TIDMLWRF
RNS Number : 4276A
LightwaveRF PLC
21 January 2020
21 January 2020
LightwaveRF plc
(AIM: LWRF)
Final Results for year ended 30 September 2019
LightwaveRF plc ("LightwaveRF", "Lightwave" or the "Company"),
the leading smart home solutions provider, is pleased to announce
its audited final results for the year ended 30 September 2019.
HIGHLIGHTS
Financials
-- Revenue of GBP4.09 million (2018: GBP2.81 million), up 46%
-- Challenging last quarter with revenue held back mostly due to
working capital and reduced digital marketing spend and revenue
slippage
-- Gross profit GBP1.32 million (2018: GBP0.83 million)
-- Gross margin 32.1% (2018: 29.3%)
-- Loss before and after taxation GBP3.61 million (2018: GBP2.54 million)
-- Investment in research and development GBP1.34 million (2018: GBP1.60 million)
Technology and Products
-- The Lightwave Smart Series technology range launched into the European market
-- Smart Series customers up by threefold
-- Further enhancements with the key voice platforms of Google,
Amazon and Apple and now Samsung
-- Integration of heating products from Honeywell Home by Resideo
-- Manufacturing now focused in Asia and mainland Europe with
prototyping now predominately in-house
Marketing
-- Significant marketing investment with an absolute focus on customer acquisition
-- Major improvements in eCommerce performance
-- End of sale of Connect Series products to focus on Smart Series
Sales and Distribution
-- Further development of four primary sales channels: direct to
consumer, premium retailers, online retailers and trade
-- Lightwave Euro dimmers on sale online and in selected Apple
stores in Belgium, France, Germany, Holland and Sweden
-- Development of Lightwave Pro, trade channel focused sales, marketing and support activity
Outlook
-- Revenue run rate for the first quarter of the 2020 financial
year demonstrates a near return to early FY2019 levels
Jason Elliott, Chief Executive of Lightwave, commented:
"We continue to see a substantial market opportunity for
Lightwave demonstrated by month on month revenue growth for the
first three quarters of the year. Despite revenue being held back
in the final quarter, we are pleased to see that our revenue was up
almost 50% during the year to GBP4.09m, with revenue for Q1 2020
almost returning to levels seen in early 2019. This increase in
sales has been driven in part by our expansion into the
professional channels and improved direct to consumer sales, which
increased our Smart Series customers threefold. We believe that
Lightwave is well positioned to execute in this rapidly developing
market".
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
For further information:
LightwaveRF plc www.lightwaveRF.com
Jason Elliott, CEO +44 (0) 121 250 3625
Kevin Edwards, CFO
Shore Capital www.shorecap.co.uk
Tom Griffiths/David Coaten +44 (0) 207 408 4090
-----------------------
Yellow Jersey PR www.yellowjerseypr.com
Charles Goodwin/Annabel +44 (0) 7747 788
Atkins 221
-----------------------
About LightwaveRF
Lightwave is Europe's leading supplier of installed home
automation technology.
Lightwave products offer convenient automation, control and
monitoring of lighting, heating and power via its app, Apple
HomePod, Amazon Alexa or Google Assistant. Lightwave is also
integrated with Samsung SmartThings and EVO protocols from
Honeywell Home by Resideo.
With market leading quality and wireless range, the modular
system enables users to begin with a small number of devices and
grow over time to easily control an entire property.
Devices are retrofittable using existing standard wiring and are
easy to install. Lightwave also recommends a network of approved,
qualified electricians who have been trained by the Company.
In markets across Europe, Lightwave products can be purchased
from the Company directly or from approved stockists, including
Apple, Amazon, ScrewFix and wholesalers, including Rexel and
CEF.
Lightwave technology can also be specified as a pre-installed
option in newly built properties from Berkeley Homes in partnership
with E.ON Home, Urban Splash and Trivselhus.
Leading tech industry publication 9to5 Mac described Lightwave
as "the best UK HomeKit solution for smart lighting" and Trustpilot
rates Lightwave 'Excellent' with 4.5 stars.
For further information and "Newsletter sign up", please
visit:
www.lightwaverf.com/corporate/
Chairman's statement
Overview
The last year has presented a number of challenges, but
nonetheless further good progress has been made. Underpinning this
is a growing number of enthusiastic and knowledgeable customers who
are highly appreciative of Lightwave products and the technical
support provided to ensure a really good user experience. This is
reflected in customer endorsements on Trustpilot being at 4.5
stars, a rating of excellent.
