LWRF.L Regulatory News (LWRF)

(For Immediate Release)

LightwaveRF Plc

(AIM: LWRF)

Interim Results for the six months ended 31 March 2014.

LightwaveRF plc ("LightwaveRF Plc" "the Company") British specialists in Radio Frequency technologies which has created the Lightwave RF connected home platform enabling households and business to remotely operate and control household applications including lighting, heating and security using smartphones, tablets, PC and MAC applications, is pleased to announce its results for the six months to 31 March 2014.

HIGHLIGHTS

• Like for like revenue up by 250%

• New UK distribution arrangements implemented in UK

• $3.2M (circa £1.9M) forward order book at half year

• Administrative expenses reduced by 7%

• Losses substantially reduced by 70%

Commenting, Mike Lord, Chairman and CEO said:

"The first half of the year has seen a significant refocusing of the business with the implementation of our new UK distribution strategy complete. We are now very much focused on the further development of our technology in line with our strategy change announced last year with a related increase in our expenditure commitment in new product development. This is already being reflected by the much improved Apps launched this year and the successful implementation of our heating platform for Warwick University."

For further information:

Business Review

Financial Results

Revenue for the six months ended 31 March 2014 was £1,670,993 (H1, 2013 £476,285) a 250% increase. The loss on operations and attributable to equity shareholders was £123,092 (H1, 2013 loss £408,938).

Revenue included £119,982 of licence fee and project management fee income. (H1, 2013, £25,806)

Administrative expenses incurred in the day to day running of the business were £575,261 (H1, 2013 £615,530), a 7% reduction.

As at 31 March 2014 as reported in the statement of financial position, the company does not have distributable reserves and is unable to declare a dividend.

The loss per share was 1.10 pence (H1, 2013 0.111pence).

Overview

The first half of 2014 has seen significant changes to the company. The highlights were:

• Like for like revenue up by 250%

• New UK distribution arrangements implemented in UK

• $3.2M (circa £1.9M) forward order book at half year

• Administrative expenses reduced by 7%

• Losses substantially reduced by 70%

Revenue reported is supported by a strong order book of $3.2M (circa £1.9M) which is scheduled for delivery in the second half of the year. We therefore expect full year sales to be in the order of £3.5M.

Average margins in the first half were lower at 29% due to the transfer of existing stocks to Megaman and

continued supply to existing customers at reduced margins due to the change in distribution strategy. Gross margins in the second half are expected to recover significantly. Overall gross profit was much improved at £490,539 (2013 £228,239) an increase of 115% 

We have continued to develop our distribution channels in the UK with the rollout to Maplin now at 180 stores. The new distribution arrangements have also been agreed with Maplin and B&Q in the period demonstrating their continued commitment. On line retail also continues with Amazon and other on line retailers. With the Megaman presence and positioning we expect these channels to build consumer sales further over the coming months.

We are now also turning our attention to international markets to seek to create similar distribution arrangements to Megaman in the UK. Securing agreements with the right partners takes investment and time but we do expect these efforts will start to impact next financial year.

Administrative expenses in the period were reduced by £40,269 or 7%. We plan on further switching this

spend to accelerate our product development and away from general administration. We plan to further develop our expertise in Radio Frequency with more software and hardware capability. This will enable the business to have a UK centred technology development team providing creativity, flexibility, focus and speed to market through the sound LightwaveRF platform we have created.

Product Development Strategies

Our focus on product, software and app development is centred around four strategies; 1. Products (covering Lighting, electrical, Eco monitoring, heating, cooling and security), 2. Apps, 3. Cloud Services/Data Mining and 4. Licencing.

Strategy 1 - Products

The business continues to introduce at pace a broad range of radio frequency controlled devices which on final launch of the new heating range will number over 100. The key step forward with the heating products is the introduction of an enhanced LightwaveRF protocol with two way communication to enable products to report on their status and to pass on commands. We now have a comprehensive range of lighting & electrical and heating products with further development underway. These will be further complemented by additional security products and new ways of Eco monitoring later in the year. We remain differentiated from our competition by the depth of our range but also our ability to control most household devices from one App.

