FireAngel SafetyTech - Techem Partnership Agreements

Fireangel Safety Technology

18/04/2023 07:00

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RNS Number : 5088W  FireAngel Safety Technology Group  18 April 2023

 RNS

18 April 2023

 

 

FireAngel Safety Technology Group plc

('FireAngel' or the 'Company')

 

 Techem Partnership Agreements

 

Highlights

 

 ·         Two delivery and production agreements signed between three parties -
           FireAngel, its long-term manufacturing partner (the "Manufacturing Partner")
           and Techem Energy Services GmbH ("Techem").

 ·         The total income opportunity for FireAngel has grown significantly to an
           aggregate of up to c.$7.50 per alarm (comprising fees, royalties, and purchase
           price of the Company's own CO sensor) based on the same previously announced
           number of units planned for production. This reflects inflation, the changing
           bill of materials and changed scope as the project has matured to this crucial
           point of engaging the Manufacturing Partner.

 ·         Shipments of the new alarm expected to start in 2024 with production volume
           building in 2025.

 ·         Increased development and manufacturing set up fees of up to £650k will be
           received by the Company.

 ·         The Manufacturing Partner has begun working on the project with its Partners
           FireAngel and Techem.

 

FireAngel (AIM: FA.), a leading developer and supplier of home safety
products, is pleased to announce that it has entered into two complementary
agreements that enable the delivery in market of the New Generation Smoke
Alarm ("NGSA") which it has been developing with its partner, Techem. These
are supplementary to the original development agreement described further
below. These new agreements comprise the Delivery Contract ("DC") for
manufacturing the NGSA and the Production Framework and Supply Agreement (the
"PFSA"), which together comprise a very significant milestone for the Company
as it continues to progress its transformational partnership with Techem. This
initiative is expected in due course to be highly cash generative for the
Group and to generate significant long-term strategic value for its
shareholders.

 

Background

On 7 April 2021, FireAngel announced that it had entered into a development
agreement (the "Development Agreement") with Techem to undertake research and
define and agree a development phase for the NGSA, which combines multiple
innovative sensor technologies to produce a state-of-the-art alarm for
installation in Techem's customers' properties. Since then, the partnership
with Techem has made very good progress against its agreed milestones and on
20 March 2023, the Company announced the successful delivery of the fourth
development milestone of the agreement (now 41 per cent. complete) which sees
the delivery of a fully featured product board, which supports all working
functions of the NGSA. Under the Development Agreement, Techem is paying the
Company for the Research and Development phases as well as further payments
for reaching certain pre-agreed milestones in the process. To date, the
Company has received cash payments of some £2.5 million against this process.

 

Overview of the agreements

The DC sees FireAngel and Techem procure the Manufacturing Partner to produce
the NGSA at volume. The Company and the Manufacturing Partner have had a
long-standing and successful relationship involving product procurement and
outsourced manufacturing since 2017. The Manufacturing Partner is a leading
electronics manufacturing services company with a large focus on security,
IoT, Smart City and smart home development.  The PFSA will see the
Manufacturing Partner assemble the NGSA with all electronics and mechanical
components to an agreed FireAngel design specification. Procurement of
specialist production and test equipment will commence immediately to ensure
the earliest possible build-up of manufacturing volume.

 

Pursuant to the terms of the DC, initial shipments of the NGSA are expected to
commence in 2024. Volumes are expected to build up further during the first
half of 2025.  The planned maximum annual throughput would be up to 1.8
million alarms. Actual production volumes will be determined by standard
manufacturing considerations and specific demand at any one time.

 

Through the separate PFSA signed with Techem, FireAngel will become the
contracting party for the Manufacturing Partner, taking responsibility for
overseeing the production of the NGSA, its certification and delivery into
market. Techem will manage marketing, sales and customer relationships.

 

Financial opportunity

As previously announced, Techem has also selected FireAngel's CO sensor to be
part of the product specification, which will be manufactured at the Company's
factory in Mississauga, Canada, to be incorporated into the NGSA. The
Development Agreement was predicated on an initial forecast of approximately 7
million units of the NGSA being sold. This opportunity has now increased to up
to $53m on the same unit forecast. Previously this partnership offered the
Company an opportunity for income of about $38m. Whilst this forecast may in
future vary up or down and will depend, among other things, on the precise
delivery date, Techem and FireAngel will co-operate to assess and maximise the
overall opportunity. The Company and Techem have previously agreed on a
minimum royalty fee of €3 million which is payable to FireAngel after
delivery commences.  There is no normal right of cancellation on the contract
in the first six years.

 

John Conoley, Executive Chairman of FireAngel, commented:

"We are delighted to have entered into these agreements with our partners, one
of them a long-standing manufacturing partner, which is a leading player
within the industry, and Techem, for the production and delivery of this new
generation smoke alarm.

 

"This continues to be a transformational initiative which will create
significant long-term strategic value for FireAngel and its shareholders, and
which is built around expectation of major revenue, margin and cash
generation. This project sits squarely within our vision of increased domestic
connectivity and within our objective to deploy the Company's resources on
higher value activities. Starting in 2024, and especially in 2025, this will
build on the expected improving financial performance of the Company in 2023.

 

"As evolving policy and legislation continues to develop, FireAngel's
connected technology is increasingly well positioned to meet the growing
demand for fire safety technology across its markets and the Board is pleased
to note that this was further underlined by the recent announcement of the
Company's contract win with British Gas."

 

- Ends -

 

For further information, please contact:

 

   FireAngel Safety Technology Group plc          024 7771 7700
   John Conoley, Executive Chairman
   Zoe Fox, Chief Finance Officer

   Shore Capital (Nominated adviser and broker)   020 7408 4050
   Tom Griffiths/David Coaten/Tom Knibbs

   Houston (Financial PR)                         0204 529 0549
   Kate Hoare/Kelsey Traynor/Ben Robinson

 

Notes to Editors

 

About FireAngel Safety Technology Group plc

FireAngel's mission is to protect and save lives by making innovative home
safety products which are simple and accessible. FireAngel is one of the
market leaders in the European home safety products market.

 

FireAngel's principal products are connected smoke alarms, CO alarms, heat
alarms and accessories. The Company has an extensive portfolio of patented
intellectual property in Europe, the US and other selected territories.
Products are sold under FireAngel's leading brands of FireAngel, FireAngel
Pro, FireAngel Specification and AngelEye.

 

For further product information, please visit: www.fireangeltech.com
(http://www.fireangeltech.com/)

 

About Techem

Techem Energy Services GmbH ("Techem"), one of the leading service providers
for green and smart buildings, has signed an agreement with FireAngel to
develop a new generation alarm primarily for the German market. Techem's focus
is on energy efficiency along the entire real estate value chain. It supports
over 12 million properties in 19 countries with efficient ways of energy and
water consumption and has been doing so for more than 70 years.

 

 

 

 

 

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