CyanConnode Holdings plc (LON: CYAN), a world leader in narrowband radio frequency (RF) mesh networks, has announced its interim results for the six months ended 30 September 2021.
Financial Highlights
· Revenue up 172% to £4.1m (H1 FY 2021: £1.5m)
· Gross profit up 104% to £1.7m (H1 FY 2021: £0.8m)
· Operating loss reduced by 26% to £1.2m (H1 FY 2021: £1.6m)
· Cash received from customers up 138% to £3.8m (H1 FY 2021: £1.6m)
· Cash and cash equivalents at end of period £1.7m (H1 FY 2021: £1.0m)
Operational Highlights
· Omnimesh modules shipped to customers up 3.4 times to 315k (H1 FY 2021: 92k)
· 152k Omnimesh modules ordered for a new customer in northern India
· Follow-on order from MEA (Metropolitan Electricity Authority) Smart Grid Project in Thailand
· 100k Omnimesh modules ordered for a new customer in Africa
· Key MOU (Memorandum of Understanding) signed with Intellismart (IntelliSmart Infrastructure Private Limited)
· Heavily oversubscribed Placing completed at a premium to the then share price, raising £3.15 million before expenses
· Selected as EESL (Energy Efficiency Services Limited) Technology Partner for the Middle East and Africa
· Global Strategic Alliance signed with SEW (Smart Energy Water)
· Further strengthening of the Indian Management Team
· Awarded the London Stock Exchange Green Economy Mark
· Won the Frost and Sullivan Global Smart Metering Technology Innovation Leadership Award
John Cronin, CyanConnode Executive Chairman, commented:
“I am pleased with the continued successful deployment of projects, which has resulted in a significant increase of revenue for the first half of the financial year ending 31 March 2022 (H1 FY 2022).
As with many companies, there have been challenges which impacted our business during the period. The year started with further Covid-19 lockdowns and ongoing component shortages, which resulted in higher costs and longer lead times. Nevertheless, we have been able to continue manufacturing and shipping our products to meet customer requirements on time.
Despite these challenges, I believe CyanConnode will meet market expectations for the current financial year.”
Chairman’s Statement
Financial highlights
Key figures
| H1 FY 2022£’000 | H1 FY 2021£’000 | % Change | |
| Revenue | 4,078 | 1,499 | + 172% |
| Gross profit | 1,696 | 831 | + 104% |
| Operating costs | (2,900) | (2,453) | + 18% |
| Operating loss | (1,204) | (1,622) | – 26% |
| Cash | 1,740 | 952 | + 83% |
· Revenue for the first six months of FY 2022 was once again affected by the COVID-19 pandemic, as well as shortages of key components required for manufacture of the Company’s hardware. Despite these challenges, CyanConnode was pleased to see significant revenue growth of 172% during the first six months of the financial year compared with the first six months of FY 2021
· Operating costs increased by 18% to £2.899m for the first six months of FY 2022 compared to the first six months of FY 2021, mainly as a result of increased costs to support the growth of the business
· Operating loss reduced by 26% to £1.204m for the first six months of FY 2022 compared to the first six months of FY 2021
· Basic and diluted loss per share improved by 37% from 0.78p to 0.49p compared to the first six months of FY 2021
· Cash and cash equivalent increased from £1.0m as at 30 September 2020 to £1.7m as at 30 September 2021
· Accounts receivables a total of £3.8m cash (H1 FY 2021: £1.6 million) has been collected from customers during the period, and a further £0.7m since
Operational Review
India
During the period India suffered a second wave of Covid-19 which resulted in further lockdowns. Nevertheless, despite these lockdowns and global shortages of key components, CyanConnode has been able to continue manufacturing and shipping products to meet customer requirements on time.
In May 2021, CyanConnode announced the signing of a MOU (Memorandum of Understanding) with Intellismart (Intellismart Infrastructure Private Limited), a joint venture company formed by EESL, (Energy Efficiency Services Limited), and NIIF, (National Investment and Infrastructure Fund). Intellismart is a Meter Asset Provider which deploys smart meters by funding CAPEX, which it then recovers through an OPEX model. Intellismart is focusing on expediting the deployment of 250 million smart meters across India and it can operate at scale by leveraging the expertise and capital of EESL and NIIF. Under the MOU, CyanConnode and Intellismart will work on existing EESL and Intellismart projects as well as new ones, in India and international markets.
In June 2021, CyanConnode India appointed Rajiv Kumar as Managing Director and Chief Executive Officer. Rajiv is a dynamic professional with twenty-five years’ experience in digital energy for transmission and distribution utilities. He joined CyanConnode India from Intellismart where he managed one of the largest smart meter deployment programs in India in his role as Chief Operating Officer, a role he held since Intellismart was set up in 2019. He joined Intellismart from EESL where he was responsible for driving the Smart Meter National Program under the Ministry of Power, Govt. of India. Prior to EESL, Rajiv’s experience included more than a decade working for Schneider Electric, both internationally and in India in strategic roles in their digital energy business, and a decade working for Powergrid Corporation of India.
