CyanConnode Holdings plc (CYAN) Earnings Call Transcript & Summary

Good morning, and welcome to the CyanConnode Holdings plc Full Year Results Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses when it's appropriate to do so. Before we begin, I would like to submit the following poll. And I would now like to hand you over to Chairman, John Cronin. Good morning to you.

Good morning, Alex, and good morning, everybody. It's really good to engage and talk directly with the shareholders of CyanConnode. And we'll go through the presentation, myself and Heather. And then at the end of it, we do have some pre questions that were sent in. So we'll go through those and then we'll answer any other questions that come through during this presentation. So just to remind everybody, I thought we'd just do a few slides just to -- especially for new investors that perhaps haven't seen or heard some of these slides, there's only a few that I'm going to do just about the company and then we'll swiftly get into results and where we are right now with the company for its growth going forward. Just on this slide, this -- we have to say this to everybody that we can't give any forward-looking statements as we're on the stock exchange. As you know, everything is published to everybody, and that's how we have to do that at the same time with any share moving information. So just to remind everybody, who we are and what we do. So we are in the Internet of Things. We supply smart communications networks focused on RF mesh and some cellular within the platform. And it's a fairly secure platform that we offer, and it's under a standard, what we call IPv6, 6LoWPAN, an international standard that we have. And we do have go through blue-chip companies to the end customer. And the good thing about our product, we are agnostic, meaning that we can connect any device, any meter in the world to our platform. We are and now having stringent SLAs, which are service level agreements, with our customers to ensure the performance is met through the scalability of the product, and in fact, the throughput of data from the consumers to our platform and through to the billing system of the utility. And what we -- how we differ from cellular, we are a very secure private network as opposed to cellular as we all know, is a public network. As an example, when you come out of a rugby match, cricket match, football match and you try and use your mobile phone, at times that's blocked, you can't make the call. We ensure that our private network really is dimensioned for the capacity getting through with all of that data all of the time. Again, just a simple drawing, and just to explain how it works. On the left-hand side, you can see devices, meters in homes. And what we then do is we put a module into the meter when it's been at manufacturer stage, and that meter goes from being a dumb meter to a smart meter with a module inside it, a bit like a SIM, just a bit bigger than a SIM card that we all use in our mobile phones. We then have a gateway or a data concentrator unit that actually collects all the data from 250 homes, and those gateways sit either on the lamppost or the side of a building. Once that data reaches there, we then, what we call, backhaul it, either over fiber or over mobile, in the main, it's over mobile networks. And then what we do, we get the data through to our head-end system, which is some software that sits in the data center and the billing system of the utility. So it's like in the call center there, and you can see end-to-end exactly how much data every 15 minutes we send data through. And you can see time of day usage net-net, when people put from solar panels energy back into the grid. We can work all that out through them. We give that data going through to the utility. So if you look on your left-hand side, what that is depicting that what we call sort of the grid, it's like a -- it forms a mesh. But basically, you can see all the parameters. And on the outside of that circle, that equates to 100% achievement. You can see the red elements within the circle. And what we have there, that shows RF mesh. And then cellular is the purple one inside that, and powerline communications is the smaller one inside that yet again. So you can see that RF mesh performs better in a lot of areas than cellular does. So what we see going forward where there's large deployments especially in the likes of India where they are going to order within the next number of years 250 million units, we see a combination of RF mesh and cellular. And in some networks, you will have both communications in the one network. Just moving on to the next slide. So this then -- just on the right-hand side, gives some -- actually USP really is to what we get with RF mesh. I mean, with low power the power is less than a mobile phone. We also have self-forming self-healing which actually means if part of the network goes down, it looks for an alternative route to get the data through, whereas if you've got cellular, cellular is what we call point to point. Mesh -- RF mesh is point to multi-point and that's why we can offer the performance of 99.5% which is really important. The bandwidth that we use, called ISM band, is the same band that everybody would use to open up electric gates, garage doors, et cetera, so it's everywhere and it's license free which is another USP as well. So now just coming on to looking a bit more closer as to where we are today and then [indiscernible] we'll get into some of the results. What we -- as you say, we're a large global player now in wireless communications globally. And today, we've got 2.7 million endpoints that we've deployed in the marketplace. We've actually deployed just over 1.3 million of those in India. And if you think today, we have something like in India 25% of the installed base. And we've got a win rate of tenders right now about 33%. It's a fairly -- highly scalable product, as we call it, Omnimesh, and it's an end-to-end platform that we offer from the home, as I say, all the way through to the building system. If you just look at India alone for a minute, and as you know, we operate in other places like the U.K., also in India, Thailand, the Middle East, and we are looking at places like Malaysia, Indonesia as well. But just on India, if you look at just for CyanConnode's part of 250 million and if they took all the communications, that's a market -- addressable market as we call it at $3 billion. And what actually would be involved right now out there that are over 200 million meters in various stages in different tenders. So as I mentioned, just we said -- I said that we're getting about 25% of the installed -- well we do have 25% of the installed base, 33% of winning on successful tenders. So even if we were pessimistic and this is just for illustrative purposes, even if we just add 10%, 15% of the market, you can see the amount of revenue we'll get from India $300 million to $500 million worth. So imagine if we got 25%, then you can double that to $1 billion. So there's a huge amount of revenue and a huge amount of market to play for, and that's what we're focused on. What we are doing right now is looking at investment in our people and growing the company immensely. And we've got nearly something like 150 people in the company. A lot of that now is in India. I mean, if you go back sort of 12 months or so, we're about 60 people across the company. Because of what's happening and the scale that's needed in the operations, especially in India, where today, we've got about 130 people or so in India, maybe a little bit more now, we're still recruiting, and then the rest is in the U.K. Not only are we looking at that, but we're also looking at our platform to enhance the platform going forward with different standards. Some of you may see some notices that we put out earlier in the year about the Wi-SUN standard where we work with Silicon Labs, that's a $6 billion company that provides silicon to us from the U.S.A. And they're coming up with a new standard called Wi-SUN, which we're working on the platform. Our engineers, the software engineers now are working on it and developing it and enhancing it. And also, we're looking at what we call Unified HES as well. We're developing that. That Unified HES will allow not only electricity, but gas, water, EV chargers, streetlights to be on the same platform. And not only that we then would allow on the Unified HES third-party communications that come onto the platform. So third-party cellular, so we could hook up Vodafone, EE, et cetera, onto the platform, and it's all in one head-end system, 1 platform, 1 system. And also, we -- we could get into other verticals, but that's what we're developing more for the future. But just to give you an idea of where some of the investment is going, as well as the investment that we've invested in silicon in advance and also other products to ensure that we have the products ready to deploy. Heather, do you want to talk about this slide, please?

