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Cyan TechnologySmart Energy Solutions for
Metering and Lighting
5 July 2012
Proactive Investors
Presentation
Cyan Holdings plc (AIM: CYAN.L)
Shareholders (29/06/2012)Share Data (29/06/2012)
Price 0.45p
Shares Issued 1,657.33m
Market Cap £7.46m
52 Weeks Range 0.36p - 1.04p
P Lobbenberg
10.6%Legal &
General 8.8%
Brewin Dolphin 5.6%
Current & Former
Directors 5.5%
MD Barnard 5.3%
Investec 3.1%
Individual & Other
Investors 61.1%
3
Cyan‟s Markets4
Smart Metering
● Complete scalable
solution for smart metering
● Wireless mesh and point to point
meter reading in license free
bands
● Best in class range and system
robustness
● Electricity metering plus battery
powered gas and water metering
Smart Lighting
● Smart lighting solution for
energy efficient lighting control
and measurement
● Street lights, tunnels, car parks
and public locations
● Can control all types of lamps
including sodium, LED and Xenon
(HID)
● Lamp dimming, bulb failure etc.
Electricity Distribution Environment in India 5
● Test recreates how meters are
tampered to disable
● Meters must withstand 35kV
„cattle prod‟ test
● Please do not try this at home!
Acid Test - © Morris Company
Six questions every investor should ask:
1. Are you solving a big problem, preferably one that is worth a lot of money and is
recognisable today?
7
Acid Test - © Morris Company
Six questions every investor should ask:
2. Is your solution differentiated, compelling and
sustainable?
8
Acid Test - © Morris Company
Six questions every investor should ask:
3. Does your venture have an understandable and relevant business
model given your solution and the problem it addresses?
9
Acid Test - © Morris Company
Six questions every investor should ask:
4. Have you assembled a team and partners with distinctly relevant
experience to make the business happen?
10
Acid Test - © Morris Company
Six questions every investor should ask:
5. Do you have a reasonable and believable strategy for getting to market
and building a potentially sizable and market-leading business reasonably
quickly?
11
Acid Test - © Morris Company
Six questions every investor should ask:
6. What kind of momentum has already been established in the business and in the
marketplace (especially with customers)
12
Smart Metering - Global Market Opportunity
Highlights
● 2.8 billion meters worldwide
● Currently ~ 10% automated
● Business, regulatory and environmental drivers for automation
● Europe moving to smart meters over next decade
Asia Pacific MarketGlobal Market
13
Key Developments for 2011-2012
● First volume order received for Cyan in India, > US$1 million for
electricity metering, deliverable in 2H2012
● TNEB first tender issued for 1.5 million meters out of requirement for
18 million meters
● Cyan fully integrated into five leading meter manufacturers, with two
more in process
● Cyan and Larsen & Toubro entered into strategic partnership
● Cyan and Wipro entered into an alliance
● Appointments of John Cronin and Geoff Sarney (ex-head of Smart
Metering at Telefonica, China experience/mandarin speaker)
● Cyan entered into a strategic partnership agreement with the
Shanghai Yaming Lighting Co.
14
India Market Opportunity – Smart Metering & Grids
● Peak power deficit ~ 18%
● Losses in Transmission and Distribution ~ 28%
- Low metering efficiency
- Tampering and theft ~ $11bn p.a. (The Economist)
● India spending ~ $8bn to encourage state utilities to
reduce losses
● 100 million+ smart meters expected to be installed in
next 5-7 years.
● India „Smart Grid Task Force‟ to fund pilot projects
15
Partnerships, India – System Integrators
● Wipro (www.wipro.com)
■ Strategic alliance – Wipro will provide IT services
● Company M (Under NDA) (India System Integrator)
■ Integrating their Oracle based interface for Smart Grid show in
July.
