Trading & Discussion Update and EGM Requisition

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7 August 2019

Frontier Smart Technologies Group Ltd

("Frontier", the "Group" or the "Company")

Update on Trading, Status of Discussions and EGM Requisition

The Board of Frontier (the "Board") provides the following update to shareholders on the Group's trading position and ongoing discussions with Science Group plc ("Science Group") regarding the composition of the Frontier Board.

Update on Trading and Status of Discussions

Frontier announces that trading in the first half of 2019 was in line with the revised expectations set out in the Company's trading update on 9 May 2019 (the "Trading Update"). Trading to date in the second half is also in line with expectations, although customer lead times have reduced in recent months and Q4 orders have still to be placed. As set out in the Trading Update, in light of adverse market and trading conditions, the Board reviewed its options for cost mitigation and potential restructuring, and a mitigation plan was drawn up to protect Frontier's cash position and return the Group to profitability at a Trading EBITDA level in FY20.

The Company received an approach from Science Group on 8 May 2019 and, as detailed in subsequent announcements, exploratory discussions have remained ongoing. Furthermore, Frontier also received an approach from a credible industry player with a view to executing a corporate transaction, which was also subject to detailed consideration by the Board.

Whilst these deliberations continued the mitigation plan was put on hold, so as to preserve options while Frontier reviewed and explored potential synergies between the Company and the two potential partners. Much management time and effort has gone into exploring these options and the professional advisory fees incurred in managing this corporate activity, particularly in respect of the ongoing discussions with Science Group, are currently in the order of $450k. These fees, which had previously not been forecast, will be charged to the Group's profit and loss account in the second half of 2019.

At the time of the Trading Update, covenants on the Company's credit facility with Clydesdale Bank ("CYB") were forecast to be met in the near term; the June covenants testing were indeed met and the Board expects the September covenants testing will be met. With regards to future covenants testing, the Company is in ongoing discussions with CYB in light of the Group's current trading position, the anticipated impact of the mitigation plan and the outlook for FY20. Further updates will be provided, as appropriate, following conclusion of these discussions.

Given Science Group's stated intention to maintain a significant minority shareholding (and ruling out a statutory merger in the near-term) and the lack of timely traction with the industry player, it is clear that Frontier will continue to operate as an independent entity for the foreseeable future. The delay to the mitigation plan, coupled with the additional advisory fees incurred in connection with the ongoing corporate activity, increase the risk to Frontier's current credit facilities and place further pressure on Group cash flows. The Board now intends to take action on cost mitigation and potential restructuring by implementing a revised version of the mitigation plan as soon as possible, so as to preserve Group outlook for FY20.

Requisition of Extraordinary General Meeting

As per the joint announcement of 30 July 2019 entitled 'Board Changes' (the "Board Announcement"), Frontier was pleased to announce an agreed transition of the Board, in conjunction with Science Group, with a view to securing a route forward for the business and allowing Science Group to have direct input into formulating Frontier's strategic priorities and targets.

Notwithstanding this agreement, the Board yesterday received notice that Science Group has requisitioned an extraordinary general meeting of Frontier (the "EGM") to replace the non-executive directors of Frontier with appointees of Science Group (the "Requisition Notice"). The proposals set out in the Requisition Notice are as follows:

-    that Sir Hossein Yassaie, Paul Taylor and Martin Harriman* all be removed from the Board;

-    that Martyn Ratcliffe and Sarah Cole be appointed to the Board; and

-    that the authorisation granted at the Company's most recent annual general meeting on 14 May 2019 to disapply pre-emption rights be revoked with immediate effect.

*As previously announced, Martin Harriman stepped down from the Board with effect from 30 July 2019.

Frontier anticipates posting notice of the EGM shortly and will provide a further update in due course.

For Further Enquiries:

About Frontier Smart Technologies Group Limited

Frontier Smart Technologies is a pioneer in technologies for Digital Radio and Smart IoT devices. The Group's customers include many leading consumer audio brands: Bose, Denon, harman/kardon, JBL, Onkyo, Panasonic, Sony, Yamaha, Altec Lansing, Blaupunkt, Grundig, Hama, Klipsch, Marshall, Pioneer, Pure, Roberts, TechniSat, Teufel and many more. Established in 2001, the Group is headquartered in London, with engineering, sales and operations teams in Cambridge, Timisoara (Romania), Hong Kong and Shenzhen. For more information, see frontiersmart.com.