FireAngel Safety Technology Group plc
(‘FireAngel’, the ‘ Group’ or the ‘Company’)
FireAngel (AIM: FA.), a leading developer and supplier of home safety products, announces a trading update for the year ended 31 December 2022 (the “Year” or “FY22”). The figures set out in this announcement are subject to audit.
The Group has delivered a resilient performance in 2022, resulting in its strongest revenue performance since 2017. Business Unit performance has been strong across most territories with demand outweighing supply, driven by the tailwind of increasing legislation.
|·||Outstanding sales growth of 32 per cent. to £57.5 million (2021: £43.5 million)|
|·||Adjusted loss before tax1 (“LBT”) reduced by 30 per cent. to £2.1 million (2021: adjusted LBT £3.0 million)|
|·||Adjusted EBITDA2 of £1.6 million (2021: adjusted EBITDA £0.3 million)|
|·||The Board remains confident of the outlook for 2023 with significantly increased revenue and enhanced gross margin expected.|
1Adjusted LBT is loss before tax, non-underlying items, purchase price variance (“PPV”) for exceptionally high costs for securing scarcely sourced components and mark to market (“MTM”) losses on forward currency contracts.
2 Adjusted EBITDA is loss before tax, depreciation, amortisation, finance costs, non-underlying items, PPV and MTM losses on forward currency contracts.
Underlying gross margin (“GM”) broadly maintained, despite significant external headwinds, with currency fluctuations and PPV impacting reported GM
In the face of the macro challenges experienced in H2 2022, the Company began work on a range of further self-help measures and these adjustments are expected to boost materially the Company’s financial performance in 2023 and subsequent years. Those improvements include:
· the impact of price rises;
· value engineering to reduce costs on selected products;
· introduction of an additional entry level product; and
· renegotiation of terms on certain contracts.
Together, these and other changes are expected to restore the financial journey that the Board outlined at the time of the Company’s fundraising in H1 2021.
The majority of the Company’s goods and services are currently purchased in USD. As previously announced in September 2022, the Company chose to establish a level of certainty by hedging a large proportion of the USD purchases for the remainder of the year and into 2023 at an average rate of 1.14 USD/GBP. This established a level of certainty as regards cash performance in the rest of the year and into 2023. At 31 December 2022, there was a mark-to-market loss on the forward currency contracts taken out from September 2022 of £1.6 million (2021: gain of £0.3 million).
Exceptionally high PPV costs for securing scarce components of £1.4 million were incurred in the year compared to £0.8m in 2021. The Company does not expect these costs to be a material cost going forward.
Balance sheet update
The significant impact of the global supply chain challenges previously reported improved across H2 2022, however, the Company and its suppliers are still having to commit to purchases 12 to 15 months ahead, as opposed to a historic norm of 3 to 6 months. Changes in product and sourcing mix along with extended shipping times from Asia have impacted the level of stock held by the Company. As a result, stock at 31 December 2022 stood at approximately £8.0 million, compared to an abnormally low comparable position as at 31 December 2021 of £3.7 million. The Board had anticipated a Year end stock number closer to £7.0 million.
Net debt before lease obligations at 31 December 2022 was £4.8 million (2021: net cash £0.1 million) and comprised cash balances of £1.4 million (2021: cash £3.3 million), invoice discount facility (“IDF”) draw down of £3.4 million (2021: IDF drawn down nil) and a CBILS loan of £2.8 million (2021: CBILs £3.2 million).
The Company’s audited final results for FY22 are expected to include a non-cash impairment of intangible assets of £0.9 million relating to historical product development which the Board has resolved will not proceed.
Further progress against strategic initiatives to move to higher value activities
FireAngel’s partnership with Techem Gmbh (“Techem”) remains on track
|·||Product development activities have progressed to date in line with planned milestones over the last 12 months. The project is now 37% complete; and|
|·||The development of a three-way manufacturing contract is progressing.|
Continued progress in sourcing entry level products from existing Chinese partner
|·||Launch of several entry to mid-level products, which began in Q2 2022, have been margin enhancing as planned; and|
|·||Since launch, over 800,000 units had been sold up to 31 December 2022.|
Demand for the Company’s products remains strong and the Board expects the Company to grow revenue and enhance gross margin significantly in 2023.
John Conoley, the Company’s Executive Chairman, said: “The expected FY22 result represents an outstanding performance set against the unprecedented macro circumstances. Whilst the reported result will not be what we had set out to achieve, the underlying numbers demonstrate the strong progress made in line with our ambitions outlined at the time of the Company’s fundraising in H1 2021.
“Societal and regulatory development continues to drive demand for our products. Our continuing focus on self-help pleasingly shows a resilience in overcoming a wide range of macro headwinds to leverage this demand. The Board expects additional significant improvement in our financial journey in 2023, positioning the Group for further progress against our strategic plans.”
The Company will provide a further update on current trading at the time of its audited final results for the year ended 31 December 2022.
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/Tom Knibbs|
|Singer Capital Markets (Joint broker)||0207 496 3000|
|Rick Thompson/Alex Bond|
|Houston (Financial PR)||0204 529 0549|
|Kate Hoare/Ben Robinson|
Notes to Editors
About FireAngel Safety Technology Group plc
FireAngel’s mission is to protect and save lives by making innovative, 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