TIDMFA.
RNS Number : 9822M
FireAngel Safety Technology Group
27 September 2021
27 September 2021
FireAngel Safety Technology Group plc
('FireAngel', the 'Group' or the 'Company')
Interim results for the six months ended 30 June 2021
FireAngel (AIM: FA.), a leading developer and supplier of home
safety products, announces its unaudited interim results for the
six months ended 30 June 2021 ('H1 2021' or the 'period').
Financial highlights
-- Revenue up 35.0% to GBP22.2 million (H1 2020: GBP16.5
million)
-- Gross profit up 42.8% to GBP5.2 million (H1 2020: GBP3.6
million)
-- 130 bps increase in gross margin to 23.5% (H1 2020:
22.2%) in line with the Board's expectations
-- Underlying operating loss(1) reduced by 46.1% to GBP1.4
million (H1 2020: GBP2.7 million)
-- Underlying EBITDA(2) of GBP0.2 million (H1 2020: underlying
LBITDA(1) GBP0.8 million)
-- Significantly reduced loss before tax GBP1.7 million
(H1 2020: GBP3.0 million)
-- Capitalised product development and production set
up costs of GBP1.3 million (H1 2020: GBP1.6 million)
-- Inventory at 30 June 2021 of GBP4.9 million (30 June
2020: GBP9.4 million) - restriction on inventory availability
due to global supply chain challenges
-- Net cash (before lease obligations) at 30 June 2021
of GBP2.2 million (30 June 2020: GBP1.5 million net
debt; 31 December 2020: GBP3.7 million net debt) which
comprised cash of GBP5.8 million and debt of GBP3.6
million
-- Net debt at 20 September 2021 of GBP0.9 million which
comprises cash of GBP2.3 million and debt of GBP3.2
million with no drawings under the Company's invoice
discounting facility
-- Successful fundraising of GBP9.8 million (gross) announced
in April 2021 and a GBP3.2 million loan under the Coronavirus
Business Interruption Loan Scheme (CBILS) plus a new
GBP0.5 million Receivables Finance CBILS secured in
March. Following the repayment of the balance of the
CLBILs for GBP2.0 million, the new loan provided a
net GBP1.2 million cash inflow to further strengthen
the Group's balance sheet
(1) Underlying operating loss of GBP1.4 million in H1 2021 is
before a share-based payments charge of GBP0.1 million (H1 2020:
GBP2.7 million before a share based payment charge of GBP0.2
million).
(2) Underlying EBITDA of GBP0.2 million in H1 2021 stated before
unaudited share based payment charge of GBP0.1 million (H1 2020;
underlying LBITDA of GBP0.8 million stated before unaudited share
based payment charge of GBP0.2 million)
Business and operational highlights
-- Good overall performance achieved in line with the Board's
expectations for the half year, despite ongoing global supply
chain challenges restricting ability to fully exploit the
growing demand for FireAngel's connected products
-- Strong performance in both UK and Benelux Trade with both
territories seeing their best ever sales periods in the Group's
history; and UK Trade sales up 87% on H1 2020
-- Continued progress against strategic priorities, including
gross margin improvement plan which benefitted from Connected
sales mix through online retail and trade margins
-- Partnership signed with German energy and efficiency service
provider continues to progress with first invoices for the
project now raised
-- Partnership with Ealing Council remains on track with 18,000
devices now installed
-- Deployment of net proceeds of approximately GBP9.0m from fundraising
on track, with the exception of building inventory levels
due to supply chain challenges
Outlook
-- On track to meet market expectations for the year, albeit the
Board remains cautious on H2 outlook given the current global
supply chain challenges being felt across the industry
-- Compelling proposition to protect and save lives with innovative,
cutting-edge home safety technology continuing to underpin growth
ambitions, supported further by legislative drivers
John Conoley, Executive Chairman of FireAngel, commented :
"Overall, we have delivered a positive performance in line with
the Board's expectations for the half year against a challenging
backdrop. Those events that are within our control have gone well
and we have continued to make progress against our strategic
priorities, including our gross margin improvement plan. We are
seeing growing interest in our Connected technology offering as we
push forward with focusing on better quality sales of our Connected
propositions. The funds raised in April are being deployed as
planned, although we have not been able to build our inventory to
the level we had hoped due to the ongoing supply chain issues.
"The second half of the year presents challenges for the Group.
Lockdown restrictions have eased in our sales markets, but
increasing challenges have come from factory restrictions, port
closures, driver shortages, sea freight delays, lost efficiency
opportunities, missed collaboration opportunities with partners,
component shortages, and ensuing complexity. There appears to be
little easing up in the issues facing the global supply chain and
the journey out of COVID-19 restrictions may not play out as
expected. We remain on track to meet market expectations for the
year, but remain cautious due to the dynamic nature of the pandemic
related challenges."