Yes. Now this is actually John mentioned on the previous slide that there's more than 200 million meters that are actually sanctioned out to the tender. So this is really either out for tender at the moment or they've been approved for tender. And this document is actually, as you can see, it's as of the 14th of July. So a very recent document, and it's a public document that we found that gives a full update on where things are. And what we've done is we've just added on the side against each of these particular sort of states and utilities where we've had orders in the past. Now they're not all the orders that we've had in the past, they're not all under the RDSS scheme, which is the latest scheme. Just as a reminder, the RDSS scheme, that's the Revamped Distribution Sector Scheme, which is the one that was approved about a year ago. And it's one that's really governed by the standard bidding document that sets out all the terms that all the contracts will need to go under, it sets out the processes for the bidding and the timelines for the actual deployment of the contract. Now you can see, so under the RDSS, there's over 200 million -- there's 205 million that was sanctioned. With other schemes, some of these are schemes that have happened in the past. It's a total of nearly 230 million meters that are sanctioned in total. And then there's -- under RDSS, there's about 43.5 million that have been awarded. Now when we talk about awarded here, we don't mean awarded all the way down to the end customers such as ourselves. These are awarded to the prime bidders. And under this process that's required under the RDSS scheme, the process that's followed is that the tenders get awarded to the prime bidder. They are required to have a special purpose vehicle set up to -- and then they're required to have the funding that will sort of cover the whole project. And all of that is required to be set up once they've had the contracts awarded to them. So that can take a few months. And after that, once all of that is set up, then they will start the negotiation with the partners such as the meter manufacturers, the system integrators if required, the communication providers such as ourselves, the meter data management system providers and all of those. So there will be a period between when these are awarded to the prime bidders to working their way down to the end partner. Now what I find really interesting is this installed column. The installed column you can see it's a total out of all of these that have been awarded. It's a total that including other schemes, that's been installed of 6.7 million. Under RDSS, it's 1.78 million (sic) [ 1.83 million ]. now what I find interesting under that is that actually those 3 states that are seeing deployments actually happening, we're in all of those states. Now Madhya Pradesh was one of our very first contracts going back to 2018. So we've installed -- we've had previous contracts for about 0.5 million. We've installed, I would say, 300,000, 400,000 in Madhya Pradesh in contracts previously. And then one of the contracts that we won in January this year was for another 1 million in Madhya Pradesh. I've sort of depicted here. So you can see which of our contracts were under RDSS, the one under the Madhya Pradesh state is obviously a combination, as I said, a combination of RDSS and other. But it's good to see that actually we're in the states that are deploying.

