Cyanconnode Holdings (LSE:CYAN) — Investor Q&A session

0:02 Good afternoon and welcome to the CYANCONNODE HOLDINGS PLC investor Q and A session. Throughout this recorded presentation, investors will be in listen only mode. Questions are encouraged and can be submitted at any time via the Q and A tab situated on the right hand corner of your screen. Simply click Q and A, scroll to the bottom, type your question and press send. The company may not be in a position to answer every question received during the meeting itself and the company review all questions submitted today and we'll publish responses where it's appropriate to do so. I'd like to submit the following poll. Before we begin, I'd like to run a short introductory video. As low cost technologies and big data are realized, IoT or the Internet of Things is expected to increase in value and volume significantly over the next few years, dramatically impacting everyday life. IoT is driving the need for highly efficient communication to maximize the use of finite spectrum.

0:52 We are beginning to witness the unprecedented adoption of narrowband technologies to meet this rapid growth. Narrowband RF mesh networks offer reliable and resilient communication for long range low power solutions and CYANCONNODE is a world leader in narrowband RF mesh networks. Its suite of innovative solutions provide a communication platform for deployment of large scale networks for quality of service IoT applications. CYANCONNODE's networks are self configuring and highly resilient with built in security whilst providing a low total cost of ownership. Our Omni IoT strategy aligns our existing technology portfolio and business models with the rapidly changing needs of our customers. Through a future assured dynamic investment model, our customers are empowered to act today and have the confidence of long term business stability.

1:43 CYANCONNODE provides a diverse portfolio. Our narrowband technologies consist of many mesh networks connecting millions of devices all managed by one server platform. The server provides network and device management handling operations such as firmware updates, configurations, monitoring of devices and the network security management. The agent is integrated within a device enabling the device to be securely connected to the network. In some solutions, an agent automatically detects if the device has a working backhaul connection. If yes, it will take the role of a mesh gateway. Otherwise, it becomes a mesh node. Our mesh WAN connection can be enabled through many technologies such as cellular, Ethernet or fiber.

2:29 Our narrowband solutions support flexible WAN backhaul which is never likely to become congested. For IPv6 based solutions, any enabled device can communicate directly with an external system as CYANCONNODE offers true IPv6 networks. However, when there is no IPv6 haul network available, the server can route application data through an IPv4 network to an external system. CYANCONNODE solutions offer standards based server platform APIs that are easily integrated with customers' critical applications. CYANCONNODE delivers exceptional value. CYANCONNODE is able to connect any device inside or outside any building globally in a cost efficient and highly reliable way.

3:15 IoT. Fantastic. And I'd like to introduce John Cronin and Heather Bee Cook, CFO. So, welcome everybody and compliments of the season. Hope you're all keeping warm in this, chilly weather here in The UK. So just to refresh, our minds, about CYANCONNODE, we thought we'd put the video up to explain what we do and how the product is implemented. And we are all about wireless communications. And we do have PhDs based in Cambridge that do the architectural design, and also the hardware and the software of the system, the end to end system that we have. And, you know, we go to market through multi million dollar organizations such as system integrators, meter manufacturers, EPCs, etc. And I think most of you know that we offer an end to end solution, and not only for electricity metering, but for gas, water, anything in the neighborhood network that we can connect up.

4:20 The really exciting moment that we're in now is that India is rolling out over the next two years, two fifty million smart meters, I should say ordering two fifty million smart meters. And these smart meters actually prepaid smart meters, which is really important as opposed to the postpaid that has been there to date. If you look at that market at two fifty million prepaid smart meters, the addressable market for CYANCONNODE is worth about $5,000,000,000 So it's a huge market for us to go at. I'm not saying we're going to win all of that, but I'm going to be saying that we'll win a good proportion of that. And if I just put an approach to what I think we can do in the next five years, round about 20,000,000, 30,000,000 smart prepaid meters, the communications of, would give us a revenue of between $400 to $600,000,000 which is a huge amount for a company that this year we're aiming to do £12,500,000 sterling as a combined entity, never mind just in India.

5:29 And since only the last few weeks, the number of tenders that are out there right now out of the $250,000,000 is 75,000,000 smart meters. And that has a potential worth to us of about well, in excess of £1,000,000,000 sterling. And it's really important that we're at the forefront of this technology, we're at the forefront of what we'd be doing. You know, we've been in India for the last ten years. We are number one in RF communications in India. And and and why is that? Well, you know, what we've got is a standards based IPv six low PAN standards. That's an international based standard that's really important for India. We also play to a standard IS one six triple four that, is applicable just for India, and we give a tick in the box in that. In fact, we sit on the standards based committees in India and actually offer advice going forward as to what the standards should be adopted going forward.

