CyanConnode Holdings (LSE:CYAN) — Full Year Results for the year ended 31 March 2021

0:01 Good morning, ladies and gentlemen, and welcome to the CYANCONNODE Full Year Results Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged and could be submitted at any time using the Q and A tab situated on the right hand corner of your screen. Just please simply type in your question and press send. The company may not be in a position to answer every question it receives during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your meet company dashboard, and we will send you an email when they're ready for your review. I'd also

0:33 like to remind you that this presentation is being recorded. Before we begin, we would like to submit the following poll. And if you would be so kind just to give that your attention, we'd be most grateful. And I'd now like to hand over to John Cronin, Chairman and Heather Peacock, CFO from CYANCONNODE. Good morning to you both. Thank you, Mark. Good morning, everybody, and welcome to CYANCONNODE's full results for 2021, and it's an update that we've given to our shareholders and investors. Just to say, prior to the pandemic, we used to do presentations at the annual general meeting. But with this video through Invest Meat Company, we've got a better reach. For instance, we used to have about 10 people attend the AGM. Now through InvestMeet company, have over 100 registered people to attend and would never get that many at an AGM. So I think technology of videos is making people to sort of get more information in a timely manner, which is great.

1:32 As we did state in the RNS sent out about this meeting and about the AGM, In light we say in light of the uncertainty surrounding COVID nineteen, physical attendance in person at the AGM is discouraged, and that's why we can do this presentation sooner than waiting for the AGM. I mean, at the AGM this year, we'd only be doing formalities now, which will probably take no longer than fifteen minutes just to put it in perspective. I have to also say just to as as we have to say this to everybody, that there's no forward looking statements in the presentation or in the questions that would be going through afterwards. There's been some pre questions that's been set which would go through every single one of them.

2:18 And we can only put forward information that has been released to the market previously, so just to put some health warnings on that. So there's the health warning that we got. So just moving on now to the next slide. What we're doing, myself and Heather are going to turn off our cameras so we can see the slides more clearly as we read out, as it's a bit difficult looking at the camera as well. But we will put the cameras back on at the question stage. So as you can see here, and just a few slides to set the scene for those people that are new to the presentation and new to the company, You can see that we've we're headquartered in Cambridge in The UK. We have offices in Sweden and in India.

3:09 We have a a number of people in India right from, you know, sales, presales, technical support, delivery, finance, HR, a full blown company, exactly replica of what's in The UK. And The UK is the center of excellence, and we also then have people in India that is where we've done some skills transfer of different skills and knowledge into India. By the way, we will be putting these slides onto the website, so there there will be copies available later on in the day just for those people who were taking notes.

3:48 Just on the next slide here, can see today we have something like 2,100,000 endpoints, electricity and streetlights to date from about 20 customers worldwide. We look at endpoints as either modules or indeed, as we do in The UK, providing software only for endpoints as Toshiba provide the hardware. But you can see the end customers and then you can see system integrators, the middle layer, and the meter manufacturers that we have. Basically, we're agnostic to any meter manufacturer in the world, and that's one of our USPs, which I'll mention later on in the presentation. Thought this would be a useful slide to show.

4:37 On the left hand side, what it's showing is the benefits of RF mesh over cellular and power line communications. That's what PLC stands for. You can see the outer ring of the spider's web, as we call it, on the red where you can see RF in all cases is better in terms of performance, in terms of two way communication, in terms of coverage, network resilience, standards, etcetera, you know, over and above the purple line, which is cellular, and then the the the the the PLC line as well. And this gives us better performance, great value, and and scalability. On the right hand side, what you can now see is what we offer as CYANCONNODE.

5:28 And that is, we offer, through our OmniMesh platform, not only RF mesh, but also cellular, whether it's two g to five g or MBIoT. And we say to our customers now, don't worry about what technology is being delivered to give you the data and the regions that you want and the measurements that you want. That's near enough, you know, live data, let us worry about that assigned canode, and we'll put in the appropriate communications to hook up your your meters. So you can see here we can have a combination in urban and suburban areas of the RF mesh in the last mile, as we call it. And then we have the backhaul over cellular, which which is good. And then when we look at isolated small clusters like small villages, individual farmhouses, we can then put cellular to those. And then the cellular and and or I NBIT and RF all go back to the head end same head end system.

6:32 So it's one system that the customer has, and therefore, they're much more happier. And the important thing is is about the the SLA that is delivered. The service level agreement that we have with the end DISCOM, the end utility, we deliver 99.5% plus, and in some cases, 100%. Cellular delivers something between 84%, and the best when you remove some features like load bearing, it goes to 95%. This is why, really going forward, it's a hybrid of RF mesh and cellular to give the performance and the clarity of the data to the customers. I'll just hand over now to Heather. She'll just take you through some of the highlights and numbers, etcetera.

7:24 Good morning, everybody. Yes. As I'm sure many of you are aware, the the last financial year was was a really good year for us despite COVID. In terms of of revenue, we saw a 163% revenue growth 6,400,000. And if you remember, the previous financial year had been a fifteen month period. So to go from 2,500,000 for fifteen months to 6.4 for a twelve month period was was was really a good achievement. And you you you will also have seen the number of modules that have been shipped in in the last financial year. We shipped nearly half a million modules versus less than a 100,000 in the previous financial year. We we we've continued also to monitor our costs, keep good cost controls, and as a result, we've seen a reduction of 57% in our operating loss to $2.2700000 for the period.

8:19 And as you can see from the graph, the company is moving towards profitability. If you look back in 2017 where we were, you can see that the strides that we have made, and and that is sort of the the the key focus is to move towards that breakeven and past into profitability stage. 6062% reduction in adjusted EBITDA to 1,900,000 adjusted EBITDA loss versus GBP 4,900,000 the previous year and a 27% increase in cash and cash equivalents to GBP 1,500,000, and that was without going out for any sort of funding in last financial year. Some of these points on the next slide have just been covered on the previous slide, as you know, just to highlight, obviously, the increased revenue, cost controls.

