Narrowband radio frequency communications networks developer CyanConnode (LON: CYAN) is raising £5m at 17p a share in order to strengthen the balance sheet and stock up with long lead time components. Three directors are investing £110,000 in the placing, which is at the current market price.
The share price has risen by more than 50% over less than four months, providing an opportunity to raise cash to finance expansion. In October 2022, there was a £500,000 share subscription at 12.25p a share. Earlier in the year, £2m was raised at 14p a share. In June 2021, £3.15m was generated from a placing and subscription at 9.5p a share.
CyanConnode has a strong order book and is participating in tenders for 75 million smart meters in India, which is equivalent to £1bn of revenues. Management hopes to win between 20 million to 30 million orders over five years. There are also opportunities in other countries.
In the six months to September 2022, revenues fell from £4.08m to £1.35m. The operating loss doubled to £2.4m. There was a £114,000 cash outflow from operations and there was more than £1m in the bank at the end of September 2022.
Revenues have already reached £5m in this financial year thanks to strong trading since the interims. The cash generated has already been invested in inventories.
Full year revenues of £12.5m are currently forecast and this is expected to rise to £16m in the year to March 2024, when a small profit is forecast.