We have further refined our distribution by working with a
number of partners. We have also successfully developed our direct
to consumer proposition through the website and telesales. The
LightwavePRO initiative of dedicated training courses for
professional electricians is also fast becoming a unique selling
point of the Lightwave business.
Results
During the first three quarters of the financial year, revenue
increased significantly, and this presented a real challenge in the
financing of working capital. We had anticipated being able to
quickly sort this issue, but the resolution took much longer than
anticipated. In particular the board did not foresee the required
publication of a circular to shareholders. I would not
underestimate the considerable amount of board time needed and the
distraction from the day to day business inherent in this process.
This amounted to a significant opportunity cost to your
company.
As a result, progress stalled in the final quarter through a
combination of revenue held back by stock shortages, reduced
digital marketing spend and some associated one-off costs. A
further significant revenue contribution at the end of the
financial year did not materialise, but is still in prospect for
later this calendar year.
Nonetheless, revenue at GBP4.1 million increased by 46% over
last year (2018 GBP2.8 million) with direct to consumer revenue
contributing significantly. The shifting revenue mix and attention
to improving efficiencies is now being seen in improving
margins.
Board and staff
Led by the Chief Executive, the Lightwave team continues to
raise its game. Despite the headwinds experienced in the last part
of the year, the team has continued to deliver, from better design
and product development through to highly attentive customer
support. I would like to thank all staff, specialist contractors
and our key suppliers and partners for their continued commitment
to the success of the company.
The board has been unchanged during the year, but we do plan to
take the opportunity to strengthen and refresh as the business
develops.
Outlook
We continue to see a substantial market opportunity for
Lightwave as currently defined, but also in the wider context of
the need to ensure optimal energy usage in response the the threat
of climate change. Lightwave has without doubt made a lot of
progress this year, has strong relationships with leading
technology and other companies all of which position it well for
further success.
Barry Gamble
Chairman
20 January 2019
Chief Executive's report
Introduction
We made a solid start to 2019 with progressive month on month
revenue growth for the first three quarters of the year. The solid
foundation of high-quality saleable products, meant that investing
in marketing and sales was required to sustain that growth.
The decision made in 2017 to develop, market and distribute the
Lightwave range of products for the European market has continued
to require more resource and take longer than had been earlier
anticipated. Some of the technical refinement required for the
European market has been directly applied to the development of the
UK Smart Series. The wider functionality, higher margin and sheer
saleability of Smart has now prompted us to withdraw the Connect
Series from all of our principal outlets.
Multiple and protracted fundraisings during the year and
securing a stock financing facility which has not worked out in
practice, has made the management of working capital an ongoing
challenge. As a result, revenue was held back in the last quarter
but did still increase for the full year by 46% to GBP4.09 million
(2018 2.81 million).
The specific challenges experienced in the last quarter impacted
revenue. We became out of stock on some of our most popular lines.
Reduced direct sale and e-commerce demand caused by a halt to
digital marketing, directly impacted our e-commerce and direct
sales. The consequent reduction in brand awareness resulted in
stock returns from some retail distribution partners. The
withdrawal of the Connect Series did impact revenue, but we are
confident this was the right decision for the future. Lastly, the
unexpected late delay of an order from a major UK DIY brand of
in-store stock profiles for all their nationwide branches was
delayed. These events equated to a GBP1.5 million shortfall in
revenue.
Managing through all these issues prompted the decision to
review costs and efficiencies across the business. As a result, a
number of actions have now been taken to reduce the underlying cost
base to further improve margins and reduce overheads. So, as we
focus on revenue growth, we are also determined to shorten the
timetable to profitability.
These actions have been followed through further with the
announcement on 18 November 2019 of a wide-ranging strategic review
which is still in process.
Technology and Products
We design and develop a range of smart home products and
software applications to control lighting heating power and
security devices through one App with manufacturing outsourced to
Asia and mainland Europe. Our in-house engineering team now
includes design and 3-D printing capability for prototype
development. So, for products such as the new wire free switch, the
time to market and cost of external prototyping have been reduced
by more than 50%.
Alongside our existing integrations with partner ecosystems such
as Apple HomeKit, Amazon Echo and Google Home, Lightwave now
integrates with Samsung Smart Things. In addition, and in
partnership with Resideo under a unique shared protocol
arrangement, Lightwave links with heating devices from the
Honeywell Home by Resideo range of products.