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/Laura Stewart
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
Chairman's Statement
Overview
The Group has experienced positive trading momentum in the first
half of the year, in line with the Board's expectations. The
operational progress made in 2020 has provided a strong platform
from which the Group has continued to make further progress against
its strategic priorities. The easing of lockdown restrictions has
also significantly reduced the disruption to day-to-day working and
resulted in growing momentum in the roll-out of major
partnerships.
As a result, revenues in H1 2021 were up 35.0% to GBP22.2
million (H1 2020: GBP16.5 million) resulting in underlying EBITDA
of GBP0.2 million versus LBITDA of GBP0.8 million in the
corresponding period in the prior year. Gross margin rose to 23.5%
(H1 2020: 22.2%) reflecting continued progress against the Group's
gross margin improvement plans.
Whilst the remaining COVID-19 restrictions combined with the
well documented and ongoing challenges in global supply chains are
hampering the Group's ability to exploit fully the growing demand
for FireAngel's connected products, the Board is pleased with the
Group's progress to date.
Business review
The overriding planned output of the Group's activity in 2021,
2022 and 2023 is to improve gross margin significantly
year-on-year. We will do this by leveraging our differentiation,
which includes our pioneering Connected Homes technology, and our
data opportunity, further details of which are set out below.
Our three key strands of activity to achieve this are:
- Migrating to higher value activities and cut out lower
value, lower impact activities;
- Commercialising our investment in Connected technology;
and
- Streamlining our value chain of end-to-end administrative
and production activities.
There remains significant opportunity in all three of these
areas as set out further below.
Moving to Higher Value Activities
The Group's project to source certain entry level products which
are uneconomic to design and produce in Europe, from an existing
Chinese partner, remains on track and is expected to be margin
enhancing in FY22. Products are on track in certification and,
following a detailed channel and pricing review, the project now
indicates a higher opportunity than originally identified.
Further to its announcement on 7 April 2021 of a significant
partnership with a German energy and efficiency service provider to
develop a new generation alarm, mainly for the German market,
FireAngel has successfully scaled up its activities to meet this
opportunity, with the first phase currently on track to be
completed this month as planned. Billing commenced in Q2 2021 with
approximately GBP850,000 having been invoiced by the Company by the
end of September 2021 for development work and IP.
Better Quality Sales of Connected Technology
H1 2021 saw a strong performance across UK Trade as lockdown
restrictions were lifted and the market fully reopened. Overall UK
Trade sales were up 87% in the period compared with the
corresponding period in the prior year and 52% up on 2019. With UK
and Benelux's performance in H1 2021 being the best in the Group's
history and performance in Q2 2021 remained strong despite
historically being a softer quarter.
Retail sales also delivered further growth on last year with
improved margin performance reflecting a higher mix of Connected
and online sales, with sales through Amazon being up 46% on the
corresponding period in the prior year.
Consumer interest and uptake in FireAngel's Connected products
has also continued to grow with over 21,000 thousand devices, at
the date of this announcement, now registered on its consumer
mobile phone application, a marked increase from the 1,400 devices
at 1 July 2020.
Over the course of the period, the Group was able to
re-establish momentum in the Connected trials and potential sales
of larger opportunities, particularly in social housing where the
Board sees significant potential for the Group's Connected Homes
proposition. The Group's partnership with Ealing Council has
progressed significantly as COVID-19 restrictions have eased and
18,000 devices have now been installed across 11 blocks, with the
rollout of hardware and connectivity continuing during the
remainder of the year.
Value Chain Improvements
The Group's strategy to improve its value chain continued to
progress in the period, underpinned by operational enhancements,
intended to make the business more efficient, as previously
communicated in part through the gross margin improvement
programme.
The packaging review and SKU rationalisation, which were both
implemented at the start of this year, have helped drive
encouraging progress. The Board expects this margin improvement to
continue in H2 2021 and into 2022 at an annualised rate of 1%.
Finally, a new framework agreement via the West Midlands Fire
and Rescue Authority ('WMFRA') was signed for FireAngel to be one
of the official suppliers of smoke alarms and associated products
to the UK's Fire and Rescue Service ('UK F&RS') for the next
four years. This was awarded at the end of H1 2021 and includes
greater focus on Connected products. This is expected to further
improve the Group's margin mix from H2 2021.
Supply chain and ongoing COVID-19 challenges
The widely reported global supply chain challenges have
inevitably been felt by the Group. The biggest impact has been
unexpected variability of input prices and timely component
availability. Also significant in the course of H1 2021 has been
shipping disruption and delays restraining FireAngel's ability to
meet the growing demand for its products.
The inability to travel freely as a result of the ongoing
COVID-19 international restrictions is also still hampering our
ability to work constructively with our manufacturing partners to
drive further efficiencies and change. The Board expects the
potential unlocking of travel restrictions in the coming months to
assist with a revision to normal practice over the second half of
the financial year and beyond.
To date, the Group has successfully managed the impact of these
issues and absorbed associated costs, with actions put in place to
mitigate the potential longer-term impact, including an inventory
strategy pricing review, channel mix and cost control. However, we
continue to monitor the situation very closely.
