TIDMCYAN
RNS Number : 3454K
CyanConnode Holdings PLC
10 April 2018
CyanConnode Holdings plc
("CyanConnode" or the "Company")
Trading Update
CyanConnode, the world leader in narrowband radio mesh networks,
today publishes a trading update for the first calendar quarter of
2018. Since the start of the year, the Company has seen increasing
momentum and demand for its products across multiple jurisdictions,
which will result in the Company generating more revenues in the
first half of 2018 than in the full year for 2017. The Company
expects levels of revenues and cash receipts to materially
accelerate throughout each quarter of the year and key commercial
and financial highlights of the quarter are outlined below.
Commercial Highlights
Following the appointment of Anil Daulani(1) , from Tech
Mahindra, as Managing Director of CyanConnode India in September
2017, both the sales and delivery teams have been significantly
strengthened. The relationships with existing meter and system
integration partners have been consolidated and new eco-system
partners added. As a result, the sales pipeline in India has
expanded and includes multiple large commercial opportunities where
orders are expected to be placed in the current calendar quarter
and the second half of 2018, resulting in cash and revenues during
2018.
In addition, the Company has generated revenues and been paid
for system integration work during the quarter by working with
local Tier 1 partners in three separate territories, including two
new territories. These three commercial opportunities could result
in significant orders which the Company will continue to pursue. An
additional benefit of this work is that the Company has increased
the number of successful integrations with Tier 1 meter
manufacturers, including some manufacturers with which the Company
has not previously been engaged.
Once an order has been received from a customer, the project
continues through a series of site acceptance tests (SATs) with
increasing deployment volumes and complexity. Successful SATs have
been delivered by the team in multiple territories during Q1 2018.
SATs have also been delivered in territories where orders had been
received prior to 2018 such as Iran and Bangladesh.
During the quarter, work on the smart metering contracts in Iran
continued. System integration work has taken place on both the
smart meter as well as the full end-to end-solution to be deployed
locally. Additional commercial opportunities have also been
identified in Iran and are being developed.
In the last Trading Update provided on 4 January 2018, the
Company updated that it had been notified by a significant customer
that deployment for one of the larger contracts had been delayed
for reasons outside the Company's control. A regular dialogue has
continued with this customer throughout the quarter, including a
senior management visit to their head office to meet the CEO. The
customer has reconfirmed that they will take delivery of the
hardware that CyanConnode manufactured for them in Q4 2017, but
currently the Company has little visibility on timing of the first
delivery. The Company will provide a further update on progress in
relation to this as soon as practicable.
The UK Smart Metering Implementation continues to progress with
over 11 million smart meters now installed in homes across the
country, according to new figures published by the government.
Furthermore, Smart Energy GB outlook survey provides clear evidence
that the overwhelming majority of customers who have smart meters
installed are happy to have them. The outlook found 73% of people
would recommend one and more than eight in ten of people with a
smart meter think their energy bill is accurate compared to 67%
with a traditional analogue meter. During 2018, the Company expects
to benefit from the roll-out of the UK Smart Metering
Implementation Programme. Licences for the contract were supplied
by Connode and paid for prior to its acquisition by the Company in
2016, and these have been built into the roll out.
(1) An interview with Anil Daulani is available through this link:
http://webcasting.brrmedia.co.uk/broadcast/5a1595583b59b604fb0b713a
Financial Highlights
At the end of the quarter, the Company had a global order book
of $100 million and a large identifiable global pipeline, with new
orders expected in the near term.
The CESC Mysore contract India has now officially passed the
User Acceptance Testing milestone which has resulted in a large
cash payment having been received. The customer contract from Genus
meters for UGVCL in India is proceeding much faster than previous
India projects, with deliveries having been made, payments already
received, and completion expected in the coming months.
As a result of the increased spending on R&D in 2017, which
was to develop the Company's new standards-based Omnimesh platform,
an R&D tax credit cash refund claim will be submitted this
month for GBP1.4 million (2016: GBP0.7 million). This includes an
amount for claims submitted for the Swedish entity in prior
years.
