28th Sep 2006 07:03
Cyan Holdings Plc28 September 2006 Press Release 28 September 2006 Cyan Holdings Plc ("Cyan" or "the Group") Interim Results Cyan Holdings Plc (AIM: CYAN.L), the fabless semiconductor company specialisingin the development of low powered, configurable microcontroller chips, announcesits Interim Results for the six months ended 30 June 2006. Business Highlights • new 16 bit eCOG1X microcontroller product range released for production • Tier One global brand name opportunity over 1 million units per annum • 14 design wins already for eCOG1X estimated to generate 250,000 units per annum • 18 further opportunities for eCOG1X over 50,000 units per annum amounting to 3.5 million units per annum • P&L and cash reserves in line with forecasts • Cyan Asia well established and generating significant opportunities • Strong pipeline of business building • Very strong position in the huge Chinese tax control terminal market with potential for significant market share Commenting on the results, Paul Johnson, Chief Executive, of Cyan, said: "Wehave seen tremendous potential in China and are buoyed by our solidrelationships throughout the area. Our eCOG1X product range will generatesignificant business in Europe and Asia as demonstrated by early stage designwins and opportunities. We look forward to continued and increasing success inAsia." For further information: Cyan Holdings plcPaul Johnson, Chief Executive Officer Tel: +44 (0) 1954 234 400 www.cyantechnology.comCollins Stewart LimitedSimon Atkinson, Corporate Finance Tel: +44 (0) 20 7523 8312 www.collins-stewart.comMedia enquiries:Abchurch CommunicationsHeather Salmond / Franziska Boehnke Tel: +44 (0) 20 7398 [email protected] www.abchurch-group.com Interim Statement The announcement at the end of August that our new 16 bit eCOG1X microcontrollerhas been released into its production stage marks a sea change in the evolutionof the Company. For the first time we will be able to supply customers with afull product range for 16 bit solutions and this has already been welcomed byexisting customers; even more importantly, it should have a positive impact withthose potential customers who wanted a larger and more flexible product rangeavailable before committing to using Cyan chips. We can now deliver across asignificantly broader range of performance, power consumption and price points.This increase in our product offerings, which now totals 32 versions, enables usto compete in many more market areas, including motor control andinstrumentation, and we anticipate a significant contribution to revenues in2007 resulting from design wins, opportunities and sales within this extendedmarket. Not only are we confident that the launch of the eCOG1X will be very positivefor growth, we are seeing the benefits of being a PLC with greater access tolarger, well established companies. While we cannot be specific as to theidentity of these companies, because of issues of client confidentiality, we candisclose that we are now in active dialogue with five of the World's largest andbest known consumer electronic companies of which four are based in Asia and theother is in the United States. eCOG1X will be available to customers in production quantities in early 2007thereby allowing deliveries against normal lead times during the course of theyear. Pre-production chips and development kits will be available to customersby the end of 2006 to support our existing eCOG1X design wins and opportunitiesfor the new product. Based on our current conversations with customers, we feelthat meaningful sales of eCOG1X could commence in the third quarter 2007, thoughsecond quarter sales are not out of the question. We currently have 14 design wins for eCOG1X which, when in full production, areexpected to generate 250,000 units of sales per annum. However, moreimportantly, we are also in discussion (in some cases late stage discussions) ona number of large opportunities from which we are confident of achievingimportant design wins. To date we have identified 18 opportunities for more than50,000 units per annum that amount in total to 3.5 million units per annum whenin full production. One of these opportunities is with a 'Tier One' globalplayer, with a market capitalisation well in excess of US$40 billion. Theproduct for which they wish to use the eCOG1X is already in volume productionusing a different microcontroller plus other chips with per annum unit sales ofover 1 million units. Substituting the Cyan product would give the customerannual savings of almost $20 million - a compelling reason to change. Thisproject is already in the late stages of development with working prototypes andsoftware and is a drop in replacement for the current solution. These costsavings could well open new market opportunities for Cyan's customer generatingfurther high volume sales for Cyan. eCOG1K addresses real market needs in the shape of lower cost, less complexapplications, particularly those needing ultra low power characteristics andcontinues