Thanks, Heather. So this one really just depicts the length and breadth of the utilities that we're working in India. And you can see there's an awful lot these days. And what we are doing, part of our strategy, and you may have seen an announcement where we got an order for 600,000 units from one of our partners, IntelliSmart, earlier in the year. And really, we use that with the strategic agreement we got, that comes out of the 2 million units that we signed with them and which we announced. It's a call-off contract. And that [ 600,000 units ], that is like a beachhead. And what we do, we put a flag in the ground in that new utility. And what we want to do is have several beachheads. And so we may say yay to that 2 million then, which now is 2.4 million left at the 3 million. We will actually maybe get 300,000, 400,000. We can go to different utilities, put our flag there as a beachhead and then we can roll -- start rolling out there as a first provider of communication services and then do it well. And hopefully then we'll get the rest from that utility. So that's a sort of strategy when you see us put in odd numbers like 600,000, then you say, well, why don't you put it out 10 million or something. They just don't do it that way. They will place orders on quantity. As you know, we got several -- a couple of million this year in the last 12 months. I mean, it's taken us what -- took us 10 years to get 1.3 million units. And actually then, we've grown that to 4.2 million, the majority of that coming in the last 12 months. So you can see things have changed quite rapidly. They also want to make sure and ensure that we're around for 10 years. I always say, well, at 1.3 million units, we've been around for 10 years. So having 2.9 million is a lot more. And obviously, we will be around 10 years plus because these contracts are 10 years in length. And that's great because it's reoccurring revenue that we get because some of it is paid upfront to us. But then another part of the contract is on equal monthly installments per meter per month for another 8 years after the installation of 2 years. Obviously, how we go to our end customers to the utilities is through partners. So just to explain this slide, at the bottom of the meter manufacturers that we work with, and as I say we're working with those meter manufacturers. Originally, we had meter manufacturers in India, only 3 and those are the top 3 that we have, which was Schneider, Genus, HPL, who have more than 50% of the static market. And now what we're doing is actually we're integrating with 10-meter manufacturers. And if you think each meter manufacturer has 3 different meter types. They have a single phase, a 3-phase and a poly. And that means for 10 that's like doing 30-meter integrations. So you can see that we're quite busy in doing that. So those are the meter manufacturers, and some of them will become prime bidders, known as AMI Service Providers where they get the money funded for the next 10 years. You can then see in the middle, we have system integrators. And also there's a new term called EPCs. EPC stands for engineering, procurement construction companies. These are very large companies that build motorways and they build airports, for instance. So big infrastructure funds, such as on here, NCC is one. IntelliSmart is another one. Alfanar is another. Then we've got the likes of Monte Carlo. So all of these what we call EPCs, big companies, and they act as the system integrators. And what they will have to do is, they'll find in most utilities, you have to have up to 3 different meter manufacturers because of the volume going into each utility. So they'll actually place orders with the meter manufacturers. They will then choose whether to go RF or cellular, hopefully, it's RF and come with us. And then they're also looking at a meter data management player to actually complete the jigsaw and they build a system integrator with themselves. And what they find in what they're doing though is getting large infrastructure funds to fund these projects. And if you think -- if you imagine 1 million units, you have to fund between $80 to $100 to offer a full end to end, including everything that I've just said, the meter, the communications, the meter data management system and the SI work, that's about $80 to $100. So multiply that 1 million times, you can see $250 million is a huge amount of money needed. And this is where the government of India has been very smart, very clever, because their strategy is this. First of all, they're going to take the grid from analog to digital. Secondly, what they're then doing is going from postpaid meter. Everybody's going on prepaid metering. And what does that mean? Well, all the cash then is paid by the consumers upfront before that utility has to buy on the wholesale markets, the electricity and it makes those then profitable. And once we've done that, the government of India that owns the majority of the 88 utilities in India, the majority of that then they will sell off to the private industries. And interestingly enough, it's like a Trojan horse with a lot of these players because once you sell smart metering in there, you know exactly who the good payers are, how much revenue is coming in from those consumers, et cetera, et cetera. So it's like doing their own due diligence by having smart metering there. They can then decide in the future whether they want to actually acquire that utility or not when it comes on to the market. So that's a great strategy. And the other part of that is the government actually give these advanced meter -- the AMI prime service providers. They give them between 15% and 22% grant money. That's free money for each project to actually go ahead and some cash upfront, which is what they get when they supply the meters. So it's a real good strategy whereby they're getting the private industry to fund this rollout, it isn't all the money coming from the government and yet the benefits will come to India, to the consumers, to the government and will improve the infrastructure immensely and stop a lot of the power outages that happen on a frequent basis. I mean in some states, multiple blackouts every day. So this will improve all of that. And just to finish off then, the top one shows the utilities that we all sell to. And as you can imagine, as we sell through our partners, our communications then is there, not only for the tenure. Because if you think about it, at the end of the tenure of that contract, if they didn't continue paying the support and maintenance for the software, it goes back to being a dumb meter. Well, that's not going to happen as they have to spend in all of these billions enrolled in that head. And I'll give you an example, our first customer was Tata Power in Mumbai. That was a 5-year contract. At the end of 5 years, they then renewed for another 5 years on the support of maintenance. So there's an example that it just continues and you negotiate again going forward. So when you look now, come in sort of more focused on to the numbers, et cetera, the great organic growth that we've had, fourth year in a row our revenue has gone up, gone quite a lot to maybe GBP 12 million, so that's 23% growth, which I think in this climate any company that can grow to 23% is very good. And this was really constant -- with the currency performance it really, as we call it -- the constant currency performance is in line with our expectations. And you can then see that the -- some of the revenue depreciation that come into it did sort of change some of that. So I'll let Heather now just speak a bit more in that detail.

