TIDMFA.
RNS Number : 3507A
FireAngel Safety Technology Group
29 September 2020
29 September 2020
FireAngel Safety Technology Group plc
('FireAngel', the 'Group' or the 'Company')
Interim results for the six months ended 30 June 2020
FireAngel (AIM: FA.), one of Europe's leading developers and
suppliers of home safety products, announces its unaudited interim
results for the six months ended 30 June 2020 ('H1 2020' or the
'period').
Financial headlines
-- Revenue GBP16.5 million (H1 2019: GBP20.7 million) due to
impact of COVID-19 lockdown restrictions
-- Underlying LBITDA (1) GBP1.4 million (H1 2019: underlying EBITDA (1) GBP0.2 million)
-- Underlying operating loss(2) GBP2.7 million (H1 2019:
underlying operating loss GBP1.7 million)
-- Gross profit GBP3.6 million (H1 2019: GBP4.7 million(3) )
-- Gross margin 22.2% (H1 2019: 22.5%(3) )
-- Loss before tax GBP3.0 million (H1 2019: loss before tax GBP3.6 million)
-- Basic and diluted EPS (2.6p) based on the weighted average
number of shares outstanding during the period (H1 2019:
(5.0p))
-- Capitalised product development costs and production set up
costs GBP1.6 million (H1 2019: GBP1.4 million)
-- Fundraising of GBP6.1 million (gross) and secured a GBP3.2
million loan under the Coronavirus Large Business Interruption Loan
Scheme ('CLBILS') to further strengthen the Company's balance
sheet
-- Net debt (before lease obligations) at 30 June 2020 GBP1.5
million (30 June 2019: GBP1.7 million; 31 December 2019: GBP4.9
million) which comprised cash of GBP1.1 million and debt of GBP2.5
million. Net debt (before lease obligations) at 25 September 2020
was GBP5.5 million , including the drawdown of the CLBILS loan to
fund the temporary increase in working capital due to COVID-19
-- Inventory GBP9.4 million (30 June 2019: GBP8.5 million),
increased in the short term due to the reduction in sales as a
result of lockdown restrictions
-- Based on current expectations of demand, while the Board
expects the second half of 2020 to deliver positive EBITDA
performance with improved gross margins, it is cognisant of the
impact of the UK Government's latest, and any possible future,
COVID-19 guidelines/restrictions on customer demand, particularly
where access to domestic properties is required, which may have a
negative consequence on the outturn for the second half
Operational headlines
-- Material initial purchase order in excess of GBP1.0 million
received for the Company's first large-scale connected homes
technology rollout with installations expected to commence in
October 2020
-- Connected homes trials completed with two large social
housing landlords, and a paid pilot with a third due to start in
October 2020. Existing commercial discussions have been slow to
advance against the backdrop of COVID-19, however, new
opportunities and enquiries about trials have recently been
received
-- Encouraging start to the year, before the full impact of
COVID-19 measures took effect, with revenue and gross profit in the
first quarter of 2020 slightly below budget and gross margin ahead
of Q1 2019 and in line with budget; revenue to 30 September 2020
expected to be around 75% of pre-COVID-19 budget
-- Revenue for the period was over 70% of the Board's
pre-COVID-19 budget due to the impact of short-term measures to
control COVID-19 with sales improving as a percentage of the
Board's pre-COVID-19 budget since May 2020
-- Lockdown period has facilitated an increased focus on
operational improvements and longer-term planning to refine the
Company's future business model
-- Post-period end, Glenn Collinson appointed as an independent
Non-Executive Director as part of the reshaping of the FireAngel
Board over the last two years to ensure it has the skills and
experience to maximise the opportunities ahead
(1) Underlying LBITDA of GBP1.4 million is loss before interest,
tax, depreciation, amortisation, share-based payments charge and
unrealised market-to-market gains on forward contracts (H1 2019:
underlying EBITDA is GBP0.2 million before non-underlying charges
of GBP1.7 million).
(2) Underlying operating loss of GBP2.7 million is before a
share-based payments charge of GBP0.2 million (H1 2019: GBP1.7
million before non-underlying charges of GBP1.7 million).
