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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