Use of net proceeds of fundraising
The net proceeds of the fundraising announced in April 2021 have
been used to strengthen the Company's balance sheet whilst the
Group continues its commitment to focus on product development.
As previously outlined, the global supply chain challenges have
frustrated the planned Q2 2021 increase in inventory. The Group is
aiming to increase inventory levels during H2 2021 to meet expected
demand and will deploy appropriate funds to secure critical
components for supply.
Investments have been made in the Group's IT systems to improve
efficiencies and operational processes, driving cost savings. These
have included increasing EDI capacity alongside improvements to ERP
and phone systems which will improve communication, provide greater
reporting capabilities and control through the business in addition
to reducing costs in FY22.
Spend on and utilisation of the Group's legacy warranty
provision covering its historic battery issues has continued. This
is tracking the Board's forecasts and is in line with the year to
date provision expectation.
Financial performance
FireAngel's revenue for H1 2021 was GBP22.2 million (H1 2020:
GBP16.5 million) representing 35.0% growth on the corresponding
period in the prior year. The Company recorded an underlying
EBITDA(1) of GBP0.2 million (H1 2020 LBITDA(1) : GBP0.8 million),
resulting in a reduction in the underlying operating loss(2) to
GBP1.4m (H1 2020: GBP2.7m).
The gross margin was 23.5% (H1 2020: 22.2%, before
non-underlying charges of GBP0.1 million) reflecting further
progress against the Board's self-help gross margin improvement
plan.
(1) Underlying EBITDA of GBP0.2 million in H1 2021 stated before
unaudited share-based payment charge of GBP0.1 million (H1 2020;
underlying LBITDA of GBP0.8 million stated before share based
payment charge of GBP0.2 million)
(2) Underlying operating loss of GBP1.4 million in H1 2021 is
before a share-based payments charge of GBP0.1 million (H1 2020:
GBP2.7 million before a share-based payment charge of GBP0.2
million).
The Group has a forward hedging policy, which aims to mitigate
the risk of currency fluctuations by locking into current rates for
future periods on a set percentage of expected future currency
flows. At 30 June 2021, there was a market to market decrease to
the sterling cost on the Group's forward contracts in place, which
is required to be recognised in cost of sales. At 30 June 2021,
this had a GBP0.6 million beneficial impact on the gross margin for
the period (H1 2020: GBP0.6m benefit).
Recognised under "other income", furlough payments of GBP0.1
million were received under the Canadian Emergency Wage Subsidy
during the period. The scheme enabled employers to retain staff
despite the economic impact of COVID-19 through government grants
relating to wage subsidies. There were no UK furlough payments
received during the period.
Basic and diluted EPS was a loss per share of 1.0p based on the
weighted average number of shares outstanding during the period of
139.2 million (H1 2020: 2.6p, based on the weighted average number
of shares outstanding during the period of 99.3 million).
Business unit performance
Revenue split between the Group's business units was as
follows:
Six months ended Six months ended 30 June 2020
30 June 2021 Change
Revenue GBP000 GBP000 GBP000 %
---------------------------- ----------------- ------------------------------ ------- ------
UK Trade 5,791 3,101 2,690 87%
UK Retail 8,328 6,008 2,320 39%
UK Fire & Rescue Services 1,488 1,530 (42) (3%)
UK Utilities 207 338 (131) (39%)
--------------------------- ----------------- ------------------------------ ------- ------
Total sales in the UK 15,814 10,977 4,837 44%
International 5,434 4,630 804 17%
European Partner 174 - 174 N/A
Pace Sensors 799 848 (49) (6%)
--------------------------- ----------------- ------------------------------ ------- ------
Total revenue 22,221 16,455 5,766 35%
---------------------------- ----------------- ------------------------------ ------- ------
From 1 January 2021, certain customers previously reported
within the UK Utilities business unit are now reported through UK
Trade. The 2020 comparatives have been adjusted accordingly.
UK Trade
The UK Trade business was significantly up on the first half
year in both 2020 and 2019 with strong margins despite the
continued COVID-19 restrictions, which were still in place for the
majority of the period.
The Group was successful in winning new business during the
period and onboarding new accounts which we expect to unlock new
market opportunities as the year progresses.
UK Retail
The Group continued to drive positive margin performance in UK
Retail with a higher mix of Connected and online sales resulting in
a 3% uplift on the corresponding period in the prior year. Whilst
sales growth was held back by the lack of available inventory due
to the global supply chain issues, good growth was still achieved
during the period, particularly when compared to the corresponding
periods in the prior two years.
UK Fire & Rescue Services ('UK F&RS') and UK
Utilities
UK F&RS and Utilities both continued to be hampered by the
ongoing access limitations as a result of the COVID-19
restrictions. However, this started to improve in April 2021 with
Connected sales growth continuing to support margin improvement. As
aforementioned, the Group was also pleased to announce that it had
been selected as one of the official suppliers of smoke alarms and
associated products to the UK's Fire and Rescue Services, which
continues FireAngel's long standing relationship with UK F&RS
and is the second time the Group has been included in such a
framework agreement.
