TIDMFA.
RNS Number : 3872L
FireAngel Safety Technology Group
30 April 2020
30 April 2020
FireAngel Safety Technology Group plc
('FireAngel', the 'Group' or the 'Company')
Business update: Q1 trading and the impact of COVID-19
FireAngel (AIM: FA.), one of Europe's leading developers and
suppliers of home safety products, provides the following update
on, among other matters, Q1 trading, the impact of COVID-19 and
mitigating actions taken as a result and connected trials.
The Company's performance in the first quarter of 2020 was close
to the Board's expectations, with revenue and gross profit slightly
below budget. Gross profit margin remains ahead of Q1 2019 and in
line with budget. However, an opportunity to outperform was lost in
part due to the impact of COVID-19 as March progressed.
Impact of COVID-19
COVID-19 will clearly have an impact on the Company outlook in
the very short term, although the medium and long-term prospects
are underpinned by the market need matching our compelling and
unique products. This offers the possibility of a quick rebound,
and the Board has taken certain mitigating actions, further details
of which are set out below, which aim to balance the clear
uncertainty with maintaining capability while conserving the
Group's cash and protecting its profit.
The Board expects the most significant effects of COVID-19 on
revenue and profitability to be in Q2 2020. This initial view will
be revised in the light of events should it be required. A
reasonable, albeit much reduced, level of revenue is expected to be
maintained due to regulatory requirement drivers, the ongoing
market need to maintain overall safety, and the different stages
which each of our markets will enter as restrictions are lifted.
Installation of our products is often driven by community safety
groups, construction and self-employed tradesmen, who we would
expect to be highly motivated to recover lost ground following the
lifting of the current restrictions.
The first half of the year typically accounts for just over 40%
of the Company's annual revenue. This year, for reasons previously
announced, the Company's second half revenue is expected to be at a
higher margin than the first half and, therefore, the timing of the
COVID-19 pandemic is expected to have a more limited impact on the
Company's performance than might have been the case later in the
year.
The Company continues to receive orders, develop products, work
with Fire & Rescue Services across the UK and other customers,
and improve its gross margin potential. FireAngel alarms are
safety-critical items and remain on sale where traditional
retailers which sell them remain open for business. Online sales
have proved to be particularly resilient with sales impacted much
less than through bricks and mortar retailers. International sales
have continued to perform close to budgeted levels.
Mitigating actions taken to conserve cash and protect profit
The Board's initial response to COVID-19 includes a range of
measures which are expected to reduce planned expenditure this year
by approximately GBP0.4 million. We have placed 18 employees
(representing 15% of the UK workforce) on furlough for an initial
period of four weeks. A thorough review of the timing of certain
R&D project deliverables has enabled further limited headcount
reductions. The Board has agreed to take reductions of 10% of
salary for Executive Directors and 20% of fees for Non-Executive
Directors for two months. All measures will be subject to continued
review as the macro and trading picture become clearer.
Re-phasing of R&D is unlikely to have a material effect on
future revenues. The existing, already spent, investment in
Intellectual Property provides ample support for revenue and margin
growth.
The Company has also implemented a further range of cash
conservation measures. These include deferral of payments, such as
VAT and payroll taxes, as well as arrangements with landlords and
suppliers. At all times, the Company remains in close contact with
its bank, HSBC, who continue to be supportive. We are reviewing
with them the possibilities of securing a Coronavirus Large
Business Interruption Loan as a further measure of prudence.
Update on connected trials
As previously announced, trials of FireAngel's connected home
products, including FireAngel Predict(TM) , have been ongoing and
have been well received. On 23 March 2020, the Company announced
that it was close to signing a contract with a local authority for
a large connected rollout using FireAngel Pro Connect and FireAngel
Predict(TM) . While commercial discussions have now been concluded
and training for installers is planned in May 2020, subject to
lockdown restrictions, with product rollout planned at the start of
June 2020, the inevitable disruption caused by the COVID-19
lockdown measures has delayed contractual sign off. Further trials
have been completed with two other significant connected
opportunities which have now entered commercial discussions,
albeit, for obvious reasons, at a slower pace. Some further
opportunities have in the past few weeks in fact become firmer
despite the impact of COVID-19. Further updates will be announced
as appropriate.
Market guidance
Due to uncertainty around COVID-19 and timing of when
restrictions will be lifted, the Board has decided to withdraw the
Company's market guidance given that it is too early to
substantiate or vary it with any certainty.
Publication of audited results for 2019 and AGM arrangements
Given the uncertainty around the duration and impact of measures
to address COVID-19, the Board has decided to delay the publication
of the Company's audited Report and Accounts for the year ended 31
December 2019 (the "Year") in order to more fully assess the impact
of current and future lockdown measures. The Company expects
currently to publish its audited statutory accounts for the Year
during May 2020 and will provide guidance as to the format and
timing of its AGM at that time. A further announcement will be made
in due course.
John Conoley, Executive Chairman of FireAngel, said : "I believe
that FireAngel is much better positioned to weather the COVID-19
storm than so many other companies. We recently completed a
fundraising of a net GBP5.5 million at an ideal time, for reasons
that remain unchanged. Our market fundamentals are intact, and
indeed future opportunities have crept forward even during the
lockdown. Our management reaction is a proportionate one therefore,
in terms of cost cutting and cash conservation, whilst retaining
capability for a fast rebound in revenue. The Company is capable of
executing such a rebound, once conditions begin to improve.
FireAngel remains very much open for business."
For further information, please contact:
FireAngel Safety Technology
Group plc 024 7771 7700
John Conoley, Executive Chairman
Mike Stilwell, Group Finance
Director
Shore Capital (Nominated adviser
and broker) 020 7408 4050
Tom Griffiths
Notes to Editors
About FireAngel Safety Technology Group plc
FireAngel's mission is to protect, save and improve our
customers' lives by making innovative, leading-edge technology
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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