TIDMCYAN
RNS Number : 3172H
CyanConnode Holdings PLC
26 July 2023
The following amendment has been made to the Final Results
announcement released today at 07:00 under RNS No. 1716H. Within
the Operational Review (India) section four references to Q1 FY23
are amended to Q1 FY24. All other details remain unchanged and the
full amended text is set out below.
26 July 2023
CyanConnode Holdings plc
("CyanConnode", "the "Group" or the "Company")
Final Results for the Year Ended 31 March 2023
CyanConnode Holdings plc (AIM: CYAN), a global leader in
Narrowband Radio Frequency (RF) Smart Mesh Networks, announces its
audited results for the year ended 31 March 2023.
Financial highlights
-- Increase of 23% in revenue to GBP11.7m in FY23 from GBP9.6m
in FY22, the highest annual revenue for the Group to date after
four consecutive years of growth [1]
-- Reduction in gross profit to GBP4.2m in FY23 (FY22: GBP5.0m)
as a result of lower margin sales of third-party products
-- Increase in operating loss to GBP3.3m in FY23 (FY22: GBP1.0m)
as a result of lower gross margin, higher operating costs and a
GBP1.0m impairment of intangible assets
-- Increase in EBITDA loss to GBP2.9m in FY23 (FY22: GBP0.4m loss)
-- Reduction in adjusted EBITDA [2] to loss of GBP1.6m in FY23 (FY22: GBP0.06m profit)
-- Increase in cash position to GBP4.1m in FY23 (FY22: GBP2.4m)
-- Increase in cash collected from customers to GBP10.7m in FY23 (FY22: GBP8.2m)
Operational Highlights
-- Orders for 2.3m modules won in India during the period -
higher than the total number of modules won in India in the
company's history prior to the current year taking order book to
3.6m during the financial year, of which 2.3m were still to be
deployed. Post period this order book has increased further to 4.2m
as set out in the post period highlights below
-- Order worth USD 6.7m won from MENA for NB-IoT gateways
-- Further new order worth USD 2.5m won from MENA for Cellular gateways
-- Oversubscribed placing and subscriptions completed raising,
in aggregate, GBP5.8m before expenses
-- 391,000 Omnimesh Radio Frequency (RF) Modules shipped against
current contracts during the period (FY22: 612,000), along with
46,000 NB-IoT gateways and 63,000 Cellular gateways
-- Strategic Framework Agreement signed to deliver 3m units
Post Year End Highlights
-- 600,000 Omnimesh RF Modules and associated products ordered from a subsidiary of IntelliSmart Infrastructure Private Limited, taking order book to 4.2m modules
-- CyanConnode India recognised as Dun and Bradstreet 'Start-Up 50 Trailblazer'
-- Memorandum of Association (MOU) signed with Alfanar
-- Revenue of greater than GBP2.8m in Q1 of FY24, being 2.1
times revenue of the whole of H1 FY23
-- 291k modules shipped in Q1 of FY24 vs 391k shipped in the whole of FY23
-- GBP3.6m cash received from customers in Q1 FY24
-- Investment into areas such as recruitment to scale up the business
John Cronin, Executive Chairman of CyanConnode, commented:
"FY23 has once again shown record revenues and orders won, and a
fourth consecutive year of growth.
Since the year end the number of live tenders in India has
continued to increase and move through the tendering process, and
the Company has won a further 0.6m Omnimesh units.
We'd like to thank all employees for their ongoing hard work and
dedication to achieve these record revenues. We'd also like to
thank all shareholders for their continued support and look forward
to continuing to deliver successful results."
- Ends -
The information contained within this announcement is deemed to
constitute inside information for the purposes of Article 7 of EU
Regulation 596/2014 (Market Abuse Regulations) which is part of UK
law by virtue of the European Union (Withdrawal) Act 2018. Upon
publication of this announcement, this inside information is now
considered to be in the public domain.
Enquiries:
CyanConnode Holdings plc Tel: +44 (0) 1223 865
750
John Cronin, Executive Chairman www.cyanconnode.com
Strand Hanson Limited (Nominated and Financial Tel: +44 (0) 20 7409
Adviser) 3494
James Harris / Richard Johnson / David Asquith
Zeus Capital Limited (Broker) Tel: +44 (0) 20 3829
Simon Johnson / Alexandra Campbell-Harris 5900
Chairman's Statement
Dear Shareholders
The financial year ending March 2023 has been the most
successful financial year for the Group in terms of revenue, orders
won and cash collected from customers. It is encouraging to see the
vast increase in volumes and numbers of tenders being released in
India after many years working in the country, as the government
continues with its plans to roll out 250 million meters by
2025.
In addition, we have seen success with contracts in other
territories around the world, particularly in the Middle East North
Africa (MENA) region.
I'm encouraged to see the momentum from FY2023 continuing into
the current financial year and am delighted to provide more details
on the highlights of both FY2023 and the current business in the
FY23 Annual Report.