9:08 We've got a significantly increased order backlog. We we achieved an order of 350,000 modules last year and along with the the deployment on the the order of 430,000 that had been delayed the previous year and other orders that we had in the backlog. It was nearly a million units that we were deploying, and we've got around about 500,000 at the end of the financial year, we had about 500,000 left just just for India still to be deployed. So so that is where when we talk about how we are on on the previous slide, actually, just mentioning here the market expectation for revenue growth to $9,400,000 in this current financial year. It was $8,800,000 which is expected from the order backlog just from last year that is expected to be delivered during this year.

10:04 Not only in India, but we've we've got contracts in Thailand. And since the end of the year, we've we've announced another order in Thailand and continued rollout of Swedish contracts. So, you know, you can see that it it has led to a major acceleration in in deployment over the year and continuing into this year. During the year, we announced a new team in India, new CEO MD, which was Ajoy Rajani, and an appointment of a new COO, Ratna Garapati. Since the the period end, as you know, we've appointed a new, CEO MD who came in from Intellismart, Rajiv Kumar, And Ajoy is now the vice chair, nonexecutive vice chair in India. So he's still very much involved.

10:51 And and, you know, it it's great to see the experience of somebody like Rajiv who's come in from Intellismart, which, you know, we we can see the benefits already within the company. The improved cash position, letters of credit, and advanced payments. So, typically, we we often go for advanced payments for rest of world contracts, and that's what we've received for most of the Thailand work that's been done, you know, in advance before we even ship. We we will receive payments from from the customers. And we received 5,300,000 altogether from customers via letters of credit and and the advanced payment and obviously payment of of any bills for things shipped during the period. This graph you may have seen before, this shows the acceleration of modules during last year.

11:40 You can see the early part of the year when we were in in lockdown last year, there were not many shipped. And then gradually, we came out of lockdown and the contracts accelerated, it's it it sort of really ramped up, especially in the the quarter from January to March this year to to taking the the 481,000 this year. This is a a share price graph just showing, you know, what what is always key focus is to deliver shareholder value. And going back a year ago and even prior to a year ago, over the summer of last year when we were in in the height of the pandemic, when many companies actually were affected from a share price point of view, our share price was was down even sort of lower than the starting point of four, which was a year ago. It was down sort of round about two and at some points even below that. So we're really pleased to see the growth in the share price.

12:36 It peaked just after the placing that we did in in June, but you can see it's it's it's gone up recently again, and and that's you know, the aim is to to grow the share price to to deliver shareholder value. Since the period end, we've announced three new orders. So the one was for a a utility sorry. Just hold on a second. Three new orders, the the one for a Northern India utility for a 152,000 modules, and we're already starting the delivery on that as as we speak. We we we said working to get modules ready to start delivery on that. Follow on order for Thailand for a further 31,000 modules. So just going through the the the background of Thailand, as you know, in December 2019, we won an order for 33,000 modules with associated software and services.

13:33 And then in March last year, we got a further order for software to take the software licenses to the total capacity for the project, which is 240,000. And then this is the next 31,000. We've delivered the whole 33,000 modules from that first order we delivered during last financial year, and this is the next order for further modules to be delivered. And then a new order for Africa for a further 100,000 modules. So Africa, John will talk a bit more about other markets later on in the in the presentation, but that's you know, this is one opportunity that that we've won, but we see opportunity in in other territories in Africa as well. We've we've signed new partnerships. So for example, the MOU with IntelliSmart, we've been selected as technology partner for EESL in Middle East and Africa, and then the global strategic alliance with Smart Energy Water.

14:28 We completed a heavily oversubscribed placing. So we received $3,100,000 gross from new and existing shareholders, and this was done at a premium to the share price. I will talk about the proceeds of that placing on the next slide just to talk about the background and the sort of reasons for going for the placing as opposed to, for example, a debt facility, which we've discussed previously. There was further strengthening of the India team, I talked about previously on on on the previous slide. And then awards. So the award of the London Stock Exchange Green Economy Mark, you know, this this is something I think everybody is is very much aware from recent events, you know, fires that we're seeing, wildfires and floods and climate change. Everybody is very much aware of the importance of doing everything that we can for the environment.

15:21 And it was really good to see that the London Stock Exchange has, recognized our technology. So the way that our technology is, considered to be green technology is, first of all, if if a utility installs smart meters, it it means that there's less people driving around in cars to read meters. It's less people having to go out to, for example, banks, post offices to go and pay their bills. So the fact that the whole system is automated, not only did it did it also sort of show benefits in the pandemic where there was lockdown because all of this process being automated was not interrupted,

15:59 it it it obviously means, you know, it's better for the environment. It also with with implementing our technology where we've seen in some utilities, also, John will talk about this later on, the one case study that we've got on MPWZ Indoor, they from installing our technology where it it sort of prevents theft and tampering of the meters and more efficiencies to to the utility and actually also means that they use less electricity. So all of that contributes to to the the environment. And the benefits to us of having achieved this award is that many companies are required now to to really sort of focus on ESG, and funds also need to focus on you know, some funds have to set aside certain amounts of their investment that that need to invest in companies that are considered to be green companies.

17:02 So all of this is is really considered as a benefit to us. Getting back to the placing and the proceeds of the fundraising. So one of the things is to to fund development to accelerate new products. You know, we we we've got sort of a a quite small team of developers in in Cambridge. We are further sort of expanding development and engineering into India, but, obviously, you know, being able to get in a couple of extra resources to help accelerate, the the development of some of new products that are needed in the short term. One of the key things is also to strengthen the company's balance sheet and give confidence to show that we can scale up. What we see is some of our partners as you know, many of our partners are multibillion dollar organizations.

