TIDMLWRF
RNS Number : 3017Z
LightwaveRF PLC
14 December 2017
14 December 2017
LightwaveRF plc
(AIM: LWRF)
Preliminary Results for the Year Ended 30 September 2017
LightwaveRF plc ("LightwaveRF" or the "Company"), the leading
smart home solutions provider, is pleased to present its final
audited results for the year ended 30 September 2017.
WHAT WE DO
LightwaveRF plc ("LightwaveRF" or the "Company") pioneered smart
home automation with the introduction of the market's first
Internet enabled devices in 2008. Today the Company markets a
complete smart home system for lighting, heating and power.
LightwaveRF offers a cloud platform and an extensive range of
retrofitted LightwaveRF designed and manufactured sockets, dimmers,
relays, thermostats, heating, energy, sensing, monitoring and
control devices. These devices are operated by conventional manual
control, handheld remote, smartphone and tablet based apps. The
LightwaveRF system can also be operated using Google Assistant and
Amazon Alexa voice control, is Apple HomeKit compatible and
provides users with dashboards to manage their smart home.
LightwaveRF is dedicated to making everyone's lives easier and
more fulfilled through world leading smart home technology.
FINANCIALS
-- Revenue of GBP3.03 million (2016: GBP1.44 million);
-- Gross profit GBP1.08 million (2016: GBP0.47 million);
-- Gross margin 35.5% (2016: 32.5%);
-- Loss before and after taxation GBP0.85 million (2016: GBP0.84 million);
-- Investment in research and development GBP0.88 million (2016 GBP0.61 million);
-- GBP2.22 million of funds raised during the financial year (2016: GBP0.21 million);
-- Post year end fundraising of GBP4.9 million net of expenses,
strengthening the pro forma unaudited net assets to GBP6.13
million;
-- Our distributor order book exceeded GBP700,000 at current
exchange rates as of 30 November 2017 month end.
HIGHLIGHTS
Technology and Products
-- Completed development of Lightwave Generation 2 technology
which is also Apple HomeKit certified; first devices now
launched;
-- Significant enhancements to cloud capabilities and
integration with Google Assistant voice control for the Google Home
device and for Amazon Alexa.
Marketing
-- Rebranded to "Lightwave";
-- Further brand recognition through press coverage, social
media activity and website traffic.
Sales and Distribution
-- Established a distribution agreement with Exertis for
supplying Apple online and in Apple retail stores in UK;
-- Increasing direct consumer sales.
For further information:
LightwaveRF plc www.lightwaveRF.com
Andrew Pearson, CEO +44 (0) 121 250
Kevin Edwards, CFO 3625
Stockdale Securities Limited +44 (0) 20 7601
Tom Griffiths/Edward Thomas 6100
Yellow Jersey PR www.yellowjerseypr.com
Charles Goodwin/Abena Affum/Katie +44 (0) 7747 788
Bairsto 221
Chairman's statement
I am pleased to be able to report on considerable progress made
by your company during the last year.
Overview
During 2017, revenue more than doubled. We further extended and
developed our UK distribution capability, expanded our direct to
market sales and successfully established a technology and
distribution relationship with Apple. Post year end we also
completed our largest fundraising to date, which saw us add two
major institutional investors to the shareholder list.
We have built on the progress of the previous year with more
market awareness, distribution led sales and through ensuring
Lightwave products and technology continue to develop. In addition,
we have developed our direct sales capability, supported by a
dedicated customer services function. The smart home market is now
becoming more clearly defined, which is helping Lightwave better
communicate its proposition and capability.
Offering access to the Lightwave platform either directly or
through Amazon, Apple and Google as well as the growth of voice
control, opens up many opportunities for the business. The broad
challenge as ever will be to ensure we prioritise our strategic
goals so that we bridge the gap between short term achievements and
the long-term ambition to build a scaled business in the smart home
sector.