We have over 10 years of engineering know-how providing us with
an increasing amount of intellectual property. We also have 2
patents filed and 7 patents pending to provide further protection
to our technology.
Marketing
Direct sales from our own website and internal sales team have
increased significantly and are now making a good contribution in
terms of gross margin and cash generation. Much of this is down to
the introduction of the new e-commerce platform driven by Shopify
Plus and the overall effectiveness of marketing led demand creation
for direct sales channels. We continue to target investment in
digital marketing to directly generate sales demand with an
emphasis on consumer messaging and education. This is supported by
comprehensive media relations programs.
Our improved processes and tools to capture and process customer
feedback and to make it easier to give direct reviews has also
brought about real recognition of Lightwave's service and support
offering. Following the introduction of Trustpilot, Lightwave has
achieved an "Excellent" 4.5 Star rating.
Sales and Distribution
We set out this year to focus on four primary sales channels:
direct to consumer via online presence and telesales team; sales
through premium retailers such as Apple; sales through online
retailers such as Amazon and Screwfix; and trade sales focusing on
supply to electrical contractors and installers.
Whilst direct to consumer, online and telesales have proved to
be a significant contributor to total revenue, retail sales have
been less buoyant and have experienced a higher degree of
seasonality. This has prompted more sales and marketing effort to
be diverted to the trade and professional sectors promoted through
Lightwave PRO. This professional accreditation scheme has been
designed to train and support professional electricians and
contractors to specify and install Lightwave products. This is
being augmented through partnerships with national electrical
wholesalers such as Rexel. We continue to support our supply to
Apple UK and European stores in Belgium, France, Germany, Holland
and Sweden as well as Apple online in 22 countries.
2019 Results
Revenue was 46% up on last year at GBP4.09 million (2018 GBP2.81
million). The strong performance in the first half of the year did
continue but not through into the last quarter.
For the full year 51.5% of total sales (2018 44.1%) came from
direct sales.
Gross profit increased significantly to GBP1.32 million (2018:
GBP0.83 million). Gross margin increased to 32.1 % (2018: 29.3 %).
The gross margin was held back by the decisions to clear the
Connect Series range and through the Increased costs of initial UK
manufacture of the European Smart Series products.
Administrative expenses increased substantially to GBP5.36
million (2018 GBP3.74 million) with a greater commitment to
marketing and sales in particular in the recruitment of key staff.
Capitalised development costs under IAS 38 reduced to GBP1.18
million (GBP1.47 million). Whilst this is lower than the previous
year, it is still significantly higher than expected due to the
complex nature of further development of the Smart Series
technology specifically for the European market. As expected, the
related amortisation of these intangible assets increased to
GBP0.79 million (GBP0.61 million). As identified last year, we do
believe a longer-term view can properly be taken on amortisation
periods, and as such, have decided to extend the life of the
platform assets from three to five years for new additions in the
last two years.
During the year the directors raised an impairment provision in
the Parent company of GBP10.1 million against the intercompany loan
following a review. This does not impact the group accounts.
Research and development tax credits of GBP0.47 million (2018
GBP0.41 million) were recognised as other income before stated
pre-and post-tax losses of GBP3.61 million (2018 GBP2.54 million).
On 6 November 2019, the Company drew down a GBP352,628 loan secured
against and repayable from research and development tax credits
receivable.
Although the loss increased, cash absorbed by operations
decreased significantly to GBP1.94 million (2018 GBP2.95 million).
The increased demand for working capital resulting from the
substantial increase in revenue was mitigated through reduced
inventories and debtors while we made further reliance on
creditors. Cash invested, almost all in the further development of
our technology, reduced slightly to GBP1.49 million (2018 GBP1.53
million). Cash balances at 30 September 2019 were GBP0.48 million
(GBP0.47 million).
New IFRS
During the year, the Group and Parent Company implemented IFRS 9
- Financial instruments and IFRS 15 - Revenue from contracts with
customers. There has been no impact on the Group's financial
statements due to these new standards being implemented. Please
refer to note 1b ii for more details on the new standards.
There are no other new standards, interpretations and amendments
expected to have an effect on the Company's or Group's future
financial statements.
