TIDMCYAN
RNS Number : 7529F
CyanConnode Holdings PLC
17 July 2019
CyanConnode Holdings plc
("CyanConnode" or the "Company")
Trading Update for the six months ended 30 June 2019
CyanConnode, a world leader in Narrowband Radio Frequency (RF)
Smart Mesh Networks, provides a trading update for H1 2019.
Financial Highlights
-- Total revenues expected to be in the region of GBP1.0m
-- Operating losses reduced by 16% to GBP3.0m
-- Period end net cash was GBP2.4m
-- R&D tax credits of GBP0.8m to be received, bringing total
cash available to GBP3.2m (31 December 2018: GBP4.6m)
-- Received approximately GBP2.0m in payments from customers during the period
John Cronin, CyanConnode Executive Chairman, commented:
"We have made solid progress during H1 2019, securing a number
of follow on orders in India and Europe, which is testament to the
strength of our Omnimesh technology. As anticipated, the Indian
general elections which took place during the period have impacted
the number of new tenders awarded in this market during the first
half of the year. Since the general elections closed in May 2019,
we have seen in country business activity resume to normal, which
we believe will result in increased contract orders from our key
market and in-turn significantly higher revenues in H2 2019 than
the whole of 2018. The growth in India and the demand from the rest
of the world gives the Board confidence that we will meet full year
market expectations[1]. We look forward to reporting on such new
orders in H2 2019 and delivering significant revenue growth for FY
2019."
[1] Market expectations denotes forecasts that have been made by
the Company's broker and external research parties
Operational Overview
India
In February 2019, CyanConnode announced a follow-on order from
Larsen & Toubro ("L&T"), worth approximately GBP0.4m. The
follow-on order relates to the order announced in May 2018, worth
GBP2.5m. Deployment has progressed rapidly and already showing
benefits of the Omnimesh solution to the utility. All of the
modules ordered in the follow-on order were delivered in H1 2019
and revenue recognised during the period. The full contract is
being rolled out over a period of up to two years followed by a
five-year support and maintenance period.
In April 2019, CyanConnode announced an order from a new partner
an Indian state-owned utility for the deployment of 3,000 smart
meter modules, which utilise a hybrid radio frequency ("RF") Smart
Mesh and cellular communication network. All hardware was delivered
to the new end customer, an Indian State-owned Utility, and revenue
recognised in H1 2019.
Europe
In April 2019, CyanConnode announced a GBP0.7m follow-on order
from HM Power ("HMP") to several Swedish utilities. The order
leverages the functionality of CyanConnode's standards based
Omnimesh Advanced Metering Infrastructure ("AMI") platform, for the
smart metering of district heating, as well as electricity. The
Company is also supplying HMP with a new product, long-range RF
communication modules, (modules with a range of up to 12km), to
increase the resilience of the RF Smart Network in rural areas.
Delivery of these modules is expected to commence in August
2019.
In June 2019, the Data Communications Company ("DCC"), who
maintain the infrastructure that underpins the roll-out of smart
meters across the United Kingdom, confirmed that over 1.3 million
new generation smart meters ("SMETS2") were connected to its secure
network. In the Central and Southern regions of the UK, it is
expected that approximately 24 million SMETS2 meters will
communicate with the DCC via a 2/3G cellular communications hub
which has CyanConnode's RF mesh technology embedded into it is
installed on the meter. Where 2/3G cellular signal is unavailable
(areas known as not-spots), a dual communications hub, which has
CyanConnode's RF mesh technology embedded into it, is installed on
the meter. Typically, to support the installation of a dual
communications hub in a not-spot, approximately four further dual
communications hubs with 2/3G cellular communication need to be
installed to form the local RF mesh network. The resulting RF mesh
is formed automatically giving multiple paths to the 2/3G gateway
and to the DCC.
APAC and Middle East
The smart metering market in the APAC and Middle East continues
to mature and presents a significant opportunity for
CyanConnode.
In January 2019, members of the Company's engineering team
visited Beijing Jingyibeifang Instruments Co Ltd ("Beijing
Instruments"), a Chinese partner with a license to manufacture
CyanConnode's RF modules and gateways (see announcement 07/12/18).