● Company T (Under NDA) (India SI)
■ Partnership for utility project in Q3/04
● Company S (Under NDA) (Worldwide SI)
■ Collaboration on a smart meter project
16
Partnerships, India – meter manufacturers
● Cyan technology now fully integrated with Capital Power Systems
and 4 other leading meter manufacturers (under NDA)
■ Capital is a leading supplier of TNEB
■ Submitted Cyan enabled meters for 1.5 million units tender, March 2012
■ Cyan pilot running in Noida, Delhi – showcasing to top 10 customers
● Strategic partnership agreement with Larsen & Toubro (L&T) to
provide Indian utility customers with smart meter solutions
■ Identified a number of projects in India where there is a need for Cyan‟s
solutions
● Integration is underway with two other top 10 manufacturers (which
will result in total Cyan 7 out of 10)
17
Tamil Nadu Electricity Board (TNEB) – Key Account
● TNEB is located in Tamil Nadu (Chennai - Madras), south east India.
● 26 million consumers connected to 50 year old electricity network.
● Government of India is providing funding to upgrade their whole infrastructure
over next 5-8 years, including the replacement of 18 million single phase
consumer meters.
● TNEB first tender for 1.5 million wireless meters and second in Q3 is reported
to be for 4 million+.
● Cyan has developed strong relationships at TNEB board level, with chairman
and executive directors as well as their existing meter suppliers, system
integrators and central government agencies in the ecosystem.
18
Source: Athena Infomatics
Business update, India - TNEB
● Nov 2011: TNEB published tender for 1.5mln meters in the first
phase - anticipated to be a total upgrade programme of 18mln
● Feb 2012: 16 companies submitted proposals, 5 based on Cyan‟s
technology, including 2 suppliers of TNEB
■ Vast majority of the other companies not able to meet the tender
specification requirements
● June 2012: 4 Cyan partners now authorised by TNEB to proceed
with pilots of 500 units which will be installed and monitored for 60
days
● Sept 2012: TNEB first tender decision expected
Announcement transformational for Cyan
19
Chinese market opportunity – smart lighting
● New „Energy Management Contracts‟ (EMC) to tap 2
billion Yuan (US$300 million)
● EMC companies set up to cut national energy usage by
upgrading existing street lighting
● EMC companies encouraged to maximise energy
savings
● EMCs in developed cities: Shanghai, Guangzhou and
Beijing – now being promoted in smaller Chinese cities
20
Partnerships, China – lighting companies
● Shanghai Yaming Lighting Co.
■ Strategic partnership to supply smart lighting control
systems
■ Integration of Cyan lighting module into Yaming‟s
products Q2 2012
■ Yaming manufactured 16 million lights in 2011
● Philips Lighting Division agreed to manufacture
a standard ballast that will connect to Cyan
21
Incremental Opportunity - Machine-2-Machine
● M2M next major opportunity for the
wireless terminal (module) and chip
industry
● Existing applications show 23% CAGR
for ~200 million devices
● Completely new applications are
emerging
● This represents a 10x expansion in the
number of links than conventional
phones (Est. 5 billion in 2010)
Explosion in M2M applications
“50 billion devices
connected by 2020”John Cunliffe CTO Ericsson, NW Europe 2010
Talking about M2M Communications
Source: ABI Research, Nielson Research, Telecom.com
$10bn
$8bn
$5bn
$3bn
$0bn
22
Summary
● Cyan Holdings plc (“Cyan”) - AIM listed company providing smart energy solutions for metering
and lighting
● Cyan’s CyNet™ core technology - platform for the rapid and cost effective deployment of smart
grid metering and energy efficient smart lighting. This includes wireless mesh networking, scalable
and secure communication with remote units and enterprise software for full end to end system
integration
● Cyan‟s focus markets are emerging markets, where power management is driven by energy
shortage, and high density areas, where deployment of low data throughput wireless mesh
networks solves key energy issues
● Cyan is committed to becoming the dominant smart grid AMI wireless communication solutions
supplier in India and a leading smart lighting suppler in China , where power management is
driven by energy shortage
● Smart Metering: Cyan has fully integrated products and has formed key partnerships and
consortia for bids with leading Meter Vendors, System Integrators and utilities companies
● Smart Lighting: Cyan has signed a strategic agreement with China‟s largest street lighting
manufacturer, has won significant orders and is currently integrating its products with other
manufacturers
● Cyan has developed innovative pricing with competitively priced hardware and a recurring license
and royalty revenue model
25
Strategy
● Be recognised as the leading provider of smart energy solutions for the utility and
lighting sectors in emerging markets.
