PhotonStar LED group 2012 revenues are up 44% over previous year

May 28, 2013
Date Announced: 28 May 2013 PhotonStar LED group plc (AIM: PSL, "PhotonStar" or "the group"), the British designer and manufacturer of smart LED lighting solutions, announces its full year results for the year ended 31 December 2012.Highlights- Revenues up 44% to £8.70m (2011: £6.06m)- Gross profit up 60% to £3.44m (2011: £2.15 m)- Adjusted EBITDA loss improves to £0.29m (2011: loss £0.63m)- Reported loss before tax of £0.84m (2011: loss £1.11m)- Basic loss per share of 0.8p (2011: basic loss per share 1.1p)- Year-end net cash position of £1.1m with borrowing facilities available up to £0.5mGood operational progress:- Completion of two new LED production facilities- ChromaWhite lighting technology successfully demonstrated prototypes- Market dynamics strong; regulatory environment and improved affordability of LED lighting driving growthJames McKenzie, CEO of PhotonStar, commented, "We achieved several major milestones during 2012, with our new production facilities coming online and successfully demonstrating the effectiveness of our ChromaWhite colour tuneable LED technology."With good revenue growth already coming through and a strengthened balance sheet, we look forward to delivering further progress this year. We are in a strong position to take advantage of the developing LED market, with new, more efficient and competitive products coming to market during 2013."PhotonStar LED group PLC ("PhotonStar" or the "group") is a British designer and manufacturer of smart LED lighting solutions. The group's proprietary technology seamlessly integrates LEDs, sensors and controls to provide intelligent lighting for commercial and architectural applications which benefit from greater CO2 reduction, lower cost of ownership & improved functionality compared to other available light sources.Photonstar's lighting products have won numerous awards for performance, innovation and reliability, and are unique in the industry for the use of recycled, and recyclable materials, which means they have 90% less embodied CO2 than equivalent products providing the same levels of illumination.PhotonStar comprises two divisions: LED Lighting Fixtures which works with lighting designers, architects, house builders, facilities management companies and sustainability consultants to provide intelligent, high-end LED lighting solutions for the commercial and architectural market, and LED Light Engines which provides LED lighting solutions for specialist applications such as film & television production lighting, UV curing and medical applications.PhotonStar is based in Romsey, Hampshire with manufacturing in Wales.OverviewPhotonStar made excellent progress during 2012, building on the strong opportunity and reputation the group has established within LED lighting. Several major milestones were achieved, including the completion of two new production facilities, one producing LED luminaires, and the other a chip on board LED packaging facility for LED light engines. These facilities underpin the group's ability to deliver on its growth strategy.The group has seen good sales growth with sales up 44% to £8.7m (2011: £6.1m) and margins improving to 40% (2011: 35%). Adjusted EBITDA (being EBITDA before share option charge) was a loss of £0.29m, an improvement on 2011 (loss £0.63m). The completion of the invoice finance facility with HSBC in July 2012 and the funds raised in December 2012 have also resulted in a much strengthened balance sheet.Particularly strong progress has been made in developing PhotonStar's ChromaWhite technology, the group's next generation smart circadian light engine. The group successfully demonstrated a prototype of ChromaWhite's colour tuneable technology in a standard lamp form factor, with full wireless control, at London's Ecobuild show in March 2013.PhotonStar remains confident in its future prospects. The market drivers for efficient, smart lighting solutions are strong with improving affordability and regulatory change increasing adoption rates. The group is well positioned to be able to take advantage of the growth in the LED market.The market opportunityLighting accounts for 19% of global electricity usage and CO2 emissions attributable to lighting are equivalent to 70% of all global motor car CO2 emissions. The lighting market is in transition, driven by energy efficiency and lower operating costs. The benefits of LED lighting are having a large impact across many sectors.General lighting of buildings is estimated to be a $70bn worldwide market with an expected compound annual growth rate of 6% between 2010-2015. It is also estimated that by 2015, LED lamps and modules will account for over 50% of general lighting light source sales. There are multiple EU and UK legislative drivers such as the Europe-wide phased banning of incandescent lamps, the code for sustainable homes and the 2013 increase in efficiency requirements for lighting included in UK building regulations.Business reviewLED fixtures businessThe LED fixtures business has scaled up well and continues to show strong growth. In March 2012 the group signed a strategic five year partnership agreement with Lightitude FZC, the specification lighting division of the Debbas group, a multinational technology & services conglomerate, based in the Middle East. The partnership will see Lightitude represent PhotonStar's LED lighting fixtures across 19 countries in the Middle East and North Africa.In September 2012 the group announced a rolling one year exclusive supply agreement with a major UK house builder, to supply LED lighting fixtures for all of the developer's new homes. In the last year, the house builder completed 1,500 homes, and is forecasting continued growth.LED light engines businessThe group raised £1.5m in December 2012 to further develop products based on its ChromaWhite technology. ChromaWhite is the group's next generation light engine product, which