Annual Results for year ended 31 December 2013 Anthony Sethill, CEO Jonathan Apps, CFO 31 March, 2014
Contents 1. Group Overview 2. Wireless Healthcare 3. Connected Audio 4. Digital Radio 5. Financials and Summary 1
Toumaz: semiconductors for low power wireless connectivity Focus on high growth markets - pioneer in wireless healthcare monitoring Wireless Healthcare Core skills / common technologies Connected Audio Digital Radio - innovator in connected audio (platform for Internet of Things) - #1 provider of solutions for digital radio Group revenues: 21.9m FY13 2
Strategy and objectives Toumaz s ultra-low power connectivity solutions address opportunities within Internet of Things and wearable technologies Lines of business What we do Goals for 2014/15 Wireless Healthcare Connected Audio Digital Radio SensiumVitals : wireless monitoring of vital signs - low power, disposable - general wards, A&E (and home) High quality solutions for mass market - Bluetooth and Wi-Fi turnkey solutions - integrated content streaming services - enhanced functionality, e.g. multi-room DAB / DAB+ in Europe and Asia Pac Developing HD radio for US Create effective global sales & marketing platform Enhance functionality Extend content streaming partnerships Top two solutions provider Drive growth of DAB / DAB+ market Enter HD market (2014) 3
Significant milestones achieved Funding 17.2m (net) raised to take Group to break-even in H2 2015 Healthcare Direct sales and distribution for territories accounting for 60% of world healthcare expenditure First commercial order: Hurley Medical Center, Flint, Michigan (A&E) CE Mark (Sep 13); Spire Healthcare UK pilot in soft launch Connected Audio Partnerships with Spotify and Imagination content streaming services Design wins include Pure, Media Saturn and Revo Digital Radio International markets growing; UK government signals digital future Frontier retained 80% market share of consumer DAB market Next generation silicon (Chorus 4) samples working / being tested by strategic customers, e.g. Sony 4
Contents 1. Group Overview 2. Wireless Healthcare 3. Connected Audio 4. Digital Radio 5. Financials and Summary 5
Wireless monitoring - high growth opportunity Global hospital wireless patient / vital signs monitoring, $m revenue 1 CAGR 370 Market growth driven by 45% 264 - growing demands on health providers (aging populations, chronic diseases) 82 128 185 - pressure to improve patient care / save costs - capabilities of enabling technologies 2013 2014 2015 2016 2017 Sources: (1) ON World Health & Wellness Wireless Sensor Networks Report 2013; (2) Novasecta (March 2013), ON World (ibid) 6
SensiumVitals - turnkey solution for vital signs monitoring Hub (1) Electronic Medical Records 1 FDA 510k cleared CE Mark approved TGA approved Disposable patch (five days battery life) for general wards and A&E - patient data (heart rate, respiration, temperature) taken every two minutes - sent wirelessly to hospital IT system - provides early warnings 7
SensiumVitals addressing 60% of global healthcare spend CE Mark (Oct 13) New North American distribution agreement with NantHealth (Oct 13) TGA approval (Mar 14) Sensium Healthcare direct salesforce: UK, France, Germany Third party distributors: US, Canada, Mexico, Sweden, Norway, Denmark, Portugal, Bahrain, Australia and New Zealand 8
First US deployment: Hurley Medical Center, Michigan Hurley Medical Center, Flint, Michigan Deployment in one of the largest Emergency Departments in US Will monitor patients, post-triage, who may wait for extended periods System installed; full launch May 14 9
First UK deployment: Spire Healthcare Spire Healthcare, Montefiore Hospital, Brighton & Hove, UK Leading UK private hospital group (38 hospitals) System installed and tested at Montefiore Hospital Soft launch underway - being integrated with ADT system 1 - full launch planned for May 14 (1) Admissions, Transfers and Discharges 10
Current pipeline of 60 potential customers Number of qualified prospects by region, March 2014 45 Hospital interest driven by - enhanced patient care (early warnings) - ability to monitor patients waiting in A&E - monitoring of patients in private wards 7 8 - patient mobility (speeds recovery) - financial benefits of early intervention UK, France, Germany North America Rest of World Policy focus on technology in health 1 (1) e.g. in response to Francis Report 11
Next steps New territories Extend distribution coverage especially, Europe & Middle East (2014) and Japan (2015) Health economics At least one major health economics study in 2014 to provide additional evidence of SensiumVitals benefits Product development Lower costs and extend range of patches Additional vital signs (SpO2, blood pressure, ECG) New market sectors Assess opportunities in - home health: post-discharge, long term chronic disease management - assisted care 12
Contents 1. Group Overview 2. Wireless Healthcare 3. Connected Audio 4. Digital Radio 5. Financials and Summary 13
Connected audio via Wi-Fi poised for take-off Global Wi-Fi connected audio market 1, $m CAGR 349.0 Connected audio devices rising from 34m units p.a. (2013) to 67m (2017) 37% 271.0 - smart devices - cloud-based content streaming 97.9 130.8 189.9 Wi-Fi to become leading standard - 37m units p.a. in 2017 - superior functionality to Bluetooth (at costeffective prices) 2013 2014 2015 2016 2017 (1) Solutions for speaker docks, home theatre systems, speakers, A/V receivers, mini-systems, networked audio players / adapters, multi-room audio systems. Source: Park Associates (Jul 2013), Frontier Silicon analysis 14
