8 November
2024
CyanConnode Holdings
plc
("CyanConnode" or the "Company")
Interim results for the six
months ended 30 September 2024 (H1 FY 2025)
CyanConnode (AIM: CYAN), a
world leader in narrowband radio frequency (RF) mesh networks,
announces its unaudited interim results for the six months ended 30
September 2024 (H1 FY 2025).
John Cronin, Executive Chairman, commented:
"The Indian
smart metering market continues to gain momentum, with sanctioned
tenders exceeding 200 million smart meters. Of this total,
contracts for approximately 132 million smart meters have already
been awarded to prime bidders, underscoring the Government of
India's commitment to install 250 million smart prepayment meters
under the Revamped Distribution Sector Scheme (RDSS).
CyanConnode's order book has
demonstrated strong growth, more than doubling during this period
from 6.3 million units at the start of the year to 13.1 million
units. Our current backlog stands at 9.7 million units yet to be
deployed, having increased substantially from 3.5 million units at
the end of March 2024, with a significant portion of this expected
for delivery in the second half of FY 2025. Historically, our
revenue recognition is heavily weighted toward the final quarter of
our financial year, as order completions and deployments often peak
near year-end. We expect this seasonal trend to continue, with a
substantial proportion of this year's revenue materialising in
Q4.
Given this pattern, we remain
confident in meeting market expectations for FY 2025.
Our business outside of India is
also progressing well. Since the end of September 2024, we have
secured a follow-on order for the Middle East and North Africa
(MENA) region, valued at over $1 million. This order is expected to
be fulfilled within the current financial year, further supporting
our revenue forecasts and expanding our international
footprint."
Financial Highlights
Full year revenue expectation
unchanged, with the following highlights for H1 FY 2025
· Revenue of £5.6m (H1 FY 2024: £5.8m)
· Increase of 9% in software and services revenue as a
percentage of total revenue from 11% in H1 FY 2024 to 20% in H1
FY2025
· Gross
profit of £2.3m (H1 FY 2024: £1.8m), driven by an improvement in
Gross Margin percentage of 10% from 31% in H1 FY 2024 to 41% in H1
FY 2025. This is partly as a result of a new version of gateway
being sold, which does not use end-of-life components, and partly
as a result of the increased software and services revenue as a
proportion of total revenue
· Operating loss of £2.1m (H1 FY 2024 loss: £2.2m)
· Cash
received from customers of £7.3m (H1 FY 2024: £7.4m)
· Cash
and cash equivalents at end of period £3.7m (FY 2024:
£0.9m)
· Completion of oversubscribed placing and subscription to raise
£5.4 million (before expenses) at a premium to prevailing share
price
Operational Highlights
· Major
new contract won in India for 6.5 million Omnimesh RF Modules and
associated products, doubling order book to 13.1 million
units
· 265,000 Omnimesh RF Modules and associated products ordered
from a subsidiary of IntelliSmart Infrastructure Private
Limited
· CyanConnode India's subsidiary, DigiSmart Networks Private Ltd
successfully empanelled as an Advanced Metering Infrastructure
Service Provider ("AMISP") for both RF and cellular, making it
eligible to bid for smart metering contracts under the Revamped
Distribution Sector Scheme (RDSS)
· Setup
of subsidiary in United Arab Emirates to promote business in the
Middle East and North Africa (MENA) region
· Changes to the organisation to strengthen leadership in India
and streamline global operations by having all engineering and
operations reporting into the MD CEO of India
· Key
milestones such as Site Acceptance Tests (SATs) and project
go-lives achieved across several key projects
· Successful deployment of over two million nodes, making
CyanConnode the first and only smart metering communications player
in India to reach this milestone
· Prestigious SKOCH Gold Award won by Tamil Nadu Generation and
Distribution Corporation Limited ("Tangedco") for its smart
metering project powered by CyanConnode's communication
network
· CyanConnode named a 2024 WIRED Trailblazer