(3) 2019 gross profit of GBP4.7 million is before a
non-underlying charge for legacy warranty of GBP1.4 million and
gross margin is gross profit before the non-underlying charge as a
percentage of revenue.
Commenting on the results, John Conoley, Executive Chairman of
FireAngel, said:
"We reacted quickly to the extraordinary global events faced
during the period and subsequently to protect the Company and
mitigate the impact of COVID-19. However, FireAngel's Trade, Fire
& Rescue Services and International customers' ability to
access properties was severely restricted, leading to a sharp
temporary reduction in demand for our products. Against this
backdrop, our performance has been satisfactory. We were encouraged
by the Company's strong start to the year and, in particular,
securing our first large-scale connected homes technology rollout
despite the economic slowdown. The lockdown period has enabled us
to focus on operational improvements and longer-term planning for a
connected future. As more normal patterns of customer behaviour
begin to return, we remain focussed on restoring the momentum we
had at the beginning of 2020. "
An interview with John Conoley in which he provides some
background on the Company, its interim results and its progress in
becoming a connected solutions provider is available at
http://bit.ly/FA_H1_overview
For further information, please contact:
FireAngel Safety Technology Group plc 024 7771 7700
John Conoley, Executive Chairman
Mike Stilwell, Group Finance Director
Shore Capital (Nominated adviser and
broker) 020 7408 4050
Tom Griffiths/David Coaten
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 Company made an encouraging start to the year, before the
full impact of COVID-19 lockdown measures took effect, with revenue
and gross profit in the first quarter of 2020 slightly below budget
and gross margin ahead of Q1 2019 and in line with budget. Revenue
in H1 2020 was over 70% of the Board's pre-COVID-19 budget with
sales improving as a percentage of that budget since May 2020.
In order to conserve cash and minimise the impact of lockdown
measures on the Company's performance, the Board took mitigating
actions whilst at the same time maintaining capability. These
actions protected the Company's staff, customers and core
business.
Given the extraordinary global events faced during the period,
the Board considers the result for H1 2020 to be satisfactory and
is encouraged by the strong start to the year made by the Company
before domestic and international lockdown restrictions took hold.
The forced restrictions on FireAngel's Trade, Fire & Rescue
Services and International customers' ability to access properties
has had a material impact on the Company's performance in the
period.
Revenue in August 2020 was significantly ahead of last year's
comparative illustrating the flow through of an element of pent up
demand and some normality returning to customer behaviour.
September 2020 sales are expected to be the highest of any month so
far this year with year-to-date revenue to 30 September 2020
expected to be around 75% of the Board's pre-COVID-19 budget.
During the period, the Company received a material initial
purchase order for its first large-scale connected homes technology
rollout with installations expected to commence in October 2020.
This represents a significant validation of FireAngel's connected
proposition. By the end of 2021, the Board expects the associated
recurring revenue will form a material and growing income stream
for the Company. Connected homes trials were completed with two
large social housing landlords, and a paid pilot with a third is
due to start in October 2020. Existing commercial discussions have
been slow to advance against the backdrop of COVID-19, however, new
opportunities and enquiries about trials have recently been
received . We will be working across the remainder of 2020 to
restore the momentum evident in both new and existing opportunities
before the slowdown caused by lockdown restrictions. The
fundamental benefits of FireAngel's connected proposition remain
unaltered.
Reduced trading activity during the lockdown period has allowed
the Company to increase focus on operational improvements and
long-term planning to refine its future business model. The Board's
gross margin improvement plan, although severely restricted by
COVID-19 in terms of immediate financial benefit, has achieved a
number of significant milestones, including:
- the signing of a lease for a new warehouse which will improve
the speed and efficiency of order fulfilment and ultimately lead to
a reduction in the Group's warehousing and logistics costs;
- a 15% net reduction in SKUs achieved, with a 30% net reduction
ultimately targeted, which will reduce production complexity and
lead to less inventory being held;
- transitioning from plastic packaging to cardboard for a large
proportion of UK products with all FireAngel products to be
transitioned by the end of 2020; and
- the recruitment of a Configuration Manager dedicated to
component pricing and specification to drive improvements in the
cost and mix of products used in production.
