21st Mar 2006 07:02
Cyan Holdings Plc21 March 2006 Press Release 21 March 2006 Cyan Holdings Plc ("Cyan" or "the Group") Preliminary results for the 12 months to 31 December 2005 Cyan Holdings Plc (AIM: CYAN.L), the fabless semiconductor company specialisingin the development of low powered, configurable microcontroller chips, announcesits preliminary results for the 12 months ended 31 December 2005. Highlights • Turnover of £29,899 (2004: £12,116) • Gross profit is £24,933 (2004: £3,016) • The milestone of 100 design wins was achieved by March 2006 • eCOG1k and CyanIDE established in the market place • Significant product development on eCOG1X • Strengthened distribution channels in Asia and Europe • Expanded and reputable management, sales and engineering teams • Successful AIM IPO which raised £6.1 million Commenting on the results, Paul Johnson, Chief Executive, of Cyan, said: "I ampleased to report Cyan's maiden results since listing on AIM in December 2005.The Group has made significant progress since flotation. The flotation itselfenabled us to attract higher profile customers around the world and build on ourstrategic plan of developing the eCOG product range. I am confident that thecombination of all of these key attributes will enable us to maintain ourcompetitive advantage." For further information: Cyan Holdings plcPaul Johnson, Chief Executive Officer Tel: +44 (0) 1954 234 400 www.cyantechnology.comCollins Stewart LimitedStephen Keys, Corporate Finance Tel: +44 (0) 20 7523 8312 www.collins-stewart.comMedia enquiries:Abchurch CommunicationsHeather Salmond / Dana Thomas Tel: +44 (0) 20 7398 [email protected] www.abchurch-group.com Chairman's Statement 2005 was a successful year for Cyan; over two thousand copies of CyanIDE weredownloaded by people in the industry, and design wins reached 89 by the year endafter the introduction of the 16 bit eCOG1k microcontroller into the market in2004. Twelve customers moved into production, considerable progress was made onthe development of eCOG1X for launch in 2006, and the company was floated on AIMon 7 December 2005. Thanks are due to all our talented colleagues who made thispossible. Our flotation was especially important, not only because it provides the financefor our growth, but also because it has increased our customers' confidence inour future which, in turn, encourages them to trust that our microcontrollerswill be available to support their products over the long term. We would liketo thank our initial investors for their support and confidence in us, and towelcome our new investors. The Board is committed to enhancing shareholdervalue through growth, which will be driven by the expansion of our productrange, enhancing our customers' product ranges and their product developmentprocesses, and providing a first class, one-stop-shop for customer support. Proceeds from the float amounted to £6.1 million, £4 million being raiseddirectly from the market and £2.1 million from the exercise of warrants byexisting shareholders. Cash at the year end was £5.5 million. Proceeds will belargely applied to continuation of the product development programme, anincreased sales effort, and the funding of working capital as customers'production quantity orders are received during 2006 and 2007. Cyan is now making rapid progress in its strategy of providing ultra low powerand low power, high performance, 16 and 32 bit microcontrollers supported bywhat we believe to be unique integrated software development tools. Ourintegrated approach to microcontroller development and software toolsdevelopment provides benefits in the performance of both, and allowsparticularly effective customer support. It is a novel approach in our businessarea. Sales in the year were £29,899, with a Gross Profit of £24,933 and a Net Loss of£2,086,863 arising out of the set-up stage of the Company and the nature of itsproducts. Microcontrollers are components of other people's products so theirown development time is followed by the development time of the customer'sproduct, which might typically take 12 to 18 months, before generatingproduction volume orders to Cyan. Longer term however, the advantage is astable business model as the incorporation of a Cyan microcontroller into acustomer's product produces a stream of orders over the lifetime of thatproduct. This stability is enhanced by the application of our microcontrollersto diverse product sectors and widespread geographical areas. At the time of the Company's flotation, Cyan's current largest customer hadcommitted to an initial order of 100,000 units of eCOG1k which the Companyoriginally estimated it would begin shipping in December 2005. Delays with theroll-out of tax control POS terminal products in China have led to arescheduling of the drawdown on this order but we are pleased to say that theinitial order will now be dispatched over April, May and June 2006. Furtherorders for this customer