17:50 And the contracts that we deliver are large contracts, and they are delivered over a long period of time. Some of them up to, you know, ten and more years and but a minimum of usually around about seven years. So we often get questions from our partners when, for example, you know, we're a public company. All of our financial financials are on our website for anybody to have a look at. And some of the companies will will come back and say, you know, we've we've looked at your, you know, your your balance sheet, and are you sure that you can deliver a contract that's gonna run out over seven, eight years? So so that was one of the reasons. It's really to give confidence that we can give that that we can scale up, give confidence to some of these large organizations that we partner with. Optimizing the company's working capital also in respect to stock and payables. This is linked to the next point as well, funding certain long lead time critical components required for production. The one thing that we have seen in the pandemic, one of the knock on effects of the pandemic, is many people going on to electronic devices, buying more electronic devices, and this has led to shortages around the world affecting car manufacturers and many other businesses, but also manufacturing of of our components. You know, they they are quite long lead times.

19:05 And fortunately, we we we sort of planned for this right from the end of last year where we could see that things were ramping up. And for some of the really critical ones, we we've sort of by also good relationships with our suppliers, we've we've managed to mitigate and ensure that we've got a pipeline of, components to come into us. But some of the other components, we've you know, it it it's sort of the the lead times have gone out, we've had to go to other places to go and buy. And in some cases, because there's such shortages, people, you know, require these to be paid up front. And, you know, it's and so that's what what what the the fundraising also helped with. And and then the final point is to enable rapid expansion and pursue large targeted growth opportunities.

19:53 As we said before, you know, we we really we've really focused over the last three or four years on just going to going for opportunities where they show the nearest term growth and nearest term revenue opportunities. But some of those that are being posed to us are, you know, they they they sort of near term and maybe we don't have resource, so we we want to make sure that we can capture any opportunities that are presented to us, as long as they are are ones that will deliver revenue in the near term to us. Looking at the different business models that we currently operate with, the the the typical model that that we've seen, particularly, for example, in in India is the CapEx model, where there would be capital expenditure over the first couple of years that would be paid by the DISCOM, and that's typically about 80% of a contract. And then after that, you would see a a support and maintenance contract paid monthly or quarterly over the next five or six years. So that's typical CapEx model.

20:54 That's the most price competitive as, you know, looking at the benefits to a discomb. Most price most competitive to them, and they only asset a 100% from from the outset. And there's much less dependency on the vendors after the initial rollout. What we've seen is we've been moving towards more of a hybrid model, and this hybrid model might be something where there's about 30% CapEx against the supply of the hardware and then 70% OpEx. So everything else that isn't isn't hardware would be spread as per meter per month over the remainder of the contract. That is obviously that that gives the added benefit to the DISCOM where there's less initial capital outflow.

21:40 The required capital can be met through the regular DISCOM funds, and they have assured deliveries as the vendor's payments are are locked. It's it also means a quick implementation as there's an early realization, which would be the vendor's target. Then what what India is really moving towards now is the OpEx model, which would be done via an infrastructure fund. So the OpEx model to CYANCONNODE still works as a CapEx model because, for example, if there is an SPV that is set up that would run the contract, we assign CYANCONNODE, would still be paid as CapEx. We would sell our product into the SPV, and things for us may not necessarily change from a revenue point of view.

22:26 The SPV were then funded, and a 100% of the the project costs are paid for by what are called EMIs, so equal monthly installments for the duration, and that's on a per meter per month basis. The benefit, the big benefit obviously to the DISCOM is that there's no upfront capital expenditure, but there's interest rates on return on equity and debt repayment. The Vandy EMIs can be paid through the benefits achieved through the AMI. As such, there's no investment. So for example, the savings that that they make can pay for the whole system on their own, and it's a quicker and faster rollout as early deployment leads to the start of the EMIs. The right technology delivered guarantees it gives a guaranteed SLA on this. So this is where, as as John talked about in one of the earlier slides, RF has been seen to deliver one of the best SLAs, 99.5 and above percent.

23:24 So, you know, that that that that's why we we feel that our technology can be really beneficial in these large rollouts in India and elsewhere. I'm now going to hand back to John. Yeah. Thanks, Heather. So just to focus a little bit more on India. As you know, India is a prime market, and we see the biggest market worldwide where, just to recap for everyone, there's two fifty million units to go after in India. And let's assume for us that we only get 20,000,000 over the next five years. That's quite a significant growth if you think that, you know, per point is anywhere from, you know, 28 to $30 a point. So that's a that's a large revenue turnover and something that we're aiming for. So we have to do that with through multiple partners, and that's why the ecosystem of partners is really important. And we're in the heart of that ecosystem of partners, which shareholders should be pleased to hear.

24:31 And today, if you think about it, there's roundabout awarded well, implemented, I should say, roundabout three three three and a half million ish meters. So it's nothing today. You know, obviously, IntelliSmart's got orders in hand, round about, in total, $89,000,000. But even so, taking that and with what we've done, there's a huge amount. I mean, we've hardly scratched the surface really in terms of the opportunity in India. You can see it's also supported by the, government of India. You can see the finance minister has allocated $42,000,000,000 for the power and renewable sector, which is good, and that will continue being implemented over the next number of years.

25:24 So there's even more cash going to come from the government. And that's proven by the the the bullet point a couple down saying that the central government also is giving grants to the discounts to the utilities to the tune of £3,100,000,000, which is about 15% of the cost of the devices will be supported. So you can see there's a real push to get that done. And not only that but there's a lot of people coming out of the woodwork now because of the opportunity in India that has become more real. So there will be other look alike type companies like IntelliSmart. So the Power Grid Corporation only announced last week that they're entering into the smart metering market very similar to wanting to fund the projects very similar to IntelliSmart.

26:13 So there'd be a number of a number of these agencies to be be able to handle the rollout as well as as core of course, our normal CapEx that Heather went through model, where we go through meter manufacturers to or system integrators or mobile operators to the customer. And that pipeline that we have today with that opportunity and bids that we're working on in India alone is worth around about $80,000,000. They're all at different stages, as you can imagine, as as you go forward. I'll I'll go through what the bidding stages are. Many of these funded through third parties as well. And more and more, we're seeing some of the opportunities aren't just CapEx, but they are the OpEx model, as Heather mentioned, and the OpEx model where the SPV she mentioned, which is special purpose vehicle.

