TIDMHIW
RNS Number : 7733W
Hiwave Technologies PLC
31 January 2013
31 January 2013
HIWAVE TECHNOLOGIES PLC
FINAL RESULTS FOR THE 12 MONTHS
ENDED 30 SEPTEMBER 2012
HiWave Technologies plc ("HiWave", the "Company" or the "Group")
today announces its audited results for the 12-month period ended
30 September 2012.
The Company currently owns two subsidiary trading entities being
HiWave Technologies (UK) Limited and HiWave Technologies (Hong
Kong) Limited. These companies develop and sell products, as
electronic components and sub-assemblies that enable designers of
consumer electronic devices to create enhanced user appeal for
their own products. These HiWave solutions raise the level of human
interaction with electronic devices through their application of
innovative sound and touch technologies. This is achieved through a
distinctive combination of intellectual property spanning control
electronics, physical components and an exceptional understanding
of bending wave physics.
KEY POINTS:
-- The Company is currently undertaking the sale of its trading
business and has secured a loan facility of up to GBP700k to ensure
the Company is properly funded through this process
-- The Board continues to review the performance of its
subsidiaries (to the point of sale) with the intention of achieving
the best value for shareholders
-- Turnover GBP1.2m (2011: GBP2.0m)
-- Component sales GBP0.7m (2011: GBP0.9m)
-- Loss before Financing income / costs GBP3.3m (2011: GBP3.9m)
Executive Chairman, David Calderwood, commented:
"Following the actions taken during the year by the Board and
the very encouraging progress made in technology innovations and
design wins momentum, the trading businesses continue to
strengthen. The Board believes that without the cost overhead of a
Plc and with a degree of restructuring afforded by a new owner they
can, in whole or in part, be a profitable business or businesses,
which enjoy significant market opportunities.
"The outlook for the Plc is strongly dependent on the
restructuring and the outcome of the sales process, which is
underway. We will make appropriate announcements going forward with
regard to our strategic plan in line with results achieved."
FOR FURTHER INFORMATION PLEASE CONTACT:
HiWave
David Calderwood, Executive Chairman
James Lewis, Chief Executive Officer +44 (0)1223 597800
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First Columbus
Chris Crawford +44 (0)203 002 2070
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FTI Consulting
Sophie McMillan
Clare Thomas
Jessica Liebmann +44 (0)207 831 3113
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Chairman's Statement
STRATEGY AND OBJECTIVES
The Board continues to review the performance of its
subsidiaries with the intention of achieving the best value for
shareholders, based on the current commercial status of our trading
companies, market opportunity, and availability of financial
resource.
For the past twenty years, HiWave has been focused on the
development and commercialisation of a significant number of
leading audio products. These products are currently being sold to
numerous major global companies, which is testament to the quality
of our technology. Despite this however, the Company has to date
failed to deliver profit despite significant investment by its
shareholders. It is the view of the Board that the cycle of raising
new capital every two years or so, to take the Company to a new
commercial event horizon is inappropriate, impractical, and
unachievable in current market conditions and a revised strategy
must be pursued. The core of that strategy is that all future
growth and development of the Group must be able to be resourced
internally, with the exception of potential acquisition of
profitable enterprises. Assisted by our advisers, we have conducted
a strategic review and have concluded that the trading entities
HiWave Technologies (UK) Limited and HiWave (Hong Kong) Limited are
still in technology development and early market stages that demand
funding, and therefore not currently large enough or financially
strong enough to sustain the overheads of a public limited Company.
On this basis the Board believes that their future should lie
outside of the Group.
The Board believes that the operating companies have significant
inherent value. We have a number of options and choices as to how
best to exploit that value in the best interests of shareholders.
These have been filtered down to a shortlist of two main options
for decision:
1. the sale of part of the business to self-fund the rest, with
future growth intended to be achieved organically and/or via
complementary acquisition(s); or
2. the sale of all the current trading businesses, and either
the establishment of a healthy plc "cash shell" and the building of
a new, larger profitable trading entity based on a strategic
acquisition or acquisitions, or the return of cash to
shareholders.
Based on the outcome of the strategic review, input from
advisers and consultation with interested parties, the Board has
decided to pursue option 2 - the sale of all operating subsidiaries
and the establishment of a new corporate growth model in preference
to but not to the exclusion of remaining open to option 1.
To this end, the Company has published an Information Memorandum
and initiated a sales process for its subsidiaries.
With regard to the activities of the trading companies, as
reported last year, the core of the new business model for them is
now in place. I am happy to report that we have achieved effective
re-negotiation of significant impeding legacy agreements between
the operating companies and third parties, so that the operating
companies now have freedom to fully exploit their intellectual
property and maximise their global potential. Control of all
relevant intellectual property rights is now held in-house. This
reorganisation had a major negative impact on cash consumption.
Patents, and patent maintenance costs continue to be a major
factor, and this is kept under continuous review to ensure that all
expenditure is relevant and proportionate to future value.
During the period, HiWave Technologies (UK) Limited launched 12
products or reference designs in its product groups (2011: 10).
HiWave Technologies (UK) Limited currently has plans to launch ten
new products in the audio sector and three products in the haptics
sector in 2013.
YEAR IN REVIEW
The 12-month period from 1 October 2011 to 30 September 2012 has
been a watershed for the Company. The delivery of the new business
model for the operating subsidiaries has continued apace and has
achieved almost all the required milestones. However, despite a
first class effort by staff and management, in a recessional market
with depressed consumer product spend, progress has been slower
than satisfactory.
This shortfall in commercial performance at the operating level
is being specifically addressed, in addition to strategic measures
at group level. Key indicators from customers show that depressed
sales have resulted from slippage in their product sales plans and
that they still foresee a period of catch-up as the general market
improves.
Management changes
Following the departure of David Bramwell in January 2012 and a
number of months where Chief Executive Officer James Lewis took on
the role of Chairman on a temporary basis in order to secure the
best available replacement, I was appointed to the role of Chairman
on 31 May 2012, having been a non-executive director ("NED") from 2
April 2012. James Lewis remains CEO, reporting to the Board through
myself. These new arrangements mark a significant change for the
Group, freeing up the CEO to focus on key technical, operational
and commercial matters while I focus on governance, investor
relations and Group strategic planning. Cash and cost control have
become fundamental, and a new business model was developed to
ensure the future of the Company and the Group. Shortly after this,
Kate Barnes, former Chief Financial Officer, chose to leave to
explore new challenges.
By way of additional support for the Company, David McIntosh and
Graham Searle joined Clive Mayne as non -executive directors on 13
August 2012. Graham and David each possess experience and skills
relevant to a company quoted on the London Stock Exchange, and have
advised on the task of planning for delivery of returns to
shareholders. I believe that HiWave Technologies plc now has a
complete and capable Board able to give full support to the CEO and
to take sound, hard and necessary decisions.
Business overview
At the operating company level, product with strong commercial
pull has been developed and released to market, sales activity has
been intensified and the design win pipeline has been strengthened.