Operational Review
India
The union budget of 2020-21 paved the way for the replacement of
250 million conventional electricity meters with smart meters by
2025 by announcing the Revamped Distribution Sector Scheme (RDSS).
It also approved an outlay for the RDSS of Rs 3,03,758 Crore (circa
GBP30 billion) over 5 years. In August 2022, the Government of
India formally approved the RDSS to help Distribution Companies
(DISCOMs) improve their operational efficiencies and financial
sustainability by providing result-linked financial assistance to
strengthen supply infrastructure. The 'Collection Efficiency' of
not less than 98%, as set out in the RDSS and which CyanConnode
achieves, favours the Group's technology for network communication
and management. RDSS mandates compulsory installation of smart
meters across the country and will run for five years from FY22 to
FY26. In addition, the Rural Electrification Corporation proposed a
Request for Empanelment (RFE) to allow participation in the RDSS
tenders. This requires Advanced Metering Infrastructure Service
Providers (AMISP) to demonstrate their solutions in a controlled
test environment. Empanelment will be required by all AMISPs to
allow participation in RDSS tenders. Following an initial delay in
the empanelment process, forty-three companies are now empanelled.
Of the 250 million smart prepaid meters approved under the RDSS,
over 200 million (an addressable market to CyanConnode worth a
potential c. GBP2.5 billion) have been sanctioned so far, according
to information recently tabled in the Indian Parliament (set out
below).
Smart meters sanctioned under RDSS
----------------------------------------------------------------------------------------------------------------- ------------------
State Consumer* DT** Feeder Consumer DT** Feeder
-------------------- ---------------- ----------------- ------------------- ------------------- ------------------
No. of meters (per cent share)
------------ -------------------------------------- ----------------- ---------------------------------------- ------------------
Tamil Nadu 30,000,000 472,500 18,274 14.7 8.7 9.2
-------------------- ---------------- ----------------- ------------------- ------------------- ------------------
Uttar
Pradesh 26,979,056 1,526,801 20,874 13.2 28.2 10.5
-------------------- ---------------- ----------------- ------------------- ------------------- ------------------
Maharashtra 23,564,747 410,905 29,214 11.5 7.6 14.7
-------------------- ---------------- ----------------- ------------------- ------------------- ------------------
West Bengal 20,717,969 305,419 11,874 10.1 5.6 6.0
-------------------- ---------------- ----------------- ------------------- ------------------- ------------------
Gujarat 16,481,871 300,487 5,229 8.1 5.6 2.6
-------------------- ---------------- ----------------- ------------------- ------------------- ------------------
Rajasthan 14,274,956 434,608 27,128 7.0 8.0 13.6
-------------------- ---------------- ----------------- ------------------- ------------------- ------------------
Kerala 13,289,361 87,615 6,025 6.5 1.6 3.0
-------------------- ---------------- ----------------- ------------------- ------------------- ------------------
Madhya
Pradesh 12,980,102 406,503 8,411 6.3 7.5 4.2
-------------------- ---------------- ----------------- ------------------- ------------------- ------------------
Punjab 8,784,807 184,044 12,563 4.3 3.4 6.3
-------------------- ---------------- ----------------- ------------------- ------------------- ------------------
Haryana 7,405,618 195,319 13,204 3.6 3.6 6.6
------------ -------------------- ---------------- ----------------- ------------------- ------------------- ------------------
Total for
above
states 174,478,487 4,324,201 152,796 85.3 79.8 76.7
------------ -------------------- ---------------- ----------------- ------------------- ------------------- ------------------
Rest of
India 30,144,695 1,087,807 46,030 14.7 20.2 23.3
------------ -------------------- ---------------- ----------------- ------------------- ------------------- ------------------
All-India
total 204,623,182 5,412,008 198,826 100.0 100.0 100.0
------------ -------------------- ---------------- ----------------- ------------------- ------------------- ------------------
*prepaid;**distribution transformer; Table shows top
10 states wrt consumer smart meters
------------------
The win rate from contracts tendered since April 2022 has been
approximately 38% in volume and the installed rate is around 25%.
CyanConnode is currently bidding for contracts worth over GBP1
billion in value.
During the period, CyanConnode won three new orders, totalling
approximately 2.3 million units from its customers IntelliSmart,
Genus and Monte Carlo Group, to be deployed in three different
states. This volume was significantly higher than the total volume
of units won by the Company in India in all years prior to FY2023
(1.3 million). All orders were for Omnimesh RF Modules together
with advanced metering infrastructure, standards-based hardware,
services, Omnimesh head-end software, perpetual license and annual
maintenance contracts. To the end of March 2023, a total of 327,000
modules and associated gateways had been shipped against these new
contracts, with a further 282,000 shipped during Q1 FY24, bringing
the total modules shipped against these contracts at the end of
June 2023 to 609,000.