are expected for delivery in the second half of 2006but the revised shipping schedules will mean that an estimated three months ofanticipated sales from 2006 will slip into 2007 potentially affecting 2006budgeted sales. Nonetheless we are pleased to report that 2006 will be our firstyear of volume sales. The Company is delighted to advise that it has reached a milestone in exceeding100 design wins in March 2006, an increase of some 30 design wins since IPO.Particularly pleasing is the quality of customers and potential volumesinvolved. A design win is when a customer has entered into a relationship withCyan whereby the customer has purchased a development board and initial siliconfrom the Company and is actively working on developing an end product for volumeproduction. There is of course no guarantee that any design win will result in asignificant order but Cyan believes that the quantity and quality of the designwins within its portfolio means that such an eventuality is likely. Cyan achieved a great deal in 2004 and 2005 - a strong management, sales, andengineering team was established, distribution channels were put in place inAsia and Europe, and the first product was introduced to the market. We nowlook forward to our initial growth period in 2006 and 2007. Professor Michael HughesChairman21 March 2006 Chief Executive's review The successful AIM IPO in December 2005 was important for two reasons. Not onlydid it provide the resources to take the Company forward but it gave the Companyadded credibility among its suppliers and customers, effectively removing the 'start-up' label. The Company is now better placed to win substantial newbusiness from many more customers. Two new revisions of CyanIDE were released last year and a third is currently inbeta release with key customers. We prototyped a test chip for our new eCOG1Xand eCOG2 product families. The eCOG1X design is currently being prepared forproduction whilst the test chip is being put through its paces. Preliminarytest results are very encouraging. All the major new technology blocks arefunctioning correctly and there should be a low risk in moving to finalproduction versions. During 2005 some customers received advance information oneCOG1X under non-disclosure agreements. At the Embedded Systems Show inNuremberg during February 2006 Cyan released preliminary data to the trade.There was great interest in the eCOG1X and we already have design wins. At theInternational IC exhibition in Shenzhen, China we had our own, well positionedstand which was manned by our own staff and staff from our distributors. About300 design engineers registered their details and great interest was shown inboth the eCOG1k and the eCOG1X. Cyan has performed a great deal of work on the upcoming 32 bit microcontrollerand we have the basics of the CyanIDE toolset completed. Cyan is now able tocompile customers' software programs on the 32 bit tools and compare with themost memory efficient processor cores available today, and we are seeingimprovements in memory efficiency. This is important as memory in most 32 bitapplications is the largest part of the chip, and chip size directly relates tocost. Cyan is now moving into the production phase of its business and we are settingup the manufacturing operations group. Production orders for silicon wafershave been placed with Taiwan Semiconductor Manufacturing Company (TSMC), oursilicon wafer manufacturing partner, to satisfy production orders from ourcustomers. Strategy Cyan's approach to the microcontroller market is novel in that it has developedand provides free-of-charge the most advanced software development tools -CyanIDE - in the industry, whilst competitors rely on generic, third partytools. The software makes chip integration into customer's products vastly moresimple, quick, reliable and hence less expensive, while dramatically reducingdevelopment time. The Company also provides, as a result of extensiveexperience in semiconductors and computers, a broad range of microcontrollers tothe market with minimal R&D and tooling costs. These microcontrollers are ofgreat importance to battery powered applications and techniques that requireultra low power Markets The market for microcontrollers has steadily grown at around 10% per annum formany years. The total market size in 2005 is estimated to be about US$14billion, with about 7 billion units shipped. Over the next 4 years the marketis expected to grow to over US$20 billion, with the fastest growth coming from16 and 32 bit microcontrollers, the areas on which the Company focuses. Cyanhas identified Europe and South East Asia as the largest markets for itsproducts and aims to have 1% of the microcontroller market within 5 years. Customers Cyan raised its first round of funding in early 2004 and has since been steadilyachieving design wins. These design wins are in diverse applications from assettrackers, taxi meters, data