6:35 What really is important that what we offer in our solution, our platform is a performance level of throughput of data from the meter in the home all the way through to the bidding system of the utility, a performance level of 99.5%. That's really good, plus actually, in fact, we can do 99.95%. But, you know, we're really pleased with what we offer. Mobile operators, they're somewhere in the region of 90 to 95%. And therefore, they need to really look at maybe a hybrid approach with us to actually get them up to 99.5% plus. Our network as well is a very secure private network, unlike the cellular network. As we all know, the cellular network is an open network that any of us can tap into. So if you leave a football match, a cricket match, rugby match, and you try and use your mobile phone, you know the cell gets clogged up and not everybody can make the call at the same time.

7:42 With our private network, we configure it for the peak amount of data throughput and that's why we can guarantee 99.5%. Nobody else is going to steal any of that capacity, any of that bandwidth. The other good thing about us as well, we are meter agnostic. I'll just take India, where traditionally we were integrated with three meter manufacturers. Now we're actually completing work to integrate up to nine meter manufacturers. Why? Because of this huge growth going for two fifty million smart meters. In our platform as well, over the last sort of twelve months or so, through innovation, we've allowed cellular to be able to connect to the platform, NB IoT and PLC.

8:29 And we're always looking at innovation, looking at cost down as well of the product. Already we've got quite a hefty chunk of some of our silicon, because the silicon providers can see the opportunity that's coming through now and the volumes that are coming through. So we're really pleased with getting quite a significant reduction in the cost, something in the region of around about 25%, which is really good. Part of innovation as well, long range radio, traditional RF mesh would go to about a kilometer. We're now getting with long range nine. Five kilometers. And that's another reason why our performance is high and that we don't always have to rely on cellular.

9:17 But we always will, if our customers say we want cellular or MBIOT or PLC, we say, look, okay, mister customer, it's not about the platform and the technology. What you want is the performance level of 99.5% plus, which is really important. And also a proven model for us, we've deployed worldwide 2,700,000 units to date, which is really exciting. And also a part of that is about 1,300,000 that were deployed in India to date. That's great. Thank you very much indeed, John. You've obviously released interim results for the half year ended 09/30/2022 today. Heather, can you just provide some highlights, please?

10:04 Yes, hi Paul. So revenue for the first six months was an amount of CHF1.3 million. Obviously this is down in last year, but the main reason for that we had by the end of the last financial year, we delivered majority of the hardware on all the previous orders. So as you know, or just to refresh, we'd taken orders for up to 1,300,000 units prior to the end of March this year. And most of the hardware on that had been delivered. So what we've been what we're reporting on those contracts is really the, you know, the software and the services element of it. And then during the first six months in India, as we'll talk through in a bit more detail, they've been going through a process of putting in place this revamped sector distribution scheme and approving that and improving the impanelment process as well.

11:00 And all of that has been going through in the first six months. We've won, as I said, know, 1,300,000 units further in India since the start of the financial year. So we've actually doubled our order book in the six months. And the largest one of those orders actually came through on in August. So if you think in terms of revenue, obviously, weren't going to take very much revenue on that in the first six months. So we've got that 1,300,000 that we won as well as $9,000,000 worth of revenue from the orders that we won in the Middle East region. And all of that is rolling out at the moment. So it's understandable that the first half was going to be lower.

11:47 It was always in terms of our market expectation that we put out because as you know, we only put out numbers into the market towards the end of September. So it was always with the first half, what was the majority of the revenue weighted towards the second half. Just continuing on some of the highlights, the gross margin was 49% for the first six months. That's because the majority was more the sort of software and services. Whereas as we move back into hardware, we expect those margins to be slightly lower because they are lower on hardware. There was a small increase in operating costs. I think most of you know that over the last few years, we've been very cost conscious and we've been keeping costs to a minimum. But as the company grows and also you will know about current inflation, I think inflation

12:34 in wages, it's understandable that there's a small increase in the operating costs, which then lead to the operating loss. And the reason why the operating loss is higher than last year is obviously because of the revenue. But as the revenue comes in, in the second half, we expect that to sort of smooth out. Our cash at the end of the six months was 1,000,000. Included actually in the balance sheet was about 350,000 units along lead time components that we purchased. Because as we've mentioned previously, there have been shortages in the market. Just to make sure that we can deliver on the orders that we've got for 1,300,000, we have been stocking up and purchasing the components, the long lead times that we've got it available for that.

13:21 And as I've mentioned earlier, there was 1,300,000 units, one in India, which doubled the order book and $9,000,000 of orders for the MENA region. Just then talking about the debtors on the balance sheet at the end of the period, because that's a question that we get asked by many of the investors. Obviously, it's key to make sure that we are collecting cash and getting paid for the contracts that we're rolling out. So you can see that there was a reduction from 7,000,000 at the end of March down to 4,600,000. And in the 6,000,000 that includes certain milestone payments that are not due yet.

14:06 The models that we've had for the orders that we'd won prior to the end of last year, they were based on sort of where we, you know, shipping the modules, we get paid for those within anything up to sixty days, but majority on this is a credit. So all of that has been collected. And then all the services actually, there's sort of elements of milestone payments included in those debtors where we have to achieve milestones such as, for example, implementing, you know, when we install, for example, 10,000 metres for each 10,000 metres, we reach another milestone and it triggers another payment. So within that 4,600,000, not everything is actually due yet.

