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.
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.
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 £6.1 million (before expenses) through an open offer and placing and consequently issued 50,623,480 new ordinary shares at 12p per share.
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:
- 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
- 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
- Many social housing authorities will have ring-fenced fire safety budgets for the fiscal year to utilise over a now reduced period of time
- 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
- Existing smoke and CO alarms installed by all manufacturers will continue to reach end of life and require replacement
- 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 £0.5 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.
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|
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