Strategy 2 - Apps

We have already launched significantly enhanced Apps to the market during this trading period and added heating to the Apps capability. We plan to launch our first web app with more comprehensive scheduling functions for easier set up on PC, Mac and Tablet formats. We have shown our new smart watch app at the recent Gadget Show. All of these platforms will see further investment over the coming months.

Strategy 3- Cloud Services and Data Mining

Significant investment has now been made in to our web services and data capture for the University of Warwick. We can now monitor and record a range of parameters including temperature, room occupancy and window opening. We believe that this micro and macro monitoring of data and environmental control response will create more power to the LightwaveRF cloud platform with further revenue streams.

Strategy 4- Licensing

We are now actively pursuing a further broadening of the range by embedding LightwaveRF technology in partner products creating a "Connected by LightwaveRF" range of products. Not only does this accelerate the range of control available but adds a potentially new income stream from licence arrangements.

Outlook

The management team believe strongly in reinvesting in the company's technology and brand at this stage in the companies evolution. While we are fully focussed on underlying profit and cash generation from our revenues we expect to make significant commitment to continued product development investment. The year should see a turnaround in the previous losses suffered by the business.

Mike Lord

Chairman & CEO Date : 22 May 2014

Interim Accounts for the Six Months ended 31 March 2014 (unaudited)

The financial information contained within these accounts has been prepared by the Directors who accept responsibility for the financial information presented below and confirm that it has been properly presented in accordance with applicable law. The interim financial statements were approved by the Board of Directors on 21 May 2014 and have been prepared on the basis of the accounting policies set out in note 1. The financial information covers the six months ended 31 March 2014.

Statement of Comprehensive Income (unaudited)

Statement of Financial Position (unaudited)

Statement of Changes in Shareholders' Equity (unaudited)

Statement of Cashflows (Unaudited)

Notes to the comprehensive financial statements

1. Accounting policies

Basis of accounting

The principal accounting policies adopted in the preparation of the interim financial statements are set out below.

In the preparation of this Interim Report there have been no changes to the accounting policies applied and disclosed in the annual financial statements for the year ended 30 September 2013.

The interim report has been prepared in accordance with the recognition and measurement principles that are consistent with International Financial Reporting Standards (IFRSs) as endorsed by the European Union using accounting policies that are expected to be applied for the financial year ending 30 September 2014.

The financial information in this interim report does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

The financial information for the year ended 30 September 2013 does not constitute the full statutory accounts for that period, but is derived from those accounts.

The Annual Report and Financial Statements for 2013 have been filed with the Registrar of Companies. The Independent Auditors' Report on the Annual Report and Financial Statements for 2013 was unqualified, did not draw attention to any matters by way of emphasis, and did not contain a statement under Section 498(2) or 498(3) of the Companies Act 2006.

Going concern

The group and company's business activities together with the factors likely to affect its future development, performance and financial position are set out in the reviews contained in the Statutory Accounts to 30 September 2013 on pages 4 - 13. In addition, note 18 to those financial statements includes the group's objectives, policies and processes for managing its capital, its financial risk management objectives, details of its financial instruments, and its exposure to credit risk, exchange risk and liquidity risk.

Based on our current expectations on the continuing progress of product range development, extending our partner distribution in other parts of the world, and our ability to manage the short-term payments of the group the directors consider that the Group will have adequate funding resources to continue in operational existence for the foreseeable future. Accordingly, we continue to adopt the going concern basis in preparing the annual report and accounts. The financial statements do not include the adjustments that would result if the company was unable to continue as a going concern.

2. Impairments

3. Finance

4. Earnings per share

From continuing operations

5. Trade and other receivables

All receivable balances are in sterling. A provision of £20,857 has been made against the trade receivable loan due to non-payment of the current outstanding balances due.

6. Borrowings

The carrying value (which is a reasonable approximation to fair value) of borrowings analysed by lender is as follows:

Long term borrowings of £395,139 are secured five year loan notes and carry an interest rate of 3% . The balance of loans outstanding carry interest at 9%.

The company has no other borrowing facilities.

7. Share capital

8. Cash & Cash Equivalents