Yes. So as John has said, we've seen year-on-year growth again. So if we think back to our financial year March 2020, our revenue for that year was around about GBP 2.5 million. So you can see the growth that has continued from then until now and 23% for this year. What John is referring to in terms of the expectation and where there were variances against the market expectation, part of this was as a result of us when we put out all the revenues that we take are in currencies other than sterling. So in India, we will transact in rupees, and in the rest of the world, we transact in dollars. And when we put out the market expectation in September last year, exchange rates where the pound was a lot weaker than it is now. And over the course of the year, obviously, that resulted in quite a large difference, as you can see, GBP 0.5 million. And the reason for this is really because significant part of our revenue was recognized in Q4 of the year with GBP 6.2 million -- more than GBP 6.2 million in February and March alone when the exchange rates were -- what the pound was at its strongest. And then just under IFRS 15 with the way that we have to recognize certain elements of the contract, that's what -- there's about [ GBP 300,000 ] that is spread over the term rather than us taking the revenue last year. Gross margin. So gross margin during FY '23 was lower than we've seen in previous years, mainly as a result of us selling third-party hardware products in other regions. So these margins are not margins that are typical in India. This is purely as a result of the hardware that we were selling in the rest of the world. And while it looks like a big difference to FY '22, we will see -- over years, we will see fluctuations in the margins because the different elements of our contracts have different margins. The hardware will be the lower margin element, and that will be in the first couple of years of deployment, rolling out and shipping the products to our customers. And then as we move into the support and services going out over the remainder of the contract, the remainder of the 10-year contract, that is at a much higher margin. So initial couple of years of rollouts in India, we'll see a lower margin, and that will eventually change. There might be some years as well where, for example, we get different revenues from different revenue streams from other areas that might be a different margin. So where we talk about our typical business model that is always India. But as we've seen last year, if we get revenues from other territories, that might be a slightly different sort of margins. There was also an increase in adjusted EBITDA loss partly as a result of the gross margin, the lower gross margin. Then as John talked about, the scaling up that we're doing to meet the demand and the contracts of 2.3 million that we are busy rolling out, they were higher operating costs. And then there is sort of largest item contributing to this is an impairment in intangible assets. So intangible assets, we -- back in 2016, many of you will be aware of the U.K. smart metering contract that we acquired when we acquired Connode. And as is typical in accounting, when you acquire a company, any large contracts like that, you would capitalize as an intangible asset on the balance sheet. And what's really happened, as you know, over the years, there have been significant delays to the contract. It was originally supposed to be all complete by 2020. It only started rollout at the end of 2018, and it was then pushed out to 2024. And during COVID pushed out to 2025. And then what's happened more recently is that we've had communication from our customer, Toshiba, who provides the hardware on this, we only provide software on this contract. So Toshiba provides the hardware. And they've been advised of an end-of-life component by their supplier [ Telet ]. And as a result of this, there's sort of a finite number now that will be supplied using mesh. This end-of-life component is purely for the mesh hubs. There's 2 types of hubs that get sort of installed for this contract depending on the area that you're located. And we provide our softwares to cover the knot spots. That's obviously areas where there is not a very strong mobile signal. And so there's a finite number of mesh hubs that can be deployed. And we took a view that even actually, if all of those were shipped, we wouldn't be required to impair the investment, but -- the intangible asset, but we took a view that because of delays. And if, for example, those don't all get connected, we would -- it represents will take impairment. And looking at cash collected from customers, I know many shareholders always ask, do we get paid in India. And you can see that this isn't all India. But over the course of last year, we collected GBP 10.7 million cash from customers, contributing to the cash position at the end of the year cash position of GBP 4.1 million, which was up from GBP 2.4 million in the previous year.