Significant progress has been made in the commercialisation of
haptic technology with a second joint development contract won in
the latter part of the year following an initial win in the summer
with a Tier 1 automotive electronics provider, underpinning future
commercially fruitful performance with this technology and these
customers. Unfortunately, as mentioned in our mid-year statement,
our largest potential contract of the year, with a major global
company, fell away at the last minute due to customer business
considerations outside of our control. However, similar potential
projects with other customers remain live and are developing. The
nature of new haptic technology, in contrast to the more mature
audio model, involves an inevitably longer sales cycle and a
requirement for more design support up-front; but this is offset
both by a much larger potential market size and by the positive
long-term implications of design-in wins.
During the year HiWave Technologies (UK) Limited introduced to
the market a number of new components, platforms and reference
designs, including a new family of Balanced Mode Radiators
("BMRs"), amplifier modules utilising the Audium chip, a haptics
platform for white goods touch panel applications and a unique
non-occluding earpiece platform. The new BMRs are larger than
previous models and deliver higher sound levels at a lower cost
thanks to the use of a ferrite magnet rather than the expensive
neodymium magnet used in previous BMRs. The Audium chip has been
designed into reference designs to ease customers' engineering
tasks, and also into a Bluetooth wireless audio module aimed at
direct customer sales during 2013. The white goods haptics platform
is a demonstration and development environment that enables
appliance manufacturers to evaluate how to best incorporate haptics
into their products to enhance the user experience. The
non-occluding headset platform shows how bending waves can be
launched into the human ear by external excitation of the cartilage
to deliver audio without blocking external sounds. This is an
important user safety enhancement for media player listening, as
well as opening up new applications such as immersive 3D
multi-player gaming. Additionally the HiWave Audium amplifier chip
has recently been chosen by Cypress Semiconductors for the world's
first 'Lightning' dock reference design supporting Apple's new
connector on iPhone5 and iPad Mini. Cypress is already a dominant
supplier in that market. The new reference design will be built in
Asia and offered to major audio brands world-wide.
At the end of a challenging year, the progress of these and
other HiWave technology innovations has been encouraging. A
progression of successful design wins has been achieved,
illustrating that HiWave is building on its early engagements with
smaller early adopter companies and extending its success into
larger brand name customers with global market reach.
FINANCIAL HIGHLIGHTS
12 months 15 months Percentage
to to
GBP'000 30 September 30 September change
2012 2011
------------------------------------ ------------- ------------- -----------
Revenue
Component sales 666 874 (24%)
Royalties 476 945 (50%)
Licences and other 83 175 (53%)
------------------------------------ ------------- ------------- -----------
Total revenue 1,225 1,994 (39%)
------------------------------------ ------------- ------------- -----------
Underlying adjusted operating loss
for the period (1) (2,971) (3,016) 1%
------------------------------------ ------------- ------------- -----------
1Underlying adjusted operating loss is loss before depreciation,
amortisation, interest and restructuring costs. Loss before
Financing Income/Costs was GBP3,295,000 (2011: GBP3,895,000).
COMPONENT SALES THROUGHOUT THE PERIOD
6 months to 6 months to
30 September
GBP'000 31 March 2012 2012
---------------- ------------- ------------
Component sales 267 399
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RESULTS
Sales for the 12 months to 30 September 2012 were GBP1.2m (15
months ended 30 June 2011: GBP2.0m). Like for like comparison of
sales would be inappropriate, as the business model has changed
completely, however, it should be noted that the proportion of
sales from component sales has increased to 54% (15 months ended 30
September 2011: 43%). Component sales have decreased, from GBP0.9m
in the 15 months to 30 September 2011, to GBP0.7m in the 12 months
to 30 September 2012, however the gross profit margin on component
sales has increased to 37% (2011: 31%). The order book for
component sales was GBP0.2m at the period end (2011: GBP0.3m).
Operating efficiency and cost reductions continue to be a
central theme. Although there have been cost reductions in
appropriate areas, there have also been unavoidable overspends, IP
and professional fees relating to fundraising and intellectual
property maintenance, accounting for the majority of the
difference. In general we have increased our overall
productivity.
A loan facility of up to GBP700,000 has been put in place with
GBP350,000 being contingent on the sale of assets and this combined
with stronger sales should give us sufficient working capital to
progress the conclusions of the strategic review. The Group has
drawn down on GBP350,000 of the bridging facility in December
2012
Basic and fully diluted loss per share was 0.7p for the 12 month
period compared to 0.9p for the 15 month period to 30 September
2011. The Board is not recommending a dividend (15 months ended 30
September 2011: GBPnil).
PEOPLE
Historically HiWave has viewed itself as a single commercial
entity, without a clear differentiation of Plc Board function where
the Plc Board is an investor on behalf of the shareholders in the
trading businesses that the Plc owns. This differentiation is now
central to Board strategy going forward.
Since my appointment as Chairman in April, a complete
reorganisation of the Board has taken place. I believe that the
Company now has a Board of seniority and experience to rely on.
Kate Barnes (CFO) chose to leave to explore new challenges in June
and a replacement CFO has not been sought. Instead, Financial
Controller and CFO-designate Nimrata Boora has taken her
responsibilities in hand.
OUTLOOK
Following the actions taken during the year by the Board and the
very encouraging progress made in technology innovations and design
wins, the trading businesses continue to strengthen. The Board
believes that without the cost overhead of a Plc and with a degree
of restructuring afforded by a new owner the trading business can,
in whole or in part, be a profitable business or businesses, which
enjoy significant market opportunities.
The outlook for the Plc is strongly dependent on the
restructuring and the outcome of the sales process, which is
underway. We will make appropriate announcements going forward with
regard to our strategic plan in line with results achieved.
Mr David Calderwood
Chairman
Business Review
Review of HiWave Technologies plc
During the majority of the trading year, the principle of
management of the Group has been to treat the trading subsidiaries
as integral to the management of the business of the Company. This
is a historical view and has been consistent with the history of
the Company. Following a review in the second half of the year a
clear distinction has now been made between the Plc, as an
investing owner, and its trading subsidiary companies. This has
assisted the Plc Board in its critical assessment of the competency
and value of these entities.
The subsidiary companies HiWave (Hong Kong) Limited and HiWave
Technologies (UK) Limited trade together and as such are reviewed
below as the "Group's business".
HiWave Technologies plc plans to realise the value of the Group,
without external funding, by the sale of assets. It will then
evaluate the options that may be available to it as a cash shell.
Such options may include a return of value to shareholders or
alternatively an expansion of the Group by the acquisition of other
businesses. The Board believes there is significant opportunity in
the current market to do this in a relatively short period. This
activity is contingent on the current sales process and a further
up-date of our strategic plan will be announced following
disposals.