to find design wins and opportunities for its unique features. TheeCOG1K product family will see further additions in the future and these R&Dprograms have commenced. We have now sold product to twelve separate companies,one of which is high volume, although most of our early stage customers were inlower volumes than recent design wins and opportunities. Design wins for theeCOG1K represent about 1.7 million units per annum when all are in fullproduction and opportunities represent about 13 million units per annum. The whole product range is supported by the unique CyanIDE software developmentenvironment which is rapidly growing into an extremely powerful developmentengineering support tool. To date Cyan has released major new versions ofCyanIDE, with enhanced features and functionality about every 6 months. During the period the Company has further developed and enhanced the quality ofits sales network by signing up new distributors in both Germany and Korea. Bothdistributors were impressed with the Cyan product range and CyanIDE developmenttools and are well positioned to introduce the Company to significant newaccounts in their respective territories. We are currently in early stage talkswith a potential distributor for the Japanese market and have started theprocess of broadening our representation in Europe, which is still a significantuser of microcontrollers. Cyan has put everything in place, ready for launch with a significant customerin China using the eCOG1K. This order represented a large part of our projected2006 and 2007 turnover at the time of flotation. The balance of our initial100,000 unit order was shipped in Q3 and we await the rollout of the project inChina. The delays are not of our own making, nor those of our customer, butrather due to government delay in the rollout of the project, which hadinitially been projected for Jan 05. All of our enquiries indicate that thedelay is administrative and that all back office IT systems are complete andfunctioning. Our customer is already an established supplier to the Chinesemarket with a reputed 20% market share and has after sales service and supportacross the country and knows the Chinese ePOS market very well. They are alsovery successful outside China having shipped over 1 million units to brand namesin Europe to date. (This is with an earlier generation product which does notuse a Cyan chip). Our customer's projections for the Chinese market exceed 50million units by 2010 and they expect to be the market leader, to which end theyhave already invested very heavily in products, production tooling and capacity. Turnover for the period was £60,000. Costs have been kept tightly under controlduring the period and the Company has earned interest of £102,000 frominvestments in treasury deposits. Our six months' operating loss and our cashbalance remain in line with expectations at £1,400,000 and £4,298,000respectively. The Company expects to maintain its steady progress during thesecond half of 2006. We look forward to exploiting the potential of the newproduct range over the course of the final quarter of 2006 and beyond. Mike Hughes Dr Paul JohnsonChairman Chief Executive Officer CONSOLIDATED PROFIT AND LOSS ACCOUNTResults for the six months ended 30 June 2006 Note Six months Six months Year ended 30 ended 30 ended 31 June June December 2006 2005 2005 Unaudited Unaudited Audited As restated As restated see note 7 see note 7 £ £ £ Turnover 60,458 20,453 29,899Cost of sales (48,874) (2,837) (4,966) Gross profit 11,584 17,616 24,933 Administrative expensesShare option charges (84,286) (168) (13,673)Other (1,327,312) (1,019,712) (2,228,526) (1,411,598) (1,019,880) (2,242,199) Operating loss (1,400,014) (1,002,264) (2,217,266) Interest receivable and similar 107,180 20,458 61,970incomeInterest payable and similar charges (41,347) (3,608) (12,621) Loss on ordinary activities (1,334,181) (985,414) (2,167,917)before taxation Tax on loss on ordinary activities - - 67,381 Loss for the financial period (1,334,181) (985,414) (2,100,536) Loss per share - basic and diluted 2 (1.6) (2.0) (3.8)(pence) All activities derive from continuing operations. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESResults for the six months ended 30 June 2006 Six months Six months Year ended 30 ended 30 ended 31 June June December 2006 2005 2005 Unaudited Unaudited Audited As restated- As restated- see note 6 see note 6 £ £ £ Loss for the financial period (1,334,181) (985,414) (2,100,536)Currency translation difference onforeign currency net 19,027 - (5,400)investments Total recognised gains and losses (1,315,154) (985,414) (2,105,936)relating to the period CONSOLIDATED BALANCE SHEETAt 30 June 2006 Note As at 30 As at 30 As at 31 June June December 2006 2005 2005 Unaudited Unaudited Audited as restated as restated see note 7 see note 7 £ £ £ FIXED ASSETSIntangible assets 2,000 6,000 4,000Tangible assets 148,044 176,527 163,236 150,044 182,527 167,236 CURRENT ASSETSStocks 127,939 36,563 59,583Debtors 78,525 101,903 