loggers, security systems, point-of-sale terminalsto small computers for skydivers. Design wins are now starting to translate intoproduction. Cyan monitors the take-up of this technology and tracks websiteregistrations for CyanIDE downloads, and design wins. There is a strongcorrelation between the two. By the end of 2005, over 2000 people in theindustry had downloaded CyanIDE. We have been successful in winning customers in Europe and China but the biggestpotential for volume sales in 2006 and 2007 will be in China. Our largestcustomer in China has included Cyan's eCOG1k in 7 of its tax control Point ofSale (POS) terminal designs. The total available market for these products isestimated to be in excess of 50 million units over the next few years and ourcustomer is tendering for some 6 million units of near term demand. We arecurrently working with this customer on the second generation of tax control POSterminals using eCOG1X. Looking ahead 2006 will see the launch of the eCOG1X product range which will be extensive andinclude more industry standard peripheral interfaces, which means an even widerrange of potential customers. We will be engaging with more distributors as wecontinue to develop from a one product start-up into a listed company with anextensive product range. Our 32 bit microcontroller (eCOG2) development willcontinue and we should complete the design of the Linux operating system to runon it. Linux is becoming increasingly important particularly in China and India. It isan operating system that can, in most cases, replace Microsoft Windows and hasthe compelling feature of being completely free, hence the interest from Chinaand India. Linux is generally regarded by software professionals as beingfaster and more reliable than Windows. The availability of Linux will furtherincrease the market for Cyan products and will make it very attractive for usein portable entertainment products which are becoming very popular in China aswell as the rest of the world. Dr Paul JohnsonChief Executive Officer21 March 2006 Consolidated Profit and Loss AccountYear ended 31 December 2005 Note 2005 2004 £ £ TURNOVER: continuing operations 29,899 12,116 Cost of sales (4,966) (9,100) Gross profit 24,933 3,016 Administrative expenses (2,228,526) (1,022,033) OPERATING LOSS: continuing operations (2,203,593) (1,019,017) Interest receivable and similar income 61,970 12,750Interest payable and similar charges (12,621) (10) LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (2,154,244) (1,006,277) Tax on loss on ordinary activities 67,381 - RETAINED LOSS FOR THE FINANCIAL YEAR BEING LOSSATTRIBUTABLE TO EQUITY HOLDERS (2,086,863) (1,006,277) LOSS PER SHARE (pence)Basic and diluted 2 (3.8) (2.5) Consolidated Balance Sheet31 December 2005 2005 2004 £ £ FIXED ASSETSIntangible assets 4,000 8,000Tangible assets 163,236 155,801 167,236 163,801 CURRENT ASSETSStocks 59,583 35,396Debtors 182,560 21,460Investments - short term deposits 5,375,000 -Cash at bank and in hand 192,680 203,459 5,809,823 260,315 CREDITORS: amounts falling due within one year (338,105) (89,734) NET CURRENT ASSETS 5,471,718 170,581 TOTAL ASSETS LESS CURRENT LIABILITIES, BEING NET ASSETS 5,638,954 334,382 CAPITAL AND RESERVESCalled up share capital 168,621 81,182Share premium account 8,598,230 1,121,634Other reserve - shares for issue - 167,200Profit and loss account (3,127,897) (1,035,634) EQUITY SHAREHOLDERS' FUNDS 5,638,954 334,382 Consolidated Cash Flow Statement31 December 2005 2005 2004 £ £ Net cash outflow from operating activities (2,015,849) (931,442) Returns on investments and servicing of finance 49,349 12,740 Taxation - - Capital expenditure and financial investment (66,114) (57,515) Cash outflow before management of liquid resources andfinancing (2,032,614) (976,217) Management of liquid resources (5,375,000) - Financing 7,396,835 1,036,016 Decrease in cash in the year (10,779) 59,799 Analysis and Reconciliation of Net Funds At 1 January 31 Cash December 2005 flow 2005 £ £ £ Cash at bank and in hand 203,459 (10,779) 192,680Current asset investments - 5,375,000 5,375,000 Net funds 203,459 5,364,221 5,567,680 2005 2004 £ £ (Decrease) increase in cash in the year (10,779) 59,799Cash outflow from increase in liquid resources 5,375,000 - Change in net funds resulting from cash flows 5,364,221 59,799 Movement in net funds in year 5,364,221 59,799Net funds at 1 January 203,459 143,660 Net funds at 31 December 5,567,680 203,459 Consolidated Statement of Changes In EquityYear ended 31 December 2005 Share premium Shares for Share capital account issue Retained loss Total £ £ £ £ £ At 31 December 2004 81,182 1,121,634 167,200 (1,035,634) 334,382Loss for the year - - - (2,086,863) (2,086,863)New issue 87,439 8,317,001 (167,200) - 8,237,240Expenses of share issue - (840,405) - - (840,405)Currency translation difference onforeign currency net investments - - - (5,400) (5,400) At 31 December 2005 168,621 8,598,230 - (3,127,897) 5,638,954 During the year 43,719,762 ordinary shares were issued for £8,404,440. Shareissue costs amounted to £840,405. The resultant premium of £7,476,596 has beencredited to the share premium account. NOTES TO THE FINANCIAL STATEMENTS 1. Accounting policies This announcement is prepared on the basis of the accounting policies stated inthe previous year's financial statements. The financial statements are prepared in accordance with applicable UnitedKingdom accounting standards. The company has adopted FRS 21 "Events after thebalance sheet date", FRS 22 "Earnings per share", the presentation aspects ofFRS 25 "Financial instruments: disclosure and presentation", and FRS 28 "Corresponding amounts". No restatement of the comparatives was necessary. The particular accounting policies adopted are described below. Accounting convention The financial statements are prepared under the historical cost convention. Basic of consolidation The group financial statements consolidate the financial statements of thecompany and its subsidiary undertakings drawn up to 31 December each year. Theresults of subsidiaries acquired or sold are consolidated for the periods fromor to the date on which control passed. Acquisitions are accounted for underthe acquisition method. Intangible fixed assets The intellectual property is amortised in equal annual amounts over a period ofthree years. The amortisation started in January 2004 when the exploitation ofthe intellectual property commenced. Tangible fixed assets Depreciation is provided on cost in equal annual instalments over the estimateduseful lives of the assets. The rates of depreciation are as follows: Leasehold property improvements 20% straight line basisOffice equipment 50% straight line basisPlant and machinery, tools and equipment 20-25% straight line basisFixtures and fittings 25% straight line basis Stocks Stocks are stated at the lower of cost and net realisable value. Research and development Research and development expenditure is written off to the profit and lossaccount as incurred. Foreign exchange Transactions denominated in foreign currencies are translated into sterling atthe rates ruling at the dates of the transactions. Monetary assets andliabilities denominated in foreign currencies at the balance sheet date aretranslated at the rates ruling at that date. Translation differences arisingare dealt with in the profit and loss account. Investments Investments held as fixed assets are stated at cost less provision for anyimpairment in value. Taxation Current, including UK corporation tax and foreign tax, is provided at amountsexpected to be paid (or recovered) using the tax rates and laws that have beenenacted or substantively enacted by the balance sheet date. Deferred tax is provided in full on timing differences, which result in anobligation at the balance sheet date to pay more tax, or a right to pay lesstax, at a future date, at rates expected to apply when they crystallise based oncurrent tax rates and law. Timing differences arise from the inclusion of itemsof income and expenditure in taxation computations in periods different fromthose in which they are included in financial statements. Deferred tax assetsare recognised to the extent that it is regarded as more likely than not thatthey will be recovered. Deferred tax assets and liabilities are not discounted. Leases Rentals under operating leases are charged on a straight-line basis over thelease term, even if the payments are not made on such a basis. Turnover Turnover is principally derived from the sale of integrated circuits and isstated net of trade discounts and value added tax. Revenue is recognised ondespatch, which is deemed to be the point at which the risks and rewards ofownership are transferred. 2. Loss per share The calculations or earnings per share are based on the following losses andnumbers of shares. Basic and diluted 2005 2004 £ £ Loss for the financial year (2,086,863) (1,006,277) 2005 2004 No NoWeighted average number of shares: For basic and diluted loss per share 54,823,213 39,567,067 The financial information set out in the announcement does not constitute thecompany's statutory accounts for the years ended 31 December 2005 or 2004. Thefinancial information for the year ended 31 December 2004 is derived from thestatutory accounts for that year which have been delivered to the Registrar ofCompanies. The auditors reported on those accounts; their report was unqualifiedand did not contain a statement under s. 237(2) or (3) Companies Act 1985. Thestatutory accounts for the year ended 31 December 2005 will be finalised on thebasis of the financial information presented by the directors in thispreliminary announcement and will be delivered to the Registrar of Companiesfollowing the company's annual general meeting. - Ends - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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