Post-Period Highlights
· Follow-on order with a value in excess of $1 million won, for
cellular gateways in the Middle East and North Africa (MENA)
region
· Cash
received from customers since the period end of £1.4m taking cash
received for the financial year to date to £8.7m
· Current market share of all installed smart metering base in
India of approximately 14% and 42% of all RF deployments
· Win
ratio of 25% in terms of volumes for RDSS tenders in
India
· Indian
smart metering market continues to gather momentum - current
tenders for more than 220 million Smart Meters have been sanctioned
to the end of October 2024, with 132 million being awarded to prime
bidders, typically Advanced Metering Infrastructure Service
Providers (AMISPs)
· Revenue for the financial year ending 31 March 2025
is forecast to meet market expectations
|
Enquiries:
|
CyanConnode Holdings plc
|
Tel: +44 (0) 1223 865 750
|
|
John Cronin, Executive
Chairman
|
www.cyanconnode.com
|
|
|
|
|
Strand Hanson Limited (Nominated and Financial
Adviser)
James Harris, Richard Johnson, David
Asquith
|
Tel: +44 (0) 20 7409 3494
|
|
|
|
|
Zeus Capital Limited (Joint Broker)
|
Tel: +44 (0) 20 3829 5000
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Simon Johnson, Louisa
Waddell
|
|
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Panmure Liberum (Joint Broker)
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Tel: +44 (0) 20 7886 2500
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Rupert Dearden, James
Sinclair-Ford
|
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About CyanConnode
CyanConnode (AIM:CYAN.L) is a world
leader in Narrowband Radio Frequency (RF) Smart Mesh Networks,
which are used for machine to machine (M2M) communication. As
well as being self-forming and self-healing, CyanConnode's RF Smart
Mesh Networks are designed for rapid deployment, whilst giving
exceptional performance and competitive total cost of
ownership.
In June 2018, CyanConnode launched
its award-winning Omnimesh Advanced Metering Infrastructure (AMI)
platform, which has already gained considerable commercial
traction, especially in India which is a key market for the
Company.
Through a Global partner eco-system,
which is vendor agnostic, CyanConnode has several routes to market,
therefore it is well positioned to capitalise upon increasing
Global demand for smart metering solutions.
For more information, please
visit www.cyanconnode.com.
Chairman's Statement
Financial review
Key
figures
|
|
H1 FY
2025
£'000
|
H1 FY
2024
£'000
|
%
Change
|
|
Revenue
|
5,629
|
5,775
|
-
3%
|
|
Gross profit
|
2,336
|
1,810
|
+
29%
|
|
Operating costs*
|
(4,424)
|
(3,987)
|
+
11%
|
|
Operating loss
|
(2,088)
|
(2,177)
|
-
4%
|
|
EBITDA
|
(1,901)
|
(2,008)
|
- 5%
|
|
Adjusted EBITDA
|
(1,597)
|
(1,916)
|
-
17%
|
|
Cash
|
3,714
|
945
|
+
293%
|
|
Basic and diluted loss per
share
|
0.70p
|
0.72p
|
-
3%
|
* Research
and Development (R&D) tax credit of £224k is included in other
operating costs following the latest amendments made to the R&D
scheme by HMRC for accounting periods beginning on or after 1 April
2024, which require R&D tax credits to be reported within
operating costs rather than within taxation.
Revenue and Operating Costs
Revenue for the first six months of
FY 2025 was flat compared to the revenue for the same period of FY
2024, largely as a result of some slowdown in deployments during
the India elections. The Company, having won its largest order to
date during the period, thereby doubling the order book, expects a
significant increase in revenue during the second half of FY 2025
over the first half year. Gross margins have improved considerably
compared to H1 FY 2024 as H1 FY 2024 included sales of gateways
using end of life components purchased at a significant premium. A
new, lower cost, gateway was developed during FY 2024 and is now
being shipped. In addition, the higher margin software and services
proportion of total revenue for the period increased from 11% to
20% in H1 FY 2025. The increase in operating costs compared to H1
FY 2024 was in line with expectations since the cost base had
increased to support expected growth, with the majority of that
increase being in H2 FY 2024.
