and morning to maximise power saving. Actual power saving is measured and reported by Cyan's system, a very popular feature with customers as many of them are financially incentivised based on the actual energy saving delivered. In addition to the above functionality CyLux can accurately monitor lamp status and proactively identify maintenance or lamp repair requirements with interactive maps showing lamp locations and status.

The increasing cost of energy and limitations in generating capacity within the developing world are significant factors restraining the potential levels of future economic growth in these countries. Accordingly, energy efficiency has become a major focus for the governments of developing nations. As a result of this Governmental pressure we are experiencing a substantial increase in enquiries from both China and India. This began towards the end of 2010 and the momentum has increased substantially during the first quarter of 2011. Not only has our order book increased dramatically, we are also awaiting the results of a number of tenders that our customers and prospective customers are involved in.

Electricity and gas meter reading (CyLec & CyGas)

Over the past three years Cyan has been at the forefront of the development of wireless mesh network solutions for electricity and gas metering. Cyan has chosen to utilise radio frequencies suited for these applications which will penetrate buildings and in the case of India and China have been specifically allocated for this purpose. Gas metering solutions require battery operation and Cyan has established a USP with wireless mesh networking meters operating for years from AA batteries, a technology that is also directly applicable to water metering. We are now seeing a substantial increase in enquiries and new tender requirements for these products within India and China. Multiple meter manufacturers have adopted Cyan wireless meter solutions and Cyan's integrated mesh metering solution is now well positioned  influential electricity boards.

A primary driver for wide deployment of remotely monitored and managed metering systems with prepayment and tamper alert capability is to address the problem that within the developing world it has become very difficult to accurately check usage and enforce payment. Cyan's metering solutions branded CyLec and CyGas have been developed over the last two years to directly address these problems, and contain many features developed and proven in field trials in collaboration with meter manufacturers. As utility companies become increasingly aware of the new capabilities of Cyan's metering solutions we expect, and are already seeing, new tender requirements reflecting these features. We are currently in discussions at high levels and are aware of tender proposals within a number of substantial electricity and gas utility companies in India and China and I am confident that during the next twelve months we will receive significant orders for Cyan metering solutions.

For the first time in Cyan's trading history it is my and the board's view that now is the right time for Cyan, that we have chosen the right markets, and that we have developed the right products. The level of customer orders and positive feedback makes us confident that we are well positioned to deliver substantial shareholder value as our revenues track the pace of growth of these markets. The business is now very well positioned to grow substantially and I would like to take this opportunity to thank all of our staff and my board for their efforts and diligence, and our shareholders for their patience and support in making Cyan a business that we will all be proud of.    

Kenn Lamb

Chief Executive Officer

28^th March 2011

Consolidated income statement

For the year ended 31 December 2010

			2010		2009
			£		£
Continuing operations
Revenue			139,047		95,569
Cost of sales			(96,326)		(62,897)
Gross profit			42,721		32,672
Operating costs			(1,259,073)		(1,633,138)
Research and development costs			(1, 737,703)		(1,532,669)
Operating loss			(2,954,055)		(3,133,135)
Investment revenue			1,487		1,639
Finance costs			(85)		(11)
Loss before tax			(2,952,653)		(3,131,507)
Tax			304,537		479,247
Loss for the year			(2,648,116)		(2,652,260)
Loss per share (pence)
Basic			(0.4)		(0.5)
Diluted			(0.4)		(0.5)

Consolidated Statement of Comprehensive Income For the year ended 31 December 2010 2010 2009   £ £   Exchange differences on translation of foreign operations (66,140) 145,834     Loss for the year (2,648,116) (2,652,260)   Total comprehensive income for the period (2,714,256) (2,506,426)

 

 

 

 

Consolidated balance sheet

At 31 December 2010

			2010 £		2009 £
Non-current assets
Property, plant and equipment			29,114		39,729
Current assets
Inventories			872,923		893,087
Trade and other receivables			411,848		569,601
Cash and cash equivalents			1,484,437		1,968,072
			2,769,208		3,430,760
Total assets			2,798,322		3,470,489
Current liabilities
Trade and other payables			283,872		229,332
			283,872		229,332
Total liabilities			283,872		229,332
Net assets			2,514,450		3,241,157
Equity
Share capital			1,847,666		1,309,565
Share premium account			20,378,625		19,026,290
Own shares held			(690,191)		(690,191)
Share option reserve			476,999		379,886
Translation reserve			(294,254)		(228,114)
Retained earnings			(19,204,395)		(16,556,279)
Total equity being equity attributable to equity holders of the parent			2,514,450		3,241,157