International
The impact of the global COVID-19 lockdown restrictions
continued to significantly hamper international retail sales.
Nevertheless, Amazon sales started the year well significantly up
on the prior year and the Group started to see improvement in some
of its core European territories as the period progressed with a
particularly strong performance from our Benelux Trade business, up
78% versus budgeted profit for H1 2021, driven by the upcoming
Dutch legislation which will take effect in July 2022 where all new
and existing properties must have smoke alarms on every floor.
Overall H1 2021 performance remained in line with H1 2019 which was
a satisfactory result given the trading challenges.
Pace Sensors
At GBP0.8 million, revenue at Pace Sensors, the Group's
manufacturer of CO sensors, is in line with the same period in the
prior year (H1 2020: GBP0.8 million), representing 3.5% of total
turnover for the period, which is slightly behind the same period
in the previous year (H1 2020: 5%), as demand for the CO sensor
technology continues to be strong.
Balance Sheet and Cash Flow
In March of this year, the Company secured a GBP3.2 million loan
under the Coronavirus Business Interruption Loan Scheme (CBILS) and
a new GBP0.5 million Receivables Finance CBILS. T he balance sheet
was further strengthened in April 2021 with a successful
fundraising of GBP9.8 million (gross) through the issue of 54.4
million new ordinary shares at an issue price of 18p per share and
incurred fundraising costs of GBP0.8 million.
At GBP4.9 million at 30 June 2021, the Group's inventory was
lower than budgeted, reflecting the challenges the business is
experiencing with the supply chain impacted by component shortages,
freight delays and production interruptions (30 June 2020: GBP9.4
million; 31 December 2020: GBP6.6 million). As we move through the
second half of the year, this continues to be a challenge within
the business with demand and momentum of sales continuing, but
restrictions on inventory for supply.
Net book value of 'other intangibles' at 30 June 2021 was
GBP12.0 million (30 June 2020: GBP13.2 million), of which GBP11.3
million is capitalised product development and software. During the
period, the Group had reduced investment of GBP1.0 million in
continuing to develop the Group's Connected Homes and new product
ranges (H1 2020: GBP1.6 million).
The Company invested a further GBP0.3 million in the period on
plant and equipment investing in tooling as part of migrating to
higher value activities and increasing capacity (2020: GBP0.1
million).
At 30 June 2021, the Company had GBP0.4 million VAT payable
under the UK Government VAT deferral scheme. This relates to VAT,
which was originally payable in July 2020, and the final payment
will be made in January 2022.
With the increasing sales in the period, the funding available
through the Company's invoice discounting facility has returned to
pre-COVID-19 levels. On 30 June 2021, the facility was not
significantly drawn on.
In total, the net increase in cash in the period was GBP4.3
million (H1 2020: decrease of GBP1.0 million). Net cash ( excluding
IFRS16 lease liabilities ) at 30 June 2021 amounted to GBP2.2
million (30 June 2020: GBP1.5 million net debt; 31 December 2020:
GBP3.7 million net debt). Net debt at 20 September 2021 was GBP0.9
million which comprises cash of GBP2.3 million and debt of GBP3.2
million.
The net cash outflow of GBP3.1m from 30 June 2021 to 20
September 2021 was due to planned seasonal changes in working
capital. In addition, we have worked with our suppliers to secure
components much further out than normal in order to mitigate
against the impact of the global supply chain challenges. We expect
this additional working capital investment to unwind when things
return to normal. As at 20 September 2021, the Company's invoice
discounting financing facility had no drawings and availability
under the facility is GBP2.6 million .
Dividend
The Board does not propose to pay an interim dividend (H1 2020:
nil).
Outlook
Since early this year, FireAngel has faced growing challenges
from its supply chain due to disruptions relating to COVID-19.
While lockdown restrictions have eased in our sales markets, our
increasing challenges have come from factory restrictions, port
closures, driver shortages, sea freight delays, lost efficiency
opportunities, missed collaboration opportunities with partners,
component shortages, and ensuing complexity. The impact has been
most notable in sharply rising costs, and in the Company's
inability to meet rising demand in a timely way. We have largely
mitigated the increasing costs to this point in part through tight
management of costs and through initial price increases.
We remain on track to meet market expectations for the year, but
remain cautious due to the dynamic nature of the pandemic related
challenges. The cost variances are expected to remain over the
medium term, impacting 2022. Our detailed and wide-ranging
restorative actions will have a deeper impact on FY 2022 and the
longer-term margin expansion journey is strongly supported by our
current work.
Nonetheless, our compelling proposition to protect and save
lives with innovative, cutting-edge home safety technology
continues to underpin our growth ambitions and is supported further
by legislative drivers.