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:
2019 Target 2018 Target
New Smart Series Customers 5,742 7,236 3,618 5,000
New smart devices deployed 50,180 60,000 22,467 25,000
Monthly temperature and energy
data - millions 100 100 61 50
The board monitors growth in the customer and device base as
this is a strategic measure of the adoption of Lightwave
products.
Investment in research and development:
2019 2018
GBP million GBP million
* Expensed 0.16 0.13
* Capitalised 1.18 1.47
------------ ------------
1.34 1.60
------------ ------------
Principal risks and uncertainties
The Company is exposed to a variety of risks in the conduct of
normal business operations. Whilst it is not possible to either
completely record or to quantify every material risk, our aim is to
continually improve the management of risks and reduce them to
acceptable levels. The Company continues to develop and maintain
management systems to enable the identification, assessment and
management of risks and make decisions based on a comprehensive
view of the reward-to-risk balance.
The level of risk control is balanced by the continued
encouragement of enterprise and innovation.
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:
i) Customer concentration and relationships
As a growing company in a very fast evolving field the Group
understand that one of the key risks is not being able to be
noticed by the customers over the other products in the market. By
increasing the number of distributors, the Group seeks to mitigate
this risk. The increase in direct consumer sales also reduces
reliance on distributors. The Lightwave Pro training program
further mitigates this risk.
ii) 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.
iii) Brexit
Brexit presents additional risks for the Group: the uncertain
economic conditions impacting its ability to grow and the specific
risks to tariffs, shipping delays and foreign currency fluctuations
are all in consideration. The minimal amount of product purchased
from Europe may result in additional tariffs but as this represents
only a small amount of products purchased the effect is not
expected to result in a major impact in this area. The general
uncertainty surrounding Brexit makes it difficult to take any
mitigating steps currently, but the Group will work to mitigate the
impact of trading issues arising from Brexit when these are
known.
Strategy and business model
Our business model is based on developing innovative technology
so as to generate revenue from making and selling devices operating
on the platform and with other systems, corporate partnerships and
data management. The key challenge remains the prioritisation of
opportunities so that the management team operates within
acceptable bandwidth.
Lightwave has the very real prospect of achieving significant UK
and international scale, and becoming a leading smart home brand.
Lightwave is at the heart of the market where we are continuing to
educate the consumer about the benefits of smart home products,
with a unique capability that provides consumers with not only a
world class smart lighting, power and heating control solution, but
also the ability to get the most from their other smart home
purchases by integrating them with Lightwave products.
Our plan now is to continue our drive into the smart home market
by significantly increasing the resources deployed on our sales and
marketing efforts. This will be undertaken whilst strengthening
business processes to support the growth that we now anticipate.
The key elements of this plan are as follows:
Technology
-- Further develop our customer focused product strategy,
ensuring that our developments and product releases are aligned
with customer needs.
Marketing
-- Invest heavily in our marketing and key campaign activity
increasing investment to build our brand, utilising product and
customer focused approaches; and
-- Increase awareness of our international device range, through
well-established European distribution channels.
Sales
-- Expand our direct sales function, focusing not only on
inbound sales but outbound customer acquisition;
-- Invest in sales capability and expertise in key vertical
markets such as homebuilders and energy retailers;
-- Manage our distribution partners better and ensure that we
satisfy the needs of the end customer; and
-- Build on our enhanced eCommerce platform ensuring that we
give a world class online customer experience.
Business processes
-- Improve our business support systems to enable seamless and sustainable business growth.
Outlook
Supported by an appropriate level of investment and the ability
for senior management to fully focus on value-added business
management, Lightwave is well positioned to execute in this rapidly
developing market. Our alignment towards the professional channels
of electrical installers, contractors and selected wholesalers
through Lightwave PRO, will work seamlessly with our internal sales
team and our eCommerce platform. The ability for Lightwave's
products to be professionally installed by qualified electricians
is already proving appealing to both the end consumer, the
electrical installer, and our wholesale stockist partners
alike.
