LWRF.L Regulatory News (LWRF)

LIGHTWAVERF PLC

 (AIM: LWRF)

Preliminary Results for the Year Ended 30 September 2014

LightwaveRF Plc ("LightwaveRF" or the "Company"), Internet of Things company and creators of the LightwaveRF Smart Home platform enabling households and businesses to remotely monitor and control lighting, heating, power and security using app or web, is pleased to announce its final results for the year ended 30 September 2014.

FINANCIAL HIGHLIGHTS

· Revenue for the year of £3.04 million, an increase of 189% (2013: £1.05 million)

· Gross profit increased to £1.03 million (2013: £0.45 million)

· Pre-tax losses substantially reduced to £0.30 million (2013: £0.81 million)

· Year closes on £1.8 million of forward orders

· Zero working capital model adopted in UK through Megaman UK distributor deal

· Total loans and borrowings decreased by £0.46 million

OPERATIONAL HIGHLIGHTS

· Launch of heating range enabling monitoring and control of heat, light and power by individual room

· Development of lighting solution with a new Smart Dimmer designed to work with latest low-energy LED lamps which do not operate with most existing dimmer switches

· Appointment of Megaman UK as our master distributor for the UK

· Warwick University Innovate UK (formerly Technology Strategy Board) energy management project now with 300 rooms

· Entire product range now available in over 150 Maplin Electronics shops across the UK, as well as their on-line store.

· LightwaveRF products now stocked by 130 UK electrical and plumbing wholesalers

· Global distribution deal for lighting products now in place with Neonlite. First stocking orders now received for Australasia and Asia.

· Almost 25,000 homes across Europe now connected using the LightwaveRF cloud-based platform

For further information:

The Company confirms that the Annual Report and Accounts for the year ended 30 September 2014 will be sent to shareholders today and will be available on the Company's website: www.lightwaveRF.com 

CHAIRMAN & CHIEF EXECUTIVE OFFICER REPORT

I am pleased to report that during the period as brand awareness increased, LightwaveRF has seen an almost threefold increase in revenues, mainly in our core UK retrofit market which has been well serviced by our UK master distribution relationship with Megaman UK.

We have expanded our product portfolio, and are now starting to see sales traction internationally through our non-exclusive distribution deal with NeonLite in Australia and Asia. Furthermore, we are seeing UK sales beyond our retail customer market into new commercial sectors including new home builds and commercial building applications.

Our product range has expanded to include heating control, which allows householders to reduce energy usage by intelligently controlling the temperature in individual rooms, something most competitors, such as Nest and Hive, do not offer. Additionally, those products do not integrate with a full Smart Home platform that we offer to control power and lighting in addition to heat.

We are now building relationships with UK companies which have large customer bases for energy related products and services in both the domestic and commercial markets. For these companies, LightwaveRF's ability to monitor and control power, light and heat provides them with great opportunities to add value to their proposition.

On 2 April 2014 the Company changed its name from JSJS Designs Plc to LightwaveRF Plc to reinforce the growing strength of the LightwaveRF brand.

Results

Revenue for the year amounted to £3,039,894 (FY13 £1,053,735) which represents a 189% increase.

Eradication of supply chain costs as a result of our Megaman UK relationship means that despite the increased revenues, administrative expenses increased by only by 5.8% in the year to £1.29 million (2013: £1.21 million). However, gross margin dropped to 33.9% (2013: 42.5%) due to transfer of stock to Megaman in the first six months of the year and by reduced margin from existing customers due to the Megaman deal. The second half of the year saw gross margins return to a more normal trading level of 39.4% (first Half 29.4%).

Pre-tax losses for the year of £0.30 million were significantly lower than in the previous year (2013; £0.81 million). The company benefitted from a tax credit of £154,546, relating to R&D claims made in respect of 2012 and 2013. During these periods and the current year development was focused primarily on research and no development costs were capitalised.

Loans and borrowings for the Group were reduced by £0.46 million in the year.