Further to these completed actions, the Board has continued to
progress with its longer-term plans. The Company has created a new
business model for future social housing connected rollouts,
commissioned detailed external market research to better understand
the size of the accessible connected marketplace, and worked with
its primary manufacturing partner in commissioning the first
robotic cell on one of FireAngel's production lines to assist with
longer-term manufacturing planning.
Results
FireAngel's revenue for H1 2020 was GBP16.5 million (H1 2019:
GBP20.7 million) representing over 70% of the Board's pre-COVID-19
budget . The Company recorded a consolidated underlying LBITDA(1)
of GBP1.4 million (H1 2019: underlying EBITDA(1) : GBP0.2 million)
and a consolidated underlying operating loss(2) of GBP2.7 million
(H1 2019: underlying operating loss GBP1.7 million).
(1) Underlying LBITDA of GBP1.4 million is loss before interest,
tax, depreciation, amortisation, share-based payments charge and
unrealised market-to-market gains on forward contracts (H1 2019:
underlying EBITDA is GBP0.2 million before non-underlying charges
of GBP1.7 million).
(2) Underlying operating loss of GBP2.7 million is before a
share-based payments charge of GBP0.2 million (H1 2019: GBP1.7
million before non-underlying charges of GBP1.7 million).
After deducting share-based payment charges of GBP0.2 million
and finance costs of GBP0.2 million, the loss before tax was GBP3.0
million (H1 2019: loss before tax GBP3.6 million).
The consolidated gross margin was 22.2% (H1 2019: 22.5%, before
non-underlying charges of GBP1.4 million). Given its link to sales
levels and the necessity to conserve cash in the short term due to
the impact of COVID-19 lockdown restrictions, the Board's self-help
gross margin improvement plan was held back in the period. In
addition, the sterling costs of the Group's US-dollar denominated
components remained high relative to previous periods as the US
dollar to sterling exchange rate weakened to an average of 1.27
over the period due to COVID-19-related market uncertainty (H1
2019: 1.29; H1 2018: 1.38). The Board's budgeted performance for
2020 was based on a rate of 1.31 which appeared reasonable before
the COVID-19 crisis.
Basic and diluted EPS was a loss per share of 2.6 p, based on
the weighted average number of shares outstanding during the period
of 99.3 million (H1 2019: loss per share of 5.0p, based on a
weighted average of 58.3 million shares in issue).
Further commentary around these results is set out in the
Business review section below.
At 30 June 2020, the Group had GBP1.1 million of cash and GBP2.5
million of debt through its invoice discounting facility ('ID') (30
June 2019: GBP1.5 million of cash and GBP3.2 million debt via ID;
31 December 2019: GBP2.1 million of cash and GBP7.0 million debt
via ID) following the Company's successful equity fundraising of
GBP6.1 million (gross) announced on 23 March 2020. To further
strengthen its balance sheet, as announced on 22 June 2020, the
Company secured a GBP3.2 million loan under the Coronavirus Large
Business Interruption Loan Scheme ('CLBILS'), which remained
undrawn at the period end. Net debt (before lease obligations) at
25 September 2020 was GBP5.5 million , which included the drawdown
in August 2020 of the CLBILS loan to fund the temporary increase in
working capital due to COVID-19 .
At GBP9.4 million at 30 June 2020, the Group's inventory was
significantly higher than would have been expected before the
impact on sales of lockdown measures to address COVID-19 (30 June
2019: GBP8.5 million; 31 December 2019: GBP6.3 million). New stock
orders have been adjusted to take account of higher levels in the
short term which are expected to be sold through in the second half
of 2020.
The net book value of 'other intangible assets' at 30 June 2020
was GBP13.2 million (30 June 2019: GBP13.7 million), the majority
of which related to capitalised product development costs.
