TIDMFA.
RNS Number : 9847N
FireAngel Safety Technology Group
27 May 2020
27 May 2020
FireAngel Safety Technology Group plc
('FireAngel', the 'Group' or the 'Company')
COVID-19 update, publication of audited accounts, details of AGM
and employee share-matching incentive scheme
FireAngel (AIM: FA.), one of Europe's leading developers and
suppliers of home safety products, provides an update on COVID-19,
announces that it has published its audited accounts for the year
ended 31 December 2019, provides details of its forthcoming AGM and
an employee share-matching incentive scheme.
COVID-19 update
As announced on 30 April 2020, while COVID-19 has impacted the
Company outlook in the short term, revenue for April, at almost 55%
of the Company's pre-COVID-19 budget, was, encouragingly, some way
ahead of the Board's revised expectations. Revenue for May is
expected to be at a similar level of budget achievement.
The Board continues to believe that the medium and long-term
prospects for the Company's unique technology are strong. We are
encouraged by online sales resilience and the increasing shift to
online fulfilment in the Retail business. In recent days, new
enquiries have come through the Trade business, adding to our
growing funnel of opportunities. In addition, pre-existing
commercial opportunities for our connected technology continue to
move forward. The recent re-opening of retail and trade channels,
and clear attempts to restart the construction sector, reinforce
the expectation of a reasonably quick rebound in demand for
FireAngel's unique cost-effective connected solutions. It is
pleasing that demand, whilst reduced, has continued to recover in
our international markets and the emphasis in many UK-customer
conversations has moved to preparing to return to normal behaviour
after lockdown restrictions have been lifted further.
The Board continues to take mitigating actions to conserve cash
and protect profit, whilst maintaining capability in these times of
exceptional uncertainty. In addition to the initial range of
measures previously announced by the Company, which included
placing a number of employees on furlough and further headcount
savings through a reassessment of R&D project deliverables, the
Board has extended the furlough period for some employees, placed
additional employees on furlough, whilst at the same time taken
required employees off furlough to meet increasing demand.
Consistent with this, the Executive Directors have agreed to extend
their reductions of 10% of salary for a further two months and
senior managers have volunteered to similar reductions for two
months. All measures remain subject to review as the macro and
trading picture become clearer.
To conserve cash, the Company has taken advantage of the
Government's tax payment deferral arrangements and has applied for
a Coronavirus Large Business Interruption Loan as a further measure
of prudence. A further announcement will be made as appropriate.
Together with our recent equity fundraising, this will strengthen
the Company's ability to navigate through these unprecedented
times.
Audited accounts
Further to the announcement of its unaudited preliminary results
on 23 March 2020, the Group's 2019 annual report has now been
finalised and can be downloaded from
www.fireangeltech.com/investors . Copies will be sent in due course
to those shareholders registered to receive physical copies along
with details of the Company's AGM which are set out below.
Fundraising since the year end
As announced on 8 April 2020, the Company raised a total of
GBP6.1 million (before expenses) through an open offer and placing
and consequently issued 50,623,480 new ordinary shares at 12p per
share.
Going concern
The Board regularly reviews revenue, profitability and cash flow
forecasts across the short, medium and longer term. A number of
downside sensitised scenarios are modelled and considered to create
a wide range of possible outcomes, the assumptions behind which are
robustly challenged. The Board compares actual performance against
budgets and forecasts and reviews variances to continually refine
and improve forecasting ability from which to make effective
decisions.