     Consolidated statement of changes in equity

at 31 December 2010
		Share Capital £	Share Premium £	Own shares held £	Share Option Reserve £	Translation Reserve £	Retained Losses £	Total Equity £
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)	(16,556,280)	3,241,157
Loss for the year		-	-	-	-	-	(2,648,116)	(2,648,116)
Other comprehensive income for the year		-	-	-	-	(66,140)	-	(66,140)
Total comprehensive income for the year						(66,140)	(2,648,116)	(2,714,256)
Issue of share capital		538,101	1,352,335	-	-	-	-	1,890,436
Credit to equity for share options		-	-	-	97,113	-	-	97,113
Bal at 31 December 2010		1,847,666	20,378,625	(690,191)	476,999	(294,254)	(19,204,395)	2,514,450

 

Consolidated cash flow statement

For the year ended 31 December 2010

		2010		2009
		£		£
Net cash from operating activities		(2,293,931)		(2,400,080)
Investing activities
Interest received		1,487		1,639
Purchases of property, plant and equipment		(15,126)		(10,927)
Net cash from investing activities		(13,639)		(9,288)
Financing activities
Interest paid		(85)		(11)
Proceeds on issue of shares		2,035,913		3,207,633
Share issue costs		(145,477)		(218,031)
Net cash from financing activities		1,890,351		2, 989,591
Net (decrease)/increase in cash and cash equivalents		(417,219)		580,223
Cash and cash equivalents at beginning of year		1,968,072		1,356,886
Effect of foreign exchange rate changes		(66,416)		30,963
Cash and cash equivalents at end of year		1, 484,437		1,968,072

Notes to the Financial Information

For the year ended 31 December 2010

1.   General information

Cyan Holdings plc is a company incorporated in the England and Wales 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 2010 or 2009, but is derived from those accounts. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 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 25 March 2011 and authorised for issue.  The Group's specific IFRS accounting policies can be found in the 2009 annual report.

Going concern

The directors have prepared a business plan and cash flow forecast for the period to 31 December 2012.  The forecast contains certain assumptions about the level of future sales and the level of gross margins and also identified the need for additional finance to fund working capital within the next six months.  These assumptions are the directors' best estimate of the future development of the business. 

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 significant 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 been in communication with a number of potential investors, including current shareholders, who have expressed interest in providing the necessary funding upon evidence of firm sales orders.  There does remain a significant risk that the required level of funding will not be received in the necessary timescales 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 Group'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, including inventories, 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

			2010		2009
			£		£
Earnings for the purposes of basic earnings per share being net loss attributable to equity holders of the parent
		2,648,116			2,652,260

Number of shares

			2010			2009
			No.			No.
Weighted average number of ordinary shares for the purposes of basic and diluted earnings per share				751,804,821		528,453,250

3.   Share capital

		2010		2009
		number		number
Authorised:
Ordinary shares of 0.2 pence each		1,500,000,000		800,000,000
		2010		2009
		£		£
Issued and fully paid:
923,832,983 (2009: 654,782,659) ordinary shares of 0.2 pence each		1,847,666		1,309,565

4. Notes to the consolidated cash flow statement

			2010		2009
			£		£
	Operating loss for the year		(2,954,055)		(3,133,135)
Adjustments for:
	Depreciation of property, plant and equipment		26,017		62,232
	Share-based payment expense		97,113		111,034
Operating cash flows before movements in working capital			(2,830,925)		(2,959,869)
	(Increase)/decrease in inventories		20,164		(45,734)
	(Increase)/decrease in receivables		(17,038)		48,035
	Increase/(decrease) in payables		54,540		(45,363)
Cash reduced by operations			(2,773,259)		(3,002,931)
	Income taxes received		479,328		602,851
Net cash outflow from operating activities			(2,293,931)		(2,400,080)

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.

 

END

 

 

FR JAMRTMBATBRB