First Licensing Agreement with Chinese Partner

CyanConnode Holdings plc

("CyanConnode" or the "Company")

CyanConnode signs its first Licensing Agreement with Chinese Partner

CyanConnode, a world leader in narrowband radio frequency ("RF") Mesh Networks, is pleased to announce that it has signed a USD 4M Licensing Agreement with Beijing Jingybeifang Instrument Co., Ltd ("Beijing Instruments"). The Licensing Agreement provides Beijing Instruments with the right to use CyanConnode's reference designs to manufacture Advanced Metering Infrastructure ("AMI") including RF mesh network technologies, which Beijing Instruments hopes to supply to its customers.

Beijing Instruments is a well-established meter manufacturer and since 1998, it has been a main supplier to the State Grid Corporation of China. CyanConnode and Beijing Instruments are also pleased to announce that they have agreed to collaborate on sales opportunities outside of China.

According to a report from analyst Navigant Research, China's shipment of smart electric meters hit 130 million units in 2016. They have also calculated that the compound annual growth rate ("CAGR") of shipments for the period 2017 to 2021, will be between 3% and 5%¹.

This is CyanConnode's first Licensing Agreement and the terms of the contract grant Beijing Instruments the right to use CyanConnode's reference designs to manufacture its AMI RF modules and gateways. Beijing Instruments will pay a license fee each time a RF module and/or gateway unit is manufactured, for a total number of modules and gateways over a two year time frame totalling USD 4m.

John Cronin, CyanConnode Executive Chairman, commented: "We are very pleased to announce the Company's first Licensing Agreement with a new Chinese Partner, Beijing Instruments.  CyanConnode can provide licensing packages that support partners' needs as well as facilitating the localised manufacture of components. As there will be little or no associated development or manufacturing costs, the impact on our resources will be minimal. We look forward to a long and successful collaborative partnership with Beijing Instruments."

Mr Li Yi, Beijing Instruments General Manager, commented: "The CyanConnode licensing package enables Beijing Instruments to offer its customers next generation smart meters based on IPv6 standard RF mesh network technologies that are self-forming and self-healing.  Beijing Instruments, a State-owned company, is well positioned in the Chinese smart metering market. It is also looking forward to working with CyanConnode in international markets." 

The smart metering market is rapidly evolving and the size of implementations increasing. CyanConnode offers licensing packages that can deliver market-leading technology to support partners' business models.  These licensing packages can provide partners with product that not only outperforms against large and well-known brands, it is also highly reliable with a competitive total cost of ownership.

This signed Licensing Agreement is the high margin license sale opportunity expected in late in 2018, referred to in the Company's previous announcement of 19 October 2018; the Company is currently taking advice from its auditors regarding revenue recognition in relation to this signed Licensing Agreement.

¹https://www.smart-energy.com/industry-sectors/smart-energy/china-smart-electric-meter-market/

The information communicated in this announcement is inside information for the purposes of Article 7 of Regulation 596/2014.

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About CyanConnode

CyanConnode is a world leader in narrowband radio frequency (RF) Mesh Networks that facilitate machine to machine (M2M) communication. CyanConnode's innovative technology uses the industrial, scientific, and medical radio band, (ISM), which is optimised to give exceptional performance and competitive total cost of ownership. Through global partnerships, CyanConnode provides customers with a solution for the rapid deployment of local or countrywide ISM RF Mesh Networks that provide reliable and secure M2M communication.

For more information, please visit www.cyanconnode.com

About Beijing Jingyibeifang Instrument Co., Ltd.

Beijing Jingyibeifang Instrument Co., Ltd. ("Beijing Instruments") was established in 1977 and was one of the first manufactures of watt-hour meters to supply state-owned enterprises.

Beijing Instruments is located in the Daxing Industrial Development Area, where it has a 30,000 square meter facility with around 400 employees; it also has a joint venture in Bangladesh.

Beijing Instruments has been a main supplier to the State Grid Corporation of China since 1998 and has won contracts in Beijing, Henan Province, Hebei Province, Xinjiang Province, Gansu Province and Hubei Province, as well as overseas contracts in Nepal, Bangladesh, India, Indonesia and Sri Lanka.

The company pays special attention to Product Quality Management (PQM) and has achieved: ISO9001 Quality Management System Certificate, ISO14001 Environmental Management System Certificate, OHSA18001 OHS Management System Certification, as well as being awarded the "Beijing Model Collective" honorary title by the Beijing municipal government.