The first two orders, totalling 300,000 units, were from
IntelliSmart for deployment in the state of Assam. IntelliSmart is
the first service provider to use the Design, Build, Finance, Own,
Operate, Transfer (DBFOOT) model and it has also installed the
first smart prepaid meter in India under the RDSS. To the end of
March 2023, a total of 195,000 modules and associated gateways had
been shipped against these two contracts, with a further 49,000
shipped during Q1 FY24, bringing the total modules shipped against
these contracts at the end of June 2023 to 244,000.
The third order, CyanConnode's largest order in its history, was
for 1 million units, received by Genus for a deployment in South
Bihar. To the end of March 2023, a total of 81,000 modules and
associated gateways had been shipped against this contract, with a
further 109,000 shipped during Q1 FY24, bringing the total modules
shipped against these contracts at the end of June 2023 to
190,000.
The fourth order, for 984,000 units was received from a new
customer, Monte Carlo Group, relating to a smart metering
deployment in Jabalpur, Madhya Pradesh. To the end of March 2023, a
total of 51,000 modules and associated gateways had been shipped
against this contract, with a further 124,000 shipped during Q1
FY24, bringing the total modules shipped against these contracts at
the end of June 2023 to 175,000.
In February 2023 the Group announced it had entered into a
strategic framework agreement with a key partner to supply its
Radio Frequency (RF) mesh technology in India. As a preferred
partner, CyanConnode will provide Omnimesh RF modules, Advanced
Metering Infrastructure, Standards-Based Hardware, Omnimesh
Head-End Software and associated components, Perpetual License,
design, installation, implementation, integration, training and
support & Maintenance Contract for 3 million smart meters.
In March 2023, CyanConnode announced a collaboration with
Silicon Laboratories, Inc. (Silabs) a prominent supplier of
System-On-Chips (SOCs), under which it will integrate SiLabs' FG25
Sub-GHz Wireless SoC into its Omnimesh product range. The FG25 is
certified by the Wi-SUN Alliance (Wireless Smart Ubiquitous Network
Alliance), which is the leading IPv6 sub-GHz mesh technology for
smart city and smart utility applications. The open-source backbone
of Wi-SUN will enable CyanConnode to quickly scale deployments and
leverage the Wi-SUN ecosystem to provide new value to its
customers. CyanConnode's adoption of SiLabs' flagship SoC and
Wi-SUN would ensure that it is the first to meet the technical
requirement set by the Government of India as defined by BIS LITD28
standards for Smart Meter RF Communication systems.
CyanConnode's adoption of SiLabs' flagship SoC and Wi-SUN will
ensure that it continues to meet the Service Level Agreements
(SLAs) required by the Government of India. For a case study of the
implementation of the FG25 and Wi-SUN in India, please visit
https://www.silabs.com/applications/case-studies/leveraging-fg25-and-wi-sun-for-smart-metering-in-india
.
APAC and Middle East North Africa
The smart metering market in the APAC and MENA continues to
mature and presents a significant opportunity for CyanConnode.
In April 2022, an order was won for a smart metering deployment
in the MENA region. Under this contract CyanConnode will supply
65,000 interoperable smart NB-IoT gateways which will communicate
with and control all existing smart meters for both electricity and
water; the gateways will have the capacity to connect up to one
million smart meters. 46,000 gateways were delivered against this
contract during FY23.
In August 2022, an order was announced for Cellular Gateways to
provide smart communications for an Advanced Metering
Infrastructure project located in the MENA region. This order,
worth USD 2.5 million, was for a new cellular product to be fitted
to existing electricity meters. All of these gateways, plus an
additional 5,000 gateways were delivered during FY23.
CyanConnode continues to deliver The Metropolitan Electricity
Authority (MEA) project with JST's partner Forth (Forth Corporation
Public Company Limited), a telecommunication and electronics
company that provides products and integration services throughout
Thailand. MEA, who serve around 4 million customers in the city of
Bangkok and two adjacent provinces, is deploying a Smart Metro Grid
platform to improve power availability and reliability, as well as
to analyse distribution losses, automate meter reading, and
increase customer satisfaction.
CyanConnode's Omnimesh technology has been integrated into
Forth's electricity meters, using the frequency bands of 442 and
447MMHz, which have been allocated to the Thai energy utilities by
The National Broadcasting and Telecommunications Commission (NBTC)
of Thailand. During the period CyanConnode's scope of the Site
Acceptance Test (SAT) has been successfully delivered.
Fundraisings
During October 2022 CyanConnode was pleased to announce a share
subscription to raise GBP500,000 at a price of 12.25 pence per
share, being the mid-market price at the time.
In January 2023 the Company completed an oversubscribed placing
and subscription, raising GBP5.25 million before expenses, at a
price of 17 pence per share, the mid-market price at the time of
announcement of the fundraising.
The net proceeds of the above fundraisings are being used to
strengthen the Company's balance sheet, to increase working
capital, to allow the Company to continue to take advantage of its
significant growth opportunities and to execute the Company's
growing order book and pipeline.
