2014 Full year results

Anthony Sethill, CEO

Jonathan Apps, CFO

April, 2015

1

Contents

1. Overview

2. Healthcare

3. Digital Audio

4. Financials

5. Summary

2

• Wireless

Healthcare

Wireless technology - medical devices and digital audio

• Connected audio

• Digital radio

• Sensium Healthcare: pioneer in

patient monitoring

• Frontier Silicon

- innovator in connected audio

- #1 in chips / modules for digital

radio

• Full year Group revenues:

£26.2m (up 19.5%)

3

Financials

• Group revenues: £26.2m (2013: £21.9m) up 19.5%

• EBITDA loss: £9.8m (2013: loss £9.4m)

• Cash: £12.5m (31 Dec 2014)

Healthcare

• SensiumVitals® evaluated / trialled in 16 hospitals in seven territories (US, UK,

France, Germany, Italy, Portugal and Australia)1

• System robustness and user interface enhancements completed March 2015

• US distribution rights regained March 2015

Digital Audio

• Connected audio and digital radio revenues up 15.1% and 17.0% respectively –

driven by market growth and new design wins

• Next generation digital radio chip shipped end of 2014

• Connected audio next generation chip to ship by year end

Highlights (FY 2014)

(1) As of 31 March 2015

4

Contents

1. Overview

2. Healthcare

3. Digital Audio

4. Financials

5. Summary

5

• First deployments:

- Spire Healthcare, UK

- Hurley Medical Center, US

• Well received, but enhancements

required to:

- improve system stability

- enhance user interface

SensiumVitals® first went live in hospitals in May 2014

6

System enhancements completed March 2015

• More intuitive user interface

- vital signs readings and trend data

- alerts / notifications for clinicians

SensiumVitals screenshot

Patch

Bridge

Hospital

IT

Connecting patches to system

• System stability

- complex RF environments causing

interference to bridge (bug fixes required)

- patches now connect to system more

quickly and reliably

7

SensiumVitals® has been trialled in 16 hospitals1

• Qualified leads

- confirmed

interest

• Test deployment

- not integrated with

hospital IT

• Test deployment

- integrated with

hospital IT

• Hospitals converting

to long term contracts

• 90% of customer

meetings lead to

confirmed interest

• 12 evaluations started

Q1 15 (Europe & RoW)

• Three trials Q2/Q3 14

(two in UK, one in US)

• Q1 15 – one trial in

Australia

• Aim to convert

hospitals in trial phase

(1) As of 31 March (2) Some hospitals start with evaluations before moving to integrated trials; some move

straight to integrated trial – once at trial stage, only minimal technology work is required to move to conversion

Pipeline

(200+)

Evaluations2

(12)

Integrated

Trials2 (4)

Conversions

(0)

Paid-for trials

• Apr 15 – four further trials:

QE Birmingham (NHS),

and Saudi Arabia (3)

8

• US large but complex market

• Sensium’s partner made limited

progress in US

• By terminating, we regain control

of our destiny in key territory

North American distribution rights

• Establishing small, focused,

business development team

• Alesia Jackson appointed VP,

Business Development, USA

• Priorities:

- key accounts (potential to be

reference sites)

- develop strategic options for

region

North America 2014

North America 2015

9

Priorities for 2015 and beyond

Commercial • Establish SensiumVitals® in key accounts in Europe, Middle East,

Australia and US – reference sites and long term customers

Health

Economics

• Evidence to demonstrate economic benefits of SensiumVitals®

• Targeting UK study by end 2015

Product

development

• Additional system functionality: ECG and accelerometer

• Paediatrics (system currently approved for adults) – this year

• Extra vital signs (blood pressure, blood oxygenation)

Longer term • Move into adjacent markets, e.g. care homes, in-home monitoring

10

Contents

1. Overview

2. Healthcare

3. Digital Audio

4. Financials

5. Summary

11

• Growth driven by

- activities of Amazon, Apple and

Google (“content ecosystems”)

- awareness of wireless audio

- falling costs of Wi-Fi technology,

• Key sectors: wireless speakers

and soundbars

Wi-Fi connected audio volumes1, millions

Wi-Fi connected audio is taking off

59

1318

1

3

7

12

2

2

2

6

7

7

13

20

29

40

3

5

2014 2015 2016 2017

Speakers Soundbars AVR Other

(1) Source: Futuresource (2014), Frontier Silicon analysis; ‘Other’ includes speaker docks & integrated audio systems

12

Frontier offers manufacturers end-to-end solutions

Device manufacturers

e.g. Bang & Olufsen,

Bowers & Wilkins, Harman

Kardon, Philips, Pure

Frontier integrated solutions

Content ecosystems

+

Technology

• Multi-room

• Interoperable

• App control

• Frontier provides manufacturers with “one stop shop” solutions – offering world class

audio technologies with integrated access to content streaming services

13

Frontier’s current solutions are performing well

• Starting from Internet Radio,

expanded in wireless speakers

- relationship with Spotify

- multi-room functionality

• Significant designs from Philips and

Bowers & Wilkins – with ten others

now using Frontier’s multi-room app

• Strong growth expected in 2015

Recent design wins for Venice 6.5

14

Next generation chip to launch end 2015

• Significant step towards wireless

streaming audio speakers

replacing standard home audio

system

• Frontier well positioned to be

major player

• Significant revenues from 2016

• New high powered chip sampling now

– on course to launch end 2015

• Offering improved Wi-Fi performance /

additional functionality, e.g.

- hi-res audio

- multi-channel audio (e.g. 5.1)

- access to additional content

ecosystems

15

• Growth driven by:

- DSO in Norway (2017), Switzerland

(2020-24)

- UK DSO decision possibly in 2017

∙ transmitter roll-out under way

∙ 12 new national services in 2016

- strong German commitment to

DAB+

- emergence of new territories – e.g.