Net cash used by operations in the period was GBP0.1 million (H1
2019: GBP0.8 million) comprising an operating cash outflow (before
cash flows relating to non-underlying items) of GBP1.4 million
improved by a net working capital inflow of GBP2.2 million. A
non-underlying amount of GBP0.9 million was spent in providing
free-of-charge replacement products in relation to the legacy
battery warranty issue.
During the period, GBP1.6 million was invested in continuing to
develop the Group's connected home and new product ranges (H1 2019:
GBP1.4 million).
On 8 April 2020, the Company raised GBP6.1 million (gross)
through the issue of 50,623,480 new ordinary shares at an issue
price of 12p per share and incurred fundraising costs of GBP0.6
million.
As a result of the temporary reduction in sales in the period
due to COVID-19 lockdown restrictions, funding available through
the Company's invoice discounting facility reduced significantly.
An amount of GBP4.5 million was repaid in the period reflecting
this temporary reduction. The Board took steps to mitigate this
reduction by securing a CLBILS loan as described above.
In total, the net reduction in cash in the period was GBP1.0
million (H1 2019: increase of GBP0.2 million). As described above,
net debt (before lease obligations) at 30 June 2020 amounted to
GBP1.5 million (30 June 2019: GBP1.7 million; 31 December 2019:
GBP4.9 million).
Subsequent to the period end, in September 2020, the Company
received a research and development tax credit payment of GBP0.8
million (2019: GBP1.2 million relating to 2018 and delayed 2017
claim).
Dividend
The Board does not propose to pay an interim dividend (H1 2019:
nil).
Business review
Major connected home order
In June 2020, FireAngel received a material initial purchase
order in excess of GBP1.0 million for the Company's first
large-scale connected homes technology rollout. The order, for a
large London Borough Council, represents the first phase of the
Council's planned rollout of FireAngel's connected homes
technology. Installer training commenced in August 2020, as soon as
the lifting of COVID-19 restrictions allowed, with installations
expected to commence in October 2020.
Connected homes trials were completed with two large social
housing landlords, and a paid pilot with a third is due to start in
October 2020. Existing commercial discussions have been slow to
advance against the backdrop of COVID, however, new opportunities
and enquiries about trials have recently been received.
Business unit performance
Despite an encouraging first quarter's performance, revenue for
the Group decreased by 21% in the first half of the year compared
to the same period in the prior year due to the impact of COVID-19
lockdown restrictions.
Revenue split between the Group's business units was as
follows:
Six months ended Six months ended 30 June 2019
30 June 2020 Change
Revenue GBP000 GBP000 GBP000 %
---------------------------- ----------------- ------------------------------ -------- ------
UK Trade 2,920 3,365 (445) (13%)
UK Retail 6,008 7,540 (1,532) (20%)
UK Fire & Rescue Services 1,530 2,249 (719) (32%)
UK Utilities 519 1,317 (798) (61%)
--------------------------- ----------------- ------------------------------ -------- ------
Total sales in the UK 10,977 14,471 (3,494) (24%)
International 4,630 5,404 (774) (14%)
Pace Sensors 848 866 (18) (2%)
--------------------------- ----------------- ------------------------------ -------- ------
Total revenue 16,455 20,741 (4,286) (21%)
---------------------------- ----------------- ------------------------------ -------- ------
From 1 January 2020, certain customers previously reported
within the UK Trade business unit are now reported through the UK
Retail and UK Utilities business units. The 2019 comparatives have
been adjusted accordingly.
UK Trade
The UK Trade business unit performed well in Q1 2020 with both
sales and gross margin ahead of the same period in the prior year.
The impact of COVID-19 access restrictions in Q2 2020 led to an
overall reduction in revenue in H1 2020 of 13% to GBP2.9 million
(H1 2019: GBP3.4 million). Slightly ahead of last year, UK Trade
sales represented 18% of the Group's turnover in the period (H1
2019: 16%).
Although sales were inevitably impacted in H1 2020, the Board is
confident that the significant progress made over the last two
years with agreements signed with various councils and housing
associations will see momentum quickly return. UK Trade sales in
August and September 2020 are expected to be close to 90% of last
year's comparative figure.