We are continuing to strengthen our management and technology
capability. As well as welcoming new chief executive, Andrew
Pearson, to the board in March, we have broadened our teams' skill
sets with the addition of new staff. This is all directed to
putting solid building blocks in place for the much larger business
we aim to create. I would like to take the opportunity to thank our
staff, our suppliers and subcontractors for the effort they have
applied during the year to achieve a further step change for the
business.
Financials
Revenue for the 2017 financial year was GBP3.03 million, more
than double last year (2016: GBP1.44 million). Gross margins
further improved to 35.5% (2016: 32.5%) benefiting from the growth
of direct sales. Administrative expenses were up to GBP2.12 million
(2016: GBP1.49 million) as we spent more on marketing, research and
development. Capitalised development expenditure was GBP0.69
million (2016: GBP0.51 million) in accordance with IAS38,
reflecting the commitment to the development of our Generation 2
technology and devices. The loss before and after tax was GBP0.85
million (2016: GBP0.84 million).
Our balance sheet has now been considerably strengthened through
our post financial year end fundraising, giving a strong and stable
foundation upon which to develop our business. The pro-forma group
statement of equity after this fundraising is as follows:
2017 Net funding
As reported proceeds Pro
GBPm GBPm forma
GBPm
Total shareholders' equity 1.23 4.90 6.13
============= ============ ========
Outlook
Completing a two-year long process of technology development
which has met the exacting criteria of Apple and other major
companies has been a major achievement for a small company. We now
have the funds in place to further strengthen our management
capability, marketing and sales as well as continuing to ensure our
technology remains at the forefront of the smart home
revolution.
We very much look forward to upping the pace of our progress
through 2018.
Barry Gamble
Chairman
Chief Executive's Report
Introduction
2017 has seen strong progress for Lightwave, with advances in,
technology, products, marketing, sales and distribution.
Technology and Products
We design and develop hardware devices and software. Our range
of almost 100 smart home devices now includes the recently launched
Generation 2 which is also a part of the Apple HomeKit offering.
Manufacturing is outsourced to Asia and mainland Europe. Platform
hosting is with cloud based operators. We have continued to grow
our technology team and intend to bring in more talent as we invest
in the further product development necessary to scale the
Company.
As well as completing the development of the Generation 2
technology, launched just a few weeks ago, we also completed
significant enhancements to our cloud-based platform. This included
integration with Google Assistant voice control for the Google Home
device. Consumer uptake of our Amazon Alexa integration has
continued with over 8,000 Lightwave customers now using our Amazon
Alexa "Skill" for voice control.
We have filed a series of patent applications to provide
protection to our technology and plan further filings of new
developments.
Marketing
Our marketing uses consumer oriented messages such as "Your
Home. Smarter". We recently launched a new website under the brand
"Lightwave". In addition to product description and guides, the
website now offers full online ordering. We are now using various
digital marketing techniques to generate direct sales demand, build
market awareness and develop the Lightwave brand. This is supported
by media relations programmes to secure coverage in both specialist
and generalist outlets.
Sales and Distribution
We sell both our Generation 1 and 2 devices primarily through
distribution partners. We have recently added Exertis as a
distributor to enable us to supply Apple, who are retailing our
Generation 2 devices both online and in UK and UAE stores. We will
continue to develop our distribution strategy to ensure we market
our devices effectively and generate increasing demand.
A growing proportion of our sales are being made directly to
consumers. As well as providing another route to market this has
significant benefit for us to fully understand the customer
experience and to be able to directly tap in to their feedback.
Principal risks and uncertainties
The Company is exposed to a variety of risks in the conduct of
its normal business operations. Whilst it is not possible to either
completely record or to quantify every material risk to which the
Group might be exposed, those risks that the directors believe are
most significant to the Group's business and could have a material
impact on future performance, causing it to differ materially from
expected or historic achieved results, are as follows:
Customer concentration and relationships
By increasing the number of distributors, the Company seeks to
mitigate this risk. The increase in direct consumer sales also
reduces reliance on distributors.