John Conoley
Executive Chairman
Consolidated income statement
For the six months ended 30 June 2021
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended 31
ended 30 June ended 30 June December 2020
2021 2020
Before Non-underlying Before Non-underlying Before Non-underlying
non-underlying items Total non- items Total non- items Total
items (note 4) underlying (note 4) underlying (note 4)
Note items items
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------- ------ -------------- -------------- -------- ---------- -------------- --------- ---------- -------------- --------
Revenue 3 22,221 - 22,221 16,455 - 16,455 39,928 - 39,928
Cost of sales (17,009) - (17,009) (12,806) - (12,806) (32,032) (1,717) (33,749)
------------- ------ -------------- -------------- -------- ---------- -------------- --------- ---------- -------------- --------
Gross profit 5,212 - 5,212 3,649 - 3,649 7,896 (1,717) 6,179
Operating
expenses (6,778) (112) (6,890) (6,327) (176) (6,503) (13,606) (1,924) (15,530)
Other
operating
income 5 122 - 122 - - - 291 - 291
------------- ------ -------------- -------------- -------- ---------- -------------- --------- ---------- -------------- --------
Loss from
operations (1,444) (112) (1,556) (2,678) (176) (2,854) (5,419) (3,641) (9,060)
Finance costs (104) - (104) (152) - (152) (278) - (278)
------------- ------ -------------- -------------- -------- ---------- -------------- --------- ---------- -------------- --------
Loss before
tax (1,548) (112) (1,660) (2,830) (176) (3,006) (5,697) (3,641) (9,338)
Income tax
credit 6 282 - 282 390 - 390 630 - 630
------------- ------ -------------- -------------- -------- ---------- -------------- --------- ---------- -------------- --------
Loss
attributable
to equity
owners of
the Parent (1,266) (112) (1,378) (2,440) (176) (2,616) (5,067) (3,641) (8,708)
------------- ------ -------------- -------------- -------- ---------- -------------- --------- ---------- -------------- --------
Basic
earnings per
share 8 (1.0) (2.6) (7.7)
Diluted
earnings per
share 8 (1.0) (2.6) (7.7)
------------- ------ -------------- -------------- -------- ---------- -------------- --------- ---------- -------------- --------
All amounts stated relate to continuing activities.
Consolidated statement of comprehensive income
For the six months ended 30 June 2021
(Unaudited) (Unaudited) (Audited)
Six months Six months ended 30 June Year ended 31 December 2020
ended 30 June 2020
2021
GBP000 GBP000 GBP000
------------------------------------------ --------------- -------------------------- -----------------------------
Loss for the period (1,378) (2,616) (8,708)
Items that may be reclassified
subsequently to profit and loss:
Exchange differences on translation of
foreign operations (net of tax) 38 30 (22)
------------------------------------------ --------------- -------------------------- -----------------------------
Total comprehensive loss for the period (1,340) (2,586) (8,730)
------------------------------------------ --------------- -------------------------- -----------------------------
Consolidated statement of financial position
As at 30 June 2021
(Unaudited) (Unaudited) (Audited)
30 June 2021 30 June 2020 31 Dec 2020
Note GBP000 GBP000 GBP000
--------------------------------- ---- ------------- ------------- ------------
Non-current assets
Goodwill 169 169 169
Other intangible assets 12,045 13,215 11,738
Purchased software costs 1,842 2,275 2,059
Property, plant and equipment 3,860 4,677 4,263
17,916 20,336 18,229
--------------------------------- ---- ------------- ------------- ------------
Current assets
Inventories 4,894 9,366 6,558
Trade and other receivables 9,442 6,418 10,071
Current tax asset 1,012 1,135 711
Derivative financial assets - 158 -
Cash and cash equivalents 10 5,839 1,073 1,466
--------------------------------- ---- ------------- ------------- ------------
21,187 18,150 18,806
--------------------------------- ---- ------------- ------------- ------------
Total assets 39,103 38,486 37,035
--------------------------------- ---- ------------- ------------- ------------
Current liabilities
Trade and other payables (10,060) (11,805) (12,834)
Lease liabilities (444) (351) (440)
Current tax liabilities - - (32)
Provisions 11 (1,304) (1,319) (1,491)
Invoice discounting facilities 9 (409) (2,515) (2,539)
Loans and borrowings 9 (160) (2,600)
Derivative financial liabilities (117) - (693)
--------------------------------- ---- ------------- ------------- ------------
(12,494) (15,990) (20,629)
--------------------------------- ---- ------------- ------------- ------------
Net current assets/(liabilities) 8,693 2,160 (1,823)
--------------------------------- ---- ------------- ------------- ------------
Non-current liabilities
Loans and borrowings 9 (3,063) (24) (23)
Lease liabilities (722) (958) (941)
Provisions 11 (870) (1,249) (1,254)
(4,655) (2,231) (2,218)
--------------------------------- ---- ------------- ------------- ------------
Total liabilities (17,149) (18,221) (22,847)
--------------------------------- ---- ------------- ------------- ------------
Net assets 21,954 20,265 14,188
--------------------------------- ---- ------------- ------------- ------------
Equity
Called up share capital 12 3,621 2,531 2,531
Share premium account 12 30,008 22,104 22,104
Currency translation reserve 159 173 121
Retained earnings (11,834) (4,543) (10,568)
----------------------------- -------- ------- --------
Total equity attributable
to equity holders of the