The Company has taken positive steps to manage and reduce the
cost base, with significant reductions being made in the last six
months. The cost base from July 2018 is expected to be around
GBP640k per month, which is significantly lower than in 2017.
Admission of final tranche of September 2017 Subscription
Shares
On 15 September 2017, the Company announced a placing and
subscription to raise GBP8.6 million through the issue of
30,852,488 ordinary shares of 2 pence each ("Ordinary Shares") at
an issue price of 28 pence per Ordinary Share. It was announced
that 1,785,714 of these Ordinary Shares were due to be issued to an
existing shareholder and admitted on 10 April 2018. As a result of
timings resulting from HMRC clearance and approval of EIS relief,
these Ordinary Shares will not be admitted on 10 April 2018 and the
Company will provide an update as soon as clearance has been
granted.
Outlook
The Company remains confident of the commercial opportunities,
with further conversion of the current order book into delivered
contracts, as well as additional significant orders expected. As a
result of the successful deployment of the current contracts in
India, further new and extension contracts are expected, including
new orders in the near term. A significant development of the
Omnimesh platform will complete this quarter(2) , which will
facilitate the Company's ability to both compete for and deliver
contracts in the larger IoT market. As a result, the Company
expects revenues for the first half of the year to be greater than
those achieved for the entirety of the 2017 financial year.
Assuming that the Company converts a sufficient number of the above
opportunities into orders during 2018, the Company expects revenue
and cash receipt progression to materially accelerate and therefore
the Board remains optimistic of meeting market expectations for
revenues during 2018. There is a large level of uncertainty on
timings relating to delivery of some larger items in the order book
and pipeline, which could cause a significant change in revenues,
both to the upside and downside.
The Company will provide a further update on trading progress
alongside its annual results announcement for 2017 which is
expected in mid-May 2018. (2) An interview with Sylvain Vittecoq,
CTO, which gives more information on the new Omnimesh platform is
available through this link:
https://www.brrmedia.co.uk/broadcasts-embed/5ac3435c9d7a167511f4d79c/event/?livelink=true&popup=true
John Cronin, CyanConnode Executive Chairman, commented: "Solid
progress was made on multiple fronts in the first quarter of 2018.
We continue to maintain management team focus on the delivery of
the current order book, including the delayed contract highlighted
above. In addition to the successful SATs described above I'm
particularly pleased by the progress made by Anil Daulani in the
India market over the last six months. We continue to be viewed as
thought leaders in the smart metering communication industry as a
result of the multiple contracts we have won and deployed. The
commercial pipeline in India looks very good and we expect to
secure additional orders from this pipeline in the near term. All
of the above factors give us a good indication of being able to
meet market expectation for the year."
The information communicated in this announcement is inside
information for the purposes of Article 7 of Regulation
596/2014.
Enquiries:
CyanConnode Holdings plc Tel: +44 (0) 1223
225 060
John Cronin, Executive Chairman www.cyanconnode.com
FinnCap Ltd (Nomad and Broker) Tel: +44 (0) 20
7220 0500
Adrian Hargrave / Giles Rolls
(Corporate Finance)
Alice Lane (Corporate Broking)
Walbrook PR (Financial PR) Tel: +44(0) 20 7933
Paul Cornelius / Nick Rome 8780
cyanconnode@walbrookpr.com
About CyanConnode
CyanConnode is a world leader in narrowband RF mesh networks
that enable Omni Internet of Things (IoT) communications. Its
innovative solutions use sub GHz frequencies and are optimised for
exceptional performance. Optimal solutions provide a higher
end-to-end quality of service and a lower total cost of ownership.
The IPv6/6LoWPAN product set delivers standards-based solutions
enabling innovation and the rapid implementation of 3(rd) party
applications. Through its global partner eco-system, CyanConnode
provides customers with the flexibility and choice required to
converge networks for applications in smart cities and IoT,
delivering increased customer value.
For more information, please visit www.cyanconnode.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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