182,560Current investments 4,030,000 1,090,000 5,375,000Cash at bank and in hand 267,870 153,589 192,680 4,504,334 1,382,055 5,809,823 CREDITORS: amounts falling due (230,451) (308,902) (338,105)within one year NET CURRENT ASSETS 4,273,883 1,073,153 5,471,718 TOTAL ASSETS LESS CURRENT 4,423,927 1,255,680 5,638,954LIABILITIES, BEING NET ASSETS CAPITAL AND RESERVESCalled up share capital 3 169,762 109,315 168,621Share premium account 3 8,612,930 3,126,739 8,598,230Other reserve - shares for issue - 40,506 -Profit and loss account (4,456,724) (2,021,048) (3,141,570)Share option reserve 97,959 168 13,673 EQUITY SHAREHOLDERS' FUNDS 6 4,423,927 1,255,680 5,638,954 CONSOLIDATED CASH FLOW STATEMENT Results for the six months ended 30 June 2006 Note Six Six Year months months ended 31 ended 30 ended 30 December June June 2005 2006 2005 Audited Unaudited Unaudited £ £ £ Net cash outflow from operations 4 (1,331,873) (873,774) (2,015,849) Returns on investments and servicing of financeInterest received and similar income 107,180 20,458 61,970Interest paid and similar charges (41,347) (3,608) (12,621) Net cash inflow from returns on investments andservicing of finance 65,833 16,850 49,349 Capital expenditure and financial investmentPurchase of tangible fixed assets (19,611) (46,590) (66,114) Net cash outflow from capital expenditure andfinancial investment (19,611) (46,590) (66,114) Net cash outflow before management of liquidresources and financing (1,285,651) (903,514) (2,032,614) Management of liquid resourcesDecrease/(increase) in short term deposits 1,345,000 (1,090,000) (5,375,000) Net cash inflow/(outflow) from management of liquid 1,345,000 (1,090,000) (5,375,000)resources FinancingIssue of ordinary share capital (net of issue costs) 15,841 1,943,644 7,396,835 Net cash inflow from financing 15,841 1,943,644 7,396,835 Increase/(decrease) in cash 5 75,190 (49,870) (10,779) NOTES TO THE FINANCIAL INFORMATION 1. Basis of preparation The financial information has been prepared in accordance with the policies setout in the statutory financial statements of Cyan Holdings plc for the yearended 31 December 2005 with the exception of accounting for share options.FRS20 "Share Based Payments" is applicable for the first time and has a prioryear impact which is detailed in note 7. These interim financial statements do not constitute statutory financialstatements within the meaning of Section 240 of the Companies Act 1985. Resultsfor the six month periods ended 30 June 2006 and 30 June 2005 have not beenaudited. The results for the year ended 31 December 2005 have been extractedfrom the statutory financial statements of Cyan Holdings plc and restated whereappropriate as explained in note 7. The financial statements for the year ended31 December 2005 have been filed with the Registrar of Companies and upon whichthe auditors' report was not qualified and did not contain a statement underSection 237(2) or (3) of the Companies Act 1985. 2. Loss per share Basic and diluted loss per ordinary share has been calculated by dividing theloss after taxation for the periods as shown in the table below. Six months Six months ended Year ended ended 30 30 June 2005 31 December June 2006 As restated - 2005 see note 6 As restated - see note 6 Losses (£) (1,334,181) (985,414) (2,100,536)Weighted average number of shares 84,670,828 48,665,598 54,823,213 FRS 22 requires presentation of diluted EPS when a company could be called uponto issue shares that would decrease net profit or increase net loss per share.For a loss making company with outstanding share options, net loss per sharewould only be increased by the exercise of out of the money options. Since itseems inappropriate to assume that option holders would act irrationally andthere are no other diluting future share issues, diluted EPS equals basic EPS. 3. Share capital and share premium account As at As at As at 30 June 30 June 31 2006 2005 December 2005 £ £ £Authorised:150,000,000 (June 2005: 100,000,000, December 2005: 300,000 200,000 300,000150,000,000) ordinary shares of £0.002 each Called up, allotted and fully paid84,881,140 (June 2005: 54,657,675, December 2005: 84,310,515) 169,762 109,315 168,621ordinary shares of £0.002 each Share Premium Account As at As at As at 30 June 30 June 31 2006 2005 December 2005 £ £ £ At start of period 8,598,230 1,121,634 1,121,634Premium on share issues 14,700 2,005,105 7,476,596 At end of period 8,612,930 3,126,739 8,598,230 4. Reconciliation of operating loss to operating cash outflow Six Six months Year ended 31 months ended 30 December ended 30 June 2005 2005 June As restated As restated - 2006 - see note 7 see note 7 £ £ £ Operating loss (1,400,014) (1,002,264) (2,217,266)Currency translation difference 19,027 - (5,400)Depreciation and amortisation 36,803 27,864 62,679FRS 20 share option charge 84,286 168 13,673Increase in stocks (68,356) (1,167) (24,187)Decrease/(increase) in debtors 104,035 (42,543) (93,719)(Decrease)/increase in creditors (107,654) 144,168 248,371 (1,331,873) (873,774) (2,015,849) 5. Analysis and reconciliation of net funds 31 Cash 30 December flow June 2005 2006 £ £ £ Cash at bank and in hand 192,680 75,190 267,870Current asset investments 5,375,000 (1,345,000) 4,030,000 Net funds 5,567,680 (1,269,810) 4,297,870 6. Reconciliation of movements in group shareholders' funds Six Six Year months months ended 31 ended 30 ended 30 December June June 2005 2006 2005 £ £ £ Loss for the financial period (as restated, see note 7) (1,334,181) (985,414) (2,100,536)Other recognised gains and losses 19,027 - (5,400) (1,315,154) (985,414) (2,105,936) New shares issued (net of expenses) 15,841 2,033,238 7,396,835Movement in share option reserve (as restated, see note 7) 84,286 (126,526) 13,673 Net (decrease)/increase in shareholders' funds (1,215,027) 921,298 5,304,572 Opening shareholders' funds 5,638,954 334,382 334,382 Closing shareholders' funds 4,423,927 1,255,680 5,638,954 7. Prior year restatement - Implementation of FRS 20 "Share-based payment" Accounting policy change The Group has applied the requirements of FRS 20 Share-based payments. Inaccordance with the transitional provisions, FRS 20 has been applied to allgrants of equity instruments after 7 November 2002 that were unvested as of 1January 2005. The Group issues equity-settled share-based payments to certain employees anddirectors. Equity-settled share-based payments are measured at fair value at thedate of grant. The fair value determined at the grant date of the equity-settledshare-based payments is expensed on a straight-line basis over the vestingperiod, based on the group's estimate of shares that will eventually vest. Fair value is measured by use of a Black-Scholes model. The expected life usedin the model has been adjusted, based on management's best estimate, for theeffects of non-transferability, exercise restrictions, and behaviouralconsiderations. A liability equal to the portion of the goods or services received is recognisedat the current fair value determined at each balance sheet date for cash-settledshare-based payments. Impact of restatement The impact of implementing FRS 20 "Share-based payment" has had the followingimpact on the financial statements. PROFIT AND LOSS ACCOUNT Six Year months ended 31 ended 30 December June 2005 2005 £ £ Administrative expenses as previously stated 1,019,712 2,228,526FRS 20 "Share-based payment" charge 168 13,673 Administrative expenses as restated 1,019,880 2,242,199 Loss per share - basic and diluted (pence) as previously 2.0 3.8stated FRS 20 "Share-based payment" charge - - Loss per share - basic and diluted (pence) as restated 2.0 3.8 8. Prior year restatement - Implementation of FRS 20 "Share-based payment"(continued) BALANCE SHEET As at 30 As at 31 June December 2005 2005 £ £ Profit and loss account as previously stated (2,020,880) (3,127,897)FRS 20 "Share-based payment" charge (168) (13,673) Profit and loss account as restated (2,021,048) (3,141,570) Share option reserve as previously stated - -FRS 20 "Share-based payment" charge 168 13,673 Share option reserve as restated 168 13,673 The impact on the current period has been to increase administrative expenses by£84,286 and to increase the share option reserve by £84,286. INDEPENDENT REVIEW REPORT TO CYAN HOLDINGS PLC Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2006 which comprises the profit and loss account,the statement of total recognised gains and losses, the balance sheet, the cashflow statement and related notes 1 to 7. We have read the other informationcontained in the interim report and considered whether it contains any apparentmisstatements or material inconsistencies with the financial information. This report is made solely to the company, in accordance with Bulletin 1999/4issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our review work, for this report, or for the conclusions wehave formed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare also responsible for ensuring that the accounting policies and presentationapplied to the interim figures are consistent with those applied in preparingthe preceding annual accounts except where any changes, and the reasons forthem, are disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) and therefore provides a lower level of assurance than an audit.Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2006. Deloitte & Touche LLP Chartered AccountantsCambridge Notes: A review does not provide assurance on the maintenance and integrity ofthe website, including controls used to achieve this, and in particular onwhether any changes may have occurred to the financial information since firstpublished. These matters are the responsibility of the directors but no controlprocedures can provide absolute assurance in this area. Legislation in the United Kingdom governing the preparation and dissemination offinancial information differs from legislation in other jurisdictions. -Ends- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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