allows microprocessor controlled colour tuning and superior light quality, at an extremely competitive price-point.Sampling of the ChromaWhite range to key customers started in June 2012. The production ramp was initially slowed by third party supply issues which have now been resolved. Shipments are expected to increase during 2013.In October 2012 PhotonStar was invited by ARM Holdings PLC ("ARM") to provide a demonstration of LED lighting with embedded microprocessors as part of a future markets showcase at the ARM TechCon in Santa Clara, California. PhotonStar's ChromaWhite colour tuneable LED technology is one of the first lighting solutions to feature an embedded ARM microprocessor, highlighting the future market opportunities for embedded processors in smart lighting.In January 2013, PhotonStar also demonstrated its LED smart lighting solutions in partnership with CSR at its stand at the CES show in Las Vegas. The group worked closely with CSR to show how Bluetooth smart low energy wireless technology can enable smartphones, tablets and other connected devices to control lighting systems throughout the home.PhotonStar was invited to host the "Evolution of Light" feature exhibit at London's Ecobuild show in March 2013, where visitors were able to interact with the lighting installations through their smartphones and experience the effects of different types of lighting. Around 5,000 people visited the feature which focused not just on efficiency and sustainability but also on the healthier, more productive built environment. A prototype ChromaWhite colour tuneable smart lamp was demonstrated to the public, in a standard lamp form factor, with full wireless control.New product developmentPhotonStar has continued to develop new, more efficient and competitive versions of its LED fixture products. For example, the new EcoStar wholesale range now has a fixture efficiency above 80 lm/W and the specification range has a fixture efficiency range of up to 100 lm/W, an increase of 25% in efficiency since the last versions.Intellectual propertyPhotonStar has a substantial and growing IP platform, comprising a total of 15 patent families covering advanced LED chip design, optimal low cost packaging, advanced colour mixing and control. In December 2012 the group signed its first licensing agreement, on a non-exclusive basis, for its next generation LED chip design patents and an associated design services supply agreement, with a leading LED chip manufacturer. The LED chip patents dating back to 2008/9 are now mostly granted in Europe and progressing through the international phase.Financial reviewGroup sales increased by 44% to £8.7m (2011: £6.1m), reflecting the strong growth in LED fixture sales. LED light engine sales contributed £0.8m to 2012 sales.Group gross margin improved to 40% (2011: 35%). The LED fixtures division saw margins of 38% (2011: 36%) and the LED light engines division saw margins of 60% (2011:35%).The increase in administrative expenses reflects the expansion of the Lighting fixtures business.Non cash costs (depreciation, amortisation and share based payments) included in administrative expenses are similar to last year at £0.5m.The group's pre tax loss for the year was £0.8m (2011: loss £1.1m). Basic (and diluted) loss per share was 0.8p (2011: basic (and diluted) loss per share 1.1p). The group has tax losses of approximately £7.5m available to set against future trading profits.During 2012, the group made capital expenditure of £0.8m, of which £0.5m was spent on development of its LED lighting fixtures and light engines, and £0.3m on plant and equipment.In December 2012 the group raised a further £1.5m net of expenses to support development of its ChromaWhite technology and provide further working capital.During 2012 the group invested £0.4m in additional inventories and trade and other receivables in support of its growing business.The group's year-end net cash position was £1.1m with available borrowing facilities of up to £0.5m.Current trading and outlookA rapid transition towards LED lighting is happening across the market. This is driven by cost reductions, increased efficiency and multiple regulatory drivers, including the Europe-wide ban on incandescent lamps and the code for sustainable homes. PhotonStar is well positioned to take advantage of this opportunity.With a growing reputation as a high quality and innovative manufacturer of LED lighting products, export channels and overseas commercial opportunities for PhotonStar are increasing. Sales to countries outside of the European Union accounted for 23% of revenue in 2012 and are expected to increase in 2013 and beyond, particularly in the Middle East. Another growth area is expected to be northern Europe.The first quarter of 2013 has seen some further operational challenges associated with the continued development and improvement of ChromaWhite, the change of CFO in April 2013 and the general low level of activity in the construction sector across Europe. As in previous years, growth is expected to be second half weighted, following the introduction of new, more efficient and competitive versions of our LED fixture products during Q2 2013.Since the end of the financial year the group's innovative position in the market has continued to be recognised. In March 2013 CEO James McKenzie was awarded Entrepreneur of the Year at the 2013 New Energy and Cleantech Awards.Additionally, in May 2013, the group was awarded a grant by the DECC Entrepreneurs fund of up to £0.4m to support the Smart Circadian Retrofit LED lighting project to develop further ChromaWhite for the retrofit market. This highlighted the innovative and ground breaking nature of ChromaWhite.*For full consolidated statement of comprehensive income and general information notes, visit Investor Relations announcements from PhotonStar LED.

James McKenzie Group Chief Executive +44 (0)2381 230381

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