Cash
During the period cash was utilised
to both purchase stocks of components to support delivery during
the remainder of the financial year, (stock of 567,000 MCUs were
held at period end to allow H2 FY 2025 deliveries to be met) and
investing in development of new products to enhance the current
product suite.
On 10 September 2024 CyanConnode
Holdings plc raised £5.4 million (before expenses) through an
oversubscribed placing of 20,204,063 New Ordinary Shares and a
subscription for 39,611,109 New Ordinary Shares at a premium to the
prevailing mid-market share price. The cash is to be used to
provide ongoing working capital for growth, to further strengthen
the Company's balance sheet and to fund the setup of a hardware
product design lab in India, which will enable a ramp up of
operations.
Accounts receivable
A total of £7.3m cash was collected
from customers during the period (compared to £7.4m for the same
period in FY 2024), and a further £1.4m since the period end. In
the period, our non-current trade receivables such as contract
assets, reported in the non-current assets part of the balance
sheet, increased to £3.3m (FY 2024: £2.4m), where revenue has been
recognised in accordance with IFRS 15, and will be paid for over
the period of the contract. The remainder of trade receivables
included in non-current assets related to accrued income from
contracts. Approximately 58% of cash collection during H1 FY 2025
related to trade receivables from FY 2024 and a further 8% of FY
2024 trade receivables has been collected since period
end.
Operational Review
India
Market
According to recent research
studies, the smart meter market in India is poised for significant
growth over the next decade. In 2023, the market size then, was
estimated at c. $212m by Zion Market Research and $219m by Astute
Analytica. Both studies projected substantial increases by 2032,
with Zion Market Research forecasting a market size of $2.8bn and
Astute Analytica predicting $3. 2bn. This growth should be driven
by several key factors, including government incentives to reduce
aggregate technical and commercial (AT&C) losses and the
integration of advanced metering infrastructure (AMI) with IoT
platforms. The Indian government's target of deploying 250 million
smart prepaid meters is a significant part of this growth, as these
meters would improve billing efficiency, reduce power theft, and
enhance the overall reliability of the power supply. This
initiative is part of a broader strategy to reform the energy
sector and improve efficiency through advanced
technologies.
The Government of India plans to
rollout 250 million smart meters through tenders for large volumes,
of which tenders for more than 220
million smart meters had
been sanctioned to the end of October 2024. According to the most
recent statistics reported on the National Smart Grid Mission
(NSGM) website, tenders for 132 million meters had been awarded to
the end of October 2024 to prime bidders. While these contracts
have been awarded to prime bidders, who are typically AMISPs, there
can be a delay of a few months between the award of the contract to
the AMISP and the subsequent award to subcontractors such as
CyanConnode.
Orders
In April 2024, the Company received
an order for 235,331 Omnimesh RF Modules, for the Madhyanchal
Vidyut Vitaran Nigam Ltd (MVVNL) smart metering project in
Lucknow
In August 2024, a Letter of Award
("LOA") was received for 6.5 million Omnimesh RF Modules, being the
largest contract awarded to the Company to date. This contract
award took the Company's order book for Omnimesh modules in India
from 6.6 million to 13.1 million, solidifying the Company's
position in India. This LOA was received from a global partner and
relates to various smart metering projects in India.
Achievements
During the period, CyanConnode
India's subsidiary, DigiSmart Networks Private Limited
("DigiSmart") qualified and was certified to participate in the
upcoming smart metering tenders as an AMISP for both RF and
cellular. As an AMISP, CyanConnode would be responsible for the
end-to-end execution of smart metering projects, from meter supply
to Meter Data Management ("MDM").
Key milestones such as Site
Acceptance Tests (SATs) and project go-lives were achieved across
several key projects during the period.