27:07 You know, everything the hardware all goes through that special purpose vehicle, and it's financed by infrastructure fund. It's a bit like all of us if you go to a car showroom and you lease a car for three years, then the car showroom, they get their money when the you when you take control of the car, but you have then the leasing arrangement for three years with the finance company. This is exactly the same. It's a way of spreading the cost over seven to ten years per meter per month to make it affordable for the DISCOMs to actually implement smart metering. And as Heather said, where they may recover, you know, 2 or $3 each month by improvements in billing, getting people to pay their bills where they they, you know, they haven't paid them, and this is where prepaid metering is important. So controlling that. So they get the money, and it might cost them 1 or $2, but they're getting, you know, 3 plus back. So it covers that that cost of doing metering as a service.

28:14 Just to as an example, indoor, which is something I'll talk about in a moment, which is in the state of MP, where we've already won three orders, they are now going to issue additional 2 or 3,000,000 tender for over three utilities. So, hopefully, we'll be in a good position to win one of at least one of those other utilities going forward. Just a little bit on IntelliSmart here around a couple of slides. So just to recap what IntelliSmart is. So they're a joint venture between ESL, which is a government body, and the National Investor Infrastructure Fund.

29:00 So NIF is a platform that manages $4,500,000,000 of equity capital, And that's those are the shareholders in IntelliSmart. And what IntelliSmart is is a bit like Macquarie is in The UK or Kelvin Capital in The UK are known as meter asset providers, which really, as I mentioned, deploying

29:25 the funding or they fund the CapEx through through the OpEx model. But what their real role is is all about, you know, looking at the finances, the procurement, the deployment and operation of smart metering, and how to accelerate the rollout of the 250,000,000 smart meters throughout India. And then obviously leveraging what they get from their their shareholders in doing that. The what they have done very successfully is what they've done is from a procurement point of view is really driven down the costs of buying the meter. The meter is the biggest bulk. I mean, they were about 7,000 Indian rupees, and through their procurement, got it down to about $2.02 point $22,500 Indian rupees. So, you know, they're they're proven that they can buy in bulk and drive down the cost.

30:19 And, really, this is where they see now that we with the MOU that we've signed, that we'll work with them to actually help them deliver the SLA now required by the utilities and the collaboration that were put together. And I'll just go on the next slide just to go through a few points that, you know, IntelliSmart here, as I mentioned, got around about eight to 9,000,000 smart meters orders to date. It's 1,700,000 that's been deployed, and this is through a nomination basis. Because of the because they're government basis, there's two types of DISCOM utilities. One is run and and controlled really by the the state governments.

31:07 Each each government has its own, and some of those governments' sizes are the with people are bigger than The UK. And then the other one is by the national party, the the Modi party, prime minister Modi. They're in control of that. There's about eight or nine utilities that are controlled by the center as opposed to the state. And those then run by the government can actually nominate where they want to place tenders or orders

31:35 because it it actually isn't a tender as we know it. It's an order, and that's how Intellismart have got those orders. Whereas what we do elsewhere is we then tender for for our work and winning those tenders with the other states throughout throughout the country. So what what we are doing or what why why do they want us? Well, they rolled out the 1,700,000 smart meters on GPRS, and we all know for even in The UK that, you know, cellular doesn't work everywhere, and there's these nuts spots, etcetera. And what you have to do on electricity metering, you have to give fifteen minutes every fifteen minutes, you have to give data back to the head end system from every single meter. So that's a lot of data, and it means that the network needs to be on all of the time.

32:26 And that's what you get with RF mesh. It's there all of the time, and it's a private network as opposed to GPRS being a public network. So the benefits

32:38 of RF will enable 99.5% service level agreements with the DISCOMs of performance up to a 100%, whereas GPRS on its own is anywhere from 48 46, 48 to the best, you know, sort of 95% if you do some adjustments. So they really do need the hybrid approach. So what we are doing there right now is working with IntelliSmart, and there's, you know, many meetings each week since we've signed the MOU with IntelliSmart looking at where, of the 1.7, we will replace some of the GPRS meters with RF meters. Now to do that, it's not a simple process of just turning up one day and just plugging something in and and taking it away. We've got to work with the ecosystem of partners, whether it's the the company that's provided the head end system, It's the company that's provided the billing system.

33:37 It's the different meter manufacturers that we have

33:40 to integrate our RF into their meters. And also to ensure that all the processes are in place for the the DISCOM, the utility to be able to read them on on on their their on their systems, etcetera. So all that's taking place, and there's a number of units that we will do as a pilot and prove to the board of IntelliSmart that the RF will work in a hybrid and replacing what we'll call the brownfield site. So I call the 1.7 is brownfield opportunity, and then I call the eight to nine million that's still to be rolled out as a greenfield opportunity. And therefore, you know, in a couple of the states, New Delhi and UP, this is where we're working on replacing a percentage of them in with RF.

34:31 And this will help them prove the RF when GPRS is a hybrid to the rest of the portfolio of the $89,000,000, as well as we are already bid bill billing bidding, sorry, in parallel on new tenders with IntelliSmart

34:47 that are out there. So we're that right now using their OpEx model, which they'll they'll do over then about seven years or so. So we are looking to look at doing this pilot, which will take a couple of months to bed down and to implement. And following on from there, then we'll know more about the quantity and the size of orders going forward that we get with IntelliSmart. So it's a bit early to say what the quantity will be, and it's a bit early to say exactly what date, but that's what we're aiming to do. And then we can all announce to the market once we're all clear on precisely the the quantum and the size and the the timelines.

