Frontier Smart Technologies Group Limited (AIM: FST), a pioneer in technologies for Digital Radio and Smart Audio devices, announces its half-year results for the six months ended 30 June 2018.
Highlights
- Results for H1-2018 are in line with the Group’s trading update issued in July 2018. The comparative period in 2017 was exceptionally strong. In H1-2018:
o revenues were US$17.0 million (H1-2017: US$25.0 million)
o adjusted EBITDA1 loss was US$2.1 million (H1-2017: profit US$1.4 million)
o period end cash was US$3.4 million (30 June 2017: US$6.3 million)
o net debt was US$3.2 million (30 June 2017: net cash US$1.7 million)
Outlook
- Digital Radio EBITDA is expected to improve in H2-2018 as sales volumes recover in line with underlying market growth
- Smart Audio EBITDA losses are expected to reduce sharply in H2-2018 due to lower R&D expenditure and operational costs
- The Board anticipates an improved second half and the achievement of full year market expectations for EBITDA
Strategy
- The Board remains fully focused on maximising shareholder value and is committed to improving the Group’s cash generation and profitability in 2019
- To support this, the Group’s key operational and strategic aims are:
o in Digital Radio, to maximise positive cashflows
o in Smart Audio, to deliver positive EBITDA in FY-2019 by tightly controlling R&D expenditure and leveraging important ecosystem relationships
o to exploit Frontier’s respected multi-ecosystem software and cloud assets via the Group’s newly established Licensing and Services business unit, which will address the significant growth opportunities in Smart Audio and Smart IoT. Recent agreements with Amazon and NXP are strong initial validations of this approach - As part of its Group strategy, Frontier has already implemented a cost rationalisation programme, resulting in annualised savings of US$3.4 million.
Anthony Sethill, CEO of Frontier, commented: “As previously announced, the first half of the year has been challenging but we are now seeing a recovery in order levels and we expect a substantially stronger EBITDA performance in H2-2018.
“The Group’s Smart Audio business achieved moderate revenue growth in H1-2018 and we expect a significant reduction in the losses for Smart Audio in the second half of the year as we control costs by reducing our investment in R&D.
“To support the Group’s longer-term strategy, we have established a new Licensing and Services business unit, which is focused on licensing the Group’s existing software and cloud assets to the broader Smart IoT market, including the Smart Audio vertical. In addition to our relationship with Google we have recently announced collaboration agreements with Amazon and NXP, which will support this business unit. We expect Licensing and Services to deliver its first revenues in 2019.”
=Notes:
1 Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation, and before share-based payments and restructuring charges.
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