14:51 So we've received 4,500,000 cash from customers during the period and a further 2,300,000 since period end. Improved payment terms with customers. So part of the reason for that increase in cash received from customers is because we've got, for example, the contracts in The Middle East. Those have got where we require them to pay upfront before shipping. So there'll be an element that they pay when they call off the shipment. And then before we actually ship it to them, they'll pay the balance. So we get all that cash upfront. There's no sort of waiting after shipping. And also on the million units contract that we won, the payment terms on that we basically we're using, we've set up GENUS, who's a meter manufacturer and do their own meters.

15:40 So they are going to manufacture our modules that will go into their meters as well. So obviously payment terms on that as we receive cash from the one end of GENUS, we'll pay that. There's no waiting time in between that as well. Improved costing on components. We've managed to get a significant reduction in the cost of our components because the suppliers recognise the large opportunity in India. And we're working very closely with them to ensure that we can meet the supply chain as well as, like I say, getting the best costs from them. The additional manufacturing capacity, so that includes setting up GENUS.

16:24 It includes setting up other contract manufacturers as well, just to make sure that we can meet the demand as we go along. And then the final slide within the interims is just talking about post period end. So what has happened since the end of the period is we took 500,000 from a subscription that was from an existing shareholder who had participated in previous placings and previous investments. Did a subscription and which was for 500,000. And substantial increase in revenue, as we've said in the quarter that ends December, we will have taken three times as much as what we took in the first half. So you can see the ramping up as we start to deliver those orders that we took in the first half of the year.

17:13 As I've mentioned before, further 2,300,000 cash received from customers taking the total to the year to date to 6.8. Cash, this is as at the end of November, it was constant at 1,000,000. And then I think as John mentioned in his slide earlier, are current tenders in India for more than 75,000,000. I think when we presented at the time of our AGM only a couple of months ago, it was around about $4,041,000,000 units that worked for tender at the time. So you can see the ramp up in that just a natural period of time, As you know, the government moves with that target of rolling out the $250,000,000. And further investment in component stocks ensure we

17:55 can deliver on orders. We had We've 350,000 units in stock at the end of the financial year, and we're continuing to take stock of, I think it's up to about 450,000 that's being delivered at the moment and into the next quarter to ensure that we meet those targets and orders. That's great. Thank you very much. John, the Indian Government recently announced approximately a £30,000,000,000 revamp power distribution scheme. Can you refresh us on the key points regarding the scheme and how CYANCONNODE will be able to take advantage of that opportunity now that you've been established as a leading position in the market? Yeah, indeed, Paul. So, as we've just described, there's a huge volume that's going to be ordered in the next number of years. So, the government wanting to really improve the efficiencies and financial stability of the utilities have come up with this scheme, the revamped distribution sector scheme.

18:50 And really, this is to put money behind the plan to actually ensure it does happen. And that's certainly to the values around about £30,000,000,000 worth of investment by the Indian government. And that equates to roundabout 15% to 22% of the projects. So each utility will get 15%, 22% as grant money. So free money basically to encourage them to roll out prepaid smart metering, which is really important. And they're looking at the efficiencies of the data going through of not less than 98%. And as I mentioned earlier on, CYANCONNODE, we operate at the SLA level at 99.5% plus.

19:39 So we're well above that threshold that they put out there for the utilities to be able to build correctly and collect

19:46 the cash. And as you know, within prepaid, it's really important because the consumers are paying the money upfront and want guarantees that the electricity will be there when you want it. Part of the process as well that's been going on in the last number of months is that have come out with a process called impanelment. And this impanelment is in panel the AMI service providers, that's the advanced metering infrastructure service providers. These are the big infrastructure funds now that are coming in to bid directly to the utilities for these large contracts. And anything from a contract might be 1,000,000 to 6,000,000 units, etc.

20:33 So there's sort of 30 plus companies now that have gone through this process, and we've been part of many of those to show that there's a full end to end solution that can be delivered. And there's a tick in the box to those AMI service providers before they actually even get into the tender stages. And you know the tender stages then there's a pre qualification that happens, there's a technical design that happens, demonstrations that happen of the equipment, and then there's a commercial, and then there's the award up to the lowest financial bidder for getting to what they call the L1, the level one

21:16 award of contract. And we're involved in many of these and that's why, well, this program really only kicked off when the Prime Minister Prime Minister Modi kicked it off in August this year and also the impanelment has taken a little bit longer to do and in the main most of them are done but I think it'll be continuous program as other players come in. They'll go through an empowerment process before they're allowed to bid for these contracts. Not only have we done that in the time, but for the market as well, we went to Schimler in the HP region and proven the long range radio. So instead of us around about one kilometer now, it's 9.5 kilometers.

