Last checked at 26 Jan 2016 07:00
Cyan Holdings plc("Cyan" or the "Company")
Trading Update
Cyan (AIM:CYAN.L), the integrated system and software design company delivering mesh based flexible wireless solutions for utility metering and lighting control, announces a trading update for the 12 months ended 31 December 2015 as well as the outlook for 2016.
The Company built on the momentum achieved during 2014 strengthening relationships with existing partners via repeat orders and establishing new commercial partners across its target markets.
India
At present, India has 200 million legacy meters deployed and it is estimated 130 million smart meters will be installed by 20211. In November 20152, the Indian Ministry of Power announced a program to implement smart metering for all consumers serviced by state distribution companies with completion deadlines ranging from December 2017, for high power usage households, through to December 2019 for the remainder. In mid January 20163, the India Union Cabinet approved amendments to the power tariff policy that aims to tighten regulations for setting rates and promote clean energy, with the policy statement including that "it shall be compulsory for consumers to use smart meters with consumption over 500 units per month by December 2017 and with consumption over 200 units per month by December 2019".
During the period, the Company continued to make strong inroads into the smart metering market in India and received two contracts worth in aggregate approximately £1.5m from Enzen Global Solutions Pvt Ltd ("Enzen"). These contracts are to be implemented on behalf of Chamundeshwari Electricity Supply Corporation Limited ("CESC") and Paschimanchal Vidyut Vitran Nigam Limited ("PVVNL") respectively. The first 450 CyLec enabled meters for CESC have now been installed at consumer homes and successfully integrated onto the Cyan AMI mesh network. Roll-out of the remaining smart meters is now expected to continue through the first half of 2016.
The Company also successfully deployed the Cyan communications solution for 5,000 smart meters for Tata Power Mumbai ("Tata") during the period. Tata is a Tata Group company and part of India's largest integrated power company with a significant international presence and over 600,000 retail customers in Mumbai alone. Importantly, this initial deployment was followed in January 2016 with repeat orders for 5,000 meters for deployment by Tata Power. Discussions are currently underway regarding a larger Framework Order.
Rest of World
China's Ministry of Industry and Information Technology released its 12th Five-Year Development Plan in 2012, with the goal of scaling the IoT market to $163 billion by 20204. As such the Company took its first steps into the Chinese smart metering market in December 2015, via a partnership agreement with Newcapec Electronics Company Limited.
During the period, Cyan announced that it had received a Letter of Intent ("LOI") from El Sewedy Electrometer Group EMG ("El Sewedy") to supply Cyan's CyLec® Advanced Metering Infrastructure ("AMI") solution for a smart meter contract, which El Sewedy has been awarded in Ghana, Western Africa. The LOI states that, subject to contract, El Sewedy intends to appoint Cyan to provide a full AMI solution for up to 200,000 consumers in batches over three years. The utility has now notified El Sewedy that it will commence a pilot project using Cyan's technology once its existing GPRS sim card based smart metering solution trial has been completed. As stated in the announcement in May 2015, the LOI is a non-binding agreement which provides no guarantee of the terms or timing of any such order, with final terms to be contained within a contract which is yet to be negotiated.
Notwithstanding the above, Cyan has recently received an order for a 120 smart meter pilot project from El Sewedy for another project with the same Ghana utility where the potential opportunity size is 40,000 meters and this order is now in the process of being delivered.
Outlook
The Company enters 2016 with significant contracted revenue backlog when compared with previous periods. The majority of both the £1 million CESC and the £0.5 million PVVNL contracts will be booked as revenue in 2016, with a significant element in H1 2016. The Tata Power repeat order will be shipped in Q1 2016. Together, the conversion of these existing contracts into revenue provides management with confidence that revenue in 2016 will be significantly higher than that reported in previous years. This increase excludes the incremental revenue the Company expects to receive from identified projects and any additional contract wins in 2016.
Across the Company's target markets, there is significant scope for scalability and the contracts generated to date demonstrate the attraction of Cyan's products and provide strong foundations for Cyan's future growth. Given the combination of services, software and hardware provided by the Company, the Directors believe that revenue visibility will improve throughout the year as more meters are deployed.
John Cronin, Executive Chairman of Cyan, commented: "This was a busy period for the Company as we further enhanced our position across our key regions. We are very much focused on converting orders into revenues, which in turn can lead to multiple orders and repeat orders from key partners. Additionally, as our model evolves, the Company is benefiting from growing recurring revenues, enhancing forward visibility.
"Having further strengthened our foundations for growth during 2015 there is huge opportunity for further scalability throughout India, China, Brazil and sub-Saharan Africa. As such, we expect trading during 2016 to reflect our growing ability to win and service new orders."
1Source: http://asian-power.com/sites/default/files/asianpower/print/APMay_2013_lr_12.pdf
2Source: http://powermin.nic.in/upload/pdf/Uday_Ujjawal_Scheme_for_Operational_and_financial_Turnaround_of_power_distribution_companies.pdf
3Source:
http://smartinvestor.business-standard.com/market/story-361348-storydet-New_power_tariff_policy_supports_low_rates_smart_tech.htm#.VqIMH4WLT3Q
4 Source: http://www.gsma.com/newsroom/wp-content/uploads/16531-China-IoT-Report-LR.pdf
Enquiries:
Cyan Holdings plc | Tel: +44 (0) 1954 234 400 |
John Cronin, Executive Chairman | www.cyantechnology.com |
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Cantor Fitzgerald Europe (Nomad and Broker) | Tel: +44 20 7894 7000 |
Andrew Craig / Chris Viggor /Richard Salmond |
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Beaufort Securities Limited (Broker) | Tel: +44 (0) 20 7382 8300 |
Jon Belliss |
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Walbrook PR - Financial PR | Tel: +44(0) 20 7933 8780 |
Paul Cornelius / Nick Rome
| cyan@walbrookpr.com |
About Cyan
Cyan provides a communication platform for energy, lighting and emerging applications in the wider 'Internet of Things' network. Its integrated platform and partner collaborations deliver end-to-end solutions that connect millions of devices and support bidirectional communication with the end customer. Cyan's smart metering and lighting solutions enhance quality of service in emerging regions, through power savings, lower operating costs and increased cost efficiency. Our vision to create improved value through Smart City solutions has provided our customers with the foundation upon which to build incremental services as these markets evolve.
For more information, please visit www.cyantechnology.com.