TIDMCYAN
RNS Number : 1328I
CyanConnode Holdings PLC
31 March 2020
31 March 2020
CyanConnode Holdings plc
("CyanConnode" or the "Company")
Interim results
CyanConnode Holdings plc (AIM: CYAN), a world leader in
narrowband radio frequency (RF) mesh networks, today announces its
interim results for the twelve months ended 31 December 2019.
Further to the announcement of 10 December 2019, in which the
Company set out the revised reporting schedule following the
decision to change the year end, these unaudited interim results
are for the twelve months ended 31 December 2019 instead of the six
months previously announced.
Financial Highlights
-- Revenue of GBP2.3 million (2018: GBP4.5 million)
-- Operating costs reduced by GBP2.2 million to GBP6.9 million (2018: GBP9.1 million)
-- Operating losses reduced by 14% to GBP5.4 million (2018: GBP6.3 million)
-- Basic and diluted loss per share improved by 41% to 2.51p from 4.26p loss per share in 2018
-- Cash and cash equivalents at 31 December 2019 of GBP1.1 million (2018: GBP4.6 million)
-- Approximately GBP3.9 million cash collected from debtors during 2019 (2018: GBP2.6 million)
Operational Highlights
-- GBP1.13 million order received from JST Group for a Thai Utility
-- GBP3.3 million Letter of Intent ("LOI") received from Genus
Power Infrastructures Ltd ("Genus")
-- GBP0.7 million follow-on order received from HM Power
-- GBP0.4 million follow-on order received from Larsen & Toubro ("L&T")
-- GBP0.2 million order received from Toshiba Information Systems (UK) Ltd ("Toshiba")
-- Delay in the rollout of a large Indian contract caused a shortfall in revenue expectation
-- Chris Jones and Peter Tyler appointed Non-Executive Directors in March 2019
-- Change of External Auditor to RSM UK Audit LLP
-- Change of financial year end to 31 March
-- Launch of new Omnimesh products including a long-range RF module
Post-Period Highlights
-- Circa GBP1 million cash received from debtors in the first quarter of 2020
-- R&D tax credits of GBP0.8 million expected to be received during 2020
-- Loan secured against R&D tax credits received in March 2020
-- GBP3.3 million order for 142,000 modules received from Genus
secured by a Letter of Credit ("LOC")
-- Follow-on order received from Forth Corporation Public Company for a Thai Utility
-- Launch of new Omnimesh Cellular products including Dual SIM Cellular Network Interface Card
John Cronin, CyanConnode Executive Chairman, commented:
"Notwithstanding a number of follow-on orders secured in India,
Thailand and Europe throughout and since the financial year, the
Board was disappointed not to achieve its original expectation. As
previously stated, this was largely as a result of the Indian
General Elections, which took place between April and May 2019, and
caused a number of new tenders to be delayed and the rollout of one
of the orders on its books to be significantly delayed. With demand
remaining strong in India and Thailand, the Group has made an
encouraging start to the first quarter of 2020, winning a
significant order for a smart metering project in South India as
well as a follow-on order for the Metropolitan Electricity
Authority (MEA) in Thailand.
"The wellbeing and safety of our staff is paramount during these
unprecedented times caused by COVID-19. We would like to reassure
our customers and stakeholders that we are continuously monitoring
the situation and are working tirelessly to ensure that CyanConnode
can continue to deliver its products and services. Further
information relating to the ways in which we are mitigating against
the COVID-19 risk are set out in the Outlook section of this
statement.
"We look forward to updating shareholders on future progress in
due course."
- Ends -
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
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation 596/2014.
Operational Review
India
2019 saw delays to the tendering process and to the roll out of
existing contracts as a result of the Indian General Elections.
In February 2019, a follow-on order was received from Larsen
& Toubro ("L&T"), worth approximately GBP0.4 million. The
follow-on order relates to an order announced in May 2018, worth
GBP2.5 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 2019 and Q1 2020,
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 ("LOT") for an order worth
GBP3.3 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 GBP0.7 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 EUR489,000 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
GBP0.2 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 roll out 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 Company 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, 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 c. 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 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 place by Forth Corporation Public Company Limited (Forth)
with The JST Group (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, becomes due as soon as the order is 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.
Financial Review
Revenue for the period ended 31 December 2019 was GBP2.3 million
(2018: GBP4.5 million). This decrease in revenue, compared to the
same period in the prior year, was due to the Indian General
Elections which delayed the roll-out of a key project and the award
of other tenders. The General Election also caused delays in the
awarding of new Indian contracts during the period.