22:04 And the engineers have been out there, proven it, climbed up the mountains and got that sort of range, which is excellent really from a performance point of view, and will bring in a lot more remote areas into the smart metering program. So hopefully for that, Paul, that gives you an idea of that program there. And look, it's not just about either, it's not all about India. You know, there's other places in world we're working in apart from The UK, apart from Sweden, Thailand, you know, I've spoken about in the past. But the real one that's coming on is

22:44 UAE, where we're working both in Saudi Arabia, Abu Dhabi, and that's really going well. We wouldn't sort of $9,000,000 of contracts there this year, and most of that will be deployed by March. So you can see with what's happening in India, what's happening in The UAE, for instance, this is where we're confident about hitting the numbers that the analysts have put out in the market at £9,500,000,000 sorry, 12,500,000,000 sterling, because of that, and because of the other areas that we're working at. And we are involved in Africa and we're also looking to other areas of the world that's listed here to implement and win new contracts. That was going to be my next question actually, John. You've obviously a great management team. You've delivered these projects, large scale deployments with global partners.

23:38 You've got that footprint you have now. You've touched on some of those areas where you are going to expand. Is there anywhere in particular that you're really focusing on? Well, yeah, I mean, what's really important that in the last number of months, the last six months or so, we're really putting in place additional key management personnel with the right skills, the right experience and the right knowledge. And that's what we've been doing both in The UK and in India. And we continue to recruit as well, the way through from finance to engineering to sales.

24:13 And as you know, with well, I should say with sales, we use the partners sales machines to go to market. As you know, we go through third parties, as I mentioned at the beginning of this. And it's really important that we have all of that to ensure that we can take on board what we've won, what we plan to win and ensure that we've got the growth of the company. And as mentioned as well, that the cost isn't exponential to the revenue. I mean, up until sort of the beginning of this financial year, our cost base was the same since 2018 to now. Yet our revenues went from in 2018 something like £1,000,000 to in excess of £10,000,000 But the costs stayed the same. And as Heather mentioned, yes, there's some costs that will go up etc in different areas because we're recruiting people. But that's because we know we're winning more orders. And the good thing about it is, know, to create in these other countries like

25:16 The UAE, we've just got to have more people to deliver those projects. It's as simple as that really. Fantastic. Thanks again, John. Heather, I think one area I'd like to touch on with you really. In 2021, you received the London Stock Exchange Green Economy Mark. Can you explain a little bit more about this award? What it means? What it means for the company and how it positions you? I think that this is something it's an area that's becoming more and more important. Everybody knows, the importance of making sure that we sort of try to meet the goals of COP twenty seven.

25:52 The green economy mark is for funds that generate 50% or more of their total annual revenues from products and services that contribute to the global green economy. And obviously, and they went through quite a detailed process of looking at technology, what we have rolled out. And as I say, was great that we were awarded this. Just on the next slide, there's some information just around what the savings are that are being made in particular in India. From the units, £1,100,000 that are rolled out in India at the moment using our technology. If you look at this number here, the INR 199,800,000, so that works out to being about £2,000,000 saving per year As a result of these initiatives, savings in CO2, savings in fuel, all sorts of savings that the utilities are seeing. Obviously, this technology is then helping contribute to the goals of India.

26:55 And as we roll out in other countries, then to their goals too. That's fantastic. Thank you, Heather. In summary, guess, what are the key priorities and points for shareholders to look out for over the coming year? Also, do you have any thoughts on the share of the Indian smart meter market that you might be able to capture and what could that be worth in module and additional services and software revenue going

27:17 forward? So quite a few things at the end there, but just a bit of a summary, please. Yeah, no, absolutely. Look, I mean, the government of India are very ambitious and they're rolling out and giving orders for the two fifty million smart prepaid meters in the next two years. They've proven that by 75,000,000 now actively being

27:41 tendered. And right now, our partners, that CYANCONNODE HOLDINGS PARTNERS have won as the L1 status that is, in excess of 25,000,000 meters. And if we were to win 100% of that, not saying we will, by the way, but it'd be great if we did, wouldn't it, with all of that, it's equating to $360,000,000 revenue to CYANCONNODE. And if you look at where are we today? Well, we have the installed base that's already there with 25% of the market in India. Since April this year, we're actually at 27% in terms of volume of winning the business. And if you take 27% of the 25,000,000, that equates to about 100,000,000 in revenue. And again, I'm not saying we're going to win all of that. But if we only win part of that 25,000,000, you know, if we win the 25,000,000,

28:38 if we only win, you know, the 27 percent, that's still an awful lot of units, and great revenue for us. So really we're very confident now that the real orders are coming, the avalanche if if you like is coming and we see we see it as a bright future for continued growth. You know, in the last three years, we've had year on year revenue growth and we continue to do that and well into the next years coming, as we predict and we see the volumes coming along, and what we can deliver. And of course, it's not only, as I say, just in India, we got backed up both in Thailand and the MENA region that I talked about in The Middle East as well. So really good outlook for us. And that's why we're working, you know, eight days a week at the moment. I mean, people are working long hours in India, The UK, doing a great job, because there's an awful lot, you know, with the empanelment, the demos that we've been doing, and then the tenders that we've been going out and tendering for and then of course getting down to contract stages. You have to understand that each tender we may have multiple partners that's bidding. So we may have three or four partners all bidding for a tender. And of course, that means we've got to do three or four different credentials, different criteria for each one of those biddings. So it's multiple amount of work that we all have

30:09 to do to get through to the end goal and make sure that we're with the right partner who's going to win and make sure that between us all, we can deliver and collect the revenues and ensure that people are delighted in the utilities and the performance that CYANCONNODE gives.