As stated in previous announcements, alarms fitted through the
UK Trade channel are predominantly mains-powered solutions with
multiple devices being required in each property. This
significantly increases the value to the Company of each sale.
FireAngel's new and unique connected technology solutions offer
housing associations, landlords and their tenants the highest level
of protection and maintenance. As a result, the Group is seeing
increased interest in its connected solutions which have been
designed to meet heightened duty of care concerns within social
housing.
UK Retail
Sales in the UK Retail business unit performed close to budget
in Q1 2020 with gross margin ahead of the same period in the prior
year. The impact of COVID-19 restrictions in Q2 2020 led to an
overall reduction in revenue in H1 2020 of 20% to GBP6.0 million
(H1 2019: GBP7.5 million). UK Retail sales represented a consistent
37% of the Group's turnover in the period (H1 2019: 36%).
Sales through online platforms, particularly Amazon, proved
remarkably resilient during the lockdown period, underlining the
suitability of the channel to clearly articulate the benefits and
product features of FireAngel's connected technology. The Company
is continuing to invest to optimise revenue through the digital
channel. UK Retail sales in August and September 2020 are expected
to be ahead of last year's comparative figure.
UK Fire & Rescue Services ('UK F&RS') and UK
Utilities
Together the UK F&RS and UK Utilities sectors accounted for
GBP2.0 million or 12% of the Group's revenue in the period. Due to
the home access requirements to fit smoke and CO alarms by both the
UK F&RS and British Gas, lockdown restrictions in Q2 2020
significantly impacted demand in both business units. As a result,
combined sales declined by over 40% to GBP2.0 million (H1 2019:
GBP3.6 million). The Group continued to supply over 90% of the UK
F&RS. Together, UK F&RS and UK Utilities sales represented
12% of the Group's turnover in the period (H1 2019: 17%).
International
International revenue in Q1 2020 was strong with sales
significantly ahead of the same period in the prior year and close
to budgeted levels. International lockdown restrictions were put in
place at varying times over the first half of 2020 and led to an
overall reduction in revenue of 14% to GBP4.6 million (H1 2019:
GBP5.4 million). Slightly ahead of last year, International sales
represented 28% of the Group's turnover in the period (H1 2019:
26%).
Pace Sensors
At GBP0.8 million, revenue at Pace Sensors, the Group's
manufacturer of CO sensors, while slightly below the same period in
the prior year (H1 2019: GBP0.9 million), represented 5% of total
turnover for the period, slightly ahead of the previous year (H1
2019: 4.2%), due to the requirement to continue to produce CO
sensors during the lockdown period.
Manufacturing
The Group transitioned the manufacture of the majority of its
smoke alarms and connected devices from China to Poland in 2018.
After a period of considerable disruption, production capacity
increased to meet the Group's demand in 2019. Both parties continue
to work closely to ensure that current processes operate optimally
and processes for future production are more efficient, including
the commissioning of the first robotic cell in September 2020. The
key to unlocking material efficiency improvements in the production
process remains in further rationalisation of the Group's product
range which is in hand and designing new ranges with production
automation at front of mind. This remains a key area of focus for
the Board in its future manufacturing strategy.
Products and brands
In January 2020, the Group's retail range was completed with the
launch of the FireAngel Pro Connected B2C platform, initially
through selected retail channels. The FireAngel Pro Connected
gateway connects directly to the FireAngel Pro Connected range of
domestic safety products and utilises the unique features provided
by FireAngel Predict(TM) .
In February 2020, the Group announced that FireAngel Predict(TM)
, the Group's predictive algorithm management information platform,
had been granted a patent by the European Patent Office following
successful patent awards in both the US and Australia. This gives
FireAngel the exclusive right to exploit this technology in Europe
and protects the key operating system required to deliver the
functionality behind FireAngel Predict(TM) . The technology
pinpoints properties where there is a higher risk of a fire which
provides stakeholders within the housing sector a unique insight
into the safety of the occupants and their property portfolio. This
is delivered seamlessly through online notifications, thereby
protecting lives and homes and providing a compelling proposition
to help fulfil the stakeholders' duty of care.
