Trading Update

RNS Number : 3323D

Cyan Holdings Plc

06 July 2016

 

Cyan Holdings plc
("CyanConnode" or the "Group")

Trading Update

First half revenues of c. £1 million, showing an increase of 500% over the same period last year

CyanConnode (AIM:CYAN.L), the world leader in narrowband RF mesh networks for Omni Internet of Things communications, provides a trading update for the six months ended 30 June 2016. This is in line with management's expectations, with revenues for the period of c. £1 million which is an increase of more than 500% compared to the revenues for the same period last year.

This was an exceptionally busy period for the Group as it focused on delivery of the contracts won during 2015, built on existing relationships, entered new and potentially highly lucrative territories and completed the acquisition of Connode Holding AB ("Connode") (the "Acquisition"), as announced on 1 July 2016.

India

The Group has made substantial progress in the period in delivering the two contracts worth in aggregate approximately £1.5 million to Enzen Global Solutions Pvt Ltd ("Enzen"), which are being implemented on behalf of Chamundeshwari Electricity Supply Corporation Limited ("CESC") and Paschimanchal Vidyut Vitran Nigam Limited ("PVVNL"), underpinning the Group's strong first half revenue performance.

Furthermore, the Group received a follow on order for a further 5,000 meters from Larsen & Toubro for Tata Power in January, which has been delivered during the period. This was another important milestone, highlighting the Group's ability to build on existing relationships and deliver a follow-on contract with a leading utility in a key emerging market for the Group.

Rest of the World

CyanConnode made significant inroads into expanding its geographic reach and establishing itself as a key player in rapidly growing markets. April's £10 million purchase order for smart metering from Micromodje in Iran, which was secured immediately following the lifting of sanctions, is significantly larger than any order received to date. As well as providing entry into a new territory, the size and scale of the order highlight how far CyanConnode has come operationally.

In May the Group continued its expansion into emerging markets via an agreement with the JST Group ("JST") to distribute CyanConnode's smart metering technology in Thailand. This relationship was further strengthened with JST investing £2 million into CyanConnode as part of the £12.6 million placing and subscription announced during the period which funded the acquisition of Connode and provides working capital for the Group.

The Acquisition provides a step change for CyanConnode - providing exposure to the UK market with existing relationships representing up to £37.3 million to CyanConnode in software licence and support fee revenue over the rollout and support lifecycle of the UK Smart Metering Implementation Programme ("SMIP"). Additionally, Connode has developed a product which is compatible with IPv6/6LoWPAN, the latest version of internet protocol and a standards based technology which can now be deployed across the enlarged Group. CyanConnode would have had to invest £2.5 million and commit to 18 months' development if it were to develop this standard on its own. As part of the transaction the Group also acquired Connode India, which will strengthen CyanConnode's presence in the Indian market and further diversified its relationships with key utilities in that market.

Financial Performance

The Group maintained the growth momentum achieved during 2015 with the PVVNL and CESC deployments underpinning its strong performance during the first half. As such, revenues of circa. £1 million are expected representing an increase of more than 250% compared with full year 2015 and over 500% compared to the same period last year. This result was achieved during an already busy period as the Group grew its geographic reach and strategic partnership base, whilst also committing significant resources to the Acquisition.

Outlook

The Group will continue to focus on growing its geographic reach in profitable markets as well as cementing relationships with existing customers. It has identified a pipeline of potential new and existing opportunities, a number of which are currently undergoing preparation for launch in the second half of 2016. The near-term focus will be on completing the local technical integration activities ahead of first deliveries for the Micromodje order and on the integration of the Connode team, technology and opportunities into the Group.

There is significant scope for scalability across the Group's target markets and the contracts generated to date within CyanConnode demonstrates the attraction of the enlarged Group's products while providing strong foundations for the Group's future growth. Given the combination of services, software and hardware revenues generated by the Group, the Directors believe that visibility will continue to improve throughout remainder of the year and they look forward to providing updates in relaton to progress with these contracts and deployments in due course.

John Cronin, Executive Chairman of CyanConnode, commented:

"I am incredibly pleased with, and proud of, the performance of the team and the Group during the first half of 2016. The performance during this period reflects the Group's growing customer orders which have led to a substantial increase in  revenues.

"We have strong relationships in place and have rapidly increased our target markest. Buoyed by the acquisition of Connode, which adds geographic reach and relevant standards to CyanConnode's portfolio, we remain excited by the Group's growth prospects. We continue to explore global opportunities and look forward to integrating the Connode team and products, securing more repeat orders and benefitting from increased levels of recurring revenues. We expect trading during the second half to reflect our increasing levels of commercialisation."

Enquiries:

Cyan Holdings plc	Tel: [phone]
John Cronin, Executive Chairman
Cantor Fitzgerald Europe - Nomad and Broker Andrew Craig / Richard Salmond	Tel: [phone]
Beaufort Securities Limited - Joint Broker	Tel:  [phone]
Jon Belliss
Walbrook PR - Financial PR	Tel:  [phone]
Paul Cornelius / Nick Rome	[e-mail]

About CyanConnode

CyanConnode is a world leader in narrowband RF mesh networks that enable Omni IoT communications. Cyan's Ultimesh provides narrowband RF mesh network, optimised for exceptional performance and total cost of ownership and Connode's Panmesh delivers standards-based IPv6 solutions, enabling rapid innovation for the implementation of 3rd party applications. The Group provides customers with the flexibility and choice required to converge networks for applications in smart cities and IoT, delivering increased customer value.

For more information, please visit www.cyantechnology.com and www.connode.com.

 

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