FST.L Share News (FST)

(Alliance News) - Frontier Smart Technologies Group said on Wednesday that it performed in line with revised expectations during the first six months of the year but its impasse with Science Group PLC, which has a 48% holding in the company, continues.

In May, due to high competition and weak legacy sales, Frontier reduced its full year adjusted earnings before interest, taxation, depreciation and amortisation guidance to USD900,000. Adjusted Ebitda was USD1.4 million in 2018.

The audio technology company said that although trading in the six months to June 30 has been in line with expectations, orders for the fourth quarter are yet to be placed.

Advisory firm Science Group has been steadily building its stake in Frontier in recent months as it initially pursued a hostile takeover. Frontier said Science Group will now "maintain a significant minority shareholding, ruling out a statutory merger in the near-term".

The two companies initially disagreed over Science Group's valuation of 35.00 pence per share with Frontier telling its shareholders to wait for a 37.00p per share offer.

Frontier said advisory fees in relation to the potential takeover have totalled USD450,000. The fees, which were not forecast, will show in the company's full year results.

The company also said conditions in relation to a credit facility with Clydesdale Bank PLC were met in the near term but it is in talks with the lender about future covenants testing. According to Science Group, Frontier would benefit from a refinancing option which would eliminate bank covenant risk.

Despite "the seriousness of the situation", Science Group said, "Frontier's board has not engaged with Science Group on this matter in any meaningful way".

Science Group proposed an extraordinary general meeting which will feature proposals to have Frontier's Chair Paul Taylor as well as audit committee member Hossein Yassaie removed from its board. Science Group will also propose adding its Chair Martyn Ratcliffe as well as its legal counsel Sarah Cole to the Frontier board. Frontier said it anticipates posting a notice of the potential meeting shortly.

Shares in Frontier were down 19% at 25.10 pence each in London on Wednesday afternoon and Science Group shares were up 0.5% at 194.49p each.