CyanConnode Holdings plc (LON:CYAN) has announced its audited results for the year ended 31 March 2022.
Financial highlights
· Increase of 49% in revenue to £9.6m in2022 from £6.4m in 2021 , the highest annual revenue for the Group to date
· Increase of 61% in gross profit to £5.0m in 2022 from £3.1m in 2021
· Decrease of 62% in operating loss to £1.0m in 2022 from £2.7m in 2021 as the Group moves towards profitability
· Adjusted EBITDA profit of £0.1m in 2022 compared to a loss of £1.9m in 2021
· Increase of 58% in cash position from £1.5m in 2021 to £2.4m in 2022
Operational Highlights
· 612,000 Omnimesh Radio Frequency (RF) Modules shipped against current contracts during the year (FY21: 481,000)
· 152,000 Omnimesh RF Modules ordered for a new customer in northern India
· 31,000 Omnimesh RF Modules for a follow-on order for the MEA (Metropolitan Electricity Authority Smart Grid Project in) Thailand
· 100,000 Omnimesh RF Modules ordered for a new customer in Africa
· Two oversubscribed placings completed, raising £5.15 million before expenses
· Award of London Stock Exchange Green Economy Mark
· Winner of the Frost and Sullivan Global Smart Metering Technology Innovation Leadership Award
Post Year End Highlights
· 1,000,000 Omnimesh RF Modules and associated products ordered from Genus Power Infrastructure Limited (Genus)
· Two orders won from IntelliSmart Infrastructure Pvt Ltd (IntelliSmart) for a total of 300,000 Omnimesh RF Modules and associated products
· New order worth USD 6.7m won from Middle East and North Africa (MENA) for NB-IoT gateways
· Further new order worth USD 2.5m won from MENA for Cellular gateways
· £2.6 million cash received from customers
· Omnimesh integration underway with a further nine meter models
· Revamped Distribution Sector Scheme (RDSS) approved by the Government of India to help Distribution Companies (DISCOMS) to improve their operational efficiencies
· Following an initial delay in the empanelment process, DISCOMS approved to release tenders under the RDSS Scheme in August 2022
John Cronin, Executive Chairman of CyanConnode, commented:
“We’ve been delighted with the results achieved during the financial year being reported, which showed record revenues being achieved, and a positive adjusted EBITDA. FY22 also saw record numbers of modules being shipped and record cash being collected.
Since the year end we have announced orders for a total of 1.3 million units in India, and orders for new products in a new territory (the MENA region). We’re currently integrating with nine new meter types. In India, the new RDSS has been launched and the empanelment process is progressing, allowing more tenders to be released. Momentum in the markets in which we operate continues to grow, and we’re looking forward to continued success in the current financial year.
We’d like to thank all employees for their ongoing hard work and dedication to achieve these record results. We’d also like to thank all shareholders for their continued support and look forward to continuing to deliver successful results.”
Chairman’s Statement
Operational Review
India
The union budget of 2020-21 paved the way for the replacement of 250 million conventional electricity meters with smart meters by 2025. The Revamped Distribution Sector Scheme (RDSS) was announced at the union budget of 2021-22, where in the first phase 100 million smart meters are to be installed by December 2023, with the remainder by March 2025.
The Ministry of Power, Government of India (GOI), also produced a revised Standard Bidding Document (SBD) 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 forward the smart metering program in India and as a result the scale of tenders has increased significantly.
During the period, CyanConnode won two new orders, the first one was for 151,740 Omnimesh RF Modules for Himachal Pradesh State Electricity Board (HPSEB), marking an entry for CyanConnode into the hilly regions of the country. The majority of the modules were dispatched during the period and deployment is expected to be completed in FY23.
The second order was for 1,000 Omnimesh RF Modules from IntelliSmart for the state of Assam. This was the first order from IntelliSmart, and was a precursor to two larger orders which have been won during FY23 bringing the total orders for this project to 301,000 Omnimesh RF Modules. IntelliSmart is also the first service provider to use the Design, Build, Finance, Own, Operate, Transfer (DBFOOT) model and it has also installed the first smart prepaid meter in India under the RDSS.
Key highlights for CyanConnode India for the financial year ended March 2022 are set out below:
• CyanConnode India delivered record annual revenue and cash collection.
• >562,000 Omnimesh RF Modules and 3,907 Omnimesh Gateways were supplied.
• >600,000 Omnimesh RF Modules and 3,752 Omnimesh Gateways were commissioned.
• CyanConnode is now the largest and most experienced supplier of RF smart mesh networks in India.
• Dedicated space for CyanConnode in the Virtual Smart Grid Knowledge Centre (SGKC) facilitated by National Smart Grid Mission and Power Grid Corporation of India, Ltd. SGKC is a Knowledge Centre platform, set up by the Ministry of Power GOI, to demonstrate excellence in Smart Grid (see: http://sgkc.powergrid.in/cyanconnode.php)
• Integration with two further meter manufacturers (Avon Meters and Linkwell) were recommenced, which will result in Omnimesh modules being compatible with the five leading meter manufacturers in India.
• Cyber security certification completed on CyanConnode Head End System (HES) (CERT-IN certified).
APAC and Middle East North Africa
The smart metering market in the Asia Pacific (APAC) and Middle East North Africa (MENA) region has continued to mature and presents a significant opportunity for CyanConnode.
During the year the Group has continued with the deployment of the order won in 2019 for the Metropolitan Electricity Authority (MEA), a Thai state enterprise under the Ministry of Interior. The initial order was for 33,000 Omnimesh RF Modules and associated products, placed on the Group by its Agent and Partner, The JST Group (JST), and Forth Corporation Public Company Limited (Forth). In March 2020, a further 206,000 Omnimesh licenses were ordered allowing MEA to connect a total of 240,000 meters to the Omnimesh Head End System (HES). All Omnimesh modules and gateways were delivered during FY21. During FY22 a follow-on order was received for a further 31,000 Omnimesh RF Modules and associated products.
