Shares in Cyan, the integrated system and software design company delivering mesh based flexible wireless solutions for utility metering and lighting control, doubled in price on Wednesday after the company announced that it has now received a purchase order from telecommunications contractor Micromodje worth approximately £10 million ($14 million) for a 360,000 unit smart electricity metering implementation in the Islamic Republic of Iran.
The purchase order is significantly larger than any purchase order received to date by Cyan and marks a step change in the Company’s commercial progress.
This £10 million purchase order is for the supply of both Cyan’s CyLec Advanced Metering Infrastructure hardware solution and its proprietary Head-End Software (“HES”). The 360,000 units will be installed for high value, high demand customers that represent an estimated 25% of total national power consumption of Iran1.
Hardware shipments are expected to commence towards the end of the current financial year following the integration with a locally manufactured smart meter. Hardware revenue will be recognised as delivered to Micromodje, with the 360,000 smart meters expected to be rolled out over a two year period.
Cyan’s proprietary HES will be hosted by its partner Micromodje with annual software license income being recognised over a five year contractual period following successful smart meter installation. As over 50% of the total order value consists of software license income, the recurring revenues from this purchase order will continue well beyond the two year hardware installation period. The software licenses will be paid annually in advance and charged on a per meter per year basis.
New and Significant Market Opportunity
International sanctions on Iran were lifted on 16 January 2016 and this is believed to be one of the first substantial purchase orders secured by a UK business, with support from the specialist UK Trade and Investment team.
The National Smart Metering Program of Iran (FAHAM in Persian) has the stated goal to replace the electricity meters for all customers, representing approximately 33 million meters, in seven years with funding provided by the Iran Power Generation, Transmission and Distribution Management Company (TAVANIR). Cyan has started a dialogue with Micromodje on the next planned rollout of 1 million units, leading to the overall Iran market requirement of 33 million smart electricity meters.
John Cronin (pictured), Executive Chairman of Cyan, commented:
“We are delighted to have secured this very significant order in Iran so quickly after our initial pilot deployment. This is a transformational point in Cyan’s development. Not only is the order ten times larger any previous orders we have received, but this Iranian order also marks Cyan’s entry into a new territory and demonstrates the compelling value of the Cyan solution for the Iranian market and emerging markets globally.
“The fact that we have secured such a substantial order so quickly after the pilot highlights just how far we have come operationally. Considering total orders received to date and our historic revenues, this is an extremely important milestone for the Company. We are delighted to have expanded our geographical footprint and to have provided a customer reference point from which we expect to establish further new relationships.”
“The order from Micromodje shows its confidence in Cyan’s enabling technology and we look forward to working with the highly experienced system integrator to deliver smart metering technology, enhancing the quality of service for energy utilities and customers in Iran.”
Mr Goldouzian, Managing Director of Micromodje, commented:
“During the pilot deployment of the Cyan solution for smart metering of street traffic cameras last month, we were able to quickly confirm the quality of its solutions as well as the support Cyan provide to local implementation partners. We will now commence the volume deployment phase knowing that we can can rely on Cyan’s continued support to ensure the project is a success.”
(Sources: Cyan, Yahoo!)