In the light of the sales exercise currently underway, referred
to in the Chairman's Statement, the Board has reviewed the carrying
value of the subsidiary investments. The Board has considered the
anticipated proceeds of such a sale, and has determined the
recoverable amount to be GBP10m (2011: NBV GBP38m). This figure is
as good an estimate as is possible in the current situation. It is
based on early indications of interest, and the Board's
understanding of the Group's IP valuation. There is a material
uncertainty around the recoverable amount.
Review of operations
HiWave has succeeded in increasing the number of customers who
are placing production orders for its components following a period
of comprehensive design-in support provided by the Company's
commercial and technical staff. With its limited resource the
Company has had to balance its prioritisation of supporting engaged
customers through an often-lengthy design cycle, and prospecting
for new customers or developing new technology and components.
Nevertheless a remarkable level of productivity has been achieved
by the small team.
The Company has announced design wins with a number of
customers: AQ Audio has launched a portable Airplay speaker that
was judged to be the best portable speaker reviewed by The
Independent newspaper in October, and better than offerings from
Bose and Nokia. It uses BMRs and the Audium amplifier. Hercules
launched wireless speakers using the Audium amplifier, and Creative
launched USB speakers using the same chip. Exciters have been
designed into products branded by Mattel and Disney, and recently
Boston Acoustics has launched surround sound speakers using BMRs.
This progression of successful design wins illustrates that HiWave
is building on its early engagements with smaller 'early adopter
companies' and is extending its success into larger brand name
customers. Additionally the HiWave Audium amplifier chip has
recently been chosen by Cypress Semiconductors for the world's
first 'Lightning' dock reference design supporting Apple's new
connector on iPhone5 and iPad Mini. Cypress is already a dominant
supplier in that market. The new
reference design will be built in Asia and offered to major
audio brands world-wide.
HiWave has continued to protect its core IP through maintenance
of its patent portfolio, and has filed new patents in areas that it
considers key for future exploitation. The Company has responded to
enquiries from major brands who are unwilling to enter into
non-disclosure agreements by patenting developments before entering
into discussions in order to defend itself from IP 'leakage'.
HiWave continues to generate revenue from key licensing
agreements, and has also embarked on a joint development agreement
with a tier 1 automotive supplier. The initial programme for an
evaluation platform for an automotive application was completed on
schedule, and a second more extensive joint development programme
has been successfully negotiated with the same company and is
progressing well. One other substantial joint development agreement
is under negotiation, with other potential customers in the early
stages of discussions. The background to such agreements stems from
the need to customise certain aspects of the Company's technology
for specific applications, and the Company ensures that its
customers make a financial commitment to such levels of
customisation, confirming that ultimately they will lead to high
volume sales.
The HiWave operating companies maintain their focus on four
identified target markets:
Sound - Stand-alone wired and wireless speakers; TVs and home
theatre; DAB radio and media player docks; Hi-Fi
Connected - Computers, tablets and smart phones; personal
communications and headsets
Automotive - Switchgear; Sat-nav; In-car Entertainment
Appliance - White goods; industrial and home automation
Business development resources are aimed at engaging with key
customers and partners in these sectors and the Company utilises
the feedback to forward-plan its exciter, BMR and semiconductor
product lines.
Results for the 12 months to 30 September 2012 (comparison 15
months to 30 September 2011)
Underlying
Adjusted
Operating
Revenue Gross profit Loss*
2012 2011 2012 2011 2012 2011
GBPm GBPm GBPm GBPm GBPm GBPm
------------ ---- ------- ---- ------------ ---- ----------
Group Total 1.2 2.0 0.8 1.4 3.0 3.0
------------ ---- ------- ---- ------------ ---- ----------
*Underlying adjusted operating loss is loss before depreciation,
amortisation, interest and restructuring costs, as shown below.
GBP'000 2012 2011
--------------------------------------- ------- -------
Loss before financing income / (costs) (3,295) (3,895)
Restructuring costs 93 597
Depreciation 84 155
Amortisation 148 101
Stock option (credit) / costs (1) 26
--------------------------------------- ------- -------
Underlying adjusted operating loss (2,971) (3,016)
--------------------------------------- ------- -------
FINANCIAL PERFORMANCE
Revenue
Group revenue, as reported for the 12 months to 30 September
2012, compared to the 15 month period to 30 September 2011, was
GBP1.2m (2011: GBP2.0m). The composition of revenue has
significantly changed over the period, with 54% of revenue coming
from component sales (2011: 43%). Royalty income accounted for 39%
(2011: 48%), whilst licensing and other income arising principally
from annual licence fees only contributed 7% of revenue (2011:
9%).
Component sales
6 months to 6 months
30 September
GBP'000 31 March 2012 2012
---------------- ------------- ------------
Component sales 267 399
---------------- ------------- ------------
Component sales in the 12 month period were GBP0.7m compared
with GBP0.9m in the preceding 15 month period, and orders taken in
the latter part of the 2012 financial year have contributed to an
open order book on 30 September of GBP0.2m (2011: GBP0.3m). Gross
profit margin on sales were 37% compared with 30% for the preceding
period.
Underlying adjusted operating loss
The underlying operating loss for the period was GBP3.0m (2011:
GBP3.0m).
Operating loss
Operating loss for the 12 months to 30 September 2012 was
GBP3.3m (2011: GBP3.9m).
Cost control
The breakdown of significant costs for the Group in the reported
period were:
-- Salaries and associated overheads and benefits and
consultants: GBP1.9m (2011: GBP2.7m)
-- Intellectual property: GBP0.7m (Including GBP0.3m for
maintenance of existing portfolio and GBP0.4m for new patent
applications) (2011: GBP0.4m)
-- Office facilities and associated costs: GBP0.3m (2011:
GBP0.4m)
-- Travel and other costs to support revenue generation
activities: GBP0.2m (2011: GBP0.3m)
-- Overheads associated with Plc status (professional fees and
other expenses incurred by HiWave Technologies plc to meet
requirements of various regulatory bodies): GBP0.5m (2011:
GBP0.5m)
The headcount during the period has been limited to 18
operational staff in order to contain expenditure. Expenditure on
IP maintenance is essential in order to meet the Company's
obligations in respect of existing license agreements, and new
patents have been applied for only in key areas of intellectual
value where it is considered that competitors could deny HiWave
access to technology development through their own patenting
activities, and to secure the working space for ongoing technology
development. HiWave seeks to reduce its IP costs, and will do so by
judicious abandonment of IP where it is not desirable for it to be
owned by another Company, sale of IP where sensible, and cutting
back on new patent filings and operating in 'stealth mode' in which
case it will not publicise its inventions and new developments,
working only with selected customers under strict non-disclosure
agreements. Additional IP-related costs were incurred in mounting
the successful cases to win back patents and renegotiate onerous
disadvantageously one-sided license agreements.
Office facility requirements have been reviewed. The UK
companies moved into substantially lower cost accommodation in
January 2013. Travel costs continue to be managed tightly with
revenue opportunity justification, and economy travel and low-cost
accommodation and subsistence are minimised where possible. Plc
overheads continue to consume a substantial amount of the Company's
cash resources compared with the size of the Company, and control
of these costs is limited by the legal obligation to comply,
including the retention of a number of advisers.