Heather, sorry. Just to say on that there, just to emphasize that of the contracts that we take especially in the Middle East, those are hardware only. So as Heather said, at the beginning of a contract, it's always hardware. Later on, it's the software and services. So if you look at software and services, they're more like 100% gross margins. So as we go over the years after the installation of the hardware, all of that kicks in, and we end up having then what we call an annuity, a buildup of services and software from several contracts, et cetera, so reoccurring revenue streams. And just to say on the U.K. contract, I did write to the Prime Minister, Rishi Sunak, about the rollout and where the failures are going across the piece. Interestingly enough, I did get a response through one of his -- one of the energy minister, and we've had several conversations with them in DCC and also [ BES ] as when it was formed to talk through how they're going about this. And an actual fact, the 3G network, you know this, but it's got to be reformed or actually they're going to stop using 3G in the future years and move to 4G. And just to move from 3G to 4G is going to cost an additional GBP 4.5 billion on top of what's already the cost of GBP 13 billion to roll out the U.K. smart metering. And a lot of the homes will get -- be disrupted again. So you can imagine when they go to 5G, 6G, et cetera. So it's just one of those that probably somebody didn't think about the future of when networks like cellular networks upgrade and change because there's only a finite amount of actually bandwidth. And in fact, some of the NPs have been up in arms, so representing Wales, the Cotswolds, Devon and Cornwall saying, look, how are you going to do this without having [ knot spot ] coverage where mobiles don't work? So that's really up in the air still and the question for the powers that B2 to what they're doing. And as Heather mentioned, remember, ourselves as Cyan when we acquired Connode in 2016 and that's why we're known as CyanConnode, from Sweden when we acquired them, we weren't involved in the negotiations. That happened a couple of years previously. So we inherited that contract and we're just being prudent really of taking that impairment. And I don't really know with impairment, but actually, if we ended up getting more revenue, you can claim that back in forward years, in future years. So we just thought we'd do that because of what's going on in some of the lack of communication to us of what's going on because we're like the tail of a dog. The contract is DCC, it then goes to Virgin Mobile O2, it then goes to Toshiba, who do the hardware, et cetera, and then it comes to us where we just supply the software. I just wanted to give a bit more color on that for you. Thanks, Heather.