30:28 That's great. Thanks, John. That's a lot going on by the sounds of it for next year, which is great stuff. A few other questions. I know some that you've had in, and we'll touch on some of the pre submitted questions we've had and some of the live ones as well. What is it the differential CYANCONNODE proposition versus a competing solution when you're tendering? Why are you better than the competition? I guess something that you come up against all the time. Yeah, sure. So, I I think the the real key is look, we've been our credentials are really first class. We are number one in India in terms of capabilities. We've been there for in excess of ten years. So we're showing that we can be there when we've just got a few orders. And we can see that we're going to be there for the next ten years. And that's really important that our customers look for is longevity and ensuring that we're there for the long

31:17 term, because these contracts now have been awarded for ten years. So, you know, they want to make sure that that with a a company that can perform, that deliver, know what they're doing. Look, we've deployed one. 3,000,000 units to date. We got orders since April, another 1,300,000 that we're heavily involved in now and rolling out right now. That's why we've got the orders. We don't need any new orders to meet them £12,500,000 revenue this year. So we're actively deploying and executing against those contracts. And that's what they're looking for is a quality product that delivers, as I said earlier on a couple of times, 99.5% performance. And that's what we do. So we always go the extra mile in the end to end solution.

32:05 So if Oracle based systems need some extra tweaking on the software from the billing platform, We have real clever people, that technology people that can do that and actually help our partners

32:19 tweak whatever they need to tweak. We help the meter manufacturers to make their dumb meters smart, and we make sure the end to end solution is there so we can all get paid. So, know, going the extra mile is something that we do and proud of within CYANCONNODE. That's great. Thanks, John. As well we've got here. Sometimes I think people can lose sight of it. As someone who doesn't know the company well with the entry, would you explain to me why it is the solution, you provide is needed? And again, I guess that's pulling it right back to basics, but, you know, sometimes these things are great to

32:50 understand what is the basics to to how you actually grow your business? Well, we've all seen the extra cost there coming the electricity going up just in The UK, etc. And really, there's controls need to be put in place to ensure not wasting the electricity, that electricity is put there at the right time for when people want it. And part of that, I mean, you an example in India. Look, they generate electricity, they distribute some of the electricity, but they don't collect the cash. And in India, particularly, they lose $32,000,000,000 a year. Every year they lose through theft and the inefficiencies of the infrastructure in the utilities. That's a huge amount of money. And they have to fix that to grow the GDP of the country. So, electricity is vital every country including The UK.

33:40 So, you you need to know who's spending, who's burning electricity when are they paying for it, where else should they build out the infrastructure to put this. So, it's really important that they

33:54 have the right sort of infrastructure and the right platform to be able to do and know who's who's using the electricity there. So it's it's kind of important really. I mean when you look at what they want to do in India as well. Well the whole world in terms of if you look at the power industry it's a bit like the telecommunications industry. So we're going from analog world in the power industry, the utility industry to a digital world. We're going to rule use and rule by sort of technology in terms of measuring the performance of electricity going through the net net. So if people got solar panels, etc, that's got to feed into the network, you've to net that off the build up people are using, etc. And you've to have the right tools to do that.

34:43 So it's moving them to making the utilities because it's prepaid profitable. So they get money upfront before they have to spend that money in the wholesale markets.

34:54 Though they're profitable and the the in India they then want to get and and sell off those assets to the private industry. The same as that what happened in The UK. India's you know number of years behind where we are. But that's their plan. So it's going analogue, digital, profitability, and then selling off those assets to move to even greater things within those power industry utilities. That's great. Thanks, John, just for going through that. And I get a technology question. You know, you're you're at the forefront of of this industry, I guess. So, you know, what could see proceed your solution as an alternative? Could you become obsolete as technology moves on?

35:36 How do you keep up with that whole development, which we all know is moving at such a rapid pace? Oh, always does. And I've been in the industry, you know, sort of forty years now. So I've seen a lot of change from the world of no mobiles to where we are now with, you know, the mobile as big as a powerful, you know, stand alone mainframe computer on, you know, held in your hand on these smartphones. So, you know, we're constantly looking at innovation and that's what we pride ourselves on. When I first arrived, we're looking at a proprietary system. Now we've got the IPV66 low pan. Now we look at a platform that not only does RF mesh, but cellular and PLC, etc. We look at being able to put a canopy out there into the network.