Parent Company 21,954 20,265 14,188
----------------------------- -------- ------- --------
Consolidated statement of changes in equity
For the six months ended 30 June 2021
Share Currency
Called up share premium translation Retained
capital account reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- ------ -------- ------------ --------- -------
Balance at 1 January 2020 1,519 17,617 143 (2,103) 17,176
---------------------------------- ------ -------- ------------ --------- -------
Loss for the six months - - - (2,616) (2,616)
Foreign exchange gains from
overseas subsidiaries - - 30 - 30
---------------------------------- ------ -------- ------------ --------- -------
Total comprehensive income/(loss)
for the six months - - 30 (2,616) (2,586)
---------------------------------- ------ -------- ------------ --------- -------
Transactions with owners in
their capacity as owners:
Issue of equity shares 1,012 - - - 1,012
Premium arising on issue of
shares - 5,062 - - 5,062
Share issue expenses - (575) - - (575)
---------------------------------- ------ -------- ------------ --------- -------
Total transactions with owners
in their capacity as owners 1,012 4,487 - - 5,499
---------------------------------- ------ -------- ------------ --------- -------
Credit in relation to share-based
payments - - - 176 176
---------------------------------- ------ -------- ------------ --------- -------
Balance at 30 June 2020 2,531 22,104 173 (4,543) 20,265
---------------------------------- ------ -------- ------------ --------- -------
Balance at 1 January 2021 2,531 22,104 121 (10,568) 14,188
---------------------------------- ----- ------ --- -------- -------
Loss for the six months - - - (1,378) (1,378)
Foreign exchange gains from
overseas subsidiaries - - 38 - 38
---------------------------------- ----- ------ --- -------- -------
Total comprehensive income/(loss)
for the six months - - 38 (1,378) (1,340)
---------------------------------- ----- ------ --- -------- -------
Transactions with owners in
their capacity as owners:
Issue of equity shares 1,090 - - - 1,090
Premium arising on issue of
shares - 8,711 - - 8,711
Share issue expenses - (807) - - (807)
---------------------------------- ----- ------ --- -------- -------
Total transactions with owners
in their capacity as owners 1,090 7,904 - - 8,994
---------------------------------- ----- ------ --- -------- -------
Credit in relation to share-based
payments - - - 112 112
Balance at 30 June 2021 3,621 30,008 159 (11,834) 21,954
---------------------------------- ----- ------ --- -------- -------
Consolidated cash flow statement
For the six months ended 30 June 2021
(Unaudited) (Unaudited) (Audited) Year ended 31 Dec
Six months ended 30 June Six months ended 30 June 2020
2021 2020
GBP000 GBP000 GBP000
---------------------------- ---------------------------- ---------------------------- ----------------------------
Loss before tax (1,660) (3,006) (9,338)
Finance expense 104 152 278
---------------------------- ---------------------------- ---------------------------- ----------------------------
Operating loss for the
period (1,556) (2,854) (9,060)
Adjustments for:
Depreciation of property,
plant and equipment, and
right-of-use assets 697 703 1,429
Amortisation of intangible
assets 909 1,162 2,482
Loss on disposal of
non-current assets 23 2 -
Non-underlying items 112 176 3,641
Cash flow relating to
non-underlying items (610) (897) (2,287)
(Increase)/decrease in fair
value of derivatives (576) (587) 264
Operating cash flow before
movements in working
capital (1,001) (2,295) (3,531)
Movement in inventories 1,664 (3,062) (479)
Movement in receivables 629 5,630 1,911
Movement in provisions - (28) (28)
Movement in payables (2,734) (345) 683
Cash used by operations (1,442) (100) (1,444)
Income taxes (paid)/received (50) (12) 680
Net cash used by operating
activities (1,492) (112) (764)
---------------------------- ---------------------------- ---------------------------- ----------------------------
Investing activities
Capitalised development
costs (998) (1,575) (2,554)
Purchase of property, plant
and equipment (315) (52) (277)
Net cash used in investing
activities (1,313) (1,627) (2,831)
---------------------------- ---------------------------- ---------------------------- ----------------------------
Financing activities
Proceeds from issue of
ordinary shares (net of
expenses) 8,993 5,499 5,499
Repayment of invoice finance (2,131) (4,469) (4,445)
Drawdown of loan 3,200 24 3,223
Repayment of loan (2,600) - (600)
Repayment of lease
obligations (215) (175) (381)
Interest paid (104) (152) (278)
---------------------------- ---------------------------- ---------------------------- ----------------------------
Net cash generated by
financing activities 7,143 727 3,018
---------------------------- ---------------------------- ---------------------------- ----------------------------
Net increase/(decrease) in
cash and cash equivalents 4,338 (1,012) (577)
Cash and cash equivalents at
beginning of period 1,466 2,062 2,062
Non-cash movements 35 23 (19)
---------------------------- ---------------------------- ---------------------------- ----------------------------
Cash and cash equivalents at
end of period 5,839 1,073 1,466
---------------------------- ---------------------------- ---------------------------- ----------------------------
Notes to the financial information
1. General information
These consolidated interim financial statements were approved by
the Board of Directors on 27 September 2021.