The launch of the connected range, combined with the predictive
analytics offered by FireAngel Predict(TM) , will address the
increasing demand for connected solutions and allow the Company to
access the higher margin product and recurring revenue streams this
unique technology will command.
Board changes
Further changes were made to the Board's composition in the
period and subsequently to provide it with the skills and
experience required to assist in guiding the Company's transition
to a connected homes technology provider.
As announced on 30 July 2020, electronics engineer and serial
entrepreneur, Glenn Collinson was appointed to the Board as an
independent Non-Executive Director with effect from 1 August 2020.
Ashley Silverton and John Shepherd stepped down from the Board and
as Non-Executive Directors on 30 June 2020 and 1 August 2020
respectively. Simon Herrick is now the Board's Senior Independent
Non-Executive Director.
Outlook
The impact of national and international measures to address
COVID-19 has had a material impact on performance for the period
and is expected to for the full year. Despite an encouraging start
to the year, core sales have been held back and the pace of
progress with certain strategically significant connected homes
trials has inevitably been delayed.
Based on current expectations of demand, while the Board expects
the second half of 2020 to deliver positive EBITDA with improved
gross margins based on the mix of revenue, it is cognisant of the
impact of the UK Government's latest, and any possible future,
COVID-19 guidelines/restrictions on customer demand, particularly
where access to domestic properties is required, which may have a
negative consequence on the outturn for the second half. The
unprecedented level of continuing uncertainty makes it particularly
difficult to forecast full year performance within reasonable
boundaries. The Board has therefore decided not to give market
guidance for 2020 full year performance.
Although the impact of COVID-19 has held back the Board's
self-help gross margin improvement plan, the recovery of sales in
higher-margin sectors in due course will help to restore this
momentum. This plan, allied to an expected improvement in margin
mix, still remains central to the Company's improved performance
towards the end of 2020 and beyond.
Reaching the milestone of commencing FireAngel's first
large-scale connected homes technology rollout is hugely
significant, particularly given the enormous disruption in the
period. The Board remains focussed on restoring the momentum the
Company had at the beginning of 2020 and is confident that the
Company's medium and long-term prospects are strong and remain
underpinned by the market need matching our compelling and unique
products. The fundamental benefits of FireAngel's connected
proposition remain unaltered.
John Conoley
Executive Chairman
29 September 2020
Consolidated income statement
For the six months ended 30 June 2020
(Unaudited) (Unaudited) (Audited)
Six months Six months Year ended 31
ended 30 June ended 30 June December 2019
2020 2019
Before Non-underlying Before Non-underlying Before Non-underlying
non-underlying items (note 4) Total non-underlying items (note 4) Total non-underlying items (note 4) Total
items items items
Note
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
------------- ----- -------------- -------------- -------- -------------- -------------- -------- -------------- -------------- --------
Revenue 3 16,455 - 16,455 20,741 - 20,741 45,486 - 45,486
Cost of sales (12,806) - (12,806) (16,076) (1,400) (17,476) (36,821) (4,308) (41,129)
------------- ----- -------------- -------------- -------- -------------- -------------- -------- -------------- -------------- --------
Gross profit 3,649 - 3,649 4,665 (1,400) 3,265 8,665 (4,308) 4,357
Operating
expenses (6,327) (176) (6,503) (6,392) (300) (6,692) (12,461) (2,608) (15,069)
------------- ----- -------------- -------------- -------- -------------- -------------- -------- -------------- -------------- --------
Loss from
operations (2,678) (176) (2,854) (1,727) (1,700) (3,427) (3,796) (6,916) (10,712)
Finance costs (152) - (152) (173) - (173) (312) - (312)
------------- ----- -------------- -------------- -------- -------------- -------------- -------- -------------- -------------- --------
Loss before
tax (2,830) (176) (3,006) (1,900) (1,700) (3,600) (4,108) (6,916) (11,024)
Income tax
credit 6 390 - 390 359 323 682 548 1,056 1,604
------------- ----- -------------- -------------- -------- -------------- -------------- -------- -------------- -------------- --------
Loss
attributable
to equity
owners of
the Parent (2,440) (176) (2,616) (1,541) (1,377) (2,918) (3,560) (5,860) (9,420)
------------- ----- -------------- -------------- -------- -------------- -------------- -------- -------------- -------------- --------
Basic
earnings per
share 8 (2.6) (5.0) (14.0)
Diluted
earnings per
share 8 (2.6) (5.0) (14.0)
------------- ----- -------------- -------------- -------- -------------- -------------- -------- -------------- -------------- --------
All amounts stated relate to continuing activities.