Okay. And then on the balance sheet, some of the sort of key points on the balance sheet. I think everybody always focuses on the trade and other receivables. This is [ GBP 7.4 million ] at the end of March this year. And we often see actually the trade debtors in particular in March, are at sort of a peak because of the fact that we take our highest revenues usually in the last quarter. And as we mentioned today, there was a significant amount of revenue taken in February and March. So that -- a large portion of that wouldn't have been collected yet by the end of the year. With -- we -- as we've mentioned before, one way that we get paid earlier, which is obviously good for our cash position, is that we do letters of credit on all of the hardware that we ship. And we discount that with the bank and just under the way that we require to report this, this is the amount that we've been paid under invoice discounting, is shown as a short-term borrowing on the balance sheet. So the net amount of the trade and other receivables would have been GBP 6.8 million at the end of March. We received GBP 3.6 million cash from customers since year-end. A large portion of this would have related to financial year '23, leaving approximately GBP 3.2 million from FY '23 debtors remaining. Some of this is still milestone-based ought to be paid over the period of the contract, depending on the sort of scope of the contract. Then this -- some of you may also see and the noncurrent assets, there's an amount of GBP 2.1 million that appears there. Part of this, about GBP 0.3 million is actually for a bank -- well, it's in lieu of a bank guarantee. What we do so that we don't have to provide bank guarantees upfront to customers, which would mean providing an amount against the contract prior to us actually even receiving anything against the contract. We have an agreement on most of our historic contracts where that our customer will retain an amount anything from 3% to 5% from their invoices. And that's under the bank guarantee -- under the same terms as a bank guarantee. So in other words, we would expect to receive that in the future at the time that bank guarantees would normally expected to be released. And then under IFRS 15 as well and the new contracts that we're currently doing there is an amount -- the balance of GBP 1.8 million sitting as a contract asset which is for revenue that's recognized, not yet invoiced. And this is expected to be invoiced over the period over the next few years. We would have -- we have seen an increase in inventories as a result of purchasing advanced components. So some of these, I think we've talked before about one of our key components, which is silicon for the modules. But also there's a large amount that we've had to purchase for the gateways because there's actually an end-of-life component and we want to ensure that we are in the process of developing, and we'll be launching in the next couple of months a new gateway with new components. But just to supply against all the demand on the previous, we have purchased components in advance of that end-of-life component just to ensure that we can deliver our orders. And some of the operational highlights we've already mentioned. So during the period, we secured orders for 2.3 million units, and that's as opposed to the 1.3 million that we won in the whole sort of 10 years prior to that. That was just in India that we're talking about. And then we won 2 orders in the Middle East, North Africa region. One of them was in order for USD 6.7 million for NB-IoT gateways. Now during the year, we supplied about 2/3 of that. And in fact, actually, we're currently in the process of arranging another shipment of about 8,000 units. So just I suppose to give some context, that order was for 65,000 units. We shipped 46,000 during last financial year. We're shipping around about 8,000 in the next month or 2, and then the rest is expected to be deployed during this current financial year. The other order for cellular gateway is also in the Middle East, North Africa region. It was for a value of USD 2.5 million. And we actually supplied more than the contract was made up of -- the contract was for 60,000 units, and we shipped 63,000 on that. Then John has mentioned earlier about the strategic framework agreement signed with IntelliSmart to deliver 3 million units. Now this contract was done where it sort of sets up all the standard terms and conditions you would expect to see. So for example, payment terms and certain terms under delivery. So that when they want to award an order to us, they can just refer largely to that contract. There will often be some small differences on the contract, depending on the scope and the requirements of the RFP of that particular tender. But it's just ready to help speed up when they want to place an order on us. Then deliveries that happened during the year, 391,000 Omnimesh modules shipped against current contracts in India last year, and some of them were on other contracts around the rest of the world as well, but majority of that was India. I talked about the 46,000 NB-IoT gateways and 63,000 cellular gateways against the other contracts. And we had a backlog at the end of the year of 2 million units still to be delivered on our contracts that we've won at that point. And that's, once again, just referring to India, that 2 million backlog. In supply chain, I think we've mentioned over the last couple of years, supply chain is a critical area of our focus because when -- for example, when we receive an order, I've already mentioned about how -- the way that the process goes is that a contract would be awarded to the prime bidder, and there might be a period of a couple of months while everything is set up. And by the time the order is actually placed with us, there might be under the said bidding document, they have a requirement to install, say, for example, 5% within 7 months. So there are requirements as to what needs to be shipped by a certain period of time. And as a result of that, sometimes we have an order, and we are required to start delivering almost immediately. So that's the reason why we have to ensure that we have the components and other stock of anything that's long lead time. I mean, a lot of the components are still up to 12 months lead time. But even if it is just a 2-month lead time, if we're required to ship within a month or 2 of getting an order, we have to make sure that we have the correct stock in place. We have very good relationships with Silicon Labs directly, and that's who we buy the silicon from, as well as Syrma, our contract equipment manufacturer, who we've worked with for 10 years and other contract equipment manufacturers. We mentioned that I think the Bihar order that we won during the year, we're using 1 division of Genus to do the manufacture on that as well. And really sort of -- I guess we focused on expanding the supplier base to ensure that we are covered with regards to requirements because as the orders get larger, we need to ensure that we can deliver to the requirements.