Cash at 30 September 2012 was GBP0.3m (2011: GBP1.1m plus GBP2m
held on deposit). Cash consumption has increased due to unavoidable
overspends on IP, professional and advisory services related to the
change in the Company's strategy. The Group has counter-acted this
with cost reductions in appropriate areas and an improvement in
debt collection, with debtor days falling from 123 days in 2011 to
103 days in 2012.
Inventory value at 30 September 2012 was GBP0.2m (2011:
GBP0.3m), as result of greater stability in material costs.
Research, development, and product development have remained a
core feature of the operating companies' business, with GBP0.8m
(2011: GBP0.8m) being applied in the period.
RISKS AND UNCERTAINTIES
There are a number of potential risks and uncertainties, which
could have a material impact on the Group's long-term performance
and could cause actual results to differ materially from expected
and historical results. The Group's risk management policies and
procedures are also discussed in the Corporate Governance
Statement.
Liquidity
With all business decisions there is an inherent risk. The
Company's disposal plan described in the Chairman's Statement
presupposes that there are willing buyers at a suitable price to
acquire the trading subsidiaries. Early indications, as of the date
of this announcement, indicate that there are. Should the Company
fail to sell sufficient assets to trade forward solvently the
Company will be forced to consider liquidation. Similarly should a
successful sale be achieved but of insufficient level to fund and
achieve a suitable acquisition, a distribution of shareholder funds
will be considered and the Company would consider liquidation.
Post year end, the Group has secured a bridging facility to
enable the Group to continue to operate, with a portion of this
facility being contingent on the sale of assets. There is a
timescale risk that the sales process does not proceed as quickly
as anticipated, which would affect the second drawdown of the
bridging facility. The Board is currently taking action to address
this risk, and pursuing alternative sources of funding in case the
timeframe for sale of assets extends past directors'
expectations.
HiWave Technologies (UK) Limited has a business model whereby it
controls its ability to generate revenue through sales of
components that implement the Group's IP. This mitigates a number
of the risks associated with the previous licensing model, but
introduces others. This is a summary of the risks to the business
from unplanned or unexpected eventualities.
Technical
HiWave's operating companies are dependent on their current
intellectual property and know-how being relevant to markets and
customer needs, and on the ability of their R&D team to develop
new differentiated technology that can be protected and exploited.
The directors believe that the HiWave operating companies have the
necessary expertise, experience and vision in key personnel to
continue to devise and implement strategies that will enable them
to develop products that compete for share of their selected
markets.
HiWave's products are complex, and can be difficult for
customers to design into their projects. HiWave supports its
products with reference designs that demonstrate comprehensive
solutions that deliver the best from the HiWave components. These
reference designs demand skill and experience from HiWave
engineers, and take time to perfect. The directors believe that the
engineers have the necessary talent to complete reference designs
that are relevant to the markets engaged with, and that sufficient
engineering resource is available in the UK to meet prospective
growth plans.
HiWave's components take a considerable amount of time and
resource to develop. For example a speaker drive unit may take a
designer 6 to 12 months to design, test, debug and make
production-ready. By comparison a semiconductor device may take an
engineering team two years to achieve the same status. Technical
issues may also arise that further add to development timescales or
delay launches. The HiWave team analyses the opportunities for new
components, and engages with customers so as to ensure that it is
designing for evolving needs, and growing market niches.
Commercial
HiWave is setting targets in times of unprecedented economic
turbulence. Most of the market sectors being addressed depend on
consumers' discretionary spending (for example, consumer
electronics and automotive), or corporate and public capital
project expenditure (for example installed audio systems in
buildings), and the harsh economic climate puts these spending
patterns at risk.
HiWave's sales prospects inevitably depend on sales personnel
being able to identify and engage with customers whose programmes
are capable of delivering revenue and gross profit margins that
meet the targets set. The directors believe that the HiWave sales
team has the appropriate skills and experience to achieve this.
Additionally, the team continues to establish sales channels with
representatives and distributors in key geographic areas, and to
provide training and support for these agents.
HiWave's customers are typically working to design cycles of one
to two years. Their product plans can be subject to change or
cancellation right up until product launch. HiWave is targeting a
range of customers whose products are differentiated, do not
overlap, and therefore not subject to the same market dynamics.
This can be evidenced by recent introduction of HiWave-based
products from several customers covering PC-attached speakers,
wirelessly connected speakers, DAB radio and media player
docking.
HiWave seeks to ensure that its customers are creditworthy, but
is aware that financial circumstances within customers may change
without notice. Credit control procedures have been tightened to
minimise exposure from such events.
Competition
HiWave is selling its components into a competitive environment,
where customers will always have a number of options for meeting
their design needs. HiWave has embraced transducer and electronic
technology to create components that interoperate and hence provide
commercial leverage for the complete solutions. This makes HiWave's
value proposition different from other companies supplying
components and technology to the same market sectors, and the
directors believe that this enhances the capability of facing up to
competitors to each individual component.
Manufacturing
HiWave depends on its sub-contract manufacturers to fabricate
its components. Sub-contractors are selected who are able to
demonstrate the necessary manufacturing quality and costs to enable
HiWave to compete in its chosen markets. There are a series of
risks involved in the manufacturing and supply side of the business
that are beyond HiWave's control. Quality assurance mechanisms are
being introduced to ensure that all components supplied by
sub-contractors meet technical specifications. Typically,
sub-contract manufacturers are located in the Far East, where
economic developments and employment legislation are forcing up
labour costs, and leading to increasing manufacturing costs.
Recognising that this may have an adverse effect on its ability to
compete, HiWave seeks to address it by designing components that
are simpler to manufacture and stay alert to appropriate
alternative sources of sub-contract manufacture where quality and
reliability can be assured.
HiWave's products use a selection of raw materials whose supply
and cost cannot be guaranteed. The cost of neodymium, a highly
magnetic material used in speaker drive units and exciters,
fluctuates with a range of up to five times typical cost. This is
because almost the entire worldwide production of this material
takes place in China, and in addition to supply and demand issues
the Chinese government has placed restrictions on its export at the
same time as introducing legislation to control the working
conditions in processing plants, leading to a number of them
ceasing production. This impacted on the unit cost of HiWave's
exciters and speaker drive units, but the Group's selection of
early stage customers offering high quality products at premium
cost points has enabled this increase to be absorbed by customers
in the first instance. To ensure longer-term competitiveness,
HiWave is developing a new family of speaker drive unit components
that utilise more readily available magnetic material, thereby
reducing costs and enhancing the Group's product range.