Consolidated statement of comprehensive income
For the six months ended 30 June 2020
(Unaudited) (Unaudited) (Audited)
Six months Six months ended 30 June Year ended 31 December 2019
ended 30 June 2019
2020
GBP000 GBP000 GBP000
------------------------------------------ --------------- -------------------------- -----------------------------
Loss for the period (2,616) (2,918) (9,420)
Items that may be reclassified
subsequently to profit and loss:
Exchange differences on translation of
foreign operations (net of tax) 30 93 31
------------------------------------------ --------------- -------------------------- -----------------------------
Total comprehensive loss for the period (2,586) (2,825) (9,389)
------------------------------------------ --------------- -------------------------- -----------------------------
Consolidated statement of financial position
As at 30 June 2020
(Unaudited) (Unaudited) (Audited)
30 June 2020 30 June 2019 31 Dec 2019
Restated
Note GBP000 GBP000 GBP000
--------------------------------- ---- ------------- ------------- ------------
Non-current assets
Goodwill 169 169 169
Other intangible assets 13,215 13,683 12,560
Purchased software costs 2,275 2,693 2,492
Property, plant and equipment 4,677 5,431 5,323
Deferred tax assets - 1,624 -
--------------------------------- ---- ------------- ------------- ------------
20,336 23,600 20,544
--------------------------------- ---- ------------- ------------- ------------
Current assets
Inventories 9,366 8,506 6,304
Trade and other receivables 6,418 9,234 12,073
Current tax asset 1,135 1,084 729
Derivative financial assets 158 54 -
Cash and cash equivalents 10 1,073 1,522 2,062
--------------------------------- ---- ------------- ------------- ------------
18,150 20,400 21,168
--------------------------------- ---- ------------- ------------- ------------
Total assets 38,486 44,000 41,712
--------------------------------- ---- ------------- ------------- ------------
Current liabilities
Trade and other payables (11,805) (10,110) (12,150)
Lease liabilities (351) (340) (348)
Current tax liabilities - (3) -
Provisions 11 (1,319) (1,821) (1,496)
Invoice discounting facilities 9 (2,515) (3,173) (6,985)
Derivative financial liabilities - - (429)
--------------------------------- ---- ------------- ------------- ------------
(15,990) (15,447) (21,408)
--------------------------------- ---- ------------- ------------- ------------
Net current assets/(liabilities) 2,160 4,953 (240)
--------------------------------- ---- ------------- ------------- ------------
Non-current liabilities
Loans and borrowings 9 (24) - -
Lease liabilities (958) (1,288) (1,131)
Provisions 11 (1,249) (1,363) (1,997)
Deferred tax liabilities - (2,199) -
--------------------------------- ---- ------------- ------------- ------------
(2,231) (4,850) (3,128)
--------------------------------- ---- ------------- ------------- ------------
Total liabilities (18,221) (20,297) (24,536)
--------------------------------- ---- ------------- ------------- ------------
Net assets 20,265 23,703 17,176
--------------------------------- ---- ------------- ------------- ------------
Equity
Called up share capital 12 2,531 1,519 1,519
Share premium account 12 22,104 17,617 17,617
Currency translation reserve 173 205 143
Retained earnings (4,543) 4,362 (2,103)
----------------------------- ------- ------ -------
Total equity attributable
to equity holders of the
Parent Company 20,265 23,703 17,176
----------------------------- ------- ------ -------
Consolidated statement of changes in equity
For the six months ended 30 June 2020
Share Currency
Called up share premium translation Retained
capital account reserve earnings Total
GBP000 GBP000 GBP000 GBP000 GBP000
---------------------------------- ------ -------- ------------ --------- -------
Restated balance at 1 January
2019 918 12,729 112 7,280 21,039
Loss for the six months - - - (2,918) (2,918)
Foreign exchange gains from
overseas subsidiaries - - 93 - 93