Italy, France, Poland

DAB/DAB+ volumes, millions1

DAB market volumes are increasing dramatically

4.45.3

6.9

9.110.0

12.7

2014 2015 2016 2017 2018 2019

(1) Consumer and automotive aftermarket receivers

16

Chorus 4: core platform for next three to five years

• First shipments end of 2014

• All new Sony models will

incorporate Chorus 4

• Expect to sell over 20 million

units in next three years

RF Baseband & apps

processor

ROM

Audio

DAC

Chorus 4 – “four chips in one”

• 50% power saving

• enhanced performance and functionality

• lower cost / higher margins

17

Frontier Silicon priorities for 2015 and beyond

Current

connected

audio

• Continue to enhance software for new functionality

• Drive sales with additional design wins

Next gen

connected

audio

• Complete development of next generation chip end of 2015

• Secure further design wins to accelerate revenue growth in 2016

Digital radio • Use Chorus4 to drive revenues, improve margins and retain share

• Investment phase completed – aim to optimise profitability

18

Contents

1. Overview

2. Healthcare

3. Digital Audio

4. Financials

5. Summary

19

2014 Income statement

• Unit volumes and revenues significantly higher than

2013

- full year 2014 volumes expected to reach 4.3m

• R&D costs unchanged – project focus on Chorus 4

(Digital Radio) and Danube (Connected Audio)

- Chorus 4 taped out August 14

- Danube taped out December 14

• Sales and administrative costs increased due to

investment in Healthcare sales & support headcount

and forex losses

• Other non-trading costs relate primarily to R&D tax

credits and foreign exchange gains offset by non-

cash share-based payments

2014 2013

£m £m

Revenue 26.2 21.9

Cost of Sales (14.8) (12.2)

Gross margin 11.4 9.7

Research & development costs (11.8) (9.1)

Sales & administrative costs (9.4) (10.0)

EBITDA (9.8) (9.4)

Depreciation and amortisation (2.9) (3.0)

Other non trading costs 0.5 1.6

Loss for the period (12.2) (10.8)

Unit volumes shipped (m) 4.4 3.5

20

Cash flow statement

• Cash position ahead of expectations

• Targeting cash flow break-even in 1H 2016 – six

months later than previously planned, following

- slippage in timing of healthcare deployments

- upgrade in specification of connected audio chip

(longer development times)

£m 31 Dec 14 31 Dec 13

Loss before tax (13.5) (13.3)

Amortisation & depreciation 2.9 3.0

Impairment - 0.1

Share based payments 0.8 0.8

Net movement in working capital

balances 1.3 0.5

Other 1.8 0.9

Tangible & Intangible fixed asset

additions (2.3) (2.9)

Proceeds of

share issues - 17.2

Net change in cash (9.0) 6.3

Cash at end of year 12.5 21.5

21

Segmental information

£m Healthcare

Digital

Audio Group Total

Revenue 0.7 25.5 - 26.2

Cost of Sales (0.4) (14.4) - (14.8)

Gross profit 0.3 11.1 - 11.4

Research & development (1.8) (10.0) - (11.8)

Sales, admin &

other expenses (1.9) (7.0) (0.5) (9.4)

Total overheads (3.7) (17.0) (0.5) (21.3)

EBITDA (3.4) (5.9) (0.5) (9.8)

Healthcare

• Expected to start gaining hospital

conversions in 2015

Digital Audio

• Digital radio

- nearing completion of investment

phase

- will start generating cash flows to

support other business lines

• Connected audio

- still in investment phase

- existing products selling well.

22

Balance sheet £m 31 Dec 14 31 Dec 13

Non-current assets

Goodwill 19.1 19.1

Other intangible assets 17.3 17.7

Property, plant and equipment 0.6 0.7

37.0 37.5

Current assets

Inventory 1.6 1.5

Tax receivable 1.5 2.7

Trade and other receivables 4.1 4.2

Cash and cash equivalents 12.5 21.5

19.7 29.9

Total assets 56.7 67.4

Current liabilities

Trade and other payables 8.9 8.3

Equity

Share capital 4.2 4.1

Contingent consideration - 0.3

Share premium 115.3 114.9

Share based payment reserve 3.3 2.6

Foreign exchange (0.1) (0.1)

Retained earnings (74.9) (62.7)

47.8 59.1

Total equity and liabilities 56.7 67.4

• Cash at year-end was £12.5m

23

Contents

1. Overview

2. Healthcare

3. Digital Audio

4. Financials

5. Summary

24

Performance against 2014 objectives

Objectives for 2014 How we did

Healthcare • Create effective global

sales & marketing

platform

• Enhance functionality

• Platform established, but revenues delayed as

system enhancements were required

• North American rights regained – revenues

delayed, but strengthens our strategic position

• System robustness and enhanced UI completed

Connected

Audio • Extend content streaming

partnerships

• New chip in mid 2015

• Positive engagements with content ecosystems

• New chip six months later than original plan –

due to upgrade in specification for major new

ecosystem initiative

Digital Radio • Drive growth of DAB /

DAB+ market

• Complete 4th generation

chip

• Market growth accelerated in 2014 – and

Frontier increased market share

• 4th generation chip commenced shipping Dec 14

25

• Strategic goals

- Establish SensiumVitals® as global leader in vital signs monitoring

- Connected Audio: establish Frontier as a leading silicon and software provider

- Digital Radio: maximise profit

• Financial objectives

- Sustained positive cash-flows in H1 2016

- Significant revenue growth over next three years

Strategic and financial objectives

Thank You

Contact:

anthony.sethill@toumaz.com (CEO)

jonathan.apps@toumaz.com (CFO)