I'll just say, Heather, on that as well. We have, and what we do is because some years back, it used to be 12-week lead times for a lot of the components. Now it's 12 months. And the car industry was hit by this during COVID. So we've got a great relationship with ecosystem of the partners all the way through from the distribution company in the U.K. is called -- is Solid State that we work with, we then put on the orders to [ SiLabs ] -- Silicon Labs in the U.S.A. And we have what I call a [ trombone ]. So we give forecast now for 12 months, and we have a flexibility with solid state. Have been able to sort of come in and out of that as we know when we need to scale up more or whatever is happening, but then it goes firm on a 3-month lead time with solid state and then on to SiLabs. And just the other day, myself and Heather, met the owner of Syrma. They've been a great success. I mean they floated their company just over 12 months back on the Indian stock market at 300 million -- equivalent GBP 300 million. This right now, it's worth about GBP 900 million equivalent sterling. So they've done exceptionally well. He said to us, he said, look, if you need another production line, I'll set one up for you, John, you just let me know what are the volumes, when and et cetera, and we'll work together. So we've got some great ecosystem of partners to make all of this work, and that's really important that we look at the back end as well as we look at the future end of additional orders. Thanks, Heather.

Okay. And then just talking about some post-period highlights. We sort of passed the first quarter, plus another month now, but this is talking about for the first quarter to the end of June. Revenue to the end of June was in excess of GBP 2.8 million, which is twice the revenue that we reported in the whole of the first half of last year. Last year, I think what we saw was we came into the year with quite a low backlog because we delivered majority of the 1.3 million that we've won prior to that. And it took some time. We won 300,000 from Assam by sort of May, June time, then 1 million on Bihar was announced in August and then another 1 million on the Jabalpur, contract in Madhya Pradesh in January. So the majority of the large-scale orders came through in the back end of the year, which is why the revenue was really skewed towards the second half and such a significant amount coming through the last couple of months. And you can see the momentum has continued into the first quarter of this year. We won the order for 600,000 Omnimesh modules by a subsidiary of IntelliSmart. That subsidiary is really a special purpose vehicle set up for that particular contract. And we shipped 291,000 modules in the first quarter versus 391,000 for the entire financial year '23 in India. And GBP 3.6 million cash received from customers in the first half -- sorry, in the first quarter. Then some other business was the MOU that we announced with Alfanar, a Saudi company, and this MOU is to potentially go into other territories, not just India. They're based -- they also -- they have an office set up in India. So we do work with them in India, but around the rest of the world. If there are number of opportunities around the rest of the world, then there's an opportunity for us there as well. And we closed the end of June with a backlog of 2.3 million units to be delivered in India. And then I think it's also important to Dun & Bradstreet, obviously, a very reputable company, and they are recognized as a Start-Up 50 Trailblazer. That's the Indian entity in particular.