Technological risk
The directors recognise that the technology in the Internet of
Things field is evolving rapidly which could pose competitive and
other risks to the Group. The directors continue to evaluate
competitors and changes in the industry to mitigate this risk where
possible. The directors also recognise that the Group faces cyber
threat-based risks. We actively monitor and assess these risks and
undertake a continuous investment programme to seek to prevent
adverse events and to mitigate any unforeseen events.
2017 Results
The revenues for the year more than doubled to GBP3.03 million
(2016: GBP1.44 million) through further stocking by our
distributors and direct consumer sales. Gross profit also more than
doubled to GBP1.08 million (2016: GBP0.47 million) in line with the
increase in revenue. Gross margin rose to 35.5% (2016: 32.5%) with
direct consumer sales starting to make a material contribution. We
recognise the scope to improve margins as we scale operations.
Administrative expenses increased to GBP2.12 million (2016: GBP1.49
million) as the Group invested further in sales, marketing,
research and development. Capitalised development costs under IAS38
increased to GBP0.69 million (2016: GBP0.51 million) driven mostly
by the investment in our Generation 2 technology. As anticipated,
the amortisation of intangible assets increased substantially to
GBP0.3 million (2016: GBP0.1 million) in line with our policy of
amortising as projects reach completion.
Research and development tax credits of GBP0.25 million (2016:
GBP0.21 million) were recognised as other income before stated pre
and post tax losses of GBP0.85 million (2016: GBP0.84 million). As
we achieve financial progress through our increased revenue and
gross profit, we plan to invest more in technology and marketing
for the medium to longer term. Our distributor order book exceeded
GBP700,000 at current exchange rates as of 30 November 2017 month
end. As the smart home market becomes faster moving, we are seeing
shorter lead times for orders and direct consumer sales have no
order component.
Cash absorbed from operations increased to GBP0.89 million
(2016: GBP0.63 million) with inventories up in support of our
direct consumer sales activity. Cash invested, mostly in the
development of our technology increased to GBP0.72 million (2016
GBP0.52 million). Cash balances at 30 September 2017 were
GBP220,000 (2016: GBP2,000) even as we approached the conclusion of
the programme to launch Generation 2 into Apple HomeKit.
The year end balance sheet saw shareholders' equity much
improved to GBP1.22 million (2016: deficit GBP0.17 million) after
the December 2016 fundraising of GBP2.2 million met the cash
outflow from operating losses and the continued investment in
technology. Long and short term loans and borrowings were
substantially reduced to GBP0.59 million (2016: GBP0.99
million).
Key Performance Indicators
The Group monitors revenue, gross margin, operating cash and
also uses the following key indicators to measure the performance
of the business in terms of progress against key strategic
objectives;
2017 2016
Global installations 46,000 40,000
Connected devices 400,000 300,000
Monthly temperature and energy
data points -UK customers 63 million 52 million
Investment in research and development GBPmillion GBPmillion
* Expensed 0.19 0.10
* Capitalised 0.69 0.51
----------- -----------
0.88 0.61
=========== ===========
Strategy
We continue to believe there is an opportunity for a UK Company
that offers a wide and deep range of integrated smart home
solutions to achieve significant scale. The competitive environment
remains broadly the same as it has done for some time, in that
gadgets, single device and single market segment solutions prevail,
while we offer a distinctive, stylish and affordable smart home
experience. During 2018 we will focus on the following key
steps:
-- Undertaking a rolling launch of a comprehensive range of new
Generation 2 devices, from early 2018;
-- Enhancing our recently redesigned app to give our customers
increasing capabilities for the coordination and control of their
smart home;
-- Broadening our cloud platform capabilities with further
integration and interoperability features for non-Lightwave devices
and software;
-- Continue building our marketing function and increase
investment to build our brand, utilising product and customer
focused approaches;
-- Expand our direct sales function, introducing a field based home visit sales team;
-- Add further distributors that complement and extend our distribution capability;
-- Launching an international device range, following an
indication from Apple that they are actively considering offering
our Generation 2 sockets and switches to their online and retail
customer base in 25 European countries.