However, the uncertain impact of COVID-19 makes such an
assessment more challenging than usual. In order to understand the
potential impact of the risks associated with this uncertainty, a
number of highly sensitised illustrative scenarios have been
modelled. Although the Board expects the most significant effects
of COVID-19 on revenue and profitability still to be in Q2 2020, it
considers a scenario based on the following assumptions to be
prudent given the nature of the Company's customers, products and
distribution channels:
-- Revenue in May 2020 to be at a similar level of budget
achievement to that seen in April 2020 with some recovery in June
2020, although still significantly below budgeted levels, due to
the impact of restrictions being lifted and some normality
returning to retailer and customer behaviour
-- Revenue to be stronger in H2 2020 and improving continually across the second half as:
o There will be an element of pent up demand which has been
deferred, not lost, due in part to a drive in the self-employed
trade sector which we would expect to be highly motivated to
recover earnings lost during the lockdown period
o The opportunity for cost savings afforded by the Company's
connected solutions will become more attractive as non-safety
critical budgets tighten as evidenced by recent UK customer
enquiries
o Many social housing authorities will have ring-fenced fire
safety budgets for the fiscal year to utilise over a now reduced
period of time
o There has been no change in the underlying demand for the
Company's unique technology and there is unlikely to be any change
in the necessity and desire to meet increased duty of care
requirements post-Grenfell
o Existing smoke and CO alarms installed by all manufacturers
will continue to reach end of life and require replacement
o Recent conversations with the UK Fire & Rescue Service
have highlighted an increased awareness of the importance of
protecting vulnerable people in their homes, particularly in the
current climate
-- Some strengthening in the value of sterling against the US
dollar in H2 2020, recovering to levels near those seen immediately
before the impact of COVID-19
-- Expected full year cost savings of GBP0.5 million from
actions already taken to reduce staff costs through furlough and
redundancy, Board and senior manager salary savings, deferred
recruitment, marketing savings and other overhead reductions
The sensitised cash flow forecast based on these assumptions
demonstrates that the Group will be able to pay its debts as they
fall due for a period of at least twelve months from the date of
this announcement. The Directors are, therefore, satisfied that the
financial statements should be prepared on the going concern
basis.
However, in the event that the COVID-19 impact is worse than
modelled, then further measures would be required to relieve any
short-term cash pressures which may arise. As previously described,
the Company has applied for a Coronavirus Large Business
Interruption Loan as a further measure of prudence. Further
measures required could include increasing the number of staff
furloughed, deeper cost savings and tougher working capital
management through negotiation of payment terms with key suppliers.
Given the uncertainty that COVID-19 has created for the Group's
operations, markets, partners and distribution channels, these
conditions indicate the existence of a material uncertainty which
may potentially cast significant doubt on the Company's ability to
continue as a going concern.
AGM
The Company will hold its AGM at 11.00am on 30 June 2020 at the
Company's offices at Vanguard Centre, Sir William Lyons Road,
Coventry CV4 7EZ. In response to the COVID-19 pandemic, the UK
Government has introduced new laws to prevent individuals engaging
in non-essential travel and attending public gatherings of more
than two people, save where essential for work purposes. Having
taken legal advice, the Board has concluded that, in these
exceptional circumstances and to ensure shareholders can comply
with the legal requirements currently in place, shareholders should
not be permitted to attend this year's AGM. Shareholder attendance
at the AGM will be limited to only the two shareholders required to
form a quorum under the Company's Articles of Association, being
the Chairman and one other identified shareholder.
Although shareholders will not be able to attend the 2020 AGM in
person, they will still be able to ensure that their votes are
counted by submitting their proxies in advance by post as detailed
in the Notice of AGM, which is expected to be posted in due
course.
Employee share-matching incentive scheme
The Board has implemented an employee share-matching incentive
scheme, as announced on 5 August 2019 at the time of the award of
share options under the Company's long-term incentive plan. The
scheme, intended to incentivise PDMRs and Executive Directors, will
award options to acquire shares at nominal value on a one-for-one
basis with any shares acquired in the market by the employee, their
spouse or civil partner, subject to the discretion of the Board's
Remuneration Committee. There is no vesting period or performance
criteria for the options under the scheme, therefore the option to
acquire shares would vest immediately and become fully
exercisable.
John Conoley, Executive Chairman of FireAngel, said : " The aim
of the Board is to take a balanced approach, adjusting to the
COVID-19 crisis while maintaining capability to address the clear
opportunity in our marketplace. The Company and its suppliers
continue to work on our many initiatives to that end, albeit at a
slower pace than previously. Over the past week or so, many
encouraging conversations have been had with retailers, housing
associations, local councils and the UK Fire & Rescue Service
which support our view of market activity rebuilding from the
middle of the year. Very recent new enquiries have also been
particularly satisfying . We will provide a further update on the
date of our AGM."
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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