35:43 Just there's a question that that was asked, and this is a slide that we used in last year's presentation. I thought it was worth putting back up again. But, it's about the you know, what do we do with the competitive tender? Well, it's a full bidding process go that goes on. Obviously, we have to work with our ecosystem of partners, which meter manufacturer or several meter manufacturer, which which SI, which meter data management software company would work with,

36:14 and we negotiate with them and put the tender together. And once they have won the tender, so let's say it's a system integrator, they then come back after the award because it depends on what they've gone in with pricing, whether we've we've got to do anything there or any of the terms and conditions, the delivery time scales, you know, can we meet the delivery time scales? So all of this takes time through the bidding process, through the gating of, you know, approving the technology, approving time scales, delivery components, also then of the pricing, and we negotiate, and then they negotiate with all their other partners, and then they place an order with us. So even though we know a partner may have won the business and they would have won it with our solution and their meters and and their their SI work, etcetera, there's still a a time time lapse before we can say, yes. We've got the order and therefore we can go ahead and announce announce the market.

37:20 But that's sort of just a typical way that India, you know, contracts work. We just have to be patient, but, you know, there's, as I say, various stages that we're operating in right now. Some some we're working that are twelve months away where we go and talk to the utility and explain to the benefits of RF mesh, our platform is a communications platform now allowing cellular as well as RF, as well as the benefits of the SLA of 95%

37:49 plus because that's what they're interested in. They're interested in the service level agreement and and the performance to date that they'll they'll get from us. Just briefly, as I say, there's there's a these slides will be on the website so you can look at these closer. But indoor is a great ambassador for us. Most chairman MDs of utilities and ministers has been to indoor to look at the performance there. Give an example, you know, within three months, we improved their billing by 25%. That's collecting more cash in that time and control of being able to do disconnect and reconnect of meters by people that's that haven't paid the bills. And this is where prepaid then comes in.

38:34 Those that haven't paid the bill where they disconnect them, then they phone up with their credit cards to get back online. They put them onto prepaid smart metering, and that means they're always getting the money upfront before they, use in the the electricity.

38:49 So you can see here some of the, drivers that indoor, as MPWZ, is is known, of why a utility would go for smart metering. On the right hand side, you see the slide here that, you know, India loses $32,000,000,000 a year where they've generated electricity, distributed it, but not collected the cash. And by the way, these two slides, I should say, have been written by the DISCOM, by the utility, not by us. So we've just copied them over just to see this is what they are saying about the performance of the CYANCONNODE RF solution that we've gone in there, which is gonna be close to about half a million units now that we'll have in installed in indoor.

39:36 So you can see some of the measurable the the benefits there. I won't go through them. As I say, you'd be able to look at them more closely, but it's a good ambassador project for us, and that's something that we're very proud of.

39:49 Just looking further then opportunities globally that we have. Heather mentioned, we've got opportunity further in both Thailand and Sweden, and we continue to to look at that as well as we mentioned the African project. And the sort of time scale that we're looking at for for that is is round about twelve, eighteen months. I mean, you know, we're just in the throes of doing surveys and planning because that's something else that has to be done, making sure we either get the well, put the gateways for the backhaul of the cellular in the right places for the last mile to be picked up by RF mesh. So, yeah, it's we we have to be careful with the information that we give on Africa because it seems that there are well, we know that there's a number of our partners, at least three that have come to us, all wanting

40:46 quotes and pricing for Africa. So it's very competitive, and we have to be careful not to give too much information to our competitors because it's starting to heat heat up there in terms of the opportunities. And that's why we're careful, and we were asked by our customer partner to do the minimum information so it doesn't leak out and we don't wanna give competitors,

41:11 you know, any any more information than than we need to. But we are actually looking at several countries in Africa right now. And we are sort of looking at other areas and working with the likes of ESL for Cambodia and The UAE, and we got opportunities. Where we're asked is to look at lighting, but lighting isn't a big big thing for us. It's mainly smart electricity metering that we're focused on because we've got so much of it where, you know, partners are coming to us and, you know, we are looking to move in other areas. We have talked in the past about Bangladesh, and I know there's a question on that which I'll address later.

41:57 Malaysia, we're working in and looking at that as well as Indonesia and, of course, The UK as well. And there are opportunities coming along in water metering. And the good thing is we do get advanced payments in some of these countries. So you'd be pleased to know in the African project, we're actually getting paid 100% for the hardware before we ship that hardware. So, you know, we get so much on order and so much before we ship. So that that's good that we get the cash in before we we we ship that.

42:34 There's a question that was asked as well just about what is our USB? What's the unique selling point to CYANCONNODE? Well, you know, we are a technology company. So what customers look for, DISCOMs look for, is standards based, I p v six six low pan, which is really important. So it's an international worldwide standard. We're very secure because we're a private network on a as opposed to GPRS or mobile, which is, as you know, a public network, and it's not very secure. Our our network, the OmniMesh network, has been approved by GCHQ from a security point of view as we're involved in The UK rollout. So security is really important, and we do have that at various different levels.

43:21 And that's that is much better than you would get on GPRS or mobile. As you know, if you all come out of Wembley and all try to make after football match and make a phone call, these towers and the cells get blocked and you can't make a call. Well, that that's not good enough when you gotta do fifteen minute readings on electricity metering. We are meter agnostic, so we can connect to any meter in the world, which is great. So we're independent from that point of view. And as I mentioned earlier on, we can handle not only RF mesh, cellular MBIoT, and power line communication PLC. We are classed as an innovative company, always looking at how we can improve. We've got long range radio as well. Instead of doing two or three kilometers, we can go up to 10 or 12 kilometers depending on the environment.

44:10 And we also and nobody's taken us up on this yet, but we got an in meter gateway. Instead of the gateway sitting on a lamppost or the side of a building, it can now fit inside a meter. So people have to just change their meter to fit that. And that's extra security, and it's also less cost as well to to our partners. So we always look at being cost effective as as we go forward. And we we are, you know, we we are excellent in ensuring there's a full end to end solution delivered to the utility. And we go the extra mile, you know, with some I mean, some, I won't mention names, some large billing companies that have had difficulty on the integration, we've gone in there and helped them do that to integrate our head end system into their billing system. And, you know, we've got some real good PhDs in the company that have got some great know how and have proven and delivered in difficult situations.

