FST.L Share News (FST)

LONDON (Alliance News) - Frontier Smart Technologies Group Ltd on Thursday said it made good progress in 2017 as its annual loss nearly halved, though the company expects "modest" revenue growth in 2018.

The digital radio and audio devices firm reported a pretax loss of GBP1.6 million for 2017, narrowed from a pretax loss of GBP3.0 million in 2016, as revenue rose 28% to GBP41.0 million from GBP32.1 million.

On a constant currency basis, revenue grew 22% to USD53.0 million from UDS43.4 million the prior year.

Earnings before interest, tax, depreciation and amortisation more than doubled to GBP1.9 million from GBP671,000 the year before. At the year-end, Frontier recorded a gross cash balance of GBP5.9 million, compared with GBP3.4 million in 2016 and had a net cash balance of GBP3.0 million, up from GBP700,000.

Frontier Chief Executive Officer Anthony Sethill said: "I am pleased to report a strong financial performance in 2017 with revenues benefitting from healthy growth in Radio and the group's first material sales in Smart Audio. This is a result of our decision in 2016 to focus on our digital audio technology business which has led to EBITDA more than doubling in the period.

Revenue in Frontier's Digital Radio segment grew 15% to GBP36.3million from GBP31.7 million the year before with the switch-off of FM in Norway performing as a key driver of growth as its volumes increased by over 100% compared to 2016.

Smart Audio segment, which is at an early stage of development, saw its "first material revenue" of GBP4.7 million, up from GBP500,000 the prior year, thank to its Minuet solution incorporating Google's Chromecast technology.

Frontier said its total volumes shipped across the business were 6.4 million units, compared with 5.2 million units in 2016.

The company said it plans to invest its cashflows in further Smart Audio and Smart Home business lines' development.

"2018 has started in line with plan and is likely to see modest revenue growth year on year. In Radio, the peak impact of FM switch-off in Norway will have passed, but we still expect to see steady volume growth in other European markets. Medium term prospects will be boosted by Switzerland starting to switch-off its FM signals in 2020/21," Sethill added.

In the separate statement on Thursday, Frontier said that it appointed Hossein Yassaie as a non-executive director with immediate effect.

Yassaie, former chief executive officer at Imagination Technologies Group PLC, also held directorship and strategic advisory roles in "several disruptive global technology companies".

Yassaie was a cofounder and also a director of Frontier when Imagination Technologies was a shareholder in the business. Frontier believes that it will "significantly" benefit from Yassaie technology expertise and vision, extensive market knowledge and industry relationships, it said.

"A number of shareholders had indicated that they would welcome Hossein's return to Frontier given his in-depth knowledge of the sector and the business as a whole. We are therefore delighted that he has accepted our offer to join the Board. His understanding of the business, its markets and the opportunities that lie ahead are important assets, which will be a significant benefit as we embark on our next phase of development and growth," Sethill added.

It also said that Non-Executive Chairman Martin Knight and Non-Executive Director Chris Batterham will not be standing for re-election at the annual general meeting and will resign in April 2018.

The company said it started a search for new chairman.

"On behalf of the Board, I would like to take this opportunity to thank Martin and Chris for their service. During their tenure, the Group has successfully disposed of its healthcare business and become EBITDA positive and cash generative, providing a good foundation for an exciting future," Sethill added.

Frontier shares were down 8.7% at 153.00 pence per share on Thursday.