In August 2021, the Group announced an order for 100,000 Omnimesh RF Modules together with Advanced Metering Infrastructure, Services, Omnimesh Head-End Software, Perpetual License and an Annual Maintenance Contract from a new customer for a smart metering deployment in Africa.
Shortly after the financial year end, the Group announced an order for a smart metering deployment in the MENA region. Under the contract CyanConnode will supply 65,000 interoperable smart NB-IoT gateways to Esyasoft Technologies, UAE. The NB-IoT gateways will communicate with and control all existing smart meters for both electricity and water; the gateways will have the capacity to connect up to one million smart meters.
Europe
In April 2019, a follow-on order worth £0.7m was received from HM Power (HMP), for smart metering of district heating and power, which further demonstrates the flexibility of CyanConnode’s standards-based Omnimesh products. The order also includes the newly introduced Omnimesh Long-Range RF Module that has a range of up to 12km, which thereby increases the resilience of the RF Smart Mesh Network in rural areas. Delivery of the Omnimesh Long-Range RF Modules commenced in Q4 2019 with 41,000 modules being delivered during the year. 90,000 modules have been delivered to date.
The UK Government requires UK energy suppliers to rollout approximately 53 million smart meters to their customers before the end of 2025. To date, 21.7 million smart meters have been installed and connected to the digital highway operated by the Data Communications Company (DCC). CyanConnode has a contract to provide software licenses and support for its Radio Frequency (RF) Smart Mesh Networks, which will be deployed in areas where there is an unreliable or weak cellular signal, and it believes that the deployment of its technology will gain momentum during the latter stages of the rollout.
Fundraisings
At the start of June 2021, the Company completed a heavily oversubscribed placing and subscription, raising £3.15 million before expenses, at a price of 9.5 pence per share. The issue price represented a premium of approximately 2.2% to the closing market price of 9.3 pence per share on the last business day prior to the announcement of the placing and subscription.
In March 2022, CyanConnode completed a further oversubscribed placing and subscription, raising £2 million before expenses at a price of 14 pence per share.
The net proceeds of the Placings and the Subscriptions are being used to strengthen the Company’s balance sheet, to increase working capital, to allow the Company to continue to take advantage of its significant growth opportunities and to execute the Company’s growing order book and pipeline.
Awards
During the year the Group was the recipient of four awards and classifications, as follows;
· August 2021, CyanConnode was 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.
· September 2021, CyanConnode won the 2021 Frost & 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.
· November 2021, CyanConnode won the Cambridge Wireless Best Connector Business” Award. This award recognises teams or businesses that are deploying wireless technology to improve products, increase operational efficiency or bring other benefits. The award celebrates impactful applications of wireless technology. CyanConnode was recognised for their success in bringing smart metering technologies to market.
· March 2022, CyanConnode won the Megabuyte Fastest Growing Company award.
Outlook
Since the period end, CyanConnode Holdings has won five orders, including the largest-ever order from India. They were as follows;
· April 2022, an order for a smart metering deployment in the MENA region. Under this contract CyanConnode will supply 65,000 interoperable smart NB-IoT gateways to Esyasoft Technologies, UAE. The NB-IoT gateways will communicate with and control all existing smart meters for both electricity and water; the gateways will have the capacity to connect up to one million smart meters.
· May 2022, an order for 100,000 Omnimesh RF Modules together with advanced metering infrastructure, standards-based hardware, services, Omnimesh head-end software, perpetual license and an annual maintenance contract, for a smart metering project in Assam. This order was received from IntelliSmart, who were the first service provider to use the DBFOOT model and also installed the first smart prepaid meter in India under the RDSS (Revamped Distribution Sector Scheme).
· June 2022, CyanConnode announced a further order from Intellismart for the same project for 200,000 Omnimesh RF Modules together with advanced metering infrastructure, standards-based hardware, services, Omnimesh head-end software, perpetual license, and annual maintenance contract.
· August 2022, an order was announced for Cellular Gateways to provide smart communications for an Advanced Metering Infrastructure project located in the MENA region. This order, worth USD 2.5 million, was for a new cellular product to be fitted to existing electricity meters.
· August 2022, the Group was delighted to announce that its subsidiary, CyanConnode India Pvt Ltd, won its largest-ever order. The Order was for one million Omnimesh Modules, together with Advanced Metering Infrastructure, Standards-Based Hardware, Omnimesh Head-End Software, Perpetual License and a Support and Maintenance Contract.
In addition, CyanConnode’s business has continued on its growth path and is currently integrating with a further nine meter models, giving access to a larger number of opportunities.
In India the market has continued to move forward with its plans to implement 250 million smart meters. In August 2022, the Government of India approved the Revamped Distribution Sector Scheme (RDSS) to help DISCOMs improve their operational efficiencies and financial sustainability by providing result-linked financial assistance to DISCOMs to strengthen supply infrastructure. The scheme has an outlay of Rs 3,03,758 Crore (£30 billion) over 5 years. in addition, following an initial delay in the empanelment process, DISCOMS were approved to release tenders under the RDSS Scheme in August 2022. Eight companies are currently empanelled.
I would once again like to thank all shareholders for their ongoing support during what has been our most successful year to date. We look forward to further order announcements during this financial year as the Indian smart metering market continues to mature, and to delivering the backlog of orders won in current and previous periods.
John Cronin
Executive Chairman