45:10 We're also you know, the applications are focused on really today is is electricity. But, yes, we can do gas, water metering, EV chargers, you know, all moving to smart cities. And the opportunities, as I mentioned, is 250,000,000 in India alone. And there's, as I say, growing opportunities then in Africa, UAE, Thailand, Sweden, and other territories that I've mentioned. So we do have as well, which is really important for shareholders to know, that we got significant orders and backlog, and that's being deployed, as Heather mentioned, another 500,000 at least ago this year just in India. And and that's great. And we're deploying that, and we will meet the end contract dates as already committed to those to those partners and customers.

45:58 And you can see our pipeline worldwide is 270,000,000, so you can see that's an awful lot to to go at. It won't all happen all these next twelve months. You know, that's spread over the next two or three years, those opportunities. Some will disappear as they do, but, you know, we we we we only can work on what information we got at any given time. And it's important that we have a growing pipeline and continue to ensure we have the right partners going forward. So what we'll now do is we'll open up to some questions. So That's great. John John, Heather, thank you very much indeed for updating investors this morning. Ladies and gentlemen, please do continue to submit your questions using the q and a tab situated on the right hand corner of your screen.

46:50 But just while the company take a few moments to review investor questions submitted already, I'd like to remind you that recording of this presentation, along with a copy of the slides and the published Q and A, can be accessed via your investor company dashboard. I'd also like to remind you that your feedback is important to the company. And immediately after this presentation has ended, you'll be redirected for the opportunity to provide feedback in order that the company can better understand your views and expectations. John, Heather, I haven't given you an awful lot of time, particularly given we've a number of questions that have come in the live event. But perhaps I could start off the Q and A with pre submitted questions. And thank you, firstly, to all those investors that have taken the time to submit those questions. If I may, the first question reads as follows. It appears EESL have done extensive work on lighting in India.

47:36 CYANCONNODE expect to be involved in the lighting sector in India going forward? Yes. Thanks, Mark. So I'll just pick that one up. I mean, you know, ESL are heavily and have been heavily focused on electric on lighting, and that's been one of their priorities actually when they they started off doing that some years back. With CYANCONNODE is heavily focused on electricity in India, and we believe a lot has been done in the past by ESL. And we're not really focused on that. I mean, if we're asked to bid, we will. But because a lot have been done already by ESL, we don't see that that sort of focus that we have at the moment. But, again, if they asked us, then we would do that. But elsewhere in the world, we've had a couple of partners wanting us to bid on lighting, and that's what we do. But, you know, there's not a lot in forecast and our budgets for lighting this this coming coming financial year.

48:39 Thank you very much indeed, John. The next question reads as follows. I know the company is doing well with increasing sales of unit and license agreements. When are investors like myself expected to see a dividend being paid? Okay. I'll pick that one up. Well, the group has no plans to adopt a dividend policy in the immediate future. All all funds generated by the group will be invested in in the further development of the business as this is is normal for in in this industry and companies at at this stage of development. They they was just just to pick up one thing as well, just covering a bit on I've seen one of the other questions earlier was regarding the the the placing. So I covered all the use of the proceeds of the placing, but I just wanted to say as well, there was a question that said, how is it that given very strong revenues, the company needed further funding, and that came from a placing and not a deck facility as had been issued in the last presentation.

49:37 So I just wanted to say that the reason why we went for placing as opposed to a deck facility is that we evaluated all options. And obviously, we are a company that is not yet profitable. And the terms that were offered on standard debt facilities were not that great. We were offered a number of convertible facilities, and we did actually discuss this with some of our key shareholders, including institutional shareholders. And most of them felt that in term looking at the terms and the cost of of debt and some of these proposals that we had, placing was actually more beneficial. And and, obviously, this is done at a premium, and we built on some significant shareholders. You would have seen, obviously, from tier ones, it was Crux and and and, know, other significant investors that that we believe will be very supportive of the company as we go forward.

50:36 Thank you, Heather. Next question is as follows. How would the company cope if the r and d rebate was redrawn by the government? Okay. I'll pick that up as well. Firstly, I'm not aware of any plans to withdraw it. But the other thing that I'll say is that actually, with us getting the r and d tax credits, often we can't take advantage of other government grants. Because if if basically, the way that the state aid rules work is that if we are using if if we get certain grants, then we cannot also take r and d tax credits. Similarly, like, for example, the CBILs and some of the government facilities that that were provided for the during the pandemic, we we didn't well, first of all, we we didn't need to furlough anybody because we were all so busy.

51:25 And we didn't take any government funds because, for example, the CBILs, the way that they were structured was that the you know, if we used if we if we got a CBIL and we took any of that to use towards paying for, you know, engineering and r and d functions, then it would mean that we lost r and d tax credits as well. So, you know, if for any reason the R and D rebate was withdrawn, then obviously there are other facilities that we can take up that we currently don't take up. That's great. Thank you very much indeed, Heather. The next question reads as follows. 500,000 connected units per annum was a figure suggested a few years ago that would seek CYANCONNODE to breakeven. Has that number been achieved in the past?

52:12 So just to clarify one thing on that. I I guess the 500,000 was the blended revenue across 500,000 units. As we've explained in the presentation, you know, each contract is made up of modules, gateways, head end software, annual maintenance charges, support and maintenance, and various services. So it would be a blended amount of all of that revenue. And because many of the contracts are still in the initial stages, while we have shipped nearly 500,000 units in last year, the the revenue from that that would have come in would only have been on the modules. And I think the modules make up typically about the modules and gateways together are about 60% of the contract. Modules are probably about 50% of the contract. So it's only when we move into the next stage of where we're also seeing the services and move into support and maintenance that we would move into that blended stage where we might see a blended revenue across 500,000 units.

53:11 Thank you, Heather. I have a couple of questions from Tony Jay. The first one reads as follows. Current North India and Africa new contracts, I assume, were negotiated in 2021 period. Can we expect to see any similar disclosures during this period that originated in 2021? Yes. I mean, we continue to tender and negotiate, and many of these take a number of months to go through a process. Slide 16, which I mentioned, sets out the typical process from tender to award that I went through. So it'd be worth looking at that, Tony. Yeah. Thank you very much indeed. Next question is, can you give any insights into the IntelliSmart 3,000,000 units that Hardman anticipates as negotiations probably occurred in previous periods?