36:22 You know, we're agnostic in terms of any meter manufacturer, and really getting agnostic in terms of whatever communications is out there. So we're keeping up to date all the time. Mentioned long range radio that we're looking at. You know, I look at what we call in meter gateway. So you can put the gateway instead of being on an external pole, all that technology sits inside the meter, still does the same job as a gateway, but it's inside the meter. What does that offer? Better security, cost down, opportunity as well to keep the margins where they should be. So, we constantly look at that all the time and give you an example. If only we'd, as CYAN, were known and being involved in The UK market, we won the contract through CANODE and when we acquired them in 2016 and that's why we're known as CYANCONNODE. But in The UK, I wouldn't have done it this way how how it has been done. It's costing all of us in The UK round about

37:23 £13,000,000,000 to roll out the smart meter in The UK. Well, guess what's going to happen here now? You know, they've rolled it out on two gs and three gs, and now they move, they want to upgrade to four gs, not five gs, four and they're going to go back to the government and ask for £4,500,000,000 more to upgrade to four gs. And that means they're going to have to disrupt all the the meters that are already being put out there to upgrade them in the homes, as well as this extra cost. Now, if we'd have done the hybrid where the local loop could have been RF mesh and the backhaul from the gateway would have been cellular, all we needed to do was upgrade the gateways. No disruption to anybody in the house and nowhere near that cost because we worked it out that instead of it costing $175,000,000,000 in the end for The UK rollout just to four gs. Remember when they go to five gs as an extra cost, six gs, seven gs, we could have done the whole country for about 4,500,000,000 all in. But there we go. That's another story as as I've written to people in the government to to explain this to them.

38:32 Yeah. So, yeah. So, we're always looking really, Paul, at innovation and keeping as much as we can ahead of the game. That's great, John. I think you touched on this slightly, you know, question we've got here, how much operational leverage does company the has? You talked about your cost base not really increasing over quite a long period of time, yet the revenue has driven through. You know, there should be significant profit upside given that fixed costs as and when new business comes through. Can you just touch a bit, and perhaps Heather as well, just on that operational gearing of where that sits within the business? Yeah. I'll give it over to Heather about what yeah. Yeah. I mean, that that that is quite true. Yes. I mean, our cost base is not gonna grow exponentially. There may be a little bit of growth, as we said before, recruitment that needs to happen, wages going up a bit and inflation. But, if we look at the opportunities and the size of the opportunities and the revenue coming in from them, they will far outweigh the increase in costs. So yes, there'll definitely be a significant profit upside.

39:32 Fantastic. And the last one here, we have obviously got a lot that we've had coming through today's meeting. And I know we did schedule this for forty minutes, so we have gone over that. If you've got time, we'll carry on and we'll cut through as many as we can. Of course, you can review these post event with published responses where appropriate to do so. The final one here on the screen is how fundamental is your solution to the modernisation of some cities? Obviously, we're just talking to you all about the infrastructure, the cost, the upgrading, you know, future proofing, I guess. Yeah, and I think Paul, just to add to that, you know, what we put out there is under RF mesh is a radio canopy, you know, which can hook up many things in the city. So really move into a smart city, you know, being able to get all the data from point A to point B, that whether it's a utility or it's someone else that wants to get data from within the city.

40:20 So as I said, moving electricity, gas, water, street lights, EV chargers, whatever's out there that not only for utilities, but for also other companies that really want to be part of the smart city movement. That's great. That's great. Thank you. So let's just go on to some of the questions we've got throughout today's meeting, and there are quite a few of them. So I'll you what to do. Why don't we just pop our cameras up so we're a bit bigger. The first one reads here, why does the share price appear to fall after declaring positive news? And what is required to retrieve the true value of the company? I'm personally dumbfounded with the lack of reality considering the huge potential opportunities with the company. Yeah, well, I guess, mean, we don't control the share price. I mean, there's other sort of dynamics that occur in the market, and we're outside of that. I we have day traders and quite rightly, they want to make 20% buying and selling. I mean, we can't do anything about that. That's their life and business.

41:25 But at the end of the day, we're doing what we're doing to show to shareholders, to investors, look, there's a big opportunity here, you know, how many companies now can actually show you this sort of potential growth. And that's what this presentation has been all about really is. And this is what we've been doing, you know, we've had numerous conversations today with different brokers, etc. And analysts and explaining to what we're doing. We're going to continue that know, up until the Christmas period and then in the New Year, we're doing further conversations with people just to get the message out really of of what what is the potential. And I know it's difficult for a number of people in The UK, you know, we're basically, you know, doing a lot of business in overseas markets, you know, you're looking at, you know, you know, looking at India, you're looking at Thailand, you're looking at The Middle East, you're looking at Africa, you know, potentially Bangladesh, Indonesia, etcetera. People will be saying, what are they doing out here? What is this all about? Sometimes it's us getting the message over and sometimes we're not that clear. And then when we go so far, people ask further questions quite rightly, just for that understanding.

