26 Jul 2018 07:00
THIS ANNOUNCEMENT CONTAINS INFORMATION WHICH, PRIOR TO ITS DISCLOSURE, WAS INSIDE INFORMATION FOR THE PURPOSES OF THE MARKET ABUSE REGULATION.
For immediate release | 26 July 2018 |
Frontier Smart Technologies Group Ltd
('Frontier' or the 'Group')
Half Year Trading Update
Frontier (AIM: FST), a pioneer in technologies for Digital Audio devices, announces the following trading update for the six months ended 30 June 2018 ('H1-2018' or the 'period').
As stated in the Group's trading update issued on 23 May 2018, the Group expects to report H1-2018 revenues of circa US$17.0 million (H1-2017: US$25.0 million) and EBITDA1 for the period is anticipated to be a loss of approximately US$2.1 million (EBITDA H1-2017: US$1.4 million).
FY-2018 revenues are expected to be in line with the Group's guidance given in May at approximately US$47.7 million, (FY-2017: US$53.0 million) and full year EBITDA is expected to be c. US$1.0 million (FY-2017: US$2.6 million).
In May 2018, the Board implemented a range of measures to reduce planned R&D and other overheads. These measures should deliver savings in FY-2018 of about US$3.4 million.
As at 30 June 2018, the cash balance was US$3.4 million (31 December 2017: US$7.9 million) which translates to a net debt position of US$3.2 million (31 December 2017: net cash US$4.0 million). This net debt figure is higher than the figure given in the Group's May update (US$2.1 million) due to the short-term timing of cash flows from other working capital balances. It is expected that by the end of the year the working capital balances will have returned to normal levels accompanied by a significant reduction in net debt.
As previously reported, the reduction in H1-2018 revenues was largely due to lower retail sales of DAB radios following the completion of the FM switch-off in Norway in December 2017. This was exacerbated by Frontier's customers holding excess stock at the start of 2018 which adversely impacted Frontier's order book for Q2-2018. This was a short-term situation caused largely by overstocking by customers in Q4 2017. In recent weeks, Frontier's radio sales orders have started to recover, and the Board expects Frontier's Digital Radio revenues to normalise in H2-2018, before returning to growth in FY-2019.
Smart Audio revenues in H1-2018 are expected to be up 19 per cent year-on-year. As highlighted in May 2018, this growth is slower than had been anticipated and reflects a delay in the uptake of voice-enabled speakers from third party brands. The prospects for FY-2019 and beyond are more promising. As the Smart Audio sector expands and matures, the Board expects sales of third-party branded products to increase, especially in the medium / higher price point categories, where consumers are looking for greater product differentiation. Frontier is well placed to address this opportunity.
Anthony Sethill, CEO of Frontier Smart Technologies, said: "As anticipated, trading conditions in the first half of the year have been challenging, especially when compared to H1-2017 which was significantly ahead of plan and our normal seasonality. I expect an improved year-on-year performance in H2-2018, with our Digital Radio and Smart Audio businesses both likely to achieve moderate growth. Nevertheless, the H1-2018 results will have an impact on full year revenues, and accordingly, we have reduced our cost base and extended our debt facility.
We will continue to closely monitor the Group's financial performance, whilst ensuring that we maintain our leadership in Digital Radio and are well-positioned to address the emerging opportunities in the Smart Audio and Smart Home sectors."
The Group expects to publish its half year results for the period ending 30 June 2018 in September 2018.
1 EBITDA means earnings before interest, tax, depreciation and amortisation, non-cash share-based payments and non-recurring restructuring costs.
- Ends -
For further enquiries:
Frontier Smart Technologies Group Ltd | +44 (0) 20 7391 0630 |
Anthony Sethill, Chief Executive Officer | |
Jonathan Apps, Chief Financial Officer | |
N+1 Singer (Nominated Adviser and Broker) | +44 (0) 20 7496 3000 |
Shaun Dobson / Ben Farrow | |
Buchanan (Financial Communications) |
+44 (0) 20 7466 5000 |
Henry Harrison-Topham / Steph Watson / Gemma Mostyn-Owen | FST@buchanan.com |
Forward-looking statements
The information in this release is based on management information. This announcement includes statements that are forward looking in nature. Forward looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Except as required by the AIM Rules and applicable law, the Group undertakes no obligation to update, revise or change any forward-looking statements to reflect events or developments occurring after the date of this announcement.
Notes to Editors
The Frontier Smart Technologies Group is a pioneer in technologies for digital audio devices. Customers include many leading consumer audio brands: Bose, Denon, Grundig, harman/kardon, Hama, JBL, Marshall, Onkyo, Panasonic, Philips, Pioneer, Pure, Roberts, Sony, TechniSat, UrbanEars, Yamaha, and many more. Established in 2001, the Group is headquartered in London, with engineering, sales, marketing and operations teams in Cambridge, Timisoara (Romania), Hong Kong, and Shenzhen. For more information, see: www.frontiersmart.com