● Sell our proven technology in India and China to capitalise on the rapid growth of the
markets with the view to building out the organisation with local specialist employees.
● Increase customer penetration through partnerships and build consortia for large-
scale tender submissions to electricity boards.
● Organisation building: roll out legal entity, staff and manufacturing operations in India
and increase marketing and sales capability to increase new sales.
● In smart metering Cyan is positioned for significant growth through the adoption of its
solutions by leading meter vendors, system integrators and utilities.
● In smart lighting Cyan has signed a strategic agreement with China‟s largest street
lighting manufacturer, Shanghai Yaming lighting Co. and agreed with Philips to
manufacture a standard easy to integrate ballast for Cyan‟s CyLux™.
26
Cyan key features and benefits
● Cyan provides innovative solutions that reduce energy consumption
for the utility and lighting markets:
■ Core technology is a platform for the rapid and cost effective
deployment of smart grid metering and energy efficient smart lighting
■ CyNet™, a wireless mesh networking protocol for scalable and secure
communications with remote units as well as Cyan‟s enterprise software
for full end-to-end system integration
■ First class support and managed services to assist in the planning and
integration of its solutions
■ Software as a Service (SaaS) model
■ Technology helps customers with revenue assurance
28
Competitive advantages and competition
● Cyan provides a world class, smart grid ready AMI communication solution, field proven for Indian
conditions. Main features:
■ End-to-end from meter to utility back office
■ Interoperable across multiple meter designs
■ Well integrated with demand response, MDM systems
■ Robust, scalable mesh network capability
■ Extensible with inbuilt flexibility to adapt to changes
● Cyan has key partnerships in place that complement its communication solution for smart grids.
Its technology allows considerable power and cost savings in the markets that it currently
addresses. These are obtained through control, verification and management of the end
customers‟ products.
● The main wireless technologies competing with Cyan are based on the Zigbee protocol which was
designed for low power mesh-based control systems at 2.4GHz. Unlike Zigbee based
competitors, Cyan‟s products:
■ Transmit better and more effectively in communicating over longer distances and within buildings
■ Offer easy interoperability between meters manufactured by different suppliers
■ Are complete end-to-end system that interfaces to the MDMS (Meter Data Management System) large scale
deployments being planned
■ Have performed better than its competitors in a wide range of pilots and trials in China, Hong Kong, India
and Europe
29
New innovative pricing model
● Competitive hardware and roadmap for licensing to third parties:
■ License model for meter hardware
■ Manufacturing model for data concentrator (security / revenue tracking)
● Recurring licence and royalty revenue model:
■ Connect to powerful market leaders MDMS (Oracle, SAP, IBM..….)
■ Per usage per meter continuous revenue
■ Tier model based on required services (same model as Oracle)
■ License to system integrators for bundling into services to utilities
■ Competitive with current manually captured data methods
30
Evolution
● Cyan is evolving from a hardware manufacturer to a service provider
delivering global, wireless networks for Machine-to-Machine (M2M)
communications.