Post period end and outlook
Momentum has continued into the new financial year, with the
Group announcing a new order in May 2023 from Paschimanchal
Infrastructure Pvt Ltd, a subsidiary of IntelliSmart Infrastructure
Private Ltd, for 600,000 Omnimesh Modules, taking the total number
of modules ordered in India to 4.2 million. The order also includes
Advanced Metering Infrastructure (AMI), Standards-Based Hardware,
Services, Omnimesh Head-End Software, a Perpetual License, and an
Annual Maintenance Contract and will support a smart metering
deployment in the utility, Pachimanchal Vidyut Vitran Nigam Ltd
(PVVNL), located in Uttar Pradesh, India.
In April 2023 CyanConnode announced the signing of a Memorandum
of Association with Alfanar, a leading engineering, procurement,
and construction (EPC) player, to explore joint investment
opportunities in Advanced Metering Infrastructure (AMI)
projects.
In June 2023 it was announced that CyanConnode Private Limited,
the subsidiary of CyanConnode Holdings plc had been recognised as a
Start-Up 50 Trailblazer by Dun & Bradstreet. This award
underscores the Company's firm commitment to innovation, quality,
and customer-centric solutions, with a robust roadmap for
sustainable growth and profitability.
We've been delighted to see the continued revenue growth into
the new financial year, with revenue for the first quarter of
greater than GBP2.8 million, more than double that of the whole of
the first half of FY23. In addition, more than 330k modules have
been shipped in the first quarter compared to 391k being shipped in
the whole of FY23.
As a result of the increased business and requirements for the
deployments, the Group is currently recruiting a number of new
roles, particularly in India to scale the business.
I'd like to thank all employees, who have worked incredibly hard
over the past year, for their commitment and contribution. I'd also
like to thank our partners with whom we look forward to continuing
to work on these groundbreaking projects. And as always I'd like to
thank all shareholders for their continued support. We're confident
that this momentum will continue through the current financial year
and look forward to updating you throughout the period.
John Cronin
Executive Chairman
Financial Review
Financial Year 23 has once again produced record results in
terms of orders won and also saw a fourth consecutive year of
revenue growth. The revenues reported during FY23 included revenues
not only from the Group's more traditional models seen for
contracts in India, but also revenues from other territories which
included revenue for sale of third-party products, often at a lower
margin. This has resulted in lower than expected gross margin for
the Group.
A summary of the key financial and non-financial Key Performance
Indicators ("KPIs") for the year and details relating to its
financing position at the year end are set out in the table below
and discussed in this section.
12 months Mar 2023 12 months Mar 2022 12 months Mar 2021 15 months Mar 2020 12 months Dec 2018
GBP000 GBP000 GBP000 GBP000 GBP000
================== ================== ================== ================== ==================
Revenue 11,732 9,562 6,437 2,451 4,465
================== ================== ================== ================== ==================
Gross Margin % 36% 52% 48% 56% 61%
================== ================== ================== ================== ==================
R&D expenditure
(including staff
costs) 2,247 1,755 1,791 2,381 2,466
================== ================== ================== ================== ==================
Operating costs 7,561 6,025 5,788 7,600 9,061
================== ================== ================== ================== ==================
Operating loss (3,347) (1,018) (2,685) (6,230) (6,320)
================== ================== ================== ================== ==================
Depreciation and
amortisation 489 616 627 773 472
================== ================== ================== ================== ==================
EBITDA (2,858) (401) (2,058) (5,457) (5,848)
================== ================== ================== ================== ==================
Stock impairment 102 62 108 4 578
================== ================== ================== ================== ==================
Impairment of
intangible assets 968 - - - -
================== ================== ================== ================== ==================
Share based
compensation 224 363 80 267 445
================== ================== ================== ================== ==================
Foreign exchange
losses / (gains) 8 34 (15) 267 16
================== ================== ================== ================== ==================
Adjusted EBITDA
[3] (1,556) 58 (1,885) (4,919) (4,809)
================== ================== ================== ================== ==================
Cash and cash
equivalents 4,070 2,355 1,489 1,172 4,564
================== ================== ================== ================== ==================
Average monthly
operating cash
outflow (185) (261) (81) (245) (487)
================== ================== ================== ================== ==================
Mar 2023 Mar 2022 Mar 2021 Mar 2020 Dec 2018
FTE [4] FTE FTE FTE FTE
Average 64 59 47 50 52
======== ======== ======== ======== ========
Year end 70 60 54 48 61
======== ======== ======== ======== ========
Included within the table above are two alternative performance
measures ("APMs" - see note 1): EBITDA and adjusted EBITDA. These
are additional measures which are not required under UK adopted
International Accounting Standards. These measures are consistent
with those used internally and are considered important to
understanding the financial performance and the financial health of
the Group.