Frontier well positioned Technology skills Partnerships Customer relationships Turn-key solutions Significant experience in Internet Radio Hardware, software & systems engineering skills Technology from Imagination Technologies Content from Spotify Global brands Importers / retailers Competitors more focused on silicon Frontier s solutions approach speeds time to market Apps & cloud-based services 15
Q2 14: Apple Airplay & multi-room added to connected solution Integrated proposition Cloud Content Multi-room streaming to wireless speakers demonstrated at CES in Jan 2014, available in Q2. Airplay will be added in April 2104 opens up market for Apple devices Strong customer interest 16
2015: Symphony, next generation solution for Connected Audio Symphony two chip solution Symphony RF IC PA Wi-Fi RF Bluetooth Modem NFC Baseband Symphony Baseband IC Apps processor Multi-channel audio Audio DAC Solution for mass market high quality connected audio systems - superior audio experience - reduction in cost, power consumption and size Revenues mid-2015 17
Contents 1. Group Overview 2. Wireless Healthcare 3. Connected Audio 4. Digital Radio 5. Financials and Summary 18
Strong growth from DAB / DAB+; upside from HD DAB/DAB+ sales (consumer and automotive aftermarket), $m CAGR 36 47 16% 61 64 66 DAB / DAB+ market growth driven by - Germany up 52% (2013) - new territories: NL, Poland, France - first countries nearing DSO: Norway (2017) up 148% in 2013 - digital future for UK radio Upside: global development of Digital Radio, e.g. HD Radio (US), DRM (India) Units (m) 2013 2014 2015 2016 2017 4.4 6.5 8.9 10.9 13.2 Sources: GfK, Frontier Silicon estimates (Oct 2013) 19
Frontier Silicon #1 provider of solutions for digital radio Portable radios Home audio systems Clock radios & docks In-car In 2013, leadership position maintained - 80% market share 1 New products included - Bluetooth-enabled solution - next generation automotive software (1) Consumer and automotive aftermarket DAB / DAB+ devices 20
2014: targeting the US HD Radio market US population density map US digital radio based on HD Radio standard To date, market predominantly automotive Frontier partnering with ibiquity (developer of HD Radio), to target domestic receiver market 21
Next generation IC (Chorus 4) launching H2 2014 Advanced single chip solution Chorus 4 four chips in one RF Baseband & apps processor ROM Audio DAC - power consumption: 50% lower - enhanced functionality 1 - cost: 36% lower - multiple (global) standards Timetable - engage with alpha customers : Q1 14 - revenues: Q4 14 (1) For consumers, faster scanning / tuning, improved radio performance; for manufacturers, tools to enable faster time to market 22
Contents 1. Group Overview 2. Wireless Healthcare 3. Connected Audio 4. Digital Radio 5. Financials and Summary 23
Income statement Full year 2013 2012 m m Revenue 1 21.9 22.1 Cost of Sales (12.2) (12.1) Gross margin 9.7 10.0 Research & development costs 2 (9.1) (9.8) Sales & administrative costs (10.0) (11.4) EBITDA (9.4) (11.2) Depreciation and amortisation (3.0) (12.8) Other non trading costs 3 (0.9) (0.1) Loss for the period (13.3) (24.1) Volumes up year on year, but revenues and gross margin down - reduced selling prices, as digital audio solutions reach end of life Q1 2014 trading in line with expectations Digital Radio and Connected Audio division trading profitably when R&D costs excluded Unit volumes shipped (m) 3.5 3.3 (1) 2012 comparatives on pro-forma basis including Frontier Silicon from Jan 2012 and excluding 0.3m of non-recurring consulting revenue in Toumaz Healthcare and 0.5m bad debt incurred by Toumaz in 1H 2012 (2) Group policy to expense R&D costs where possible. (3) includes costs of share based payments of 0.8m in 2013. 24
Balance sheet at 31 December m 2013 2012 Non-current assets Goodwill 19.1 19.1 Other intangible assets 17.7 17.7 Property, plant and equipment 0.7 0.9 37.5 37.7 Current assets Inventory 1.5 1.8 Tax receivable 2.7 1.6 Trade and other receivables 4.2 3.3 Cash and cash equivalents 21.5 15.3 29.9 22.0 Total assets 67.4 59.7 Cash/net working capital in line with expectations at end February Current liabilities Trade and other payables 8.3 7.8 Equity Share capital 4.1 2.8 Contingent consideration 0.3 1.1 Share premium 114.9 98.0 Share based payment reserve 2.5 1.9 Foreign exchange (0.1) (0.1) Retained earnings (62.6) (51.8) 59.1 51.9 Total equity and liabilities 67.4 59.7 25
Financial objectives Group expected to be cash-flow positive in 2015 Mid-term: grow revenue 5x by 2017 Overheads and indirect costs continue to be kept under tight control Gross margins expected to improve from today s blended 44% as a result of new chip developments 26
Summary Focus: three high growth sectors Strategic goals - establish SensiumVitals as global leader in vital signs monitoring in-hospital and later in-home - in Connected Audio, establish Frontier Silicon as leading silicon platform - in Digital Radio, leverage leadership position to drive global market growth Financial objectives - cash-flow positive by H2 2015 - increase revenues 5x by 2017 27