Intellectual property
HiWave protects its investment in IP through patenting, or
secrecy. Technological differentiation is maintained by leveraging
IP advantage and prosecuting the HiWave patent portfolio. The
filing, granting and prosecuting of IP is expensive, and HiWave has
sought to refine its patent portfolio to ensure that core IP is
well protected, and non-core IP does not consume cash
unnecessarily. Patents are protected in key geographic areas that
are anticipated to be relevant to their exploitation over their
lifetimes. Patent and trademark attorneys are retained to ensure
that IP is properly prosecuted. There is a risk that infringement
cases may endure significant legal costs to win, and the outcome
may be subject to a judicial decision, which cannot be predicted.
HiWave's strategy of utilising its inventions in-house to create
components reduces leakage of proprietary knowledge, and makes the
technology more difficult to reverse-engineer.
Not all patent filings are yet granted, and proprietary
information is kept secret in appropriate cases so that
un-protected and potentially unprotectable knowledge may still be
exploited.
HiWave takes care to observe third parties' intellectual
property rights when developing new technology, but is aware that
it may inadvertently infringe due to the time delay for patent
filings to become public knowledge. In such instances, a license
for IP or redesign will be negotiated, if possible to allow for use
without infringement.
Foreign exchange risk
The Group is exposed to foreign exchange risk in the normal
course of its business as a consequence of both trading with
foreign companies and owning subsidiaries located in foreign
countries. As a result, the Group's balance sheet can be affected
by movements in these countries' exchange rates.
The Group has transactional currency exposures. These arise on
sales or purchases by the trading subsidiary companies in
currencies other than the companies' operating (or 'functional')
currency. Significant sales and purchases are matched where
possible.
These currency exposures are reviewed regularly by the
Board.
LEGACY BUSINESS MODEL
HiWave's previous licensing and royalty business never delivered
profits. A review in 2010 concluded that a change of strategy to a
component sales model was a better option. This has necessitated
renegotiation of a number of licenses. There were and are a number
of issues relating to previously signed licenses including:
-- Some previous licenses were exclusive and perpetual with no
performance targets set for the licensee to meet in order to retain
exclusivity. This means that without successful renegotiation
HiWave would have been unable to deploy its technology into
lucrative opportunities, whether through licensing or component
sales models.
-- Such exclusive and perpetual licenses signed in the past were
with companies that had minimal brand recognition or track record
in the relevant market, and who are insubstantial to the extent
that they were poorly placed to make an impact on these markets,
making the likelihood of royalty returns small in size and distant
in time.
-- Past licenses had committed the licensees to low per unit
royalty returns to the extent that it would take an
uncharacteristically high volume of unit sales to create a return
on investment on the technology exclusively licensed.
-- Patents had on occasion in the past been assigned as part of
license negotiations, with no or severely restricted license-back
terms, with the effect of constraining the Company's ability to
commercially deploy its IP under its own control.
In the past, license agreements had been highly complex making
policing difficult.
In summary, the above issues have presented the executive team
with constraints and distractions that have increased the level of
challenge in the task of turning the business around. However,
significant work in the last fifteen months has resulted in the
resolution of the majority of these issues and HiWave is now in
control of its IP.
FUTURE DEVELOPMENT
Following a review in the second half of the year a clear
distinction has now been made between the HiWave Technologies plc,
as an investing owner, and its trading subsidiary companies. This
has assisted the Plc Board in its critical assessment of the
competency and value of these entities. HiWave Technologies plc
plans to consolidate the value of the Group, without external
funding, by the sale of assets. It then plans to expand the Group
by the acquisition of profitable businesses, to create a Group of
investments capable of sustaining the overhead of a public listing.
HiWave Technologies plc, following the successful sale of the
subsidiary companies, will look to invest by the acquisition of a
profitable subsidiary trading entity.
HiWave Technologies (UK) Limited plans to continue its strategy
to exploit its intellectual property within electronic and
transducer components that it can sell to customers worldwide.
Despite tough economic circumstances, the directors believe there
is still a strong market opportunity for HiWave's technology. The
enjoyment of listening to recorded music continues to be a
worldwide staple. HiWave components enable manufacturers of audio
players to deliver increased performance and enjoyment cost
effectively. The market for hand-held devices has become firmly
established, be it mp3 player, tablet, smartphone, E-reader, or
other device. Manufacturers are expected to seek enhanced user
interface through the deployment of sophisticated haptic, or
tactile, feedback, as well as ever-better audio reproduction.
Clearly market growth is related to the state of the global
economy, and discretionary spending by consumers will reflect
subdued consumer confidence in some markets. The enabling qualities
of HiWave's technology at differing price-points suggests, despite
the West's current economic outlook, that there continues to be
significant headroom in all our markets for growth.
In order to sustain growth and value, it will be essential that
the HiWave operating companies continue to invest in the evolution
of their technology and the development of new intellectual
property.
The HiWave Technologies (UK) Limited team has a developed
product roadmap for its core component development activities of
electronic and transducers for audio and haptics. This includes new
derivatives of its audio amplifier chip, and reference designs that
illuminate its performance in a range of applications, along with
several new speaker drive units and exciters. Forthcoming strategy
will lead to further product introductions through HiWave's focus
on innovative solutions in its chosen markets, with new chip
developments targeted in the next twelve months, and a range of
drivers being introduced, designed to offset the rising costs of
neodymium magnets. On-going developments of new moving coil and
piezoelectric transducers for haptics are producing good
results.
The directors believe that, HiWave Technologies (UK) Limited has
globally significant technology and IP and also matching expertise
in development and delivery. Freed up from the running costs of the
plc, the Company should be well able to address growth market
niches in a timely manner, and achieve growth in both revenue and
profitability in the years ahead.
CORPORATE SOCIAL RESPONSIBILITY
HiWave has several schemes to embrace its corporate social
responsibility.
Environmental Issues
The Group itself does not manufacture the components and
therefore the direct environmental impact of the Group is
minimal.
Social and community responsibilities
The Group encourages its employees to give something back to
their local community. Our policy in this area is that all
employees are encouraged to invest in community projects. As such
three employees took part in local community projects in the year
(2011: one).
Employees
The Group has a policy of equal opportunities, which applies in
relation to recruitment of all new employees and to the management
of existing personnel. All staff are offered training relevant to
their roles. An apprenticeship scheme embarked upon in 2011/2012,
for engineers and administrative roles, has resulted in the first
apprentice applying and going to University.
KEY PERFORMANCE INDICATORS
Key performance indicators (KPI's) have been monitored during
the period. Non-financial indicators prove the progress of the
Group on a tangible basis, such as products launched and customers
won, and in this respect the Company is comfortably ahead of plan
having launched 22 new products and reference designs thus far, and
attained 24 new customers cumulatively. Gross profit margin
increase put the operating companies within sight of the 2013
target, and the sales and cash KPIs will depend on customer
performance in the forthcoming year.
In addition the Company signed up RS Components as its Europe
and Asian distributor. It is expected that small and medium-sized
customers will place increasing levels of orders with RS enabling
HiWave to concentrate its effort on the major customers.