EBITDA (Loss) before Interest, Tax, Depreciation and
Amortisation is a measure of cash generated by operations before
changes in working capital. Adjusted EBITDA is a measure of cash
generated by operations before stock impairment, impairment of
investments, share-based compensation, impairment of intangible
assets and foreign exchange losses. It is used to achieve
consistency and comparability between reporting periods.
Notably from the table on the previous page:
-- Revenue of GBP11.7 million was 23% higher than for FY22 (GBP9.6 million)
-- Increase in operating loss to GBP3.3 million from GBP 1.0 million
-- Reduction in adjusted EBITDA to loss of GBP1.6 million in FY23 from GBP0.06 million in FY22
-- EBITDA loss for the year to March 2023 increased to GBP2.9
million from GBP0.4 million loss in FY22
-- Cash and cash equivalents at the end of FY23 of GBP4.1
million was GBP1.7 million higher than the end of FY22
-- Share based compensation charges reflect the fair value of
share options granted to employees over the vesting period of these
options. Please see note 35 to the financial statements of the FY23
Annual Report for more information.
Financial items of note during the year other than those set out
above were:
-- Cash received from customers during FY23 was GBP10.7 million (2022: GBP8.2million)
-- Trade and other receivables increased by GBP1.81 million
during the year to GBP9.26 million (including retentions) as a
result of increased revenue, particularly in the last two months of
the financial year
-- R&D cash tax credit of GBP0.7 million for FY23 (FY22: GBP0.6 million)
During the year 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, the loan from one director
remained in place at year end, and 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 and non-financial KPIs for the Group are as set
out in the table above and described below.
-- FY23 revenues were 23% up on the previous year FY22 as a
result of major contracts in India which started deploying during
the year, and contracts delivered in the MENA region.
-- Gross margin for the year reduced from 52% to 36%, mainly as
a result of the sale of third-party hardware at gross margins lower
than usual for the Group. Gross margin will vary from year to year
depending on the stage of deployment of each contract. Hardware,
for which revenue is recognised typically during the first two
years of a contract, is at a lower gross margin than software and
services for which revenue can be recognised later in the
deployment.
-- O perating costs for the year increased by 25% compared to
FY22, as a result of additional costs required to scale the
business up to deploy its growing backlog of orders and a GBP1.0
million impairment of intangible assets.
-- Adjusted EBITDA decreased from a profit of GBP58k in FY22 to
a loss of GBP1.56 million in FY23 as a result of lower gross
margin, increased operating costs and EBITDA loss increased from a
loss of GBP0.4 million in FY22 to a loss of GBP2.9 million in FY23
also as a result of lower gross margin and increased operating
costs, as well as an impairment of intangible assets.
-- Average headcount increased by 5, and FTEs at year end
increased from 59 in FY22 to 64 in FY23.
-- Non-financial KPIs included the number of modules shipped
which decreased from 612,000 in FY22 to 391,000 in FY23. However
46,000 NB-IoT hubs and 63,000 Cellular Gateways were also delivered
in the MENA region.
The Group continually reviews whether additional financial and
non-financial KPIs should be monitored.
The Group's long-term strategy is to deliver shareholder returns
by generating revenue and moving into profitability. It seeks to do
this by focusing its resources on emerging but fast-growing markets
where it believes it can reach a market leading position with its
technology. Management uses KPIs to track business performance, to
understand general trends and to consider whether the Group is
meeting its strategic objectives. As it grows, and as highlighted
in the previous paragraph, it intends to review these KPIs and
adapt them as appropriate, in response to how the business and
strategy evolves.
The Group's key focus for the financial year ending March 2023
continued to be to streamline its processes from order to delivery
and working to close further orders. A further focus was ensuring
collection of cash from customers as Group revenues continued to
grow.
Dividends
The directors do not recommend the payment of a dividend (2022:
GBPnil). 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 year ended 31 March 2023
Note Year Year
31 March 2023 31 March
GBP000 2022
GBP000
================================================== ==== ============== =========
Continuing operations
Revenue 11,732 9,562
Cost of sales (7,518) (4,554)
=================================================== ==== ============== =========
Gross profit 4,214 5,008
Exceptional item: impairment of intangible assets 2 (968) -
Other operating costs (6,593) (6,025)
--------------------------------------------------- ---- -------------- ---------
Operating loss (3,347) (1,017)
Amortisation and depreciation 489 616
Share-based payments 224 363
Stock impairment 102 62
Impairment of intangible assets 968 -
Foreign exchange losses 8 34
--------------------------------------------------- ---- -------------- ---------
Adjusted EBITDA (1,556) 58
--------------------------------------------------- ---- -------------- ---------
Finance income 35 3
Finance expense (136) (164)
--------------------------------------------------- ---- -------------- ---------
Loss before tax (3,448) (1,178)
Tax credit 1,042 307
--------------------------------------------------- ---- -------------- ---------
Loss for the year (2,406) (871)
=================================================== ==== ============== =========
Loss per share (pence)
Basic 3 (1.03) (0.42)
Diluted 3 (1.03) (0.42)
=================================================== ==== ============== =========
Consolidated statement of comprehensive income
Derived from continuing operations and attributable to the
equity owners of the Company.