[Operator Instructions] John and Heather, as you know, we have received a number of presubmitted questions, as well as live questions throughout today's presentation. And if I may, I hand back to you to address those questions you can and give responses where appropriate to do so, and I'll pick up from you at the end.

Yes, thanks, Alex. So with regard to the questions, if I go through the first one. This one, John, I'll leave to you to answer. The question was with the company's ever developing success in the electricity metering market, what plans are underway to develop systems for water metering?

Yes. So as you can probably imagine, right now with 250 million in India that we're chasing, and those will be orders placed in the next couple of years. We're very focused on that on the electricity market. So we're not wanting to sort of defocus and put resource onto other areas like water metering, like gas right now. That's something that we'll look into the future when we develop the Unified HES product and the Wi-SUN product. But right now, let's keep focus, win those orders, and we can look at doing other verticals later on.

Thanks, John. And then the second question is CyanConnode likely to introduce a licensing business model for its products similar to the ARM business model or is this model not right for our business? That one also for John.

Yes. Thanks, Heather. Again, actually, we do have a model to do a licensing royalty type of payment where they pay something upfront and the royalty when they manufacture it. And we have discussed this with several customers. It's really further on from being a contracted equipment manufacturer. It's giving them the rights to do that, and they design and make all the components, et cetera, to our recipe basically. But to date, there's no one that's taken that up. So it's there if it's required. But at the moment, we have moved on to a new model, a business model in India anyway where we get some CapEx upfront. And then we have equal monthly installments, as Heather has said, instead of having milestones and those would then roll out for 8 years after the 2-year installation.

Thanks, John. And then the third question, can you give some indication of the number and types of entities, i.e., companies, organizations, et cetera, that CyanConnode is currently working with and/or collaborating with?

Yes. Well, I mentioned some of our suppliers like Solid State, Silicon Labs, Syrma, Genus and others that we're working on there. And obviously, I've mentioned other meter manufacturers. And I'm saying there's 10 in India and there's others around the rest of the world that we work with. And then I've mentioned the engineered procurement companies already in the presentation and the system integrators. And in particular, IntelliSmart, I mean they've done some terrific work. I mean, IntelliSmart was born out of EESL, an energy conservation company which is wholly owned by the government of India. And now IntelliSmart is basically 49% owned by the government and 51% by national investment infrastructure fund. And they turned around all the projects that were under EESL, which had an SLA something like 90 to 95 -- sorry 80% to 95%. And now they've got them up to 98%. So they've done terrific there, they continue then to win business and lead the March really as of everybody in India as we speak. So some real good quality people in that organization that we work with. In total, I suppose, adding them up just briefly, I suppose with circuits sort of -- were between I suppose 10 to 15 partners that we work with go-to market just in India. So that's quite something.

Thanks, John. And then as of the meeting date, 1st of August, how many employees does CyanConnode employ, and what percentage of these employees are employed in India, U.K. and rest of world? So we only have employees in U.K. and in India. We don't have actual employees anywhere else in the world, but we have contractors in other places, like for example in Thailand as well. And if I look at it, and this is as of today and it changes all the time because we are doing so much recruiting. So it is literally changing on a daily basis. In the U.K., we've got 37 permanent employees. And in India, we've got 56 permanent employees. So you can see there's a lot more in India with a lot of those being focused on the project rollouts and the sort of deployments and project management. And then in the U.K., we've got 60 contractors, and we've got 87 contractors in India. So that's a total with permanent and contractors of 147 across the 2 entities. And then the next question is the order for 600,000 units part of the framework agreement for 3 million units or completely separate?

Yes. No, it is part of the agreement, as I mentioned, this -- now the agreement of 3 million is down to 2.4 million. As I say, we're using this as beachheads to new utilities to stop the competition getting on there and go for the first mover advantage. So we may get other orders 300,000, 500,000 from that and eat into it as we go along. So it's a call-off contract as we call it.