On behalf of the board
Jason Elliott
Chief executive officer
20 January 2020
Consolidated statement of comprehensive income
for the year ended 30 September 2019
Notes 2019 2018
GBP GBP
REVENUE 2 4,094,299 2,813,997
Cost of sales (2,779,002) (1,988,426)
GROSS PROFIT 1,315,297 825,571
Other Income 4 472,171 410,848
Administrative expenses 3 (5,386,155) (3,767,583)
OPERATING LOSS 3 (3,598,687) (2,531,164)
Finance expense 6 (12,275) (13,486)
LOSS BEFORE TAXATION (3,610,962) (2,544,650)
Taxation 7 - -
LOSS FOR THE YEAR (3,610,962) (2,544,650)
Other comprehensive income - -
LOSS AND TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE
TO EQUITY SHAREHOLDERS OF THE PARENT (3,610,962) (2,544,650)
=============== ===============
Loss per share - basic 8 3.48p 3.80p
=============== ===============
Loss per share - diluted 8 3.48p 3.80p
=============== ===============
Group statement of financial position
as at 30 September 2019
Notes 2019 2018
GBP GBP
ASSETS
Non-current assets
Intangible assets 10 2,453,516 2,070,485
Property, plant and equipment 11 293,005 50,132
2,746,521 2,120,617
============= ===============
Current assets
Inventories 13 908,937 992,991
Trade and other receivables 12 346,448 677,887
Cash and cash equivalents 18 476,733 469,550
Corporate tax recoverable 470,171 410,848
2,202,289 2,551,276
============= ===============
Total assets 4,948,810 4,671,893
============= ===============
Equity & liabilities
Shareholders equity
Share capital 21 6,040,941 3,578,632
Share premium 21 9,720,540 8,726,774
Reverse acquisition reserve 21 (100,616) (100,616)
Share based payment reserve 21 81,295 88,340
Profit and loss account 21 (12,305,511) (8,694,549)
Total shareholders equity 3,436,649 3,598,581
============= ===============
Current liabilities
Trade and other payables 14 1,041,426 615,860
Loans and borrowings 14 412,017 423,892
Total current liabilities 1,453,443 1,039,752
============= ===============
Provisions
Warranty provision 15 58,718 33,560
============= ===============
Total equity & liabilities 4,948,810 4,671,893
============= ===============
The Financial Statements were approved and authorised for issue
by the Board of Directors on 20 January 2020 and were signed on its
behalf by:
Jason Elliott Kevin Edwards
Chief executive officer Chief financial officer
Group statement of cashflows
for the year ended 30 September 2019
Notes 2019 2018
GBP GBP
Cash flow from operating activities
Loss for the year (3,610,962) (2,544,650)
Adjusted for:
Depreciation and amortisation 868,147 646,849
Finance expense 12,275 13,486
Share based payments (7,045) 17,529
Other income (470,171) (412,794)
Decrease/(Increase) in inventories 84,054 (604,979)
Decrease/(Increase) in trade and other receivables 331,439 (194,140)
Increase /(Decrease) in trade and other
payables 450,724 (118,253)
------------- ------------
(2,341,539) (3,196,952)
Research and development tax credits received 410,848 249,946
Finance costs paid (12,275) (13,486)
Cash absorbed by operations (1,942,966) (2,960,492)
============= ============
Cash flows from investing activities
Purchase of property, plant and equipment (316,346) (59,905)
Development expenditure made in the year (1,177,705) (1,471,724)
(1,494,051) (1,531,629)
============= ============
Cash flows from financing activities
Proceeds from issue of shares 3,948,824 5,248,579
Costs associated with issue of shares (492,749) (344,429)
Invoice discounting repaid - (8,341)
Repayment of convertible loan note (15,784) (49,975)
Repayment of other loan - (120,115)
3,440,291 4,725,719
============= ============
Net increase in cash and cash equivalents 3,274 233,598
Effective of exchange rate changes 3,909 14,019
Cash and cash equivalents as at the beginning
of the year 469,550 221,933
Cash and cash equivalents as at the end
of the year 18 476,733 469,550
============= ============
Group statement of changes in equity
for the year ended 30 September 2019
Share
Issued Reverse Based Profit
Share Share Acquisition Payment and loss Total
Capital Premium Reserve Reserve Account Equity
GBP GBP GBP GBP GBP GBP
As at 1 October
2018 3,578,632 8,726,774 (100,616) 88,340 (8,694,549) 3,598,581
Comprehensive
income for the
year
Loss for the
year - - - - (3,610,962) (3,610,962)
---------- --------------- ------------ -------- ------------------------ ------------
Total comprehensive
expense for the
year - - - - (3,610,962) (3,610,962)
---------- --------------- ------------ -------- ------------------------ ------------
Contributions
by and distributions
to owners
Share based payments - - - (7,045) - (7,045)
Shares issued 2,462,309 1,486,515 - - - 3,948,824
Share issue
costs - (492,749) - - - (492,749)
---------- --------------- ------------ -------- ------------------------ ------------
Total Contributions
by and distributions
to owners 2,462,309 993,766 - (7,045) - 3,449,030
As at 30 September
2019 6,040,941 9,720,540 (100,616) 81,295 (12,305,511) 3,436,649