A fundraising of £385,550 was completed in the year, the proceeds of which were predominantly used to strengthen our in-house development team and bring the heating products to market. The recruitment of additional software and hardware design resource is intended to create additional Intellectual Property value for the Company. All design work is now undertaken in the UK giving the business the opportunity to source hardware product supply more effectively.

Strategy for Growth

Our mission is to create an affordable market-leading Smart Home platform that will deliver cost-savings to home and commercial building owners through reduced energy usage, increased safety and security, plus enhanced convenience and time saved through automation of energy monitoring and control processes.

There are three main core markets we are focused on serving with our product range. Our product development priorities have therefore continued to centre on lighting, power and cooling control together with security.

• Domestic Retrofit

Over the last 12 months we have extended our presence in this market beyond retail and on-line outlets to a large trade wholesale presence which services tens of thousands of electrical and heating contractors. In addition we are developing relationships with key partners in the domestic retrofit/upgrade market, predominantly providers of energy products and services who have existing relationships with large customer bases.

• New House Build

141,000 new homes were built across the UK last year. Our products allow builders to offer all the benefit of a Smart Home platform to their customers for a very low percentage incremental cost. We are in the planning stages of showcasing the LightwaveRF Smart Home platform in a number of new build Show Homes.

• Light Commercial

The ability to link multiple Smart Home hubs in a single network allows affordable control in very large buildings at a fraction of the cost of current commercial building energy control solutions. This is supported by the level of interest we have had from this sector, and the value we have demonstrated, not only in our 12 month involvement with Warwick University, but more recently with trials with other large commercial customers. We are in the process of creating partnerships with service providers for owners and operators of commercial buildings, such as facilities management and maintenance companies.

The company's strategic intent is to grow internationally through replication of this UK business model seeking in country master distributors to create global awareness of the LightwaveRF Smart Home platform.

Outlook

The financial outlook for the business is increasingly positive. Our order book at the start of the year was almost £2 million just through our UK Megaman relationship. With the additional UK opportunities, as well as our increasing international business, we expect to move make significant progress in the coming year.

I welcome Tom Sykes and his considerable financial management experience to the team. I believe that the right team is now in place with the skills and experience aligned to deliver success in all elements of the business. We are focused on achieving rapid global growth through concentrating on our core competencies of Smart Home technology development.

We believe that pursuing our strategies as detailed will allow us to maximise our potential within the global Smart Home market, which according to Berg Insights, will be worth £9.5bn in 2015 and is growing annually at a rate of 33% through to 2020.

Michael Lord

Chairman & CEO

 STRATEGIC REPORT AND PRODUCT REVIEW

The last year has seen the company continue to augment its LightwaveRF Smart Home platform to exploit the significant growth expected in demand from the Internet of Things market, and within it the control and monitoring of Power, Light, Heat and Security for homes and business premises.

Beyond creating a large global network of devices and users, we recognise from the prices paid by companies such as Google and Samsung for relatively small Smart Home companies such as Nest ($3.2 billion), Dropcam ($555 million) and SmartThings ($200 million), that the real prize in the Smart Home sector is not only the sale of the devices themselves, but the user base these generate and the power of the huge amount of data about how people interact with their homes that can then be used to optimise the use of energy, better protect their families and property, and create valuable time and savings through automation of many of their home's processes.

Principal risks and uncertainties

The company is exposed to a variety of risks in the conduct of its normal operations. Whilst it is not possible to either completely record or to quantify every material risk that the company faces, below is a summary of those risks that the directors believe are most significant to the company's business and could have a material impact on future performance, causing it to differ materially from expected or historic achieved results.

Treasury function

The company monitors cash flow as part of its day to day control procedures; the implementation of the zero working capital model through the relationship with Megaman UK, has greatly simplified the risk associated with treasury and the board considers cash flow projections and liquidity risk at its meetings and ensures that appropriate facilities are available to be drawn down upon as necessary.