54:00 Yeah. I think I did cover that on the slide, I mean, there's $89,000,000 units within IntelliSmart. And as I say, we're working on the pilot to prove it to their board, you know, of the National Infrastructure Fund and ESL. And then we'll decide on on the volumes, or they'll decide on the volumes, I should say, of what they'll they'll give to us going forward. Thank you very much indeed, John. It is anticipate sorry. It is now accepted that the Bangladesh order is canceled or any reasons to believe it may be resurrected? Yeah. So yeah. Okay. I accept that it is canceled from that point of view. We did say back 10/31/2019 in an RNS that we had removed this from our backlog and from it's not in any of our forecast or pipelines.

54:48 We decided to be prudent and do that. We did announce that to the market. Interesting enough, much of the press announcement about smart metering in Bangladesh not really come to much. I mean, there's a lot of confusion with the press announcements out there. I mean, you talk about one particular utility called d d p d c. The press says that they've got 3,800,000 deployed. But, actually, it hasn't gone live yet, so that's interesting. Now what we are doing is we're aiming to get a meeting with the power minister, Nasrall Ahmed, to discuss this, and we're in we were and have been in discussion with a number of people early back in 2020 to progress the opportunity. But, with due to COVID travel restrictions, we've not been able to meet anyone as yet.

55:34 So we're we've we've still got it on our radar, and, hopefully, we get another chance to sign up through a partner that ensures that it can be delivered. But it you know, Bangladesh is one of them that they have ordered and canceled a number of contracts across the country. And as I say, until we go back and get face to face meetings because of COVID, we we we can't go there just yet. Thanks, John. The the the next question is quite long winded, but bear with me whilst I read it out. The TNEB, it relates to the TNEB. During the July 2013, the original TNEB tender was lodged and the procurement process had been suspended. During January 2020, CYANCONNODE received an order from GENUS Power concerning a, inverted brackets, a new order for smart metering project in South India, which we later learned from a company presentation PDF was from the TNEB.

56:32 Can you give some background information on how during the interim seven year period since the lodging, the company managed to turn this initial disappointing period for both the company and its shareholders into a significant achievement and say what the present RF potential for the TNEB is? Gosh. That's a that's a long question. I mean, gosh, it it this takes us back when I first joined the company, actually. But so the tender was lodged or suspended, which is when I heard the word lodged, was quite a new word for me. But what has happened along this journey is that the chairman, MD, of the state got imprisoned for fraud, and, unfortunately, later, she died. And there's a new regime in place, and they changed their name from TNEB, which was known as Tamil Nadu Electricity Board, to Tangenko, Tamil Nadu Generation Distribution Corporation, that stands for.

57:26 So the Indian government changed their policies in 2014, and then they introduced, if you remember, smart grid pilots, which we went for some of those, which was really all about smaller projects projects to review different types of technologies. And, originally, TNAB was talking about 18,000,000 units, which we now know would be unlikely to be placed in one go because we all know where we are today. Now Tangeco has a total of 30,000,000 consumers, So the future smart meeting looks looks likely to be more on an OpEx model as we we talked about earlier on, you know, via either IntelliSmart or special purpose vehicles. So, yes, we are very focused on that. We're pleased to have got the order eventually through Genius, who's one of our key partners, and we continue to look for for other opportunities in in that state.

58:24 Thanks, John. Can you say what CYANCONNODE's smart street lighting market is in India and also worldwide, if possible, especially in connection with smart cities? And I know you did touch on it, but I wondered if there's anything further you could expand on. Well, I I think I've already said that, Mark. I think I think what we're doing is we're not actively pursuing it. But as partners look at it, we are very much focused on the electricity opportunities we've got, which is plentiful at the moment. Not to say that we won't, but as I say, it's not a priority for us. No problem at all. I am obviously mindful of your time and your wanting to give you the opportunity with some of the live questions as well. We've got about three or four pre submitted questions. Perhaps if I can just take a couple more of those and then give you a time just to scan through the Q and A that's coming in the live meeting. And of course, to all the investors, we will review all these questions where appropriate if we haven't addressed them, provide responses on our website.

59:23 Perhaps I could deal with the the final two questions on the pre submitted side. With the collaboration between EESL and CYANCONNODE in The Middle East and Africa, can you elaborate in any way on the prospect for the development of smart metering and smart lighting in these regions? Sorry. Sorry. Just just give me that again. Yeah. With the collaboration between EESL and CYANCONNODE in The Middle East and Africa, can you elaborate in any way on the prospects for the development of smart metering and smart lighting stroke smart street lighting for CYANCONNODE in these developing regions? Yeah. I mean, very much we working with them. And as I mentioned, we are working with them on particular projects with ESL.

1:00:09 And, you know, once we continue the negotiation remember, when we say this, we're not it's not just with ESL, it's also with the local partners in country and the ecosystem of partners. So we have to build up the whole soup to nuts. So, you know, which meters, which type of meters, which meter data management system, which billing system, which SI company shall we use, and all of that. And that's what we're doing actively with ESL. So once we've got that more information clarified, then we'll be able to let them our shareholders know more information along the way. Thank you, John. And then finally, really around the green economy, Mark. In what way can you see the recent award from the London Stock Exchange concerning the green economy mark award awarded to CYANCONNODE being a benefit to the company in the future?

1:01:01 I think I covered this really in the presentation. You know, climate change is high on the agenda of the government and corporate governance and, you know, corporate social responsibility. And, you know, it's an excellent strategic accreditation that should allow a number of green funds and institutional investors to meet their ESG and climate change investing framework. You know, some funds are set aside specifically for green technologies. I think it it opens up a lot of new potential funding streams in the future as well as adding value to our imaging profile and corporate visibility. Thanks, Heather. Well, thank you very much. That's the the most of the pre submitted questions. As I say, mindful of time. Could I just ask you both to open the q and a tab on the right hand side of the screen? And of course, where it's appropriate to do so, just if I could ask you to read out the question and perhaps even who it's from. And what I'll do is I'll pick up with you in the end.

