Radio frequency communications networks developer CyanConnode (LON: CYAN) continues to manage its cash, while increasing revenues. The order book should ensure that further growth in revenues.
Chief executive John Cronin and finance director Heather Peacock are receiving part of their annual remuneration payment in shares.
In the six months to September 2020, revenues were £1.5m and the loss was £1.37m. This was achieved even though there was Covid-19 disruption in the period. Operating costs were reduced so that they are in line with levels of turnover. There are no direct comparisons because of the change in year end to March. However, there is a declining trend for the loss.
A short-term working capital loan from directors has helped CyanConnode to help finance the cash outflow from operating activities. Advanced payments from clients have reduced the cash outflow.
There was cash in the bank of £952,000 and short-term borrowings of £785,000. Since then, £750,000 has been received from clients. Tax credits of £1.1m will help cash flow and advanced payments continue to build up.
The order book in India is worth £19m, which is equivalent to one million units, and these orders could be deployed over the next two years. That is still a small percentage of the 250 million smart meter roll out planned in India. The management team in India has been improved.
There are also orders in Thailand and Sweden. There are also opportunities in UAE and Nigeria.
In the two months since the period end, revenues have been around £1m, taking the eight months figure to more than £2.5m generated in the 15 months to March 2020. At 4.7p a share, CyanConnode is valued at £8.6m. That is low compared to the potential for the communications technology in the smart meter and internet of things markets. Once the overheads are covered by revenues, the profit should increase rapidly. There is still some time before that will be achieved, though.