Second Pilot in Brazil and Order Update

RNS Number : 4539P

Cyan Holdings Plc

19 August 2014

 



Cyan Holdings plc
("Cyan" or the "Company")

Second CyLec Pilot Successfully Deployed in Brazil and Order Update

Cyan Holdings (AIM:CYAN.L), the integrated system and software design company delivering mesh based flexible wireless solutions for utility metering and lighting control, provides the following order update and announces a new smart metering pilot in Brazil.

1.    New smart metering pilot with a second Tier 1 utility in Brazil

As announced on 18 December 2013, Cyan signed a strategic partnership agreement with Nobre de la Torre ("Nobre") to collaborate on the development, supply and system integration of CyLec®, Cyan's smart metering solution, in Brazil.

On 5 March 2014, Cyan announced Nobre had successfully installed a small number of CyLec retrofit units to existing meters for an unnamed Tier 1 utility. This first pilot proved that the CyLec technology met the overall expectations of the utility customers. Following the first pilot, Nobre started to design products fully integrated to Brazilian electricity meters, including three retrofit solutions designed in collaboration with engineers from the utilities. Nobre believe that this approach will lead to a faster acceptance of smart metering technology in Brazil.

Today, Cyan announces Nobre has successfully deployed a second pilot with another Tier 1 utility. In order to provide a thorough evaluation of the Nobre/Cyan technology in the field, the utility selected three different locations, each with different deployment challenges for smart metering technology:

•      The first location was one where multiple electricity meters are installed on a pole. The meters are securely contained inside a metal cabinet (at a height of 4 metres) which has a viewing lens and clear window to allow visual reading of the meters. These cabinets can reach temperatures of up to 90°C and also suffer from tampering whereby the viewing lens is painted over to prevent meter reading and this issue is completely resolved with the Cyan solution where the meter readings are transmitted over the CyLec two way wireless communication network back to the utility's billing systems.

•      The second location was in a gated community. The average distance between the houses is 160 metres and as a result, the meter reader currently spends substantial time walking between houses to get the readings.  The location also demonstrated that the consumer's power supply could be remotely connected and disconnected without having to send utility staff on site. The current cost of sending staff for manual disconnection and reconnection duties is a significant cost burden for utilities in Brazil. For this particular deployment, excellent wireless network performance was achieved despite the Cyan Data Concentrator Unit ("DCU") being located up to 300 metres from the furthest meter.

•      The third location was three separate apartment block towers. In this particular case, the enhanced Nobre/CyLec solution was used where the meters were installed in multi-meter secure metal cabinets in the basement of the apartment towers. Nobre were able to establish an effective two way wireless communication network from inside the metal cabinets to pole mounted Cyan DCUs, which were located up to 90 metres from the base of each building.

The smart meters were deployed by the utility's own staff with assistance from a small team from Nobre as well as one Cyan engineer, who acted as an advisor.

According to GlobalData's latest report*, smart meter market revenues in Brazil will increase tenfold, from $36m in 2013 to $432m by 2020. The main market drivers for this projected growth are the need to upgrade grid reliability and power outages, and to improve the integration of renewable energy generation into the system, reducing per-capita power consumption. In addition, with power theft as high as 20% in some Brazilian regions, local authorities are currently pursuing investments in smart meters, as the technology provides a simpler way for companies to track and prevent such activity.

* "Smart Grid Market in North and South America - Key Issues, Regulations, Current Market Outlook and Key Equipment Market Size to 2020" GlobalData, January 2014.

John Cronin, Executive Chairman, Cyan Technology commented: "Nobre have developed innovative, cost effective smart metering solutions based on the CyLec solution. The success of these new pilots, in addition to the one they deployed earlier in the year, show that Nobre were an excellent choice of partner for Cyan in Brazil. We will continue to support Nobre on a day to day basis and look forward to entering the commercial orders phase of our partnership."

João Nelson C de la Torre, Executive Director, Nobre, commented: "This second pilot is a significant validation by a Tier 1 utility customer of the technology that Nobre and Cyan have developed together. Immediately following the deployment of this second pilot, we have been contacted by many new potential customers in Brazil and believe that these new solutions are a break-through point for the deployment of smart metering in Brazil as they are both cost effective and robust. We look forward to placing our first commercial order with Cyan before the end of the year and establishing ourselves as one of the largest smart metering solution providers in Brazil during 2015."

