TIDMCYAN
RNS Number : 4171U
CyanConnode Holdings PLC
12 July 2018
CyanConnode Holdings plc
("CyanConnode" or the "Company")
Trading Update
H1 Revenues exceed those achieved in FY 2017
H2 Revenues are expected to materially accelerate
CyanConnode (AIM: CYAN), the world leader in narrowband radio
mesh networks, provides a trading update for the six-month period
ended 30 June 2018.
Key Developments
During the period the Company continued to grow its product
portfolio and geographic reach while further strengthening
relationships with existing clients through fulfilment of its
orderbook. As a result of its broader geographic reach and the
growing size and scale of the order book, the Company has realigned
its delivery processes to ensure order fulfilment forecasts were
met during the period, enabling the Company to achieve its highest
ever first half revenue performance.
Financial Highlights
The Company expects H1 2018 revenues of GBP1.6 million, which is
37% higher than for the entire FY 2017 with India being the main
contributing region. H1 2018 operating loss before tax is expected
to be in the region of GBP3.3 million, being a significant
improvement over the loss before tax of GBP11.15 million for FY
2017. Furthermore, operating margins were expanded as a direct
result of the reduction in overheads with further cost savings
expected during the second half for the current financial year. The
Company ended the period with GBP2.8 million of net cash, including
GBP1.4 million from R&D tax credits.
Operating Highlights
India
During the period, the Company announced a US$3.2m order from
L&T for Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company
Ltd ("MPWZ"), which is the largest government utility project on RF
mesh technology to date. Delivery of this contract is commencing
this month, with the majority of hardware expected to be delivered
during 2018. In addition, Larsen and Toubro ("L&T") placed
orders for the Company's Optimal solutions during H1 2018, which
brought the total number of units ordered by L&T for this
product to date to 31,735.
The Indian smart metering market continues to evolve rapidly and
given the experience gained from ongoing pilot projects, the
opportunities and scale of deployments is increasing. The Company
is excited by the significant market developments and, having
strengthened its management team in-country, is well placed to take
advantage of the government's plans to move to smart prepaid meters
with the recent launch of its new Omnimesh product. The Minister of
Power and New & Renewable energy, R.K Singh announced recently
that "in the next three years metering will go smart prepaid and
gone will be the days of bills reaching your house. So need of the
hour is to scale up manufacturing of smart prepaid meters and to
bring down their prices(1) ".
The Company maintains its market leading position in India, with
proven technology that meets the AMI requirements in India and an
established partner ecosystem. Leading meter manufacturers, such as
Genus, Larsen & Toubro("L&T") and HPL, have integrated
CyanConnode's standards-based Omnimesh technology with their IS
16444 smart meters to comply with Bureau of Indian Standards meter
protocol and through these channels we expect to see further strong
growth.
Indian utilities are issuing large Requests For Proposal's, from
100k to 500k units, for smart meters solution based on RF mesh
technology. Through collaboration, the Company is well positioned
to submit proposals and is actively working on a pipeline of
approximately US$100 million in India. A number of these pipeline
opportunities are at the final stages of tender.
Rest of the World
The smart metering market in the Rest of the World (ROW) is
maturing and continues to present a significant opportunity for the
Company with a US$320m pipeline. This vast market opportunity
brings a number of challenges and key to the Company obtaining a
leading position in ROW is to establish strategic alliances.
The contracts in Iran and Bangladesh are still active and are at
different stages of the SAT process. The Company continues to work
through these key processes with its key partners.
In competitive evaluations, CyanConnode's technology outperforms
and works 'first time' against some large and well-established
brands. Across ROW, the Company's brand is rapidly becoming
synonymous with reliability, delivery and value for money.
The Company continues to reinforce the leading position of its
standards-based solution through follow-on orders from the existing
customer base in Europe. In June, the Company announced a Euro
184,000 order for an existing partner for a smart metering
deployment for a European utility.
UKSMIP
The Company looks forward to the continued rollout of the UK
Smart Metering Implementation Programme (SMIP). Telefonica's SMIP
solution is based upon its existing cellular network in the UK,
supported by CyanConnode's solution, which connects households
without reliable cellular coverage (known as "not-spots" by the
mobile phone network operators). The contract, which consists of
software license and support fees, is projected to deliver GBP24m
of revenues based on an assumption of 10% of "not-spots" across the
UK implementation. However, following a recent Ofcom report(2)
Network Operators have been tasked to provide 90% coverage of the
UK, which is currently only 70%. Based on the current coverage of
70% of the UK, the Company could expect significantly increased
revenue from the SMIP contract.
Outlook
The Company has previously stated that H2 2018 revenue will be
substantially larger than H1 2018 based partly on contracts already
won and already in the delivery phase and partly on new orders
expected for hardware to be delivered. Management still believes
this will be the case.
John Cronin, CyanConnode Executive Chairman, commented: "The
Board is focussed on providing returns to shareholders and has
taken a number of steps to ensure the Company moves to a position
where it can generate profits as revenues grow. We believe that the
steps we have taken in recent months and the opportunity ahead mean
that we will be able to deploy further significant contracts as we
convert our order book."
[1]
https://economictimes.indiatimes.com/industry/energy/power/all-electricity-meters-to-be-smart-prepaid-in-3-years-r-k-singh/articleshow/64493720.cms
[2]
https://www.engadget.com/2017/12/18/uk-infrastructure-adonis-ofcom-mobile-coverage/?guccounter=1
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 8780
Paul Cornelius / Nick Rome 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 end-to-end
quality of service and total cost of ownership and IPv6 6LoWPAN
delivers standards-based IPv6 solutions, enabling rapid innovation
for the 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.
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END
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