FireAngel Safety Technology Group plc
(‘FireAngel’, the ‘Group’ or the ‘Company’)
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.
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|
|Singer Capital Markets (Joint broker)||0207 496 3000|
|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