1:01:56 And again, obviously, any questions that we don't get time to respond to here, we can take that offline and publish responses later. Yeah. I'm I'm just scrolling through. So I've got I think we've covered the one about IntelliSmart and and where we are with the following on from signing the MOU. I think we talked about Africa and time frames. I mentioned that twelve, eighteen months. I mentioned about the competition as to why we're obviously being cautious in terms of any other information to the market for now. I think there's one here, Heather, on looking at where we are with local currencies hedging and Yeah. App management, the debt facilities, anything like that. Yeah. Yeah. So what are your projections for ARR as a percentage of total revenue for this financial year?

1:02:53 Not not really a lot because that part really comes later on in the contract. You know, the initial part of our contract is the delivery of modules and services, which is all sort of one off. It's it's not really recurring revenues. So recurring revenues are gonna come sort of later on in the contracts. Then the next question is bad debt can be a major problem in some of the geographies you operate. What percentage of sales are not paid upfront by customers, and do you have any guarantees in place? So as as we talked about quite a bit over the last year, really, we we are going as much as possible really for for the the the part of our sort of prod project that's that costs us money, which is the manufacture of the hardware, we are almost always getting, lists of credit for that or advanced payments. So that that's one element that we always try and get. The the the services and, software often goes back to back with the terms of our end customer.

1:03:58 But, you know, as I say, the the the the most important part, which is the hardware, we've got lists of credit and advanced payments in place with the majority of our customers. And then contracts in local currencies, are any contracts in local currencies? And if so, do you hedge? And if so, how far out? Now in India, all the contracts are in rupees. We have an entity in India which operates in rupees, so there's no requirement for hedging there. And then the other currency, the other main currency that we operate in for the rest of the world, we always quote in US dollars, and that is because we buy all our components in US dollars. So there is an element in in some of some areas that that we will have some currency fluctuations and and need to hedge.

1:04:46 But so far, you know, between the US dollars and the rupees, we're sort of managing with as little as possible of that. Where we do see sort of current currency fluctuations affecting us is not true sort of loss of of currency, and it's nothing you can hedge against. So for example, in our the the the conversion of our revenues and our and the way that we state our our revenues and our financials, you know, if the contracts are in rupees and then they convert into pounds, that's just a conversion. So we're not actually losing money, but we can we can see fluctuations, and we have seen fluctuations even in the last year in terms of our revenue. What's what's being reported is is lower because the pound has strengthened.

1:05:33 So when it's converted, you know, the the the revenue in pounds comes in lower than originally expected. So, yeah, the the the research. There's another question with ramp up of units deliverable, will will working capital funding be required to accelerate delivery to reduce backlog? I think that was covered under the use of the proceeds. You know, that was one of the reasons for us doing the placing so that we're relevant if we need to, for example, in some cases, get the best prices for components and also if there are component shortages, you know, that that we we wanted to ensure that we've got cash that we can do that if required. And and we'll continue to monitor it as as we win other contracts in terms of working capital requirements. But what does also help it is the letters of credit and advanced payments against those the manufacturer.

1:06:33 Yeah. I've got I've got one here as well, I think, that I can see. I think probably the final one, I think, is it says, you are building an amazing private network. Have you looked at the possibility of using this network to carry data beyond meter readings, e g from IoT, Internet of Things, devices, a business model similar to Helium. I don't know Helium. I'll I'll I'll look them up after this presentation. But basically I mean, we can connect any any anything in in the neighborhood network, any device. Again, you know, our focus with our resource and the the opportunity for earlier revenue is all about electricity metering. So that's what we're focused on. But we part of the business model that we did mention is we could license out our product to companies that are focused more on other IoT devices if they wish to go to market on that. So we're happy to talk to anybody that want to consider that, and we can support them in the background. But, yeah, I I will definitely look at that Helium just to see what their business model is.

1:07:41 John, Heather, it'd probably be an opportunity time for me to jump in. And thank you both for being so generous with your time and addressing those questions that investors have submitted. Perhaps, John, Heather, I know investor feedback is important to you, and I'll shortly redirect investors to provide you with their thoughts and expectations. But perhaps I could just hand back to John maybe for a few closing comments just to wrap up, and then I'll redirect investors. Yeah. Thanks, Mark, and thanks, everybody, for your time today. Hopefully, you can see the benefits of of doing this online that, you know, we can reach more people. We've given quite a lot of information to this company. You know, the board has put in investment with mainly equity and a a little bit of debt into the company of £6,000,000 sterling.

1:08:31 You know, I put in about 1,500,000 of my own money in there. So, you know, we're committed to making this happen, and we can see ourselves really sort of turn the corner as a company. And things are looking very, very positive despite COVID. I mean, you know, we didn't furlough anybody. We didn't make anybody redundant. We didn't take any government handouts to keep us going. You know, we were very prudent in the early days, and, you know, we hadn't done a a placing for over two years. And when our shareholders asked us to, you know, put a small placing together, you know, they said, look. You know, we think it's the best thing to shore up your balance sheet and all the reasons that Heather said. So thank you very much shareholders invested for your support. And I also would like just to thank the employees of the company for getting through this. You know, it's been difficult, as we know, all around the world, and they've kept the company going, working remotely.

1:09:25 And we have our office back open. Well, it never closed, actually. We continue operating to a degree where we could and where we were allowed and keeping people safe. But thank you very much for investing. Thank you very much for being shareholders, and thanks for listening. John, Heather, thank you once again for updating investors this morning. Can I please ask investors not to close this session? It shall now be automatically redirected for the opportunity to provide your feedback in order the management team can better understand your views and expectations. This will only take a few moments to complete, but I'm sure will be greatly valued by the company. On behalf of the management team of CYANCONNODE Holdings PLC, we'd like to thank you for attending today's presentation. That now concludes today's session, and good morning to you all.