· CyanConnode has passed multiple Site Acceptance Tests (SATs)
across several key projects and has achieved "Go Live" status in
one project
· CyanConnode is consistently meeting the desired SLAs as per
the agreements across projects
· This marks a crucial milestone that enables the commencement
of billing for deployed meters
· The "Go Live" milestone is a critical achievement for any
project as it signifies the transition to the billing phase,
allowing for revenue generation
· The SAT qualification process involves rigorous quality and
performance testing of the meters and the communication network,
ensuring the highest standards of operation
· TANGEDCO and TN72 projects have come under FMS in FY
2024
Organisation
In May 2024 a strategic decision was
taken to make changes to the organisation to strengthen leadership
in India and streamline global operations by having all engineering
and operations reporting into the MD CEO of India. The key reasons
for this change were
· Strengthened Leadership: The new structure brings together
seasoned leaders with extensive experience in smart metering, IoT
solutions, and technology innovation. This ensures a robust
leadership team capable of driving the company's strategic vision
forward.
· Enhanced Operational Efficiency: By reorganising the
engineering and technology teams, CyanConnode aims to streamline
processes, improve execution speed, and enhance troubleshooting
capabilities. This will enable the company to better meet the
dynamic demands of customers and the market.
· Focus
on Innovation: The restructured teams are focused on continuous
innovation in product development and technology
solutions.
· Market
Expansion: The reorganisation underscores CyanConnode's commitment
to leveraging the immense potential of the Indian market while
continuing to deliver exceptional service and innovation to global
stakeholders.
· Alignment with Strategic Goals: The new structure aligns with
CyanConnode's strategic goals of maintaining market leadership,
expanding technological capabilities, and driving sustainable
growth in the smart metering sector.
Innovation
During the period significant work
has been undertaken on innovation to further enhance the Company's
product suite. The following products have either been developed or
enhanced, in each case to ensure the highest performing and lowest
cost version to maintain the Company's competitive position in the
market, and reputation as a company achieving constantly high
Service Level Agreements ("SLAs").
· In-Meter Gateway
o To
compete with cellular
o Be
Competitive
o Faster and Ease of Deployment
· Production of Long-Range Radios
· Gateways with 3 Phase Power Supply
o For
compliance to local specifications
o Thailand and markets abroad
· Unified Head End System ("uHES")
o A
Head End System that will allow both cellular and RF, including
that of third-party providers, to connect
· Low
Cost CNIC
o A
low cost version of the Company's Cellular Network Interface Card
("CNIC") at a competitive price point to suit the market in
India
· Solution on FG28 platform
o Design in of a newer, high performing chip
APAC and Middle
East
The smart metering market in the
APAC and Middle East continues to mature and presents a significant
opportunity for CyanConnode.
During the period CyanConnode
continued to deploy its contracts for the MENA region and
additionally completed incorporation of its subsidiary in Dubai. In
October 2024, the Company was pleased to announce a follow-on order
for this region, and shipments for this order are expected to
complete during this financial year. Further orders for the region
are expected to be won in the near term.
Additionally, the Metropolitan
Electricity Authority (MEA) Smart Grid Project, won in December
2019 continues to roll out in Thailand and reached go-live during
the period.
The Company is currently working on
opportunities in Malaysia, Indonesia and Azerbaijan.
Cash
On 10 September 2024 CyanConnode
Holdings plc raised £5.4 million (before expenses) through an
oversubscribed placing of 20,204,063 New Ordinary Shares and a
subscription for 39,611,109 New Ordinary Shares at a premium to the
prevailing mid-market share price. The cash is to be used to
provide ongoing working capital for growth, to further strengthen
the Company's balance sheet and to fund the setup of a hardware
product design lab in India, which will enable a ramp up of
operations.
Awards and recognition
In September 2024, CyanConnode was
pleased to announce that it has been named a WIRED Trailblazer
2024. This prestigious recognition, awarded by WIRED Magazine in
partnership with HSBC UK, highlights innovative companies driving
positive economic, social, and environmental change through
technology. The WIRED Trailblazers programme celebrates
organisations that are making a tangible impact on the future of
industries by tackling key global challenges such as sustainability
and resource management. CyanConnode's commitment to innovation,
demonstrated through its award-winning RF communication solutions
and large-scale project deployments, positions the Company as a
leader in smart energy transformation.