2012 2011 Target(1)
----------------------------------- --------- --------- -----------------------
Financial KPI's
Revenue GBP1.2m GBP2.0m N/A(3)
Gross Profit Margin on component
sales 37% 31% 40%
Underlying adjusted operating
loss (2) (GBP3.0m) (GBP3.0m) Breakeven in period
to September 2013
Cash at bank and in hand and Cashflow positive
investments GBP0.3m GBP3.1m in period
to September 2013
Non-financial KPI's
Product launches and new reference 20 new products
designs 12 10 and
reference designs
by 2013
New customer orders 18 6 24 customers reordering
by September 2013
----------------------------------- --------- --------- -----------------------
1 Target KPI's were set at the beginning of the 15 month period
to 30 September 2011 and relate to the period from 1 July 2010 to
30 September 2013.
2 Underlying adjusted operating loss is loss before
depreciation, amortisation, interest and restructuring costs. Loss
before Financing Income/Costs were GBP3,295,000 (2011:
GBP3,895,000).
3 The Group has a policy not to disclose revenue targets
GOING CONCERN BASIS
As described in the Chairman's Statement and as previously
announced on 9 October 2012 and updated with a further statement to
the market on 18 December 2012, the Board of HiWave Technologies
plc is progressing a new strategy based on the sale of all or parts
of its trading subsidiaries to realise cash proceeds to fund the
Company's new strategy and ensure that the remaining business is a
going concern. To this end, as announced on 18 December 2012 last,
the Company has published an information memorandum and is
progressing an active sales process, with the help of advisers
Barons Financial Services (UK) Limited.
The Company is in negotiations with potential purchasers. Based
on negotiations conducted to date, the directors have a reasonable
expectation that the sale will proceed successfully, but there can
be no certainty of this. The risk that the sale does not conclude
satisfactorily, and for sufficient proceeds, represents a material
uncertainty around the ability of the remaining business to
continue as a going concern. Were a sale not to be concluded, and
in the absence of a successful conclusion to the discussion of
alternative plans to fund the business appropriately, then the
remaining business would need to consider liquidation.
In the light of the Company's new strategic plan and the steps
being taken to prosecute it to a successful conclusion, the Board
has prepared a business plan and cash flow forecast for the period
to 31 January 2014. The forecast contains certain assumptions about
the level of future sales, the level of gross margins, operating
margin, overhead expenditure, the disposal of assets and funds from
the secured bridging facility.
The Company has secured a bridging facility to ensure that the
Group has adequate resources to continue in operational existence
until a sale of all or part of the trading subsidiaries is secured.
The Group has drawn down on GBP350,000 of this bridging facility in
December 2012, the availability of the further GBP350,000 being
contingent on receipt of an offer to purchase assets.
The directors have prepared cashflow forecasts reflecting
expected cashflows from trading and other operating activities,
during the intervening period prior to the expected sale. The Group
held cash of GBP219,000 as at 17 January 2013. The Board is
satisfied that this, together with bridging facility funds and
proceeds from sale described above will enable the remaining
business to continue in operational existence for a period of not
less than 12 months from approving these financial statements. The
risk that the sales process does not conclude before existing
available funds expire also represents a material uncertainty
around the ability of the business to continue as a going concern.
In these circumstances the Company would also need to consider
liquidation.
The directors have considered future trading and cash flows as
the Company continues as an investor business, subsequent to the
successful sale or sales described above. Based on the forecasts,
cash on sale of part or parts of the business will allow the
Company to pursue its strategy as an investor.
After making enquiries and considering the material
uncertainties described above, the directors have a reasonable
expectation that the Group will be able to obtain adequate
resources to continue in operational existence for a period of not
less than 12 months from approving these financial statements. For
these reasons, the directors have concluded that the Group is a
going concern, although as a result of the circumstances described
above, there is a material uncertainty over this conclusion.
The Board has also considered the anticipated proceeds of a
sale, and has determined the recoverable amount of the Company's
investment in its subsidiaries to be approximately GBP10m (2011:
Net book value GBP38m). In the opinion of the directors this figure
is as good an estimate as is possible in the current situation. It
is based on current indications of interest and the Boards'
understanding, on the basis of independent advice, of the Group's
IP valuation. Due to the inherent nature of this estimate, there is
a material uncertainty around the recoverable amount.
Consolidated Statement of Comprehensive Income
12 months ended September 2012
12 months 15 months
ended ended
30 September 30 September
2012 2011
GBP'000 GBP'000
-------------------------------------------- ------------- -------------
Continuing operations
Revenue 1,225 1,994
Cost of goods sold (421) (607)
-------------------------------------------- ------------- -------------
Gross profit 804 1,387
-------------------------------------------- ------------- -------------
Continuing operating expenses (4,006) (4,685)
Restructuring costs (93) (597)
------------- -------------
Operating expenses (4,099) (5,282)
-------------------------------------------- ------------- -------------
Loss before financing costs (3,295) (3,895)
Financing income 31 13
Financing costs (7) (6)
-------------------------------------------- ------------- -------------
Loss on ordinary activities before taxation (3,271) (3,888)
Taxation 198 207
-------------------------------------------- ------------- -------------
Loss for the financial period (3,073) (3,681)
-------------------------------------------- ------------- -------------
Currency translation differences 3 26
-------------------------------------------- ------------- -------------
Total comprehensive income attributable
to equity holders of the Company (3,070) (3,655)
Basic and fully diluted loss per share (0.7)p (0.9)p
-------------------------------------------- ------------- -------------
Consolidated Balance Sheet
As at 30 September 2012
As at As at
30 September 30 September
2012 2011
GBP'000 GBP'000
----------------------------------- --------------- ------------- -------------
Assets
Non-current assets
Property, plant and equipment 170 140
Intangible assets 603 555
Long-term debtors 23 28
---------------------------------------------------- ------------- -------------
796 723
--------------- ------------- -------------
Current assets
Inventories 224 267
Trade and other receivables 585 2,970
Current tax recoverable 198 200
Cash and cash equivalents 345 1,092
---------------------------------------------------- ------------- -------------
1,352 4,529
--------------- ------------- -------------
Total assets 2,148 5,252
---------------------------------------------------- ------------- -------------
Equity and liabilities
Share capital 4,269 4,269
Deferred share capital 22,682 22,682
Share premium account 92,408 92,408
Other reserve 82 82
Stock option reserve 788 789
Accumulated deficit (118,708) (115,638)
---------------------------------------------------- ------------- -------------
1,521 4,592
--------------- ------------- -------------
Current liabilities
Trade and other payables 627 647
Short-term provisions - 13
---------------------------------------------------- ------------- -------------
627 660
--------------- ------------- -------------
Total liabilities 627 660
---------------------------------------------------- ------------- -------------
Total equity and liabilities 2,148 5,252
---------------------------------------------------- ------------- -------------
Consolidated Statement of Changes in Equity