2.    Order Update

On 24 December 2012, Cyan notified shareholders that an order from a meter manufacturer customer in India (originally announced in May 2012 and exceeding $1m) would be fulfilled in 2013 due to delays in the Tamil Nadu Electricity Board ("TNEB") tender process.

On 15 November 2013, due to the continued delays in the TNEB tender process, the meter manufacturer informed Cyan that their order will be carried forward into the new calendar year and that they were optimistic that they will require delivery in 2014, although this remained contingent on the TNEB tender and their participation therein.

Given the substantial period of time that has passed since the order was placed in May 2012 and the fact that the TNEB tender process has not resulted in any tender awards for smart metering, the customer (now identified as Capital Power Systems Limited ("CPS")) has given recent indications that they intend to cancel the order. Whilst no formal cancellation has been received, Cyan believes that it is prudent to take this order off Cyan's books at this time, given that the most likely outcome is that a new smart metering tender will be issued at a future date. Cyan's eco-system of smart metering partners (with the Cyan module now embedded in eight different meter manufacturers) has substantially evolved since the order was originally placed in May 2012 and as a result other meter manufacturer vendors (incorporating Cyan's technology) may now be better placed than CPS to win smart metering orders from TNEB as they are able to offer additional products and services to utility customers other than just meters.

The Tamil Nadu Electricity Board have made a strategic commitment to deploy smart metering in the "Vision Tamil Nadu 2023 - Strategic Plan for Infrastructure Development in Tamil Nadu" published in February 2014*, which details a Smart Grid investment plan of Rs. 20,000 Crore (US$3.3Bn) during the period from 2014 - 2023 and therefore we expect TNEB to issue a new tender in the medium term in order to achieve these dates, given their expected requirement to procure and deploy a significant element of smart meters for their current installed base of 19M consumers.

During 2014, Cyan has continued to engage with TNEB, including educating the new board members on the benefits of Advanced Metering Infrastructure ("AMI"). Additionally, Cyan has continued to invest in the 2,000 meter CyLec pilot which our partners deployed in Trichy, Tamil Nadu in 2012 and has upgraded a substantial element from Automated Meter Reading ("AMR") to full AMI. This allows Cyan to demonstrate a complete end to end solution. Cyan is not aware of any other smart metering pilots being successfully deployed with TNEB and remains confident that its partners have a good opportunity to be awarded substantial business at TNEB as part of their smart grid rollout plans.

* http://admin.indiaenvironmentportal.org.in/files/file/Tamil_Nadu_VISION_2023_Phase_2.pdf

Enquiries:

Cyan Holdings plc John Cronin, Chairman	www.cyantechnology.com Tel:  [phone]
Allenby Capital Ltd - Nominated Adviser and Joint Broker Jeremy Porter/Michael McNeilly	Tel: [phone]
Hume Capital Securities plc - Joint Broker Jon Belliss	Tel:  [phone]
Walbrook PR - Financial PR Paul Cornelius	Tel:  [phone] [e-mail]

About Cyan

Cyan is an integrated system design company based in Cambridge, UK. We provide a communication platform that enables the measurement and control of energy consumption for the metering and lighting markets, helping to reduce energy losses. Our wireless mesh networking platform offers 'last mile' connectivity between millions of devices and enterprise software, supporting bilateral communications with the end customer. For more information, please visit www.cyantechnology.com.

About CyLec®

CyLec^® is a complete control and communication network for electricity metering. CyLec^® uses wireless technology to enable the collection and delivery of data from and to a meter, such as energy profiles, instant readings and the sending of tariff updates. Priority data can also be sent back to the utilities such as information regarding tampering enabling the utility to take action immediately.

About Nobre de la Torre

Founded in 2007, Nobre has developed deep domain knowledge in the field of smart metering. The length of expertise within the smart metering industry is significant and several Nobre employees have been part of Automated Meter Reading ("AMR"), Telecommunications and systems management and support industry since its first steps in Latin America. Operating as a trusted system integrator, the Company's focus on research and development has delivered high-levels of innovation for smart meter vendors, utilities and mobile device manufacturers alike.

Since 2010, Nobre has engaged with several utilities within Brazil to help develop the information technology required to support Advanced Metering Infrastructure ("AMI") across the region. For more information, please visit www.nobredelatorre.com.br

 

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