31
India market ecosystem
Funders R-APDRP Smart GridPGCLPrivate Utilities
MDMS
PlayersMecomsOracle Phoenix SAPIBM
Utilities TNEB JuscoAP
Eastern
AP
CentralMSEDC
MP
CentralBSES
TTDPL
(NDPL)Haryana Bescom
SI‟s CMCTCSMahindra
SatyamWipro
KPIT
CummingsSiemens
UB
EngineeringSpanco
HCL
Tech
Solution
PlayersCyan MoxaKalkitechEchelonSensus
Silver
SpringTendril
Smart
SyncRTone
Data
CarriersIdeaAirtel
Tata
DocomoReliance Telefonica Vodafone
Component
PlayersCyan DigiMelangeEmberRadiocrafts Silabs Maxim
Meter
VendorsL&G
HPL
SocomecElsterL&TLinkwellCPS Secure Matrix ElymerGenus
32
Cyan Board of Directors
John Cronin (Executive Chairman)
John Cronin was recently appointed a Non-Executive Director and will take over as Executive Chairman at close of the
Annual General Meeting on 17 May 2012. John Cronin has been instrumental in several key sector mergers and acquisitions
and in raising equity, debt facility and vendor financing. He has created significant value for shareholders with four company
exits at Azure Solutions, i2, Netsource Europe and Picochip totalling over US$600m. He holds or has held posts of
Chairman, CEO, NED, executive or adviser to GCI Com, Antenova, Aria Networks, Picochip, Arqiva, Azure
Solutions, Subex, i2, Cambridge Networks, Kast, Netsource, Next2Friends, Bailey Fisher, BT, Mercury (C&W) and been
adviser to several private equity and VC firms.
Dr John Read (NED)
Dr John Read is an experienced manager with a record of developing profitable high-tech semiconductor businesses. In the
late 1990s he was a director of GEC Plessey Semiconductors and joint president of GPS Inc. In California. Since then he has
been involved with a number of fabless startups: he was a director of Alphamosaic Limited (which was sold to Broadcom
Europe Limited), and served on the board of Anadigm Limited from 2000 to 2003. He is an active mentor for the Cambridge
Entrepreneurship Centre and for SETSquared in Surrey.
Other positions held include technical director of Texas Instruments in the UK, technical director at STC
Telecommunications, and director of engineering at Honeywell's Solid State Electronics in Minnesota. Dr Read is a director of
the semiconductor company Si-Light Technologies Limited and a director of Iceni Advisory Limited. He became a Director of
Cyan in November 2005 and was appointed Chairman in October 2007.
Simon Smith (NED)
Simon joined the board in March 2010. He is an experienced financial executive with over twenty years' experience in the
semiconductor and technology sectors. He is currently an independent adviser to both start-up and listed technology
companies providing a range of assistance including fund raising, business planning and contract negotiation.
Prior to establishing himself as an independent adviser in 2007, Simon held the position of Chief Financial Officer/Director of
Finance at multi-national businesses in both the UK and USA since 1997 and his experiences include multiple business
acquisitions/disposals, fund raising, business planning, cash management and customer contract negotiation. Simon qualified
with the Institute of Chartered Accountants in England & Wales in 1991.
33
Cyan Senior Management Team
Bijan Mohandes (VP World Wide Sales & Marketing)
Bijan Joined Cyan in December 2009 having over 22 years experience in Sales & Marketing following a 15 year engineering
design background. He has spent most of his recent career organising sales & distribution networks worldwide and
developing business in key fast growing markets whilst employed by Analogictech, Nemerix, Micrel and Siliconix & Temic.
Stephen Page (VP Engineering)
Stephen joined Cyan in 2004 having over 20 years experience in embedded systems design and implementation. Spending
much of his career in freelance consultancy he has worked on a diverse range of systems for many global
companies, including development of next generation secure smart cards with the Secure Products Team of NatWest
Bank, consumer digital TV, video and graphics products for Pace plc and Imagination Technologies, pre payment electricity
meters for Schlumberger and many other projects including those with Shell, BP, BNFL, NPL and the RAF Institute of
Aviation medicine.
Geoff Sarney (VP Strategy)
Geoff joins Cyan from Telefonica/O2 on 2nd July 2012 where he was Head of Smart Metering/Smart Architecture. In this
role, he led Telefonica‟s Smart Metering Implementation Program as well as building partnerships through the Smart
Architecture Alliance Program. Geoff was a regular presenter at Smart Metering events on behalf of Telefonica and is widely
recognised as an industry expert in this domain. Prior to Telefonica, Geoff worked for a two year period in China on
strategy, clean energy and the smart grid (for China). During the 8 year period from 2001 to 2008, Geoff worked for
Siemens, including three years as Head of M&A, Strategy and Planning for Siemens Energy Services, where he led the
smart grid initiative on a global basis.
34