The team, led by Allan Baig (VP Engineering & Operations),
visited Beijing Instruments to develop the project plan, establish
peer-to-peer relationships and provide the hardware design and
manufacturing information to enable Beijing Instruments to set up
the production line for manufacturing. The partnership has
progressed well and the Company believes Beijing Instruments will
be ready to commence manufacture CyanConnode's RF modules and
gateways in H2 2019.
Due to geopolitical factors, which have accelerated in recent
weeks the Company has removed from its order pipeline an Iranian
order from Micromodje, for a smart metering contract that was
announced in February 2016.
Cash Collection
Whilst there are no plans to raise further capital from
investors, several avenues are being pursued to secure working
capital facilities, should it become necessary to ease cash flows
and or mitigate against any unforeseen delays in deliveries or
customer payments.
Board and senior management changes
Harry Berry and Paul Ratcliff stepped down from the Board during
the period, and two new Non-Executive Directors, Chris Jones and
Peter Tyler, were appointed.
There were also changes to senior management with the promotion
of Heather Peacock to Chief Financial Officer, Anil Daulani to
Chief Executive Officer & Managing Director of India, and Allan
Baig to Vice President Engineering & Operations.
Post Period
H2 2019 has started with three follow-on orders, the first being
from Genus Power Infrastructures Ltd, for a further 4,050 smart
meters under the Uttar Gujarat Vij Company Ltd ("UGVCL") contract
in India. The first phase of the project for 23,000 smart meters,
has seen significant improvement to back office functions such as
cash collection, and major reduction of Aggregate Technical &
Commercial, (AT&C), losses and was inaugurated on 27 February
2019 by The Energy Minister of Gujarat, Shri Saurabh Bhai
Patel.
The second follow-on order post period was from Toshiba
Information Systems (UK) Ltd ("Toshiba") and was for service
enhancements relating to the DCC infrastructure that underpins the
roll-out of smart meters across Great Britain. The order is worth
approximately GBP213k, which CyanConnode expects to recognise as
revenue in H2 2019.
The third follow-on order was from an existing Partner and is
for legacy hardware and software for a Nordic Utility. This order
is worth approximately EUR489k with 50% of the revenues for this
follow-on order expected in 2019 and 50% in 2020.
Outlook
Following the re-election of Narendra Modi as Indian Prime
Minister, CyanConnode expects to see a material acceleration of the
Indian Smart Meters National Programme. It is currently working on
a large number of tenders for the Indian market, that the Company
believe will result in significant new orders for the Company. The
Company's expectation and budget anticipated this increase in
orders, revenues and therefore cash receipts in H2 2019. Trading is
therefore in line with market expectation.
CyanConnode reconfirms that it believes that its UK Smart
Metering Implementation Programme ("SMIP") contract with Toshiba
will ultimately deliver revenue and believe that it will begin to
receive material revenue from the contract during 2020.
Enquiries:
CyanConnode Holdings plc Tel: +44 (0) 1223 225 060
John Cronin, Executive Chairman www.cyanconnode.com
Yellow Jersey PR (Financial PR) Tel: +44 (0) 20 3004 9512
Felicity Winkles / Sarah Hollins/ Annabel Atkins
cyanconnode@yellowjerseypr.com
Arden Partners plc (Broker and Nomad) Tel: +44 (0) 20 7614
5900
Paul Shackleton / Dan Gee-Summons (Corporate Finance)
Simon Johnson (Corporate Broking)
About CyanConnode
CyanConnode (AIM:CYAN.L), is a world leader in Narrowband Radio
Frequency (RF) Smart Mesh Networks, which are used for machine to
machine (M2M) communication. As well as being self-forming and
self-healing, CyanConnode's RF Smart Mesh Networks are designed for
rapid deployment, whilst giving exceptional performance and
competitive total cost of ownership.
In June 2018, CyanConnode launched its award-winning Omnimesh
Advanced Metering Infrastructure (AMI) platform, which has already
gained considerable commercial traction, especially in India which
is a key market for the Company.
Through a Global partner eco-system, which is vendor agnostic,
CyanConnode has several routes to market, therefore it is well
positioned to capitalise upon increasing Global demand for smart
metering solutions.
For more information, please visit www.cyanconnode.com
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END
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