The bright lights of Las Vegas are once again where intelligent lighting and building controls technology firm PhotonStar LED Group PLC (LON:PSL) were heading to this week as the group gears up for the commercial launch of its key halcyon ‘Internet of Things’ product.
The company is participating in the IBM InterConnect 2017 Cloud & Mobile Conference, which is taking place between March 19 and March 23, having first been invited to showcase the halcyon cloudBMS system at the same gathering last year.
The group's new system for building controls expands on a prior generation of low cost, retrofit-able wireless monitoring and control platform.
The company has included additional functionality, with the ability to regulate heating and cooling, shading and power management as well as the existing lighting and environmental sensor controls.
Whilst the commercial launch is imminent, set for April 1, the AIM-listed firm has already been rolling-out the product via paid-for technology trials, with the system having been installed across nine customer sites, including a trial at Royal Bank of Scotland’s offices in Bristol.
Brexit wobble …
The bullish move comes after PhotonStar revealed in a trading update at the end of January that its results been hit by the disruption and uncertainty at its more traditional lighting business in the construction sector since last June’s Brexit vote.
The firm said business in its commercial light fittings business slowed towards the end of 2016 and had remained subdued into early 2017.
PhotonStar added that group revenues for 2016 were approximately £5.4mln, down from £6.9mln in 2015, and its numbers were impacted by an after tax loss of £1.3mln including investment in the halycon intelligent lighting system business.
Dr James McKenzie, the group’s chief executive said then that good progress had been made changing the focus towards intelligent light systems, but the growth in traditional lighting that had been expected in the fourth quarter did not materialise.
He added: “Significant delays in construction projects due to uncertainty caused by Brexit and margins were also affected due to increasing costs associated with buying many key components in USD, Euros and RMB.”
PhotonStar’s half-year results back in September had seen revenues down by 22% to £2.53mln, while adjusted losses (EBITDA) increased to £0.54mln, from £0.2mln a year earlier.
The group said then that it had entered the second half with a much leaner business, having managed to reduce its cost base, but that the difficult trading conditions had taken its toll on its traditional LED and contract assembly businesses.
Although it reported revenue improvements in all business units in the third quarter.
Connectivity key …
The key for the group, however, is the transformation of the business from a high-end lighting specialist to an organisation at vanguard of machine-to-machine technology, also known as the internet of things (IoT).
The group’s Halcyon cloudBMS software that remotely connects multiple buildings is built on a partnership with IBM’s Watson IoT platform that segues with the US technology giant’s Maximo and Tririga facilities management systems.
The partnership with IBM was not coincidental; the technology and consulting giant’s systems are embedded with around 80% of building managers worldwide that are also potential customers of PhotonStar.
“We partnered with them [IBM] because they have a customer base we are really interested in,”, McKenzie said in an interview with Proactive last year.
“We are pretty unique now as we have demonstrated integration with Maximo and we are integrating currently with Tririga.”
He added: “Clearly they have a business to run, but they are helping us help their customers.
“We may do some co-selling but really we are at the let’s-prove-it-works-stage.”
Being able to remotely control the whole building ecosystem across multiple sites can lead to huge energy savings.
Significant further economies can be garnered from fixing a device before it goes wrong using what’s called predictive maintenance.
The Photonstar boss reckons the group’s service “will be able to save 80% of the trips to site.”
“Our connectivity is ‘retrofitable’ and unique in the sense that wireless is so cheap to install. It is around a fifth of the [cost of the] wired solution.”
A £1mln fundraising by the group a year ago, via a placing of 40 mln shares at 2.5p each, was designed to allow PhotonStar to complete the development of its software and scale it up.
A full commercial contract should be transformational for the AIM-listed business, which is currently only valued at around £1mln following a near 30% slide in its share price in the year-to-date, to 0.6p currently, and with the stock down over 80% year-on-year.
Analysts at ‘house’ broker Northland Capital - which has a price target of 4.9p on PhotonStar shares - said in a note after January’s trading update: “The Group made significant cost savings in 2016, ahead of our outlook (£3.28m) which establishes a sound platform for 2017.”
They added: “Pressure on traditional lighting operations (an estimated 58% of our 2016 projections) is not a surprise and underlines the importance of PhotonStar’s emphasis on IoT and intelligent building systems, as attested by its collaboration with IBM and halcyon™ systems development.”