22nd May 2014 10:20
LONDON (Alliance News) - Radio frequency technology company LightwaveRF PLC saw its shares rise sharply Thursday, after it reported a substantial reduction in its loss in the first half of its financial year as revenue more than tripled following a refocusing of the business on expanding its distribution outlets.
The company, which produces technology allowing household lighting, heating and security systems to be operated remotely using smartphones, tablets or computers, reported a pretax loss of GBP123,092 for the six months to the end of March, compared with a GBP408,938 loss a year earlier, as revenue jumped to GBP1.7 million, from GBP476,285.
It also said it expects its full-year sales to be about GBP3.5 million, thanks to its GBP1.9 million order book scheduled for delivery in the second half. Its revenue in the whole of fiscal 2013 was GBP1.1 million.
LightwaveRF spent the first half making significant changes to its business in an effort to secure a turnaround and drive growth. It developed its UK distribution channels, agreeing new deals with Maplin and B&Q and continued its rollout in Maplin to 180 stores. It is also building online sales through Amazon and other e-retailers. It also has a partnership deal with low-energy lightbulb manufacturer Megaman in the UK, a model it wants to replicate as it pushes overseas.
"We are now also turning our attention to international markets to seek to create similar distribution arrangements to Megaman in the UK. Securing agreements with the right partners takes investment and time but we do expect these efforts will start to impact next financial year," it said.
The company said average margins in the first half fell to 29%, due to the transfer of existing stocks to Megaman and continued supply to existing customers at reduced margins due to the change in distribution strategy. However, it's expecting margins to recover "significantly" in the second half.
The company's cost of sales rose steeply due to the changes and revenue rise, but it cut administrative expenses by 7%.
"We plan on further switching this spend to accelerate our product development and away from general administration. We plan to further develop our expertise in Radio Frequency with more software and hardware capability. This will enable the business to have a UK centred technology development team providing creativity, flexibility, focus and speed to market through the sound LightwaveRF platform we have created," the company said in its statement.
It said it isn't yet able to pay a dividend as it doesn't yet have reserves it can distribute, and for the time being is focused on turning the business around.
"The management team believe strongly in reinvesting in the company's technology and brand at this stage in the companies evolution. While we are fully focussed on underlying profit and cash generation from our revenues we expect to make significant commitment to continued product development investment. The year should see a turnaround in the previous losses suffered by the business," it said in an outlook statement.
LightwaveRF shares were up 16.7% at 38.50 pence Thursday morning, one of the biggest gains on AIM.
By Steve McGrath; [email protected]; @stevemcgrath1
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