For the year ended 31 March 2023 Year Year
31 March 31 March
2023 2022
GBP000 GBP000
========================================================== ========= =========
Loss for the year (2,406) (871)
Exchange differences on translation of foreign operations 21 76
========================================================== ========= =========
Total comprehensive income for the period (2,385) (795)
========================================================== ========= =========
CyanConnode Holdings plc
Consolidated statement of financial position
As at 31 March 2023
31 March 31 March
Note 2023 2022
GBP000 GBP000
================================================================ ====== ======== ========
Non-current assets
Intangible assets 3,433 4,093
Goodwill 1,930 1,930
Other financial assets 30 58
Property, plant and equipment 122 31
Right of use asset 62 153
Trade receivables 2,076 1,058
================================================================ ====== ======== ========
Total non-current assets 7,653 7,323
Current assets
Inventories 793 159
Trade and other receivables 7,182 6,393
R&D tax credit receivables 748 562
Cash and cash equivalents 4,070 2,355
================================================================ ====== ======== ========
Total current assets 12,793 9,469
================================================================ ====== ======== ========
Total assets 20,446 16,792
================================================================ ====== ======== ========
Current liabilities
Trade and other payables (3,833) (2,364)
Short-term borrowings (1,226) (1,867)
Corporation tax liabilities - (193)
Lease liabilities (29) (28)
---------------------------------------------------------------- ------ -------- --------
Total current liabilities (5,088) (4,452)
================================================================ ====== ======== ========
Net current assets 7,705 5,017
================================================================ ====== ======== ========
Non-current liabilities
Lease liabilities (94) (125)
Deferred tax liability (452) (746)
Other payables (42) (38)
================================================================ ====== ======== ========
Total non-current liabilities (588) (909)
Total liabilities (5,676) (5,361)
================================================================ ====== ======== ========
Net assets 14,770 11,431
================================================================ ====== ======== ========
Equity
Share capital 4 5,438 4,726
Share premium account 78,671 73,883
Own shares held (3,611) (3,611)
Share option reserve 804 1,068
Translation reserve 52 31
Retained losses (66,584) (64,666)
================================================================ ====== ======== ========
Total equity being equity attributable to owners of the Company 14,770 11,431
================================================================ ====== ======== ========
CyanConnode Holdings plc
C onsolidated Statement of Changes in Equity
For the year ended 31 March 2023
Share Own Share
Share Premium Shares Option Translation Retained Total
Capital Account Held Reserve Reserve Losses Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------------------ --------- --------- -------- --------- ------------ --------- --------
Balance at 31 March
2021 3,735 69,662 (3,253) 925 (45) (64,015) 7,009
------------------------ --------- --------- -------- --------- ------------ --------- --------
Loss for the year - - - - - (871) (871)
Other comprehensive
income for the year - - - - 76 - 76
------------------------ --------- --------- -------- --------- ------------ --------- --------
Total comprehensive
income for the year - - - - 76 (871) (795)
Issue of share capital 991 4,221 (358) - - - 4,854
Credit to equity
for share options - - - 363 - - 363
Transfer - - - (220) - 220 -
------------------------ --------- --------- -------- --------- ------------ --------- --------
Total transactions
with owners 991 4,221 (358) 143 - 220 5,217
------------------------ --------- --------- -------- --------- ------------ --------- --------
Balance at 31 March
2022 4,726 73,883 (3,611) 1,068 31 (64,666) 11,431
Loss for the year - - - - - (2,406) (2,406)
Other comprehensive
income for the year - - - - 21 - 21
------------------------ --------- --------- -------- --------- ------------ --------- --------
Total comprehensive
income for the year - - - - 21 (2,406) (2,385)
Issue of share capital 712 4,788 - - - - 5,500
Credit to equity
for share options - - - 224 - - 224
Transfer - - - (488) - 488 -
------------------------ --------- --------- -------- --------- ------------ --------- --------
Total transactions
with owners 712 4,788 - (264) - 488 5,724
------------------------ --------- --------- -------- --------- ------------ --------- --------
Balance at 31 March
2023 5,438 78,671 (3,611) 804 52 (66,584) 14,770
------------------------ --------- --------- -------- --------- ------------ --------- --------
CyanConnode Holdings plc
C onsolidated cash flow statement
For the year ended 31 March 2023
Year Year
Note 31 March 2023 31 March
GBP000 2022
GBP000
======================================================== ====== =============================== ===================
Net cash outflow from operating activities 5 (2,217) (3,134)
Investing activities
Interest received 3 3
Purchases of property, plant and equipment (31) (26)
Purchases of intangible assets (734) (259)
(Purchase) / disposal of other financial assets (4) (14)
======================================================== ====== =============================== ===================
Net cash outflow from investing activities (766) (296)
======================================================== ====== =============================== ===================