Outlook
2017 has been a pivotal year for the Group. Having launched
Generation 2 devices into the market we are now moving to pursue
our goal of creating a scaled Company able to compete with the
major brands in the smart home market.
In 2018 we will move to strengthen our management team in
marketing, sales and technology, enhancing the talented group which
has achieved considerable progress to date. We recognise the
ability to retain and attract suitably qualified and experienced
staff will be critical to our success and growth.
Consumer awareness and understanding of the benefits of smart
home technology continues to rise, and our market opportunity is
increasingly large. Our relationship with Apple is a significant
asset that supports our growth in the UK and which should also
allow us to enter international markets efficiently. We look
forward to building a great company in the rapidly growing smart
home market.
Andrew Pearson
Chief executive officer
Consolidated statement of comprehensive income for the year
ended 30 September 2017
Notes 2017 2016
GBP GBP
REVENUE 3,032,268 1,443,091
Cost of sales (1,954,942) (973,737)
GROSS PROFIT 1,077,326 469,354
Other Income 248,000 211,372
Administrative expenses (2,121,559) (1,489,106)
OPERATING LOSS (796,233) (808,380)
Finance expense (49,079) (33,074)
LOSS BEFORE TAXATION (845,312) (841,454)
Taxation - -
LOSS FOR THE YEAR ATTRIBUTABLE
TO EQUITY SHAREHOLDERS OF THE
PARENT (845,312) (841,454)
Other comprehensive income - -
LOSS AND TOTAL COMPREHENSIVE INCOME
ATTRIBUTABLE TO EQUITY SHAREHOLDERS
OF THE PARENT (845,312) (841,454)
============ ============
Loss per share - basic 2 2.39p 4.37p
============ ============
Loss per share - diluted 2 2.39p 4.37p
============ ============
Group statement of financial position as at 30 September
2017
2017 2016
GBP GBP
ASSETS
Non-current assets
Intangible assets 1,210,071 820,094
Property, plant and equipment 25,766 17,094
1,235,837 837,188
============ ============
Current assets
Inventories 388,012 102,527
Trade and other receivables 468,697 319,026
Cash and cash equivalents 221,933 2,116
Corporate tax recoverable 248,000 189,000
1,326,642 612,669
============ ============
Total assets 2,562,479 1,449,857
============ ============
Equity & liabilities
Shareholders equity
Share capital 1,938,452 1,028,737
Share premium 5,462,804 4,153,002
Reverse acquisition reserve (100,616) (100,616)
Share based payment reserve 70,811 51,893
Profit and loss reserve (6,149,899) (5,304,587)
Total shareholders equity 1,221,552 (171,571)
============ ============
Current liabilities
Trade and other payables 752,623 628,460
Loans and borrowings 588,304 787,279
Total current liabilities 1,340,927 1,415,739
============ ============
Non-current liabilities
Loans and borrowings - 205,689
Total non-current liabilities - 205,689
============ ============
Total equity & liabilities 2,562,479 1,449,857
============ ============
Group statement of cash flows for the year ended 30 September
2017
2017 2016
GBP GBP
Cash flow from operating activities
Loss for the year (845,312) (841,454)
Adjusted for:
Depreciation and amortisation 323,121 123,078
Finance expense 49,079 33,074
Share based payments 18,918 28,817
Other income (248,000) (211,372)
Foreign exchange (profit)/ loss
on convertible loan (11,781) 90,911
Increase in inventories (285,485) (102,527)
(Increase)/decrease in trade and
other receivables (149,671) 320,457
Increase/(decrease) in trade and
other payables 124,163 (172,787)
(1,024,968) (731,803)
Research and development tax credits
received 189,000 138,644
Finance costs paid (49,079) (33,074)
Cash absorbed by operations (885,047) (626,233)
============ ============
Cash flows from investing activities