========== =============== ============ ======== ======================== ============
Share
Issued Reverse Based Profit
Share Share Acquisition Payment and loss Total
Capital Premium Reserve Reserve Account Equity
GBP GBP GBP GBP GBP GBP
As at 1 October
2017 1,938,452 5,462,804 (100,616) 70,811 (6,149,899) 1,221,552
Comprehensive
income for the
year
Loss for the
year - - - - (2,544,650) (2,544,650)
---------- --------------- ------------ -------- ------------------------ ------------
Total comprehensive
expense for the
year - - - - (2,544,650) (2,544,650)
Contributions
by and distributions
to owners
Share based payments - - - 17,529 - 17,529
Shares issued 1,640,180 3,608,399 - - - 5,248,579
Share issue
costs - (344,429) - - - (344,429)
---------- --------------- ------------ -------- ------------------------ ------------
Total Contributions
by and distributions
to owners 1,640,180 3,263,970 - 17,529 - 4,921,679
As at 30 September
2018 3,578,632 8,726,774 (100,616) 88,340 (8,694,549) 3,598,581
========== =============== ============ ======== ======================== ============
1. ACCOUNTING POLICIES
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.
New Standards
A number of new standards and amendments to existing standards
have been published which are mandatory and are effective for the
year ended 30 September 2019. The Directors do not anticipate that
the adoption of these revised standards and interpretations will
have a significant impact on the figures included in the financial
statements in the period of initial application other than the
following:
IFRS 9 Financial Instruments
The standard is effective for periods beginning on or after 1
January 2018.
The standard makes substantial changes to the measurement of
financial assets and financial liabilities. There will only be
three categories of financial assets whereby financial assets are
recognised at either fair value through profit and loss, fair value
through other comprehensive income or measured at amortised cost.
On adoption of the standard, the Group will have to re-determine
the classification of its financial assets based on the business
model for each category of financial asset. This is not considered
likely to give rise to any significant adjustments other than
reclassifications.
Most financial liabilities including the convertible loans will
continue to be carried at amortised cost and therefore there has
not been any additional impact on these financial statements
following the adoption of the new accounting standard in the 2019
financial year.
IFRS 15 - Revenue from contracts with customers
The standard has been developed to provide a comprehensive set
of principles in presenting the nature, amount, timing and
uncertainty of revenue and cash flows arising from a contract with
a customer. The standard is based around the following steps in
recognising revenue:
1. Identify the contract with the customer;
2. Identify the performance obligations in the contract;
3. Determine the transaction price;
4. Allocate the transaction price; and
5. Recognise revenue when a performance obligation is
satisfied.
On application of the standard the disclosures have increased in
the financial statements. The standard includes principles on
disclosing the nature, amount, timing and uncertainty of revenue
and cash flows arising from contracts with customers, by providing
qualitative and quantitative information.
The standard is effective for periods beginning on or after 1
January 2018. It was endorsed by the EU in September 2017.
There has not been additional impact on these financial
statements following the adoption of the new accounting standard in
the 2019 financial year.
New Standards mandatory, but not effective for the year ended 30
September 2019
IFRS 16 - Leases
The standard is effective for periods beginning on or after 1
January 2019, (and can be applied before that date if the Company
also applies IFRS 15 revenue from Contracts with Customers). IFRS
16 eliminates the classification of leases as either operating
leases or finance leases for a lessee. Instead all leases are
treated in a similar way to finance leases applying IAS 17. Leases
are 'capitalised' by recognising the present value of the lease
payments and showing them either as lease assets (right-of-use
assets) or together with property, plant and equipment. If lease
payments are made over time, a company also recognises a financial
liability representing its obligation to make future lease
payments. IFRS 16 replaces the typical straight-line operating
lease expense for those leases applying IAS 17 with a depreciation
charge for lease assets (included within operating costs) and an
interest expense on lease liabilities (included within finance
costs). The Directors are still assessing the impact of adopting
the new standard and conclusions regarding the practical expedients
to be used when the standard is adopted.