The operating loss for the period was GBP5.4 million (2018:
GBP6.3 million) and net loss after tax was GBP4.6 million (2018:
GBP5.4 million).
During 2019, cash used by operations was GBP3.4 million (2018:
GBP5.8 million) (see note 4). Cash received from debtors during
2019 was GBP3.9 million (2018: GBP2.6 million). Net cash and cash
equivalents as at 31 December 2019 was GBP1.1 million (2018: GBP4.6
million), of which GBP0.1 million were investments. Cash received
from customers during 2020 is c. GBP1 million and R&D tax
credits of GBP0.8 million is expected to be received during
2020.
In 2019 the Company adopted IFRS16 (Leases). The impact of this
adoption is reflected in the Financial Statements and explained in
Note 1.
COVID-19 Update and Outlook
At the time of writing this report, 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, employees are now operating productively from
their homes and as they were accustomed to 'Remote Working', the
Company was able to swiftly implement a 'Home Working' policy.
In the UK, all engineering staff were prepared with the
necessary equipment and an agreed remote working model in
preparation for the risk of a potential lock down. 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 Project Management Teams continue to support customer
projects, so that they remain on track. CyanConnode 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
Manufacturing and Operations Teams have been working to secure the
supply chain and they are beginning to see improved delivery times
from Chinese manufacturers.
This pre-emptive planning means that in the second week of
remote working the engineering team 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 ready to commence field
work.
Covid-19 poses significant worldwide uncertainty. CyanConnode is
working hard to understand the risks and how best to mitigate them
and it will put in place the most appropriate measures to protect
its business. CyanConnode is confident that it is 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. Almost GBP1 million of
cash has been received from customers since the period end. In
addition, to further improve its financial position, CyanConnode
has secured funding against future Research and Development Tax
Credits.
The Indian Government has 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]
CyanConnode continues to make significant progress with various
Indian Tenders and it anticipates the receipt of material orders in
due course.
[1]
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
Consolidated income statement
12 months to 12 months to
31 December 31 December
Note 2019 2018
GBP000 GBP000
============================ ====== ================= ==============
Continuing operations
Revenue 2,307 4,465
Cost of sales (850) (1,724)
============================ ====== ================= ==============
Gross profit 1,457 2,741
============================ ====== ================= ==============
Other operating costs (6,268) (8,589)
Amortisation / depreciation (623) (472)
============================ ====== ================= ==============
Total operating costs (6,891) (9,061)
============================ ====== ================= ==============
Operating loss (5,434) (6,320)
Investment income 13 13
Finance costs (26) (2)
============================ ====== ================= ==============
Loss before tax (5,447) (6,309)
Tax credit 862 927
---------------------------- ------ ----------------- --------------
Loss for the year (4,585) (5,382)
============================ ====== ================= ==============
Loss per share (pence)
Basic 3 (2.51) (4.26)
Diluted 3 (2.51) (4.26)
============================ ====== ================= ==============
Consolidated statement of comprehensive income
Derived from continuing operations and attributable to the
equity owners of the Company
12 months to 12 months to
31 December 31 December
2019 2018
GBP000 GBP000
=============================================================== ============== ==============
Loss for the year (4,585) (5,382)
Items that may be reclassified subsequently to profit and loss
Exchange differences on translation of foreign operations (165) 54
=============================================================== ============== ==============
Total comprehensive income for the year (4,750) (5,328)
=============================================================== ============== ==============
Consolidated statement of Financial Position
As at
31 December 31 December
2019 2018
GBP000 GBP000
========================================== ==========================
Non-current assets
Intangible assets 4,628 5,048
Goodwill 1,930 1,930
Investments 92 44
Property, plant and equipment 51 73
IFRS 16 right of use assets 316 -
------------------------------------------ -------------------------- -------------
Total non-current assets 7,017 7,095
========================================== ========================== =============
Current assets
Inventories 299 319
Trade and other receivables 4,280 4,827
Cash and cash equivalents 1,106 4,564
========================================== ========================== =============
Total current assets 5,685 9,710
========================================== ========================== =============
Total assets 12,702 16,805
========================================== ========================== =============
Current liabilities
Trade and other payables (1,789) (1,994)
IFRS 16 lease liability (158) -
------------------------------------------ -------------------------- -------------
Total current liabilities (1,947) (1,994)
========================================== ========================== =============