Purchase of property, plant and
equipment (28,533) (4,378)
Deferred development expenditure (693,237) (514,490)
(721,770) (518,868)
============ ============
Cash flows from financing activities
Proceeds from issue of shares 2,361,172 217,248
Costs associated with issue of
shares (141,655) (10,864)
Invoice discounting (repaid)/drawdown (45,450) 53,791
Repayment of convertible loan
note (69,859) (15,394)
Repayment of other loan (277,574) (141,392)
1,826,634 103,389
============ ============
Net increase / (decrease) in cash
and cash equivalents 219,817 (1,041,712)
Cash and cash equivalents at 1
October 2016 2,116 1,043,828
Cash and cash equivalents at 30
September 2017 221,933 2,116
============ ============
Group statement of changes in equity for the year ended 30
September 2017
Share
Issued Reverse Based Retained
Share Share Acquisition Payment Earnings/ Total
Capital Premium Reserve Reserve (Losses) Equity
GBP GBP GBP GBP GBP GBP
As at 1 October
2016 1,028,737 4,153,002 (100,616) 51,893 (5,304,587) (171,571)
Loss for the
year - - - - (845,312) (845,312)
Share based
payments - - - 18,918 - 18,918
Shares issued 909,715 1,455,541 - - - 2,365,256
Share issue
costs - (145,739) - - - (145,739)
As at 30 September
2017 1,938,452 5,462,804 (100,616) 70,811 (6,149,899) 1,221,552
========== ========== ============ ======== ============= ==========
Share
Issued Reverse Based Retained
Share Share Acquisition Payment Earnings/ Total
Capital Premium Reserve Reserve (Losses) Equity
GBP GBP GBP GBP GBP GBP
As at 1 October
2015 943,542 4,031,813 (100,616) 23,076 (4,463,133) 434,682
Loss for the
year - - - - (841,454) (841,454)
Share based
payments - - - 28,817 - 28,817
Shares issued 85,195 132,051 - - - 217,246
Share issue
costs - (10,862) - - - (10,862)
As at 30 September
2016 1,028,737 4,153,002 (100,616) 51,893 (5,304,587) (171,571)
========== ========== ============ ======== ============= ============
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 consolidated financial statements have been prepared on a
historical cost basis.
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 2017.
2017 2016
Numerator
Loss used for calculation of
basic and diluted earnings per
share GBP845,312 GBP841,454
Denominator
Weighted average number of ordinary shares used
for the calculation of basic and diluted EPS 35,343,621 19,272,323
pence pence
Loss per share- basic 2.4 4.4
Loss per share- diluted 2.4 4.4
At 30 September 2017, there were 2,310,000 (2016: 1,010,000) of
potentially issuable shares which are anti-dilutive; such shares
may become dilutive in future periods.
3. POST BALANCE SHEET EVENTS
Since 30 September 2017, the Company has issued shares and
raised funds (net of expenses) through subscriptions, placings and
an open offer as follows:
Shares Issue Amount
issued Price raised
No. GBP
GBP
1 November 2017 -subscription
and placing 12,607,501 0.16 2,017,200
22 November 2017-subscription,
placing and open offer 9,470,198 0.16 1,515,231
13 December 2017-placing 10,725,917 0.16 1,716,147
----------- ------------
32,803,616 5,248,579
Less expenses (344,429)
------------
Net funds raised 4,904,150
Pro forma statement of net assets after these transactions is as
follows:
As at 30 September 2017 shares
in issue and net assets 38,769,031 1,221,562
As at 13 December 2017 revised
shares in issue and net assets 71,572,647 6,125,712
=========== ==========
4. ANNUAL REPORT
A copy of this announcement and the Annual Report from which it
is extracted, will be available on the Company's website
www.lightwaveRF.com. The Annual Report will be posted to
shareholders shortly.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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