42:29 So, you know, we are, I suppose, a complex business in a way of technology. But, you know, at the end of the day, it's simple. We're out there to win business, get revenue, get profits. And obviously, that will then show in the in the share price. That's great. Thanks, Sean. And you you touched on you're seeing brokers and analysts. We've got a question here saying, can you please to point to any useful recent analyst reports covering CYANCONNODE? Well, even today, there's been a a couple out. So there's one from Arden Partners that come out with an analyst has come out there. Also, SENCOS has bought out a note as well. We have Hardman that covers us. And then there's there's other that come out independently as well. So those are the three that I can mention today that's actively, know, pushing on. There are links, there's links and a place on our website to all of them. So some of them will be to portals where people have to register to get them under MiFID. There's certain rules with how they can be shared.

43:36 Some of them are actually sort of posted on the website as well or links directly to the reports. So within this, maybe within questions and answers that people can see afterwards, I can post a link as to where those reports can be found. Absolutely Heather, we can put that into the published Q and A, that's what I'll probably can distribute that. A question here, it may be a little bit tricky to answer. We've been told CYANCONNODE's monthly cost over the past few years. We'll be told on a monthly basis income that's coming in, especially with new schemes that have broken out twenty four month contracts that split out. Obviously, forecasts and the like kind of off limits. But if there's anything you can add to that, please. I mean, you say, forecasts are off limits and and especially that that sort of level of detail. So, you know, we we generally go through the way the the the contracts roll out and the pricing and things like that with the analysts and then they put their numbers into the market.

44:31 So it's really down to them. But I suppose I can give a little bit of a flavor as to the way the contracts are moving. And that is that they're moving to, in fact, all the contracts from this financial year and going forward. They have an element that is CapEx to us and then an element that's OpEx. So the CapEx will just more than cover the cost of our hardware that gets shipped. And we will get paid for that often on letters of credit, but certainly within thirty, sixty days maximum after shipping. So we get that CapEx. And that CapEx makes up about 60% of the contract. We ship the majority of the modules within the first two to three years because that's the implementation phase of the contracts. And after that, once we've had the CapEx, then the remainder of the contract forms what are called equal monthly instalments, EMIs.

45:23 And those will run for the rest of the contract, so up to ten years. So if, for example, it's a two year installation period, the CapEx will be in two years of installation. And then the remainder of the contracts EMIs will be eight years afterwards. That's great. Thank you, Heather. I was going to say, Heather, of course that's slightly different in UAE contract, isn't it as well? Yeah, yeah, yeah. So the UAE contracts, think I mentioned earlier that, we receive cash. It's a portion of that cash is paid to us upfront before we actually sort of place the order. Well, as soon as they call off an order, and then we'll place the order on our supplier. And then before we actually ship it, they have to pay the balance. So we collect all the cash. And that's just purely hardware on that contract as well. So we'll recognize that as soon as we ship it as well.

46:15 Great. Thanks, Heather. Another one that's sort of there, but obviously investors are always keen to look at share price and a good rise in the share price, having peaked at 29p earlier this year, possibly 800,000,000 units on the books, now 2,600,000. Do you think the share price should be way beyond 29p? Well, of course, we'd all love to say that, Paul, of course, course, who wants it higher than that? I mean, look, you know, the board, you know, your board has invested something like £6,500,000 of their own money, you know, at different stages throughout the life of, you know, in the company. So it's in our interest, we're all aligned here to want to get the share price as high as possible. But as I say, the dynamic sometimes I just don't understand how the share price moves. We put out good news and it goes down.

47:01 Not so good. It goes up and I get rewarded, but it's just as a paper people controlling the market. It's an AIM company happens all over. You know, we said it's outside our control, but you know, yes, the share price should be greater than that. But and that's what we're working to get up and beyond. That's great. Thanks, John. Again, just touching on a bit of research here. Question saying, HOLDINGS PLC suggests potential upward growth in the financial forecast for CYANCONNODE for the immediate future. Is it prudent to say that at what stage CYANCONNODE will reach a break even point? Do you see this continuous once you there? Is that a continuous process going forward? Well, firstly, mean, we with the contracts that we have with us and what we believe we should win in the near future, we certainly believe that that's achievable within the next sort of year to eighteen months maximum.

47:55 And definitely with the size of the contracts that we're getting, once we've achieved that, I would say that it should remain that we would be breakeven and above, certainly well above breakeven. We've talked about the operating leverage and certainly believe that once we've achieved that, it should continue. That's great. Thanks for that. And Heather, next question I think probably directed at you. We have kind of touched on this. With the introduction recently of the new contracting framework payment scheme. There's been a slowdown initially in the cash payments coming into the company. We'd all hope that other RF contracts will be forthcoming to the company. This should give the potential for consistent cash injection over a period of the contract rather than the lumpy sum upfront one off payments. Can you give any further information on this particular important phase of the business? Guess is that transition from lumpy payments to almost sort of recurring revenue payments?

