Cash, as of 31 December 2016, was £3.9 million.
Importantly, a significant portion of revenue growth was underpinned by the PVVNL and CESC deployments in India and the long-term nature of subsequent contract wins provides improved visibility going forward, with order backlog from existing contracts going into 2017.
Operating Highlights
Acquisition of Connode Holding AB (Connode)
The acquisition of Connode during the period was transformational as it significantly expands the geographic reach of the Group and enhances the product suite with a full standards-based (IPv6/6LoWPAN) technology platform.
The enlarged Group is now well-placed to build its presence in new markets and to cross sell to existing customers.
UK Smart Metering Implementation Programme (SMIP)
In November 2016, the UK Data Communications Group announced the official go-live of the UK smart metering project with the data centre now active for communication between consumers and the utilities and the rollout of smart metering can now commence during 2017.
The smart metering rollout in the UK will involve the rollout of 53 million gas and electricity meters nationwide by the UK government target of 2020. CyanConnode was selected by Telefonica and Toshiba to provide a software platform that uses narrowband mesh technology to complement Telefonica’s existing cellular network, allowing previously off-grid households to be reached as part of the UK SMIP. Telefonica was awarded a contract as the preferred communications service provider in two out of the three regions tendered by the UK Government. Telefonica's SMIP solution is based upon its existing cellular network in the UK, supported by CyanConnode's C4 solution, which connects households without reliable cellular coverage (known as "not-spots" by the mobile phone network operators). The CyanConnode software license and support fees revenue is expected to be £25 million over the life of the contract and we are pleased to report that the 2016 milestones under the contract were successfully delivered.
India
The Group continued to strengthen its relationships in India, highlighted by the third Smart Metering Order with Larsen & Toubro (L&T). This order for 4,700 additional smart meters is part of a larger framework agreement between Tata Power Mumbai and L&T and follows previous orders of 10,000 consumer meters in Mumbai.
Tata Power continues to grow and now has over 2.6 million consumer customers, including over 660,000 in Mumbai. They have recently been awarded the distribution franchise for Jamshedpur circle from the Jharkhand State Electricity Board (JSEB).
The Group’s two contracts, worth in aggregate approximately £1.5 million from Enzen Global Solutions Pvt Ltd (Enzen) and implemented on behalf of Chamundeshwari Electricity Supply Corporation Limited (CESC) and Paschimanchal Vidyut Vitran Nigam Limited "PVVNL), provided just under half of revenue during the period.
At a January 2017 steering committee meeting hosted by the Ministry of Power (MoP), and attended by representatives from the State utilities, CyanConnode and Enzen were congratulated for their successful delivery of the CESC project to date, viewed as a significant success within the MoP funded pilot projects. The Group understands that the MoP remains committed to installing a majority of the planned 35 million smart meters by 2019 and are pushing the local smart metering suppliers to accelerate their readiness for volume deployments.
Rest of the World
The key contract win for the Group during the period was the £10 million purchase order for smart metering from Micromodje in Iran, which the Group expects to move into the delivery phase during 2017. This contract was secured shortly after the country sanctions being lifted and was 10 times the size of any previous contracts won by the Group. Importantly, over 50% of the total order value consists of software license income, meaning that the recurring revenues from this purchase order will continue well beyond the two-year hardware installation period. Furthermore, there is scope for significant growth, with CyanConnode well placed to benefit from the new National Smart Metering Program of Iran, replacing the electricity meters for all energy consumers which represents around 33 million meters.
During the period it also extended its reach into Sweden through an order from E.ON and a follow on order from Landis+Gyr for a utility customer in Finland, as well as into expanding into Thailand via an agreement with the JST Group (JST) to distribute CyanConnode's smart metering technology.
Outlook
The Group has now established itself around the world with the leading system integrators and end users of smart metering solutions. The proven ability to generate repeat orders from existing customers provides a strong foundation for further contract wins during the year ahead as well as deliveries against existing contracts. The Group now has a strong pipeline of new opportunities and management is confident that it will be able to further build on the significant progress achieved during 2016 over the next 12 months.
John Cronin, CyanConnode Executive Chairman, commented: “We are delighted by the strong performance during the period with record revenues reflecting the strength and growing maturity of our model. We have good backlog of orders from India, Iran and the UK. The global opportunity is clear and our ability to generate revenues in a number territories looks set to underpin a strong period of growth for CyanConnode.”
The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). This inside information is now considered to be in the public domain.
Enquiries:
CyanConnode Holdings plc
Tel: +44 (0) 1223 225 060
John Cronin, Executive Chairman
Cantor Fitzgerald Europe - Nomad and Broker
Tel: +44 20 7894 7000
Andrew Craig / Richard Salmond
Beaufort Securities Limited – Joint Broker
Tel: +44 (0) 20 7382 8300
Jon Belliss
Walbrook PR - Financial PR
Tel: +44(0) 20 7933 8780
Paul Cornelius / Nick Rome
cyanconnode@walbrookpr.com
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