As at 30 September 2012
Deferred Stock As at
Share share Share Other option Accumulated 30 September
capital capital premium reserve reserve deficit 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- -------- -------- ----------- -------------
At 30 June 2010 1,587 22,682 88,058 282 815 (112,183) 1,241
Retained loss for
the
financial period - - - - - (3,681) (3,681)
Currency translation
differences - - - - - 26 26
Other reserve - - - (200) - 200 -
Issue of shares
(net of expenses) 2,682 - 4,350 - - - 7,032
Fair value of stock
options - - - - (26) - (26)
--------------------- -------- -------- -------- -------- -------- ----------- -------------
At 30 September 2011 4,269 22,682 92,408 82 789 (115,638) 4,592
Retained loss for
the
financial year - - - - - (3,073) (3,073)
Currency translation
differences - - - - - 3 3
Other reserve - - - - - - -
Fair value of stock
options - - - - (1) - (1)
--------------------- -------- -------- -------- -------- -------- ----------- -------------
At 30 September 2012 4,269 22,682 92,408 82 788 (118,708) 1,521
--------------------- -------- -------- -------- -------- -------- ----------- -------------
Consolidated Cash Flow Statement
12 months ended 30 September 2012
12 months 15 months
ended 30 ended 30
September September
2012 2011
Note GBP'000 GBP'000
----------------------------------------------------- ----- ---------- ----------
Cash flows from operating activities
Loss before finance income / (costs) (3,295) (3,895)
Adjustments for:
Depreciation and amortisation 233 256
Fair value of share-based payments (1) (25)
Foreign exchange translation 1 25
------------------------------------------------------------ ---------- ----------
(3,062) (3,639)
Decrease/(increase) in inventories 43 (267)
Decrease/(increase) in trade and other receivables 385 (241)
(Decrease)/increase in trade and other payables (20) 230
Utilisation of provisions (13) -
Loss on sale of fixed assets - 2
------------------------------------------------------------ ---------- ----------
Cash outflow from operations (2,667) (3,915)
Taxation received 201 195
------------------------------------------------------------ ---------- ----------
Net cash outflow from operating activities (2,466) (3,720)
------------------------------------------------------------ ---------- ----------
Cash flows from investing activities
Transfer from/(to) investments 2,000 (2,000)
Purchase of intangible assets (197) (186)
Purchase of property, plant and equipment (113) (122)
Proceeds from sale of property, plant and
equipment - 11
Decrease in long-term debtor 5 13
Interest received 31 13
------------------------------------------------------------ ---------- ----------
Net cash inflow/(outflow) from investing activities 1,726 (2,271)
------------------------------------------------------------ ---------- ----------
Cash flows from financing activities
Proceeds from the issue of share capital (net
of issue costs) - 7,032
Interest paid (7) (6)
------------------------------------------------------------ ---------- ----------
Net cash (outflow)/inflow from financing activities (7) 7,026
------------------------------------------------------------ ---------- ----------
Net (decrease)/increase in cash and cash equivalents (747) 1,035
Cash and cash equivalents at the beginning
of period (note A) 1,092 57
------------------------------------------------------------ ---------- ----------
Cash and cash equivalents at the end of period
(note A) 345 1,092
------------------------------------------------------------ ---------- ----------
A Cash and cash equivalents
All cash balances consist of cash on hand with banks or in a
guaranteed fixed interest deposit account for a maximum of three
months.
Company Balance Sheet
as at 30 September 2012
As at As at
30 September 30 September
2012 2011
GBP'000 GBP'000
----------------------------- ------------- -------------
Assets
Non-current assets
Investments 10,000 37,624
Long-term debtors 23 28
----------------------------- ------------- -------------
10,023 37,652
----------------------------- ------------- -------------
Current assets
Trade and other receivables 82 8,864
Cash and cash equivalents 567 760
----------------------------- ------------- -------------
649 9,624
----------------------------- ------------- -------------
Total assets 10,672 47,276
----------------------------- ------------- -------------
Equity and liabilities
Share capital 4,269 4,269
Deferred share capital 22,682 22,682
Share premium account 92,408 92,408
Other reserve 82 82
Stock option reserve 788 789
Accumulated deficit (109,791) (73,072)
----------------------------- ------------- -------------
10,438 47,158
----------------------------- ------------- -------------
Current liabilities
Trade and other payables 234 118
234 118
----------------------------- ------------- -------------
Total liabilities 234 118
----------------------------- ------------- -------------
Total equity and liabilities 10,672 47,276
----------------------------- ------------- -------------
Company Statement of Changes in Equity
as at 30 September 2012
Deferred Stock As at
Share share Share Other option Accumulated 30 September
capital capital premium reserve reserve deficit 2012
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- -------- -------- -------- -------- -------- ----------- -------------
At 1 July 2010 1,587 22,682 88,058 282 815 (72,675) 40,749
Retained loss
for the
financial period - - - - - (597) (597)
Other reserve - - - (200) - 200 -
Issue of shares
(net of expenses) 2,682 - 4,350 - - - 7,032
Fair value of
share-based payments - - - - (26) - (26)
---------------------- -------- -------- -------- -------- -------- ----------- -------------
At 30 September
2011 4,269 22,682 92,408 82 789 (73,072) 47,158
Retained loss
for the
financial year - - - - - (36,719) (36,719)
Fair value of
share-based payments - - - - (1) - (1)
---------------------- -------- -------- -------- -------- -------- ----------- -------------
At 30 September
2012 4,269 22,682 92,408 82 788 (109,791) 10,438
---------------------- -------- -------- -------- -------- -------- ----------- -------------
Company Cash Flow Statement
12 months ended 30 September 2012
12 months 15 months
ended 30 ended
September 30 September
2012 2011
GBP'000 GBP'000
-------------------------------------------------------- ---------- -------------
Cash flows from operating activities
Loss before interest and taxation (36,746) (604)
Fair value of share-based payments 1 (19)
Impairment of investment in subsidiary undertaking 27,624 -
Increase in provisions against intercompany receivables
from subsidiary undertakings 8,734 -
-------------------------------------------------------- ---------- -------------
(387) (623)
Increase in receivables (31) (25)
Increase/(decrease) in payables 115 (1)
-------------------------------------------------------- ---------- -------------
Net cash outflow from operating activities (303) (649)
-------------------------------------------------------- ---------- -------------
Cash flows from investing activities
Transfer from/(to) investments 2,000 (2,000)
Investment in subsidiary undertakings (1,920) (3,654)
Decrease in long-term debtor 5 13
Interest received 28 13
-------------------------------------------------------- ---------- -------------
Net cash inflow/(outflow) from investing activities 113 (5,628)
-------------------------------------------------------- ---------- -------------
Cash flows from financing activities
Proceeds from the issue of share capital (net of
issue costs) - 7,032
Interest paid (3) (6)
-------------------------------------------------------- ---------- -------------
Net cash (outflow)/inflow from financing activities (3) 7,026
-------------------------------------------------------- ---------- -------------
Net (decrease)/increase in cash and cash equivalents (193) 749
Cash and cash equivalents at the beginning of period
(note A) 760 11
-------------------------------------------------------- ---------- -------------
Cash and cash equivalents at the end of period (note
A) 567 760
-------------------------------------------------------- ---------- -------------
A Cash and cash equivalents
All cash balances consist of cash on hand with banks or in a
guaranteed fixed interest deposit account for a maximum of three
months.
