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Allenby Capital Report – Interim Results – momentum continues to build

Interim Results – momentum continues to build

Cyan’s first half results reflect a period of strategic investment to strengthen the Group’s resources ahead of an increasing pipeline of opportunities in India and elsewhere and an anticipated acceleration in the order book. This investment has included adding new senior level staff, increasing R&D spend to support product development, further investment in the project delivery team in India, an increase in marketing & sales and a widening of the ecosystem of global partners. Consequently, the Group reported an increase in the loss before tax of £1.0m to £2.3m. We anticipate a continuation of positive news flow into the second half commensurate with the increasing pipeline of opportunities. To support the anticipated growth, Cyan’s balance sheet was strengthened at the end of June 2015 by a £4.6m (gross) fund raise which is not reflected in the results just reported. Significantly, the Group’s current pipeline now includes utilities in India with an aggregate customer base of 42m, around one third of the government’s stated 2021 smart meter target of 130m – a clear indication of increasing momentum. We continue to believe it too early to offer full financial forecasts, however, as highlighted in our previous note (8 June 2015), an analysis of the market opportunity suggests that by 2019 Cyan could be reporting revenues of circa £40m, with blended gross margins of 80% and a potential enterprise value of £400-£560m.

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