TIDMFA.
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 GBP25.6 million, representing growth of 15%
above the same period last year (H1 2021: GBP22.2 million). The
underlying loss before tax ('LBT') is expected to be materially
better than the Board's internal budget at GBP1.6 million (H1 2021:
LBT GBP1.5 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 GBP1.7 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 GBP0.7 million of cash and GBP4.5
million of debt excluding IFRS16 lease liabilities (at 30 June
2021: GBP5.9 million of cash and GBP3.6 million of debt), whilst
the Company's undrawn Inventory Discount Finance (IDF) facility had
capacity of GBP4.1 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 GBP279k 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 GBP0.1 million (H1 2021:
GBP0.1 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
Singer Capital Markets (Joint broker) 0207 496 3000
Rick Thompson/Alex Bond
Houston (Financial PR)
Kate Hoare/Joe Burgess 0204 529 0549
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
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END
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