2. Basis of preparation
These consolidated interim financial statements of the Group are
for the six months ended 30 June 2021.
The condensed consolidated interim financial statements for the
six months to 30 June 2021 do not include all the information and
disclosures required in the annual financial statements and should
be read in conjunction with the Group's annual financial statements
for the year ended 31 December 2020 which are available at
www.fireangeltech.com/investors.
The condensed consolidated interim financial statements for the
six months to 30 June 2021 have not been audited or reviewed by an
auditor pursuant to the Auditing Practices Board guidance on Review
of Interim Financial Information.
The condensed consolidated interim financial statements for the
six months to 30 June 2021 have been prepared on the basis of the
accounting policies expected to be adopted for the year ending 31
December 2021. These are anticipated to be consistent with those
set out in the Group's latest annual financial statements for the
year ended 31 December 2020. These consolidated financial
statements are prepared in accordance with international accounting
standards in conformity with the Companies Act 2006 ('IFRS'). The
financial statements are presented in thousands (GBP'000) unless
otherwise indicated.
In determining whether the Group and Parent Company's financial
statements can be prepared on a going concern basis, the Directors
considered the Group's business activities, together with the
factors likely to affect its future development, performance and
position. The Directors prepared cash flow forecasts for the period
ending 31 December 2022 which considered the financial position of
the Group, its cash flows, borrowing facilities and financial
covenants thereon.
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.
The Group has been loss making in recent years and absorbed
cash. The Group raised equity funding in April 2021 and secured
support from its bank through the government backed loan schemes.
Based on the cash flow forecasts, the Group is anticipated to
absorb cash in 2021 and to be close to cash neutral in 2022 and as
such has successfully achieved increased committed loans through
the government backed COVID-19 loan schemes. Accordingly, the
interim accounts for 2021 have been prepared on the going concern
basis.
AIM-quoted companies are not required to comply with IAS 34
Interim Financial Reporting and accordingly the Company has taken
advantage of this exemption.
3. Operating segments
An analysis of the Group's revenue by business unit is as
follows:
(Unaudited) (Unaudited) (Audited) Year ended 31
Six months ended 30 June Six months ended 30 June Dec 2020 GBP000
2021 2020 GBP000
GBP000
--------------------------- --------------------------- -------------------------- --------------------------
Revenue from continuing
operations:
UK Trade 5,791 3,101 8,000
UK Retail 8,328 6,008 16,603
UK Fire & Rescue Services 1,488 1,530 2,875
UK Utilities 207 338 923
---------------------------- --------------------------- -------------------------- --------------------------
Total sales in the UK 15,814 10,977 28,401
International 5,434 4,630 9,198
European Partner 174 - -
Pace Sensors 799 848 2,329
---------------------------- --------------------------- -------------------------- --------------------------
Total revenue 22,221 16,455 39,928
---------------------------- --------------------------- -------------------------- --------------------------
From 1 January 2021, certain customers previously reported
within the UK Utilities business unit are now reported through the
UK Trade. The 2020 comparatives have been adjusted accordingly.
4. Non-underlying items
(Unaudited) (Unaudited) (Audited) Year ended 31
Six months ended 30 June Six months Dec 2020 GBP000
2021 GBP000 ended 30 June
2020
GBP000
--------------------------- --------------------------- -------------------------- --------------------------
Within cost of sales
Provision for warranty
costs - - 1,168
Commercial distributer
settlements 324
Provision against stock and
disposal costs - - 225
- - 1,717
Within operating expenses
---------------------------- --------------------------- -------------------------- --------------------------
Restructuring and
fundraising costs - - 77
Impairment of intangible
assets - - 1,416
Impairment of tangible
assets 188
Share-based payment charges 112 176 243
112 176 1,924
--------------------------- --------------------------- -------------------------- --------------------------
Total non-underlying items 112 176 3,641
---------------------------- --------------------------- -------------------------- --------------------------
5. Other Operating Income
Furlough payments of GBP0.1 million were received under the
Canadian Emergency Wage Subsidy during the period. The scheme
enabled employers to retain staff despite the economic impact of
COVID-19 through government grants relating to wage subsidies. As
per the accounting policies adopted, the grant received was
recognised in the profit and loss in 'other income' as the related
salaries for the furloughed employees were recognised.
