Cyan’s £10m Iran order outstrips its market cap
Smart metering and lighting technology company Cyan has clinched a £10 million order from Iran – larger than the quoted Cambridge UK company’s £9.2m market cap.
The order – from telecomms contractor Micromodje Iran – marks a rapid conversion following trials of Cyan’s smart electricity meters in the Islamic state. It also represents one of the first major pieces of business by a ‘foreign’ company since trade sanctions against Iran were lifted.
Cyan shares doubled to an albeit modest 0.27p on the news and broker Cantors sees plenty of upside – suggesting the shares were worth 1p apiece. Executive chairman John Cronin (pictured) said the order was significantly larger than any received by Cyan to date and demonstrated Cyan’s ability to move swiftly into new territories.
The new purchase order is for the supply of both Cyan’s CyLec Advanced Metering Infrastructure hardware solution and its proprietary Head-End Software (HES). Some 360,000 units will be installed for high value, high demand customers that represent an estimated 25 per cent of total national power consumption in Iran.
Hardware shipments are expected to start 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 per cent of the total order value consists of software licence income, the recurring revenues from this purchase order will continue well beyond the two-year hardware installation period. The software licences will be paid annually in advance and charged on a per meter per year basis.
International sanctions on Iran were lifted on January16 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 & 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 one million units, leading to the overall Iran market requirement of 33 million smart electricity meters.
John Cronin said: “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 10 times larger than any previous orders we have received but also it marks Cyan’s entry into a new territory and demonstrates the compelling value of our 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.”