Credit risk

The company's credit risk is primarily attributable to its trade debtors. All customers normally pay for product in advance of delivery which minimises such risks.

Customer concentration and relationships

The loss of, or deterioration in any single customer relationship, could have a material impact on the company's results. The company's relationship with its main distributor - Megaman UK - has been well established for 18 months and is contracted to 2017. In addition, the risk of Megaman not renewing this contract is mitigated by maintaining strong working relationships with the individual customers of Megaman.

Key Performance Indicators

The company monitors turnover, gross profit margin, pre-tax profit, cash generated from operations and uses the following non-financial key performance indicators to measure the performance of the business and progress against key strategic objectives:

2014 2013 YOY Change

Number of global installations (Rounded) 25,000 12,500 +100%

Number of countries with installations 5 5 -

Number of UK distribution outlets 800 436 +83%

Our strategy on product and software development remains focused in the four main areas; Products, Apps, Cloud Services and Big Data, and Licensing. The aim is to create a world beating range of Smart Home controls at affordable prices.

1. Products

Our product strategy is to create a broad platform of devices that are; easily retrofittable, intuitive to operate either traditionally or remotely and aesthetically designed. We aim to give the user complete control of their home or workspace using only one App. The product range is therefore centered on four main categories.

Light Control

The well-established lighting control range is now comprehensive. We have improved this range further in the year with the launch of our Smart Dimmer. This addresses the problem that many existing dimmers have of working with the new LED lamps that are rapidly taking over from CFL lamps due to their very low power usage and "instant-on" capability.

In the coming year we plan to improve our light solutions with new technology that allows monitoring of electricity usage in real-time. This technology will benefit from the two way communication protocol development we have already successfully implemented in our heating range.

Power Control

Similarly the power solutions we offer are now comprehensive and once again in the coming year we plan to improve them further with new technology that allows monitoring of electricity usage in real-time. This technology will also benefit from the two way communication protocol development.

This level of information and control in power and light offers us a market leading proposition in the UK being able to deliver far more granular data to further optimise savings and benefits. However, the big opportunity for this level of technology is the commercial market, where our solution can offer savings through increased control and visibility, for a significantly lower cost than current commercial solutions.

Finally, with currently half a million homes in the UK with roof solar panels, we believe there is a major opportunity for integration with solar electricity generation by allowing homeowners to automatically turn on high power usage devices such as immersion heaters, washing machines and dishwashers during the day when the power generated by the solar panels would otherwise be wasted. Here we are working with a hardware partner to give homeowners real-time visibility of the power they are generating and how much money they have saved through the control that the LightwaveRF Smart Home platform gives them.

Heating and Cooling

Our recently launched heating system when combined with the power and light solutions reinforces our market leading proposition being the only provider of power, heat and lighting control on one platform.

The LightwaveRF heating system consists of boiler control, independent thermostat, thermostat and a thermostatic radiator valve. The system has full two way communication allowing users to both set and see temperatures in each room independently.

In addition when used with the LightwaveRF window switch can cut off the heat supply to a room when a window is opened. In addition the LightwaveRF system can also control electrical heating in the same system with the thermostatic radiator switch.

In a commercial application occupancy sensing is also available allowing temperature to be set back when a room is unoccupied. A domestic solution will ultimately also be available.

Security

Our easy to use apps and web manager allow control of lighting and electrical devices enabling users to "be at home when they are not". Our new two way communications protocol in our heating range has already been extended to include door and window sensors to automatically manage room heating. We will be extending that functionality to alert users via their smartphones if doors or windows are opened and will be adding that same technology into our motion sensing devices

We are now in discussions with potential cloud based webcam partners to integrate video alerting and recording into the LightwaveRF Smart Home platform. This offers a level of two-way interaction between our devices and sensors much more advanced than the current simple motion detection offered in the market.

This combination of cameras, sensors and reporting on the use of light and power devices will create an alerting system for homeowners of any unauthorised activity in their home which will be much more comprehensive than traditional home security solutions.