Also in September 2024, the
distribution company, Tangedco, won the prestigious SKOCH Award for
Gold Category in the Power & Energy category. The award
recognises the digital transformation of Tangedco's commercial
operations under the smart metering project powered by
CyanConnode's communication network. The project has delivered
exceptional billing and smart metering communication rates of over
99%, accelerating invoicing, reducing errors, and enhancing
customer satisfaction through timely billing. It has also optimised
operations, reduced carbon emissions, increased revenue, and
optimised manpower, among many other benefits.
Post period end developments and outlook
Orders
In October 2024, CyanConnode
announced a follow-on order with a value in excess of $1 million
for cellular gateways in the Middle East and North Africa (MENA)
region. This contract builds upon the initial MENA order for this
project, which was announced by the Company on 4 August 2022. The
full order is scheduled for delivery, with revenue also recognised,
within this financial year, which ends on 31 March 2025.
Notes to the Accounts
1. Basis of
Preparation
The interim financial statements are
for the six months ended 30 September 2024. They do not include all
the information required for full annual financial statements and
should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 March 2024, which
have been filed at Companies House. The Group's auditor issued a
report on those financial statements that was unqualified and did
not contain a statement under section 498(2) or section 498(3) of
the Companies Act 2006, however, the auditor's report emphasized
the uncertainty around the Group's ability to continue as a going
concern.
These interim financial statements
have been prepared in accordance with accounting policies which are
consistent with the measurement requirements of UK-adopted
International Accounting Standards. These financial statements have
been prepared under the historical cost convention.
These interim financial statements
have been prepared in accordance with the accounting policies
adopted in the last annual financial statements for the year to 31
March 2024. The accounting policies have been applied consistently
throughout the group for the purpose of preparation of these
interim financial statements and are expected to be followed
throughout the year ending 31 March 2025.
2. Going
Concern
To assess the ability of the Group
to continue as a going concern, the Directors have prepared a
business plan and cash flow forecast for the period to 31 March
2026 which, together, represent the Directors' best estimate of the
future development of the Group. The forecast contains certain
assumptions, the most significant of which are the level and timing
of sales and the timing of customer payments. These detailed
cashflow scenarios include Letters of Credit which have been
secured from the customers against contracts recently
won.
The Group's business activities,
together with the factors likely to affect its future development,
performance and position, have been considered in depth as part of
the Directors' assessment of the Group's ability to continue as a
going concern. The Directors have reviewed detailed trading
forecasts for H2 of FY 2025. An upturn in
business activities and revenue is expected during this period,
which will ensure the Group's ability to meet market expectations
for the full financial year. At 30 September 2024 the Group had
cash reserves of £3.7 million (31 March 2024: £0.8 million). Based
on detailed cash flow provided to the Board to cover the period to
31 March 2026, there is sufficient cash for
a period of at least 12 months from the date of approval of this
report, with forecasts prepared in line
with its standard operating model. The Company continues to discuss
potential working capital funding facilities with banks,
particularly in India. The Company has been approached with
alternative sources of finance, to support growth, such as secured
loans, which it could accept should such a requirement arise. It
also continues to discuss options of taking equity into its
subsidiary in India.
The Company received a R&D tax
credit of £664,558 from HMRC in September 2024. An advance loan of
£400,000 received in May 2024 was in place against this R&D tax
credit, and was repaid out of the proceeds of the tax credit
received in September 2024. The Company intends to secure an
advance against its R&D tax credit for the current financial
year, anticipated to be for a minimum of £0.5 million, in the
coming months.
Notwithstanding the material
uncertainties described above, which may cast significant doubt on
the ability of the Group to continue as a going concern, on the
basis of sensitivities applied to the cash flow forecast, the
directors have a reasonable expectation that the company can
continue to meet its liabilities as they fall due, for a period of
at least 12 months from the date of approval of this
report.