Financing activities
Interest paid on borrowings (125) (157)
Cash inflow from borrowings 500 500
Cash net (outflow) / inflow from debt factoring (541) (366)
Loan repayment (600) (385)
Capital repayments of lease liabilities (30) (153)
Interest paid on lease liabilities (11) (7)
Proceeds on issue of shares 5,844 5,177
Share issue costs (344) (327)
======================================================== ====== =============================== ===================
Net cash inflow from financing activities 4,693 4,282
======================================================== ====== =============================== ===================
Net increase in cash and cash equivalents 1,710 852
Effects of exchange rate changes on cash and cash
equivalents 5 14
Cash and cash equivalents at beginning of the year 2,355 1,489
-------------------------------------------------------- ------ ------------------------------- -------------------
Cash and cash equivalents at end of the year 4,070 2,355
-------------------------------------------------------- ------ ------------------------------- -------------------
Analysis of changes in net cash / (debt)
Other Net foreign
At 1 April non-cash exchange At 31
2022 Cash flow movements difference March 2023
For the year ended 31 GBP000 GBP000 GBP000 GBP000 GBP000
March 2023
--------------------------- ------------- ------------ ----------- ------------ -------------
Cash and cash equivalents 2,355 1,710 - 5 4,070
--------------------------- ------------- ------------ ----------- ------------ -------------
Short-term borrowings (1,867) 641 - - (1,226)
Lease liabilities (153) 41 (11) - (123)
--------------------------- ------------- ------------ ----------- ------------ -------------
(2,020) 682 (11) - (1,349)
--------------------------- ------------- ------------ ----------- ------------ -------------
Net cash / (debt) at
end of year 335 2,392 (11) 5 2,721
--------------------------- ------------- ------------ ----------- ------------ -------------
Other Net foreign
At 1 April non-cash exchange At 31
2021 Cash flow movements difference March 2022
For the year ended 31 GBP000 GBP000 GBP000 GBP000 GBP000
March 2022
--------------------------- ------------- ------------ ----------- ------------ ----------------------
Cash and cash equivalents 1,489 852 - 14 2,355
--------------------------- ------------- ------------ ----------- ------------ ----------------------
Short-term borrowings (2,118) 251 - - (1,867)
Lease liabilities (98) 160 (215) - (153)
--------------------------- ------------- ------------ ----------- ------------ ----------------------
(2,216) 411 (215) - (2,020)
--------------------------- ------------- ------------ ----------- ------------ ----------------------
Net cash / (debt) at
end of year (727) 1,263 (215) 14 335
--------------------------- ------------- ------------ ----------- ------------ ----------------------
Other non-cash movements include interest on lease liabilities and
new leases taken out in the year.
Notes to the Financial Information
For the year ended 31 March 2023
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 UK-adopted
International Accounting Standards. The financial information has
been prepared in accordance with the accounting policies used in
the statutory financial statements for the year ended 31 March
2022.
The financial information set out in the announcement does not
constitute the company's statutory accounts for the years ended 31
March 2022 or 31 March 2023 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 years ended 31 March 2022 and the year ended 31
March 2023 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 2025 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, the timing of customer payments and the level of working
capital requirements. The detailed cashflow scenarios include
Letters of Credit which have been secured from customers against
contracts recently won.
At 31 March 2023 the Group had cash reserves of GBP4.1 million
(FY22: GBP2.4m) and based on detailed cash flows provided to the
Board within the FY24/25 budget, there is sufficient cash to see
the Group through to profitability based on its standard operating
model. However, should the Group require additional cash to cover
working capital, as a result of rapid growth, there could be a
requirement for additional funding to cover this. The Group is
discussing working capital funding solutions with banks,
particularly in India.
To assist with working capital, a loan from one director for
GBP300,000 is still in place, after being extended to the Group in
November 2020. The Company received an advance of GBP500,000
secured against its R&D tax credit in November 2022 and an
invoice discounting facility secured against Letters of Credit for
deliveries of Omnimesh modules in India. The advance against the
R&D tax credit will be repaid out of the HMRC receipt which is
expected to be received by October 2023.
Notwithstanding the material uncertainties described above which
may cast significant doubt on the ability of the Group to continue
as a going concern, 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.
Alternative Performance Measures
The Group presents Alternative Performance Measures ("APMs") in
addition to the statutory results of the Group. These are presented
in accordance with the Guidelines on APMs issued by the European
Securities and Markets Authority ("ESMA").
2. Exceptional item: impairment of intangible asset
SMIP intangible carrying value
We have modelled expected net cash flows from Connode AB's UK
SMIP contract over the lifetime of the contract and compared the
net present value of these cashflows to the GBP3,259k carrying
value of the related intangible asset at the end of March 2023.
