CyanConnode Holdings PLC Pre-AGM Update (0400R)
12 June 2018 - 4:00PM
UK Regulatory
TIDMCYAN
RNS Number : 0400R
CyanConnode Holdings PLC
12 June 2018
CyanConnode Holdings plc
("CyanConnode" or the "Company")
Pre-AGM Update
CyanConnode, the world leader in narrowband radio mesh networks
provides an update to shareholders ahead of the Annual General
Meeting to be held in Cambridge on 18(th) June. In response to
shareholder feedback over the last several weeks, and in light of
the last year's significant under-delivery against the order book,
the Board has continued to 'right-size' the business and further
cost reductions of GBP500k pa, effective immediately, have now been
made in addition to those previously announced.
Over the preceding two years CyanConnode has achieved some
impressive orders for a company of its size, obtaining several
large orders across the globe. In many cases, however, it has
proved impossible to deliver against these orders to the
anticipated time-scales and as a result the Company's revenues have
not reached expected levels, with corresponding operating losses
being much larger than anticipated.
The reasons for these delivery delays are the subject of
constant and intense management and Board scrutiny. Few of the
delays are due to problems with the Company's product, delivery or
deployment processes; any weaknesses in these areas have always
been very quickly resolved.
The overwhelming majority of the issues relate to either
customer "readiness" or political factors. CyanConnode is dealing
with very large organisations with many layers of management who in
many cases have a lower sense of urgency. For all of the Company's
sales, the contract has been won by either a meter manufacturer or
a system integrator partner, who then have the contract with the
end utility customer. Both our customers and, even more so, the end
utility customers, can be subject to severe political disturbance.
The management team and Board have in the past underestimated the
impact of these issues across multiple contracts and geographies,
particularly on timing of delivery of the contracts.
Sales
As demonstrated in the two new contracts announced from
customers in India in the last three weeks, CyanConnode continues
to win new orders which does much to underpin our confidence in the
fundamental strength of the market demand for what we offer. India
has moved to a more fast-moving and assertive standards-based
approach. CyanConnode is very well placed to see more orders in
India this year including much larger commitments. The Company has
recently won one of the largest orders ever placed by the Indian
government and have won the highest number of smart metering
contracts in India to date.
Operations
The Company knew that the global market was moving from an
embryonic phase to a more active point in its lifecycle - one
involving more orders and much higher volumes. This was very clear
from the orders won over the last two years. We felt it was
therefore important that we act in advance to build up the
company's operational capability. This was needed both to deliver
CyanConnode's new Omnimesh product (essential for the India market)
and to also increase the size and capability of the delivery team
to support the orders already won.
The Company has already started delivering Omnimesh into the
field and have had large orders for the product placed by both
Genus and L&T, who are two of the largest meter manufacturers
in India.
CyanConnode have the largest number of successful deployments of
smart metering in India, with the CESC Mysore project being used as
a reference site by government ministers.
Financials
The combination of the costs in scaling up in line with
contracted orders, set alongside delayed deliveries and therefore
cash payments from the customer side is the primary cause of our
disappointing 2017 results.
In our most recent trading update, we indicated that 1H2018
revenue would be higher than revenue booked for the whole of 2017.
As the first half draws to a close, we are re-confirming this and
can also confirm our expectation that 2H2018 revenue will be
substantially larger than 1H2018 based on contracts already won and
already in the delivery phase. We are endeavouring to secure as
many customer payments as possible to cover our cost base and we
are now seeing a regular stream of these customer payments from our
contracts in India as well as both revenue and customer payments
from the UK smart metering project.
The further actions taken over the last several weeks, focused
on reorganisations within the Company's sales and finance
functions, will result in a cost base which is reduced by an
additional GBP500k pa, effective immediately, which is incremental
to the cost reductions previously announced and which already took
the operating cost base excluding non-cash items down from over
GBP800k per month in 2017 to GBP670k per month from 1 July 2018
onwards.
John Cronin, CyanConnode Executive Chairman, commented: "I want
to thank all shareholders for your continued patience and ongoing
support in what has been a difficult year. As shareholders will be
aware I have invested approximately GBP900k in CyanConnode shares
since I joined with corresponding investments of approximately
GBP250k and GBP550k from Harry Berry and Simon Smith. You can be
assured that the Board and my senior team are deeply committed to
seeing a successful outcome for all of our shareholders and I look
forward to speaking with those of you who can attend the AGM in
Cambridge next week. I believe that 2018 will represent a turning
point in the Company's ability to deliver against its order book
and demonstrate high levels of growth."
Enquiries:
CyanConnode Holdings plc Tel: +44 (0) 1223
225 060
John Cronin, Executive Chairman www.cyanconnode.com
FinnCap Ltd (Nomad and Broker) Tel: +44 (0) 20
7220 0500
Adrian Hargrave / Giles Rolls
(Corporate Finance)
Alice Lane (Corporate Broking)
Walbrook PR (Financial PR) Tel: +44(0) 20 7933
Paul Cornelius / Nick Rome 8780
cyanconnode@walbrookpr.com
About CyanConnode
CyanConnode is a world leader in narrowband RF mesh networks
that enable Omni Internet of Things (IoT) communications. Its
innovative solutions use sub GHz frequencies and are optimised for
exceptional performance. Optimal solutions provide end-to-end
quality of service and total cost of ownership and IPv6 6LoWPAN
delivers standards-based IPv6 solutions, enabling rapid innovation
for the implementation of 3(rd) party applications. Through its
global partner eco-system, CyanConnode 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.cyanconnode.com.
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END
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