48:48 Yeah, I mean I wouldn't say that it's sort of slowed down because you can see we've taken 6,800,000 to date that we've received from customers, but it'll certainly smooth the receipt of cash with this more standard model with the CapEx that I talked about earlier and then moving to the equal monthly installments after. And certainly as we get more and more larger contracts and all of them reach that point, then yes, it's much more smooth and guaranteed cash injection coming in on a monthly basis. If I could just clarify a little point on that. So just reemphasize really that for the hardware, we're getting that paid upfront. So I don't want people to think that we've got to pay out for the hardware and then we have to collect that over monthly installments. No, you get that upfront.

49:33 Secondly, then as Heather said, for the software and the services, that's equal monthly installments, the end of every month, it's just continuous. And that's fine, because at the end of the day, that's really margins of 95% plus on that side of things. So, just be just to clarify. Thanks for clarifying John. Another one we've got here with the use of solar generated power electricity being part of the energy mix in India in particular and also potentially in the MENA regions of Africa where you highlighted you were operating and other regions. Can you give any details on the adaptability of the CYANCONNODE OmniMesh solutions for the potential use in solar powered electricity and for any other renewable energy suppliers such as wind and hydrogen? Yeah, so as I mentioned, look, you know, our solution can hook up any device in anywhere in the neighborhood network.

50:24 Now, obviously, the measurement of what you've just said, the solar and all the rest of it and wind turbines. Yes, of course, all that's going to have to be monitored and measured for the input into the grid. And they need tools, I. E, smart meter tools to be able to say, yeah, that much has been put back into the grid, and therefore it's netting off, you know, what the burning. So we do have that. I mean, we're not directly ourselves going to the wind turbines and asking them to, you know, have a sensor and log in there. There's different tools that can get that into the grid. But all of it is important as a global, you know, cities, smart grid, if you like, being able to hook all these devices up and make sure they can be measured and monitored.

51:14 That's great, thank you very much indeed John. And as I say, know we have run over time, we've still got a lot of people on the call, so if you do have a little bit longer to go through, we have had some further questions come through. If you could just, where appropriate to do so, perhaps start at the top, just read out the question and give you a response, I'll pop my camera up and pick up from you at the end. Over how many years are the quoted potential revenues of 400 to 600,000,000 for the 20 to 30,000,000 meters deliverable? Well, as we've explained, the way the contracts work is the contracts, most of them are up to ten years with 60% taken in the first two to three years. I say it's typically gonna be two years with the balance over the remaining eight years. So when we talk about this, this would potentially be one over a period of anything up to five years, and then roll out for a period of ten years.

52:05 John, I don't know if you want to say anything further on that. I think you've covered it really Heather with that, yeah. One for you here. How do you compare with the cellular NB IoT, Laura Wen combination? Yeah. Look, Laura, NB IoT, I mean, it's a bit like Sigfox, is it? Which is very similar to Laura. Sigfox, a lot of money being put behind that company unfortunately went into bankruptcy sort of within the last twelve months. French company and and that the Laura and you know, Sigfox, they use the scenario of building network, and expect customers to come. You know, what we do is we win contracts, then we build a network based on that contract.

52:52 And when you look at NB IoT, NB IoT is very good and proven for getting data through on water and on gas. And that's great. Now coming to electricity metering, it's a bit more complex because all the parameters that you have to look at measuring sort of time of day usage, net inflows, every 15 minutes is a data reading that has to be sent through. So masses of data goes through the network. And it's really, you know, it's on proving your NB IoT of its can it reach the performance levels of 99.5%. It's a watch and wait on that really. Let's see. But again, you know, it said MB IoT is a derivative of cellular.

53:39 That's all it is. It's cellular and it just uses a a thinner stream to get the data through. So, we'll see what the performance is on the electricity. And yeah, look, it works. It works. It's, you know, as I always say, if you don't have competition, there's no market. So we welcome openly the competition on that. I think because we we are sort of running out. I mean, any questions that we don't get to, we could always write answers and submit them along with the the the presentation. Know, is that Absolutely. Your your questions will be up uploaded that you can review, Heather, we can publish those and put those back onto the question. I am kind of conscious we are coming up to time and you have covered a lot of questions that we've gone through today. Just a reminder, if there are any further questions that do come in, the team will be able to review those. And as I say, we're published responses where appropriate to do so on the Investor Me Company platform.

54:30 Just so we are coming to that time, John, just before redirecting the attendees, to give you some feedback, I may just ask just for a few closing comments, please. Yeah, sure. So, that people have given time to listen to us today. And we are at this inflection point. Are is and we are negotiating a lot of contracts right now. And it's really is a very exciting time for us. That's fantastic. John, Heather, thank you very much for updating investors today. Can you please ask investors not to close the session as you'll be automatically redirected to provide your feedback, nor the team can better understand your views and expectations. On behalf of the management team of CYANCONNODE PLC, we'd like to thank you for attending today's presentation. That concludes today's session. Thank you.