Net current assets 3,738 7,716
========================================== ========================== =============
Non-current liabilities
IFRS 16 lease liability (153) -
Deferred tax liability (530) (690)
------------------------------------------ -------------------------- -------------
Total non-current liabilities (683) (690)
------------------------------------------ -------------------------- -------------
Total liabilities (2,630) (2,684)
========================================== ========================== =============
Net assets 10,072 14,121
========================================== ========================== =============
Equity
Share capital 3,656 3,648
Share premium account 69,547 69,515
Own shares held (3,253) (3,253)
Share option reserve 2,422 1,761
Translation reserve (241) (76)
Retained losses (62,059) (57,474)
========================================== ========================== =============
Total equity being equity attributable to
owners of the Company 10,072 14,121
========================================== ========================== =============
Consolidated statement of changes in equity
Share Own Share
Share premium shares option Translation Retained Total
capital account held reserve reserve losses equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------- -------- -------- -------- -------- ------------ --------- ---------
At 1 January 2018 2,559 65,655 (3,253) 1,316 (130) (52,092) 13,955
Issue of share
capital 1,089 3,950 - - - - 5,039
Share-based payments - - - 445 - - 445
----------------------- -------- -------- -------- -------- ------------ --------- ---------
Transactions with
owners 1,089 3,950 - 445 - - 5,484
-
Loss for the year - - - - - (5,382) (5,382)
Other comprehensive
income - - - 54 - 54
----------------------- -------- -------- -------- -------- ------------ --------- ---------
Total comprehensive
income - - - - 54 (5,382) (5,328)
----------------------- -------- -------- -------- -------- ------------ --------- ---------
At 31 December
2018 3,648 69,515 (3,253) 1,761 (76) (57,474) 14,121
----------------------- -------- -------- -------- -------- ------------ --------- ---------
Issue of share
capital 8 32 - - - - 40
Share-based payments - - - 661 - - 661
----------------------- -------- -------- -------- -------- ------------ --------- ---------
Transactions with
owners 8 32 - 661 - - 701
Loss for the year - - - - - (4,585) (4,585)
Other comprehensive
income - - - - (165) - (165)
----------------------- -------- -------- -------- -------- ------------ --------- ---------
Total comprehensive
income - - - - (165) (4,585) (4,750)
----------------------- -------- -------- -------- -------- ------------ --------- ---------
At 31 December
2019 3,656 69,547 (3,253) 2,422 (241) (62,059) 10,072
----------------------- -------- -------- -------- -------- ------------ --------- ---------
Consolidated cash flow statement
12 months to 12 months to
31 December 31 December
2019 2018
GBP000 GBP000
==================================================== ==============
Net cash outflow from operating activities (Note 4) (3,378) (5,843)
Investing activities
Interest received 13 13
Purchases of property, plant and equipment (3) (41)
Disposal of investments 48 4
==================================================== ============== ==============
Net cash used in investing activities 58 (24)
==================================================== ============== ==============
Financing activities
Capital repayments on IFRS 16 lease liability (152) -
Interest paid (26) (2)
Proceed on issue of shares 40 5,467
Share issue costs - (428)
==================================================== ============== ==============
Net cash from financing activities (138) 5,037
==================================================== ============== ==============
Net decrease in cash and cash equivalents (3,458) (830)
Cash and cash equivalents at beginning of period 4,564 5,394
==================================================== ============== ==============
Cash and cash equivalents at end of period 1,106 4,564
==================================================== ============== ==============
Notes to the Accounts
1. Basis of Preparation
The interim financial information has been prepared in
accordance with the IFRS accounting policies used in the statutory
financial statements for the year ended 31 December 2018, with the
exception to the adoption of IFRS 16 "Leases" as detailed
below.
These interim financial statements do not constitute statutory
financial statements within the meaning of section 435 of the
Companies Act 2006. Results for the twelve-month period ended 31
December 2019 have not been audited. The results for the year ended
31 December 2018 have been extracted from the statutory financial
statements of CyanConnode Holdings plc.
Statutory financial statements for the year ended 31 December
2018 are available on the Group's website www.cyanconnode.com and
have been filed with the Registrar of Companies. The Group's
auditor issued a report on those financial statements that was
unqualified and did not contain a statement under section 498(2) or
section 498(3) of the Companies Act 2006; however the auditor's
report emphasised the uncertainty around the Group's ability to
continue as a going concern.
IFRS 16 brings all operating leases onto the statement of
financial position. The leases effected are the Group's head office
in Cambridge.
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 GBP473,000 are
equal to the present value of the future lease payments of
GBP473,000 as at the date of transition (1 January 2019).