Connode AB's contract involves the supply of software in areas
where traditional smart meter technology would not work due to lack
of mobile coverage ("not-spots"). The intangible asset had
originally been valued based on the assumption that 10% of the
areas being supplied by the contract would be not-spots, which
would result in 2.3 million units of software being supplied over
the duration of the contract.
The Group has now been notified by its customer Toshiba, that
due to an end-of-life Telit component, which is essential in the
design of the Toshiba hardware (mesh hub), there will now only be a
maximum of 761k mesh hubs supplied under the contract. In addition,
the Group has been notified that 3G is gradually being switched off
in the UK, and meters will be replaced with 4G, commencing in
2025.
A model has now been created based on sensitivities to determine
if an impairment to the intangible asset is required. Sensitivities
were run based on various percentages of the finite number of 761k
hubs being activated. Due to the uncertainties surrounding the
contract and taking into account the numerous delays that have
already occurred, the Board has agreed that an impairment of
GBP968k would be taken in FY23 based on an assumption that 70% of
the finite number of 761k hubs, being 532k meters, would be
activated.
We note that if a 60% activation assumption had been adopted
then there would have been an additional impairment of GBP352k with
no impairment arising if an assumption of 90% had been taken.
3. Loss per share
The calculation of the basic and diluted loss per share is based
on the following data:
2023 2022
============================================================================================ =========== ===========
Loss for the purposes of basic loss per share being net loss attributable to equity holders
of the parent (GBP000) (2,406) (871)
============================================================================================ =========== ===========
Weighted average number of ordinary shares for the purposes of basic and diluted loss per
share (excluding own shares held) 232,763,664 205,173,434
============================================================================================ =========== ===========
Loss per share (pence) (1.03) (0.42)
============================================================================================ =========== ===========
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.
4. Share capital
Issued and fully paid, ordinary shares No GBP000
of 2.0 pence each
As at 31 March 2021 186,742,898 3,735
Issue of new shares 49,566,137 991
----------------------------------------------- ------------ ---------
As at 31 March 2022 236,309,035 4,726
Issue of new shares 35,578,329 712
----------------------------------------------- ------------ ---------
As at 31 March 2023 271,887,364 5,438
----------------------------------------------- ------------ ---------
In the year, shares were issued at prevailing market prices as
settlement for professional services provided. GBP68,750 was raised
this way during the year (2022: GBP4,710).
In October 2022 the Company successfully raised funding of
GBP500,000 before expenses through a subscription for 4,081,632
ordinary shares.
In January 2023 the Company successfully raised funding of
GBP5.25m before expenses through a placing of 30,882,354 ordinary
shares.
During the year, shares were issued to directors and employees
as part payment for their remuneration. GBP24,175 was raised this
way during the year (2022: GBP4,710).
During the year 451,722 shares were issued as a result of the
exercise of share options (2022: 201,250 shares). The Company has
one class of ordinary share which carries no right to fixed
income.
5. Reconciliation of operating loss to net cash outflow from operating activities
Group 2023 2022
GBP000 GBP000
========================================================= ======= =======
Operating loss for the year: (3,347) (1,017)
Adjustments for:
Depreciation of property, plant and equipment 32 31
Amortisation of Intangible assets 426 432
Depreciation on right of use assets 31 153
Impairment of intangible assets 968 -
Interest received on contract assets 32 -
Foreign exchange 8 20
Shares issued in lieu of bonus 24 5
Share-option payment expense 224 363
---------------------------------------------------------- ------- -------
Operating cash flows before movements in working capital (1,602) (13)
(Increase)/decrease in inventories (634) 52
Increase in receivables (1,827) (2,054)
Increase/(decrease) in payables 1,475 (1,568)
---------------------------------------------------------- ------- -------
Cash reduction from operating activities (2,588) (3,583)
Income taxes received 371 449
========================================================== ======= =======
Net cash outflow from operating activities (2,217) (3,134)
========================================================== ======= =======
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.
6. Annual Report and Accounts and Notice of Annual General Meeting
The Notice of AGM and Proxy Form and full colour Annual Report
and Accounts will be sent to shareholders by 1 August 2023 and made
available on the Company's website shortly thereafter.
[1] The majority of the Group's revenues are received in rupees
for India and US dollars for the rest of world, whilst accounts are
reported in Pound Sterling. Foreign exchange volatility can have an
impact on the reported figures. Stockmarket Broker forecasts during
2022 used a rate of 1.15 against the USD and 95 against the
Rupee
[2] Where Adjusted EBITDA is Operating loss before amortisation,
depreciation, stock impairment, impairment of intangible assets,
share-based compensation and foreign exchange losses.
[3] Where Adjusted EBITDA is Operating loss before amortisation,
depreciation, stock impairment, impairment of intangible assets,
share-based compensation and foreign exchange losses.
[4] Where FTE is the equivalent number of full-time
equivalents
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END
FR FZGZNVVZGFZM
(END) Dow Jones Newswires
July 26, 2023 12:34 ET (16:34 GMT)
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