In August 2021, the Company announced a new order for 152,000 Omnimesh modules from a new end customer in Northern India. The order includes Services, Omnimesh Head-End Software, Perpetual Licence and an Annual Maintenance Contract. Under the contract CyanConnode will supply its new Omnimesh Cellular Modules as well as Omnimesh RF Modules. Deployment of this contract has commenced with 40,000 modules being shipped during the period.
The Government of India recently announced in The Gazette of India that all Industrial, Commercial, Residential and Government Consumers, (except Agriculture Consumers), will be supplied electricity through Smart Meters with prepayment features. The timeline for replacing all dumb meters with Smart Meters has been split into two phases:
The first phase of approximately 100 million meters is to be implemented by December 2023 and will include the following Consumers;
· All Union Territories;
· Electrical divisions having more than 50% of Consumers in urban areas with Aggregate Technical & Commercial (AT&C) losses more than 15% in the financial year 2019-20;
· Other electrical divisions with AT&C losses more than 25% in the financial year 2019-20;
· All Government Offices at Block Level and above, and;
· All Industrial and Commercial Consumers.
The second phase of approximately 150 million meters is to be implemented by March 2025 and will cover all remaining Consumers.
The Government of India has also announced a “Revamped Power Distribution Scheme” with funding of circa £30 billion aimed at strengthening Transmission and Distribution Infrastructure.
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 April 2021, CyanConnode was pleased to announce it had been selected by EESL Energy Solutions LLC, Dubai, (EESL), as technology partner for projects in the Middle East and Africa for smart metering and smart lighting projects.
In May 2021, a Global Strategic Alliance Agreement was signed with SEW (Smart Energy Water). Headquartered in California, SEW is a global energy and water cloud platform provider serving over three hundred utilities worldwide. The company delivers and builds the best digital customer and workforce experiences in the utility industry. Its innovative solutions are easy to use and integrate seamlessly with utility enterprise systems to improve customer and operational efficiency using artificial intelligence (AI), cloud and mobile technologies. Under the terms of the Agreement, each of CyanConnode and SEW shall promote and be authorised to sell the others’ Products and Services, as well as referring potential customers to each other, thereby expanding the geographical reaches of each Company.
In August 2021, a follow-on order was received from JST (The JST Group), for 31,000 Omnimesh modules and associated gateways, this order is in addition to the 33,000 Omnimesh Modules and 206,735 Omnimesh perpetual software licences purchased in 2019 and 2020. Deployment of this order will follow the successful ‘Go-Live’ phase of the MEA Smart Grid Project, which is expected in Q4 of 2021.
CyanConnode is delivering the MEA project with JST’s partner Forth (Forth Corporation Public Company Limited), a telecommunication and electronics company that provides products and integration services throughout Thailand. MEA, who serve around 4 million customers in the city of Bangkok and two adjacent provinces, is deploying a Smart Metro Grid platform to improve power availability and reliability, as well as to analyse distribution losses, automate meter reading, and increase customer satisfaction.
CyanConnode’s Omnimesh technology has been integrated into Forth’s electricity meters, using the frequency bands of 442 and 447MMHz, which have been allocated to the Thai energy utilities by The National Broadcasting and Telecommunications Commission (NBTC) of Thailand.
Also in August 2021, a contract for a smart metering deployment in Africa was received. Under the contract, CyanConnode will supply 100,000 Omnimesh Modules together with Advanced Metering Infrastructure, Services, Omnimesh Head-End Software, Perpetual License and an Annual Maintenance Contract.
Europe
CyanConnode’s project with HM Power for the smart metering of district heating and power, continues to progress well with more than 70,000 units having been shipped against the order for 107,000 units to date.
Awards
In July 2021, CyanConnode was delighted to be awarded the Green Economy Classification Mark by the London Stock Exchange. This classification, first introduced in 2019, was created to highlight companies and investment funds listed on all segments of London Stock Exchange’s Main Market and AIM that are driving the global green economy. To qualify for the Green Economy Mark, companies and funds must generate 50% or more of their total annual revenues from products and services that contribute to the global green economy.
In September 2021, CyanConnode was awarded the Frost and Sullivan Global Smart Metering Technology Innovation Leadership Award. Frost & Sullivan was impressed with CyanConnode’s innovation in the smart meter industry and recognised that it has grown from a regional European pioneer into a global leader.
Outlook
Following the announcement of the £30 billion “Revamped Power Distribution Scheme” aimed at creation and strengthening of the transmission and distribution infrastructure the Ministry of Power, Government of India has issued a standard bidding document and a contract agreement that can be directly adopted by utilities for rolling out the smart metering programme.
These steps have acted as a catalyst in spurring the smart metering movement in the country as the size of tenders has gone up from thousands to millions of units. There are tenders for 11 million meters that are currently being floated or will be floated shortly. Given the Government’s ambition these numbers are only going to increase exponentially in near future. The Board of CyanConnode, with its experience of understanding the Indian market, believes the Company is well placed to cater to the current and upcoming requirements.
In addition, as markets around the world mature, CyanConnode believes that as well as its opportunities in India, it is well placed to capture further orders to build on other projects such as its project in Thailand and the African order announced recently.
