FireAngel SafetyTech - Trading Update

Fireangel Safety Technology

27/07/2022 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220727:nRSa8283Ta&default-theme=true

RNS Number : 8283T  FireAngel Safety Technology Group  27 July 2022

 

27 July 2022

FireAngel Safety Technology Group plc

('FireAngel', the 'Group' or the 'Company')

Trading Update

 

FireAngel (AIM: FA.), one of Europe's leading developers and suppliers of home
safety products, provides the following trading update for the six months
ended 30 June 2022 ('H1 2022' or the 'Period').

 

The Company performed strongly during the Period, with trading results
expected to be ahead of the Board's internal H1 2022 budget. Demand continued
to be driven by regulation leading to anticipated sales of £25.6 million,
representing growth of 15% above the same period last year (H1 2021: £22.2
million). The underlying loss before tax ('LBT') is expected to be materially
better than the Board's internal budget at £1.6 million (H1 2021: LBT £1.5
million).

 

Supply chain disruptions eased across the Period and in Q2 2022, the Company
sold a total of approximately 1.4 million units, against a supply-constrained
total of 1.0 million in Q1 2022, with 581k products sold in June 2022 alone.
Furthermore, in Q1 2022, all standard freight from Asia was booked for the
balance of the year offering greater certainty of supply.

 

FireAngel has continued to successfully execute its gross margin ('GM')
improvement plan and the Board is satisfied with an ahead of budget H1 2022 GM
performance of 21.9% (H1 2021: 23.5%), achieved despite low availability of
higher margin products and strong input price pressures. Prior to our
mitigations taking effect, the Company has had to absorb £1.7 million of
input purchase price variance in H1. Planned mitigations against inflation and
volatile input prices began to improve performance from mid-Q2 2022 and the
Company delivered GM of 26% in June 2022, leaving it well positioned for the
historically stronger second half of the year. The recent GM improvements were
driven particularly by pricing action, sales mix and the establishment of new
entry and mid-level product lines, as detailed below, which the Board believes
will comprise a greater proportion of sales mix as H2 progresses.

 

The Group has benefited during the Period from its currency hedging policy
with a particular focus on the USD/GBP rate. An active review of next year's
hedging options is underway, and the Company is also reviewing other
longer-term requirements with suppliers.

 

At 30 June 2022, the Group had £0.7 million of cash and £4.5 million of debt
excluding IFRS16 lease liabilities (at 30 June 2021: £5.9 million of cash and
£3.6 million of debt), whilst the Company's undrawn Inventory Discount
Finance (IDF) facility had capacity of £4.1 million. Net debt was materially
lower than budgeted and, as inventories build to meet demand, net debt is
expected to return to forecast levels by the year end. The Company expects to
generate positive cash flow in H2 2022.

Connected homes update

FireAngel has made significant further progress with its project to develop a
new generation smoke alarm alongside its partner Techem Gmbh ('Techem'). Two
development milestones were passed in Q2 2022, and the development phase of
the project is now 27% complete. A third milestone was passed in June 2022
when a contracted payment of £279k was made by Techem for use of FireAngel's
pre-existing IP within the project. FireAngel continues to work closely with
Techem to select a manufacturing partner, details of which will be announced
by the Company in due course.

 

Supply of connected products was particularly challenging due to shortages of
key components until mid Q2 2022, and supply is expected to continue to
improve as the year progresses.

 

Value chain update

The Group continued to make progress with its strategy to improve its value
chain, with some operational enhancements already delivering value. The
project to source certain entry and mid-level products, which are uneconomic
to design and produce in Europe, from an existing Chinese partner, was
delivered at the end of Q1 2022. This project is now margin enhancing, as
planned, with 380k units shipped to customers in just over 3 months, replacing
previous models sold by the Company.

 

Outlook

As a result of strong momentum coming into H2 2022, ahead of the typically
stronger second half of the year and eased supply chain restrictions, the
Board expects the Company to meet full year market expectations, primarily as
a result of the strong foundations laid in the Period and in the second half
of last year. The precise progress will be determined partly by the current
variability of inflation and foreign exchange rates, in particular USD/GBP.

 

John Conoley, Executive Chairman of FireAngel, commented: "I am pleased that
the Company has delivered solid growth and ended the first half ahead of the
Board's expectations, thereby making good progress against our strategy for
improved performance.

 

"Despite all challenges so far, management action has preserved Company
progress in the half, and we are still on track to meet our full year market
expectations. The Board continues to expect a materially positive EBITDA
performance for FY2022, along with a cash generative second half, thanks to
strong product demand driven in part by continued regulation.

 

"I want to thank all of our staff who, once again, have been instrumental in
delivering such a strong first half. We are confident in our ability to
deliver against market forecasts for the year, and the Board will continue to
monitor the macro environment and its associated risks closely."

 

The Company will provide a further update on trading and prospects in its
unaudited interim results for the Period, which are expected to be released in
late September 2022.

 

 

*Underlying Loss before Tax in H1 2022 is stated before unaudited share-based
payment charge £0.1 million (H1 2021: £0.1 million)

 

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 joint broker)                               020 7408 4050
 Tom Griffiths/David Coaten

                                                                                  0207 496 3000

 Singer Capital Markets (Joint broker)

Rick Thompson/Alex Bond

 Houston (Financial PR)                                                           0204 529 0549

Kate Hoare/Joe Burgess

 

Notes to Editors

 

About FireAngel Safety Technology Group plc

FireAngel's mission is to protect and save lives by making innovative,
leading-edge 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/)

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTFLFSRDSIRFIF