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RNS Number : 1710I
Frontier Smart Technologies Grp Ltd
07 August 2019
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN
PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION
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REGULATIONS OF THAT JURISDICTION.
7 August 2019
Frontier Smart Technologies Group Ltd
("Frontier", the "Group" or the "Company")
Update on Trading, Status of Discussions and EGM Requisition
The Board of Frontier (the "Board") provides the following
update to shareholders on the Group's trading position and ongoing
discussions with Science Group plc ("Science Group") regarding the
composition of the Frontier Board.
Update on Trading and Status of Discussions
Frontier announces that trading in the first half of 2019 was in
line with the revised expectations set out in the Company's trading
update on 9 May 2019 (the "Trading Update"). Trading to date in the
second half is also in line with expectations, although customer
lead times have reduced in recent months and Q4 orders have still
to be placed. As set out in the Trading Update, in light of adverse
market and trading conditions, the Board reviewed its options for
cost mitigation and potential restructuring, and a mitigation plan
was drawn up to protect Frontier's cash position and return the
Group to profitability at a Trading EBITDA level in FY20.
The Company received an approach from Science Group on 8 May
2019 and, as detailed in subsequent announcements, exploratory
discussions have remained ongoing. Furthermore, Frontier also
received an approach from a credible industry player with a view to
executing a corporate transaction, which was also subject to
detailed consideration by the Board.
Whilst these deliberations continued the mitigation plan was put
on hold, so as to preserve options while Frontier reviewed and
explored potential synergies between the Company and the two
potential partners. Much management time and effort has gone into
exploring these options and the professional advisory fees incurred
in managing this corporate activity, particularly in respect of the
ongoing discussions with Science Group, are currently in the order
of $450k. These fees, which had previously not been forecast, will
be charged to the Group's profit and loss account in the second
half of 2019.
At the time of the Trading Update, covenants on the Company's
credit facility with Clydesdale Bank ("CYB") were forecast to be
met in the near term; the June covenants testing were indeed met
and the Board expects the September covenants testing will be met.
With regards to future covenants testing, the Company is in ongoing
discussions with CYB in light of the Group's current trading
position, the anticipated impact of the mitigation plan and the
outlook for FY20. Further updates will be provided, as appropriate,
following conclusion of these discussions.
Given Science Group's stated intention to maintain a significant
minority shareholding (and ruling out a statutory merger in the
near-term) and the lack of timely traction with the industry
player, it is clear that Frontier will continue to operate as an
independent entity for the foreseeable future. The delay to the
mitigation plan, coupled with the additional advisory fees incurred
in connection with the ongoing corporate activity, increase the
risk to Frontier's current credit facilities and place further
pressure on Group cash flows. The Board now intends to take action
on cost mitigation and potential restructuring by implementing a
revised version of the mitigation plan as soon as possible, so as
to preserve Group outlook for FY20.
Requisition of Extraordinary General Meeting
As per the joint announcement of 30 July 2019 entitled 'Board
Changes' (the "Board Announcement"), Frontier was pleased to
announce an agreed transition of the Board, in conjunction with
Science Group, with a view to securing a route forward for the
business and allowing Science Group to have direct input into
formulating Frontier's strategic priorities and targets.
Notwithstanding this agreement, the Board yesterday received
notice that Science Group has requisitioned an extraordinary
general meeting of Frontier (the "EGM") to replace the
non-executive directors of Frontier with appointees of Science
Group (the "Requisition Notice"). The proposals set out in the
Requisition Notice are as follows:
- that Sir Hossein Yassaie, Paul Taylor and Martin Harriman* all be removed from the Board;
- that Martyn Ratcliffe and Sarah Cole be appointed to the Board; and
- that the authorisation granted at the Company's most recent
annual general meeting on 14 May 2019 to disapply pre-emption
rights be revoked with immediate effect.
*As previously announced, Martin Harriman stepped down from the
Board with effect from 30 July 2019.
Frontier anticipates posting notice of the EGM shortly and will
provide a further update in due course.
For Further Enquiries:
+44 (0) 20 7391
Frontier Smart Technologies Group Limited 0630
Anthony Sethill, Chief Executive Officer
Jonathan Apps, Chief Financial Officer
Patrick Hannon, Vice President, Corporate Development
+44 (0) 20 7496
N+1 Singer (Nominated Adviser and Broker) 3000
Sandy Fraser / Lauren Kettle / Ben Farrow
About Frontier Smart Technologies Group Limited
Frontier Smart Technologies is a pioneer in technologies for
Digital Radio and Smart IoT devices. The Group'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.
For more information, see frontiersmart.com.
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END
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