TIDMFA.
RNS Number : 6171N
FireAngel Safety Technology Group
24 January 2023
24th January 2023
FireAngel Safety Technology Group plc
('FireAngel', the ' Group' or the 'Company')
Trading Update
FireAngel (AIM: FA.), a leading developer and supplier of home
safety products, announces a trading update for the year ended 31
December 2022 (the "Year" or "FY22"). The figures set out in this
announcement are subject to audit.
S trong growth
The Group has delivered a resilient performance in 2022,
resulting in its strongest revenue performance since 2017. Business
Unit performance has been strong across most territories with
demand outweighing supply, driven by the tailwind of increasing
legislation.
-- O utstanding sales growth o f 32 per cent. to GBP57.5
million (2021: GBP43.5 million)
-- Adjusted loss before tax(1) ("LBT") reduced by 30 per
cent. to GBP2.1 million (2021: adjusted LBT GBP3.0 million)
-- Adjusted EBITDA(2) of GBP1 . 6 million (2021: adjusted
EBITDA GBP0.3 million)
-- The Board remains confident of the outlook for 2023 with
significantly increased revenue and enhanced gross margin
expected.
(1) Adjusted LBT is loss before tax, non-underlying items,
purchase price variance ( " PPV " ) for exceptionally high costs
for securing scarcely sourced components and mark to market ("MTM")
losses on forward currency contracts.
(2) Adjusted EBITDA is loss before tax, depreciation,
amortisation, finance costs, non-underlying items, PPV and MTM
losses on forward currency contracts.
Underlying g ross margin ("GM") broadly maintained, despite
significant external headwinds, with currency fluctuations and PPV
impacting reported GM
In the face of the macro challenges experienced in H2 2022, the
Company began work on a range of further self-help measures and
these adjustments are expected to boost materially the Company's
financial performance in 2023 and subsequent years. Those
improvements include:
-- the impact of price rises;
-- value engineering to reduce costs on selected products;
-- introduction of an additional entry level product; and
-- renegotiation of terms on certain contracts.
Together, these and other changes are expected to restore the
financial journey that the Board outlined at the time of the
Company's fundraising in H1 2021.
Currency
The majority of the Company's goods and services are currently
purchased in USD. As previously announced in September 2022, the
Company chose to establish a level of certainty by hedging a large
proportion of the USD purchases for the remainder of the year and
into 2023 at an average rate of 1.14 USD/GBP. This established a
level of certainty as regards cash performance in the rest of the
year and into 2023. At 31 December 2022, there was a mark-to-market
loss on the forward currency contracts taken out from September
2022 of GBP1.6 million (2021: gain of GBP0.3 million).
PPV
Exceptionally high PPV costs for securing scarce components of
GBP1.4 million were incurred in the year compared to GBP0.8m in
2021. The Company does not expect these costs to be a material cost
going forward.
Balance sheet update
The significant impact of the global supply chain challenges
previously reported improved across H2 2022, however, the Company
and its suppliers are still having to commit to purchases 12 to 15
months ahead, as opposed to a historic norm of 3 to 6 months.
Changes in product and sourcing mix along with extended shipping
times from Asia have impacted the level of stock held by the
Company. As a result, stock at 31 December 2022 stood at
approximately GBP8.0 million, compared to an abnormally low
comparable position as at 31 December 2021 of GBP3.7 million. The
Board had anticipated a Year end stock number closer to GBP7.0
million.
Net debt before lease obligations at 31 December 2022 was GBP4.8
million (2021: net cash GBP0.1 million) and comprised cash balances
of GBP1.4 million (2021: cash GBP3.3 million), invoice discount
facility ("IDF") draw down of GBP3.4 million (2021: IDF drawn down
nil) and a CBILS loan of GBP2.8 million (2021: CBILs GBP3.2
million).
The Company's audited final results for FY22 are expected to
include a non-cash impairment of intangible assets of GBP0.9
million relating to historical product development which the Board
has resolved will not proceed.
Further progress against strategic initiatives to move to higher
value activities
FireAngel's partnership with Techem Gmbh ("Techem") remains
on track
-- Product development activities have progressed to date
in line with planned milestones over the last 12 months.
The project is now 37% complete; and
-- The development of a three-way manufacturing contract
is progressing.
Continued progress in sourcing entry level products from existing
Chinese partner
-- Launch of several entry to mid-level products, which began
in Q2 2022, have been margin enhancing as planned; and
-- Since launch, over 800,000 units had been sold up to 31
December 2022.
Outlook
Demand for the Company's products remains strong and the Board
expects the Company to grow revenue and enhance gross margin
significantly in 2023.
John Conoley, the Company's Executive Chairman, said : "The
expected FY22 result represents an outstanding performance set
against the unprecedented macro circumstances. Whilst the reported
result will not be what we had set out to achieve, the underlying
numbers demonstrate the strong progress made in line with our
ambitions outlined at the time of the Company's fundraising in H1
2021.
"Societal and regulatory development continues to drive demand
for our products. Our continuing focus on self-help pleasingly
shows a resilience in overcoming a wide range of macro headwinds to
leverage this demand. The Board expects additional significant
improvement in our financial journey in 2023, positioning the Group
for further progress against our strategic plans."
The Company will provide a further update on current trading at
the time of its audited final results for the year ended 31
December 2022.
For further information, please contact:
FireAngel Safety Technology Group
plc 024 7771 7700
John Conoley, Executive Chairman
Zoe Fox, Chief Finance Officer
Shore Capital (Nominated adviser and
joint broker) 020 7408 4050
Tom Griffiths/David Coaten/Tom Knibbs
Singer Capital Markets (Joint broker) 0207 496 3000
Rick Thompson/Alex Bond
Houston (Financial PR) 0204 529 0549
Kate Hoare/Ben Robinson
Notes to Editors
About FireAngel Safety Technology Group plc
FireAngel's mission is to protect and save lives by making
innovative, home safety products which are simple and accessible.
FireAngel is one of the market leaders in the European home safety
products market.
FireAngel's principal products are connected smoke alarms, CO
alarms, heat alarms and accessories. The Company has an extensive
portfolio of patented intellectual property in Europe, the US and
other selected territories. Products are sold under FireAngel's
leading brands of FireAngel, FireAngel Pro, FireAngel Specification
and AngelEye.
For further product information, please visit:
www.fireangeltech.com
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