Going concern
The Directors, having made suitable enquiries, analysis and
judgements, consider that the Group has adequate resources to
continue in business for at least 12 months from the date of
approval of these financial statements. For this reason, the
Directors continue to adopt the going concern basis in preparing
the financial statements.
In making this assessment the Board has considered the Group
budgets, routinely updated forward forecasts for revenue, costs and
cash flow and applied sensitivities thereto, which show that the
Group will require additional funding. In addition, it has also
considered the availability of, and access to, debt and equity
finance. Committed Capital Limited, which holds 36.98% of the
Parent Company's issued share capital directly through its Nominee
entities and controls 37.84% through the Committed Capital Concert
Party, has also confirmed its continued willingness to invest the
additional capital into the Parent Company that is required
in-order to fulfill its strategy, although this support is not
legally binding could invest a further 12% in the Group. The Board
have started a Strategic review and have factored the raising of
further required capital into its plan to continue operating as a
going concern and to follow its current strategy.
The Directors recognise that there must be material uncertainty
regarding their going concern assessment. Inter alia there is no
legally binding commitment from the major shareholder. Although
this may cast significant doubt on the ability to continue as a
going concern for a period of at least twelve months from the date
of approval of these financial statements, the Directors are
continuing to actively pursue a number of funding options.
2. REVENUE
Operating segments are identified in a manner consistent with
the internal reporting provided to the Chief operating decision
maker, identified as the Chief executive officer. The Directors
consider that the Group has only one operating segment which is the
one principal activity of the Group.
Geographical analysis of revenue is as follows:
Group Group
2019 2018
GBP GBP
United Kingdom 3,515,508 2,764,612
Middle East - 49,385
Rest of Europe 578,791 -
4,094,299 2,813,997
========== ==================
Revenues of GBP855,323 related to one distributor customer
(2018: GBP625,922).
Channel analysis of revenue is as follows:
Group Group
2019 2018
GBP GBP
Direct 2,107,187 1,240,526
Distribution 1,379,918 1,206,526
Trade 607,194 366,945
4,094,299 2,813,997
=========== ===========
3. OTHER INCOME
Group Group
2019 2018
GBP GBP
Apprentice grant receivable 2,000 -
Research and development tax credits receivable 470,171 410,848
472,171 410,848
======== ========
4. 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 2019.
2019 2018
Numerator
Loss used for calculation of basic and diluted GBP3,610,962 GBP2,544,650
earnings per share
Denominator
Weighted average number of ordinary shares
used for the calculation of basic and diluted
EPS 103,813,479 66,952,179
pence pence
Loss per share- basic 3.48 3.80
Loss per share- diluted 3.48 3.80
At 30 September 2019, there were 5,494,000 (2018: 3,954,000) of
potentially issuable shares which are anti-dilutive; such shares
may become dilutive in future periods.
5. POST BALANCE SHEET EVENTS
Since the financial year end, on 6 November 2019, the Company
has drawn down a GBP352,628 loan secured against and repayable from
research and development tax credits receivable. This loan is
secured by a fixed and floating charge over the Company's assets
and carries an interest rate of 1.5% per month. It is expected that
the loan will be repaid by the end of February 2020.
The Directors have also started a strategic review process in
order to find additional finance from a financial or larger
corporate partner in order to support the Board's growth plan. This
was announced on 18 November 2019.
Since 30 September 2019, the Company has issued shares and
raised funds (net of expenses) through subscription as follows:
Shares Issue Amount
issued Price raised
No. GBP GBP
9 October 2019 1,121,437 0.07 78,500
31 October 2019 698,515 0.07 48,896
13 December 2019 944,680 0.07 66,128
---------- ------------
2,764,632 193,524
Less expenses (9,676)
------------
183,848
------------
The unaudited pro forma net assets of the Company after these
transactions is as follows:
As at 20 January 2020 revised shares
in issue and net assets 123,583,446 3,620,497
============ ==========
6. ANNUAL REPORT
A copy of this announcement is available, and the Annual Report
from which it is extracted will be available later today, on the
Company's website www.lightwaveRF.com. The Annual Report will be
posted to shareholders shortly.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR UAVVRRKUAURR
(END) Dow Jones Newswires
January 21, 2020 02:01 ET (07:01 GMT)
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