General information
The accompanying consolidated financial statements of HiWave
Technologies plc are based on the Company's financial statements
which are prepared in accordance with International Financial
Reporting Standards as adopted for use in the EU. While the
financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement
criteria of International Financial Reporting Standards (IFRSs),
this announcement does not itself contain sufficient information to
comply with IFRSs.
The financial information set out in the announcement does not
constitute the Company's statutory accounts for the 12 months ended
30 September 2012 and the 15 months ended 30 September 2011. The
financial information for the year ended 30 September 2012 has been
extracted from the statutory accounts for the year ended 30
September 2012 which were approved by the Board of Directors on 31
January 2013. The auditor has reported on the 2011 statutory
accounts; their report was unqualified and did not contain a
statement under s498(2) or (3) Companies Act 2006 or equivalent
preceding legislation. The auditor has reported on the 2012
statutory accounts, but has issued a disclaimer of opinion, due to
limitations in audit evidence available surrounding the
applicability of the going concern basis and the carrying value of
the Company's investments in its subsidiary. These limitations
relate to availability of cash flow forecasts, evidence supporting
the going concern conclusion and carrying value of the Company's
investment in its subsidiaries and consequential disclosures. The
statutory accounts for 2011 have been delivered to the Registrar of
Companies and the statutory accounts for 2012 will be delivered to
the Registrar of Companies following the Company's Annual General
Meeting.
The Company
HiWave Technologies plc (the 'Company'), is a company
incorporated in England and Wales. The consolidated financial
statements of the Company for the 12 months ended 30 September 2012
comprise the Company and its subsidiaries (together referred to as
the 'Group').
The Group has changed its year end to 30 September in the
previous period, resulting in a 15-month period. Consequently, the
12-month data is not entirely comparable to the previous 15-month
amounts.
Going concern
The directors assessment of going concern is set out in the
Business Review on page 12.
Basis of preparation and statement of compliance
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRSs)
as adopted for use by listed companies in the EU and also in
accordance with those parts of the Companies Act 2006 applicable to
companies reporting under IFRSs.
Basis of consolidation
The consolidated financial statements comprise the financial
statements of the Company and its subsidiaries. No Statement of
Comprehensive Income is presented for HiWave Technologies plc as
permitted by s408 of the Companies Act 2006. All intra-group
balances, transactions, income and expenses are eliminated in
full.
Segmental analysis
The Group operates in a single reportable business segment,
being the development, licensing and sale of audio and touch
products and technologies.
Information presented to the Chief Operating Decision Maker
(CODM) show revenues split between component, royalties, and
licence and these revenues are presented for the Group's single
reportable segment, that being the development and licensing of
audio and touch technologies.
The Group's revenue originates in the UK. The customers are
located in the following geographical areas:
12 months 15 months
ended ended
30 September 30 September
2012 2011
GBP'000 GBP'000
-------------------------------------------------------------- ------------- -------------
UK 146 101
Rest of Europe 112 241
Asia Pacific 662 989
USA and Canada 305 663
-------------------------------------------------------------- ------------- -------------
Total revenue 1,225 1,994
12 months ended 30 September
2012 GBP'000 UK Hong Kong Japan USA Total
----------------------------------- ------- --------- ----- ------------- -------------
Revenue
Components 666 - - - 666
Royalties 476 - - - 476
Licences and other 83 - - - 83
----------------------------------- ------- --------- ----- ------------- -------------
Costs (4,236) (286) 4 (2) (4,520)
----------------------------------- ------- --------- ----- ------------- -------------
Loss before financing income/costs (3,011) (286) 4 (2) (3,295)
Financing income 31
Financing costs (7)
----------------------------------- ------- --------- ----- ------------- -------------
Loss before tax (3,271)
Tax 199
----------------------------------- ------- --------- ----- ------------- -------------
Loss for the period attributable
to equity shareholders (3,072)
----------------------------------- ------- --------- ----- ------------- -------------
Depreciation and amortisation 228 5 - - 233
Non-current assets 783 13 - - 796
Current assets 1,328 24 - - 1,352
Liabilities 619 6 - - 627
----------------------------------- ------- --------- ----- ------------- -------------
15 months ended 30 September
2011 GBP'000 UK Hong Kong Japan USA Total
----------------------------------- ------- --------- ----- ----- -------
Revenue
Components 874 - - - 874
Royalties 945 - - - 945
Licences and other 175 - - - 175
----------------------------------- ------- --------- ----- ----- -------
Costs (4,534) (787) (268) (300) (5,889)
----------------------------------- ------- --------- ----- ----- -------
Loss before financing income/costs (2,540) (787) (268) (300) (3,895)
Financing income 13
Financing costs (6)
----------------------------------- ------- --------- ----- ----- -------
Loss before tax (3,888)
Tax 207
----------------------------------- ------- --------- ----- ----- -------
Loss for the year attributable
to equity shareholders (3,681)
----------------------------------- ------- --------- ----- ----- -------
Depreciation and amortisation 243 13 - - 256
Non-current assets 710 13 - - 723
Current assets 4,401 100 24 4 4,529
Liabilities 624 36 - - 660
----------------------------------- ------- --------- ----- ----- -------
The results above exclude management recharges.
Included within the above are revenues of approximately GBP0.2m
(2011: GBP0.2m) which arose from sales to the Group's largest
customer.
Loss per share and underlying loss reconciliation
Basic and fully diluted loss per share has been calculated on
the Group's loss attributable to shareholders of GBP3,070,000 (15
months ended 30 September 2011: GBP3,655,000) and on the weighted
average number of ordinary shares in issue during the financial
period (excluding deferred shares as defined in note [19]), which
was 426,818,261 (15 months ended 30 September 2011 - 362,816,964).
Whilst unexercised share options and warrants in the Company would
increase the weighted average number of potential shares in the
period, due to the losses of the Group they are not considered to
be dilutive.
Related party transactions
Relationship between parent and subsidiaries
HiWave Technologies plc is the ultimate parent of all of the
subsidiary companies.
Management compensation
Key management personnel are deemed to be the executive
management team. Remuneration for the key management personnel
during the period is shown below:
15 months
12 months ended
ended September September
2012 2011
GBP'000 GBP'000
------------------ ---------------- ----------
Salaries and fees 628 520
Benefits in kind 3 2
Pension costs 37 35
------------------ ---------------- ----------
668 557
------------------ ---------------- ----------
Availability of the Annual Report and Accounts
A full version of the Annual Report and Accounts 2012 will be
posted to shareholders who have opted for hard copy accounts before
the end of February. The Report will also be made available through
the Company's website www.hiwave.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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