Notes to the Accounts continued
3. Loss per
Share
The calculation of the basic and
diluted loss per share is based on the following data:
|
|
Unaudited
6 months
to
30
September
2024
|
Unaudited
6 months
to
30
September
2023
|
Audited
12 months to
31 March
2024
|
|
Loss for the purposes of basic loss
per share being net loss attributable to equity holders of the
parent (£000)
|
(2,121)
|
(1,874)
|
(3,830)
|
|
Weighted average number of ordinary
shares for the purposes of basic and diluted loss per
share
|
297,056,605
|
260,581,840
|
271,910,382
|
|
Loss per share (pence)
|
(0.71)
|
(0.72)
|
(1.41)
|
The denominations used are the same
as those detailed above for both basic and diluted earnings per
share from continuing operations. However,
in accordance with IAS 33 "Earnings Per Share", potential ordinary shares are only considered
dilutive when their conversion would decrease the profit per share
or increase the loss per share from continuing operations
attributable to the equity shareholders.
4.
Trade and Other
Receivables
|
|
Unaudited
6 months
to
30
September
2024
|
Unaudited
6 months
to
30
September
2023
|
Audited
12 months
to
31 March
2024
|
|
|
£000
|
£000
|
£000
|
|
Non-current
|
|
|
|
|
|
|
|
|
|
Contract assets
|
2,812
|
2,141
|
2,537
|
|
Other non-current assets
|
514
|
315
|
548
|
|
Trade and other
receivables
|
3,326
|
2,456
|
3,085
|
|
Current
|
|
|
|
|
|
|
|
|
|
Trade receivables: amount receivable
for the sale of goods and services[3]
|
6,882
|
8,056
|
8,692
|
|
Allowance for expected credit
losses
|
(127)
|
(275)
|
(175)
|
|
|
6,755
|
7,781
|
8,517
|
|
Contract assets
|
854
|
374
|
910
|
|
Other receivables
|
603
|
274
|
911
|
|
Prepayments
|
58
|
84
|
153
|
|
Trade and other
receivables
|
8,270
|
8,513
|
10,491
|
Notes to the Accounts continued
5. Reconciliation of Operating
Loss to Operating Cash Flows
|
|
Unaudited
6 months to
30 September
2024
£000
|
Unaudited
6 months to
30 September
2023
£000
|
Audited
12 months
to
31 March
2024
£000
|
|
Operating loss for the
period
|
(2,088)
|
(2,177)
|
(4,204)
|
|
Adjustments for:
|
|
|
|
|
Depreciation of property, plant and
equipment
|
55
|
22
|
58
|
|
Amortisation of intangible
assets
|
75
|
133
|
267
|
|
Depreciation on right of use
assets
|
57
|
14
|
73
|
|
Impairment of intangible
assets
|
-
|
-
|
791
|
|
Foreign exchange
|
-
|
(8)
|
-
|
|
Share-option payment
expense
|
(24)
|
100
|
51
|
|
R&D tax credit
|
(224)
|
-
|
-
|
|
Operating cash flows before
movements in working capital
|
(2,149)
|
(1,916)
|
(2,964)
|
|
Decrease/(increase) in
inventories
|
34
|
(747)
|
(913)
|
|
Decrease/(increase) in
receivables
|
1,980
|
(1,711)
|
(4,348)
|
|
(Decrease)/increase in
payables
|
(2,378)
|
901
|
4,662
|
|
Cash outflows from operating
activities
|
(2,513)
|
(3,473)
|
(3,563)
|
|
Income taxes received
|
712
|
759
|
703
|
|
Net cash outflow from operating
activities
|
(1,801)
|
(2,714)
|
(2,860)
|
6. Post Balance Sheet
Event
The Group has no post-balance sheet
events to report.
7. Interim
Results
The Group's Interim Results report
will be available for download on the Group's website,
www.cyanconnode.com. The report will not be posted to
shareholders.