6. Income tax
The income tax credit for the period is based on the estimated
rate of corporation tax that is likely to be effective for the year
to 31 December 2021.
7. Dividends
As a result of the loss reported for the period, the Directors
do not propose payment of an interim dividend for 2021 (2020: nil
pence per share).
8. Earnings per share
Earnings per share are as follows:
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended
ended 30 June ended 30 June 31 Dec
2021 2020 2020
Earnings from continuing
operations GBP000 GBP000 GBP000
-------------------------------- --------------- --------------- ------------
Earnings for the purposes
of basic and diluted earnings
per share (loss for the
period attributable to owners
of the parent) (1,378) (2,616) (8,708)
-------------------------------- --------------- --------------- ------------
Number of shares '000 '000 '000
-------------------------------- --------------- --------------- ------------
Weighted average number
of ordinary shares - basic
earnings calculation 139,204 99,300 112,865
Dilutive potential ordinary
shares from share options - - -
-------------------------------- --------------- --------------- ------------
Weighted average number
of ordinary shares - diluted
calculation 139,204 99,300 112,865
-------------------------------- --------------- --------------- ------------
2021 2020 2020
pence pence pence
---------------------------- ------ ------ ------
Basic earnings per share (1.0) (2.6) (7.7)
Diluted earnings per share (1.0) (2.6) (7.7)
----------------------------- ------ ------ ------
Basic EPS is calculated by dividing the earnings attributable to
ordinary owners of the parent by the weighted average number of
shares outstanding during the period.
Diluted EPS is calculated on the same basis as basic EPS but
with a further adjustment to the number of weighted average shares
in issue to reflect the effect of all potentially dilutive share
options. The number of potentially dilutive share options is
derived from the number of share options and awards granted to
employees and Directors where the exercise price is less than the
average market price of the Company's ordinary shares during the
period. Under IFRS no allowance is made for the dilutive impact of
share options which reduce a loss per share. The basic and diluted
EPS measures are therefore the same for the period ended 30 June
2021.
9. Loans and borrowings
(Unaudited) (Unaudited) (Audited)
30 June 31 Dec
30 June 2020 2020 2020
GBP000 GBP000 GBP000
----------------- ---------------- --------------- ------------ ----------
Canadian government COVID-19
loan 23 24 23
Bank Term Loan 3,200 - 2,600
Invoice discounting facilities 409 2,515 2,539
----------------------------------- --------------- ------------ ----------
3,632 2,539 5,162
----------------------------------- --------------- ------------ ----------
On 26 March 2021 the Group announced it had refinanced its
existing Coronavirus Large Business Interruption Loan Scheme
('CLBILS'). As the Group's revenue dropped below GBP45.0 million,
the CLBILS (which reduced to GBP2.0 million at the end of March
2021) have been refinanced under the Coronavirus Business
Interruption Loan Scheme ("CBILS") with HSBC UK. The new loan of,
in aggregate, GBP3.7 million ("New Loan") comprises a CBILS loan of
GBP3.2 million and GBP0.5 million Receivables Finance CBILS .
10. Cash and cash equivalents
(Unaudited) (Unaudited) (Audited)
30 June 31 Dec
30 June 2021 2020 2020
GBP000 GBP000 GBP000
-------------- ------------- --------------- ------------ ----------
Cash at bank and in hand 5,839 1,073 1,466
----------------------------- --------------- ------------ ----------
11. Provisions
FireAngel BRK Brands
warranty warranty
provisions provisions Total
GBP000 GBP000 GBP000
------------------- ------------ ------------ --------
At 1 January 2020 3,465 28 3,493
Charge in period
Utilisation (897) (28) (925)
--------------------- ------------ ------------ --------
At 30 June 2020 2,568 - 2,568
--------------------- ------------ ------------ --------
At 1 January 2021 2,745 - 2,745
Utilisation (571) - (571)
--------------------- ------------ ------------ --------
At 30 June 2021 2,174 - 2,174
--------------------- ------------ ------------ --------
The total warranty provision is classified between less than one
year and greater than one year as follows:
(Unaudited) (Unaudited) (Audited)
30 June 31 Dec
30 June 2021 2020 2020
GBP000 GBP000 GBP000
-------------- ------------- --------------- ------------ ----------
Current provision 1,304 1,319 1,491
Non-current provision 870 1,249 1,254
----------------------------- --------------- ------------ ----------
Total warranty provision 2,174 2,568 2,745
----------------------------- --------------- ------------ ----------
12. Share capital and reserves
On 19 May 2021, the Company raised GBP9.8 million (gross)
through the issue of 54,444,444 new ordinary shares of 2p nominal
value each at an issue price of 18p per share.
The premium on issue was 16p per share amounting to GBP8.7
million. This was credited to the share premium account. Share
issue expenses amounted to GBP0.8 million. These were debited to
the share premium account.
13. Availability
Further copies of this interim announcement are available on the
FireAngel Safety Technology Group plc investor relations website,
www.fireangeltech.com .
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