2. Apps

Smartphone app development has continued during the year with the launch of our new IOS and Android Apps leading to much better ratings and consumer acceptance. This development continues with further releases being anticipated in the coming year. A significant update has been the addition of heating allowing heat, power and light to be controlled in one App which we believe to be unique.

The Apps now allow customers to interact with, monitor and control their LightwaveRF Smart Home from the comfort of their settee, or when out travelling away from the home. Every interaction between the user and our devices plus a consistent stream of device status can now be collected and stored, using secure encryption, to build the historical data that will allow users to analyse and then optimise their set-up.

We will shortly be launching of a new web-based interface that takes advantage of the larger desktop on PCs or tablets to allow better visibility of the increasing number of LightwaveRF devices in our users' buildings. For businesses we have further enhanced this with user level access and control options.

3. Cloud Services and Big Data

The Wifi Link is at the heart of a LightwaveRF Smart Home platform. Although many of our products can be controlled easily with conventional style switches and easy-to-use hand-held remote controls when in the home, to fully exploit the power of our products customers need a WifiLink. This is the connection between the devices in the home and the LightwaveRF Cloud that allows control using our IoS and Android smartphone apps and our web manager portal.

The Wifi link which can be updated by LightwaveRF Cloud as updates become available makes it possible to have virtually no computing power or data storage in the home but to manage services from the Cloud. This makes the LightwaveRF Platform constantly updatable and flexible. With our new two-way communication the LightwaveRF Platform is now capable of monitoring and collecting data for use in either realtime for storage and analysis later.

Warwick University has provided a huge opportunity to develop the monitoring and analysis tools. The LightwaveRF Cloud in conjunction with our Commercial Web Manager can now display a site map showing temperatures, which windows are open and room occupancy. The system also records and stores data for later analysis or actioning changes to settings based on predefined rules. The Cloud based nature of the LightwaveRF platform also makes it considerably cheaper than traditional building management systems.

Finally, the levels of "Big Data" that the LightwaveRF Cloud can produce will also have real value, beyond the home or business owner themselves. They will provide data for energy producers, consumer electronic businesses and construction companies, as they aim to design and improve their products and services to make them more efficient and more effective.

4. Licensing

We continue to pursue a further broadening of the range by embedding LightwaveRF technology in to partner products creating a "Connected by LightwaveRF" range. Not only will this increase the range of control available but it will potentially create recurring revenue streams.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 SEPTEMBER 2014

GROUP STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2014

COMPANY STATEMENT OF FINANCIAL POSITION

AS AT 30 SEPTEMBER 2014

GROUP STATEMENT OF CASHFLOWS

FOR THE YEAR ENDED 30 SEPTEMBER 2014

STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 SEPTEMBER 2014

NOTES

1. Basis of preparation of the financial statements

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.

These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB), as adopted by the European Union ("adopted IFRSs"). The financial statements have also been prepared in accordance with those parts of the Companies Act 2006 applicable to companies preparing financial statements in accordance with IFRS.

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgement in applying the company's accounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in the note below.

The financial information set out above does not constitute the Company's statutory accounts for the years ended 30 September 2014, but is derived from those accounts. Statutory accounts for 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered shortly.

2. Loss per share

The basic loss per share is calculated by dividing the loss for the financial year attributable to shareholders by the weighted average number of shares in issue. The remaining securities in issue are not dilutive as at 30 September 2014.

On April 3 2014 a share consolidation was undertaken with 50 ordinary shares of 0.1p each in existence at that time being consolidated into one new ordinary share of 5p each. The prior year has been restated on a comparable, post-consolidation, basis.

At 30 September 2014, there were 360,000 (2013: 2,360,000) of potentially issuable shares which are anti-dilutive; such shares may become dilutive in future periods.

3. Annual Report

The Annual Report will be available from the Company's website www.lightwaveRF.com and will be posted to shareholders on 9 February 2015.