The impact on the consolidated statement of comprehensive income
is a reduction in operating losses of GBP20,000 as the pre-IFRS 16
rental charge is replaced by depreciation charge and interest cost.
There has been no impact on cash flows, although the presentation
of the Cash Flow Statement has changed in the period with an
increase in net cash inflows from operating activities being offset
by an increase in net cash outflows from financing activities
(interest paid). There is no net impact on the opening balance
sheet and the depreciation and interest payable have been increased
by GBP158,000 and GBP26,000 respectively, with the rental cost in
the period being reduced by GBP176,000.
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 2021 which together represent
the Directors' best estimate of the future development of the
Group. The forecast contains certain assumptions, the most
significant of which are the level and timing of customer receipts.
The Directors believe that the Group will be able to meet their
liabilities as they fall due for at least 12 months, however they
have highlighted the risks that the Group continues to face
below.
At the time of writing this report, the coronavirus COVID-19 is
having a significant impact on the world, with a large part of the
world being required to remain in isolation and many businesses
being unable to operate. The Company has set out how it is
mitigating against the risks being posed by the virus in the
Outlook section of these accounts. Notwithstanding, there is a risk
that the isolation measures could last longer than anticipated and
that projects could be delayed further than currently
anticipated.
The Group trades in emerging country markets. Such markets have
an inherent level of uncertainty associated with them and this may
result in the predicted level of sales not being achieved, and/or
the timing of customer receipts being delayed. The Directors have
taken reasonable steps to satisfy themselves about the robustness
of their forecasts but acknowledge that the collection of customer
receipts in the Group's target markets can take longer than
expected. This may impact the timing of the Group's ability to
generate positive cash flow. There is also a risk that the level of
sales achieved is lower than the forecast or may be delayed.
There is a level of uncertainty related to the assumptions
described above which may cast doubt on the Group and Company's
ability to continue as a going concern and, therefore, it may be
unable to realise its assets and discharge its liabilities in the
normal course of business. The financial statements do not include
the adjustments that would result if the Group or Company was
unable to continue as a going concern. In the event the Group and
Company ceased to be a going concern, the adjustments would include
writing down the carrying value of assets, including stocks, to
their recoverable amount and providing for any further liabilities
that might arise.
Notwithstanding the uncertainties described above, on the basis
of sensitivities applied to the cash flow forecast, of contracted
sales orders which are currently being delivered to customers on
further orders which the Group expects to win, the Directors have a
reasonable expectation that the Company and Group can continue to
meet its liabilities as they fall due, for a period of at least
twelve months from the date of approval of this report.
3. Loss per Share
The calculation of the basic and diluted loss per share is based
on the following data:
12 months to 12 months to
31 December 31 December
2019 2018
====================================================================================== ==============
Loss for the purposes of basic loss per share being net loss attributable to equity
holders
of the parent (GBP000) (4,575) (5,382)
====================================================================================== ============== ==============
Weighted average number of ordinary shares for the purposes of basic and diluted loss
per
share 182,631,857 126,443,036
====================================================================================== ============== ==============
Loss per share (pence) (2.51) (4.26)
====================================================================================== ============== ==============
The denominations used are the same as those detailed above for
both basic and diluted earnings per share from continuing
operations. However, in accordance with IAS 33 "Earnings Per
Share", potential ordinary shares are only considered dilutive when
their conversion would decrease the profit per share or increase
the loss per share from continuing operations attributable to the
equity shareholders.
4. Reconciliation of Operating Loss to Operating Cash Flows
12 months to 12 months to
31 December 31 December
2019 2018
GBP000 GBP000
========================================================= ============== ==============
Operating loss for the year: (5,434) (6,320)
Adjustments for:
Depreciation of property, plant and equipment 202 51
Amortisation of Intangible assets 421 421
Impairment of stock 4 578
Provision for expected credit losses 12 64
Foreign exchange (165) 55
Share-option payment expense 661 445
--------------------------------------------------------- -------------- --------------
Operating cash flows before movements in working capital (4,299) (4,706)
Decrease in inventories 20 231
(Increase)/decrease in receivables 284 (2,441)
Decrease in payables (205) (253)
--------------------------------------------------------- -------------- --------------
Cash reduced by operations (4,200) (7,169)
Income taxes received 822 1,326
========================================================= ============== ==============
Net cash outflow from operating activities (3,378) (5,843)
========================================================= ============== ==============
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.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BCGDXIUXDGGG
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