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RNS Number : 3186N
Frontier Smart Technologies Grp Ltd
17 January 2019
For immediate release 17 January 2019
Frontier Smart Technologies Group Ltd
('Frontier' or the 'Group')
Pre-Close Trading update and Notice of Results
Improved H2 EBITDA driven by revenues higher than H1 and
targeted cost rationalisation
Frontier (AIM: FST), a pioneer in technologies for Digital Radio
and Smart Audio devices, announces the following unaudited trading
update for the year ended 31 December 2018 ('FY 2018') ahead of its
full year results.
As set out in the Group's announcements in May and Sept 2018,
Frontier's priorities are to:
-- maximise Digital Radio cashflows
-- control R&D expenditure and leverage ecosystem relationships in Smart Audio
-- establish a Licensing business, which exploits the Group's
multi-ecosystem software and cloud assets, to address the
opportunities in Smart Audio and Smart IoT
Pursuing this strategy, the Group expects to report a much
improved second half and a FY 2018 financial performance broadly in
line with current market expectations(1) . Revenue for the
financial year is expected to be not less than US$41.0 million and
EBITDA(2) is anticipated to be c. US$1.4 million.
The US$1.4 million EBITDA comprises Trading EBITDA of c. US$0.8
million together with capitalised R&D costs of c. US$0.6
million. In addition, restructuring costs incurred during the year
are expected to be in the order of US$0.7 million and are accounted
for below EBITDA.
Following the Trading EBITDA loss of US$2.1 million in the first
half of the year, H2 2018 is expected to report a positive Trading
EBITDA in the region of US$2.9 million. This improvement is due to
increased revenues in the second half of the year coupled with
targeted cost reductions in R&D and other overheads.
As at 31 December 2018, the Group had gross cash of US$3.8
million (net debt US$2.1 million).
Digital Radio
The Group's Digital Radio business continues to deliver positive
cashflows, albeit lower than FY 2017, which benefitted from the
Norwegian digital switch over. H2 2018 trading for Digital Radio
was considerably stronger than H1. This improvement is underpinned
by the continued development of European DAB markets, in which
Frontier retains its leadership position, coupled with tight
management of costs.
Smart Audio
Smart Audio continues to be loss-making, albeit H2 2018 losses
are expected to be substantially lower than in previous periods. As
reported in September 2018, the Group is developing a Licensing
business model for Smart Audio, targeting global Tier 1 customers.
To support this initiative, the Group is establishing new,
collaborative relationships with silicon providers, such as NXP
Semiconductors NV. Since the period end, the Group has secured its
first customer for Licensing. Revenues for this new business line
are expected to build gradually during 2019.
Outlook
The Board expects a continued improvement in EBITDA in FY
2019.
Anthony Sethill, CEO of Frontier Smart Technologies, said:
"In the second half of 2018, the Group delivered a significantly
improved financial performance based on a recovery in sales and the
implementation of our targeted cost reduction programme. Our
Digital Radio business continues to generate strong positive
cashflows. In Smart Audio, our Licensing business has secured its
first revenues and established a healthy pipeline of potential
customers.
"For FY 2019, we expect further improvements in EBITDA, driven
by the sustained performance of Digital Radio and the growth of our
Smart Audio business, in particular its Licensing arm."
Notice of Results
The Group expects to publish its full results for the year to 31
December 2018 in March 2019. A further announcement will be made in
due course.
- Ends -
Notes
(1) Current market expectations prior to this announcement for
the Group's Trading EBITDA for the year ending 31 December 2018 are
approx. US$0.9 million. Trading EBITDA means earnings before
interest, tax, depreciation, amortisation, and before
restructuring, other non-recurring costs and certain non-cash
items. It excludes the benefit of capitalised R&D costs.
(2) EBITDA means Trading EBITDA plus the capitalisation of
certain R&D costs in compliance with IAS38. In prior periods,
whilst the Group has been in compliance with IAS 38, R&D has
not been capitalised. The Group's policy on capitalisation of
R&D expenditure has been consistently applied and is disclosed
in the Principal Accounting Policies in the 2017 Annual Report and
Accounts.
This trading update is based upon unaudited management accounts
and has been prepared solely to provide additional information on
trading to the shareholders of Frontier. It should not be relied on
by any other party for other purposes. Certain statements made in
this update are forward-looking statements. Such statements have
been made by the Directors in good faith using information
available up until the date that they approved this update.
Forward-looking statements should be regarded with caution because
of the inherent uncertainties in economic trends and business
risks.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulation. Upon the publication of this
announcement via a regulatory information service, this inside
information is now considered to be in the public domain.
For further enquiries:
+44 (0) 20 7391
Frontier Smart Technologies Group Ltd 0630
Anthony Sethill, Chief Executive Officer
Jonathan Apps, Chief Financial Officer
+44 (0) 20 7496
N+1 Singer (Nominated Adviser and Broker) 3000
Lauren Kettle / Ben Farrow
+44 (0) 20 7466
Buchanan 5000
Henry Harrison-Topham / Steph Watson FST@buchanan.com
About Frontier Smart Technologies
Frontier Smart Technologies is a pioneer in technologies for
Digital Radio and Smart Audio devices. The Company's customers
include many leading consumer audio brands: Bose, Denon,
harman/kardon, JBL, Onkyo, Panasonic, Sony, Yamaha, Altec Lansing,
Blaupunkt, Grundig, Hama, Klipsch, Marshall, Pioneer, Pure,
Roberts, TechniSat, Teufel and many more. Established in 2001, the
Group is headquartered in London, with engineering, sales and
operations teams in Cambridge, Timisoara (Romania), Hong Kong, and
Shenzhen.
www.frontiersmart.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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