---------------------------------- ------ -------- ------------ --------- -------
Total comprehensive income/(loss)
for the six months - - 93 (2,918) (2,825)
---------------------------------- ------ -------- ------------ --------- -------
Transactions with owners in
their capacity as owners:
Issue of equity shares 601 - - - 601
Premium arising on issue of
shares - 5,400 - - 5,400
Share issue expenses - (512) - - (512)
---------------------------------- ------ -------- ------------ --------- -------
Total transactions with owners
in their capacity as owners 601 4,888 - - 5,489
---------------------------------- ------ -------- ------------ --------- -------
Balance at 30 June 2019 1,519 17,617 205 4,362 23,703
---------------------------------- ------ -------- ------------ --------- -------
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
---------------------------------- ----- ------ --- ------- -------
Consolidated cash flow statement
For the six months ended 30 June 2020
(Unaudited) (Unaudited) (Audited) Year ended 31
Six months ended 30 June 2020 Six months ended 30 June 2019 Dec 2019
GBP000 GBP000 GBP000
------------------------------ ----------------------------- ------------------------------ -----------------------
Loss before tax (3,006) (3,600) (11,024)
Finance expense 152 173 312
------------------------------ ----------------------------- ------------------------------ -----------------------
Operating loss for the period (2,854) (3,427) (10,712)
Adjustments for:
Depreciation of property,
plant and equipment, and
right-of-use assets 703 562 1,267
Amortisation of intangible
assets 1,162 1,146 2,105
Loss on disposal of
non-current assets 2 - 16
Non-underlying items 176 1,700 6,916
Cash flow relating to
non-underlying items (897) (1,546) (2,346)
(Increase)/decrease in fair
value of derivatives (587) 159 643
Operating cash flow before
movements in working capital (2,295) (1,406) (2,111)
Movement in inventories (3,062) (83) 418
Movement in receivables 5,630 1,558 (1,281)
Movement in provisions (28) (37) (106)
Movement in payables (345) (1,287) 520
Cash used by operations (100) (1,255) (2,560)
Income taxes (paid)/received (12) 491 1,191
Net cash used by operating
activities (112) (764) (1,369)
------------------------------ ----------------------------- ------------------------------ -----------------------
Investing activities
Capitalised development costs (1,575) (1,422) (2,882)
Purchase of property, plant
and equipment (52) (212) (841)
Interest received - - 1
------------------------------ ----------------------------- ------------------------------ -----------------------
Net cash used in investing
activities (1,627) (1,634) (3,722)
------------------------------ ----------------------------- ------------------------------ -----------------------
Financing activities
Proceeds from issue of
ordinary shares (net of
expenses) 5,499 5,488 5,488
Drawdown of invoice finance (4,469) 3,173 6,985
Drawdown of loan 24 1,300 1,300
Repayment of loan - (7,000) (7,000)
Loan restructuring costs - - (209)
Repayment of lease obligations (175) (130) (307)
Interest paid (152) (242) (382)
------------------------------ ----------------------------- ------------------------------ -----------------------
Net cash generated by
financing activities 727 2,589 5,875
------------------------------ ----------------------------- ------------------------------ -----------------------
Net (decrease)/increase in
cash and cash equivalents (1,012) 191 784
Cash and cash equivalents at
beginning of period 2,062 1,251 1,251
Non-cash movements 23 80 27
------------------------------ ----------------------------- ------------------------------ -----------------------
Cash and cash equivalents at
end of period 1,073 1,522 2,062
------------------------------ ----------------------------- ------------------------------ -----------------------
Notes to the financial information
1. General information
These consolidated interim financial statements were approved by
the Board of Directors on 29 September 2020.
2. Basis of preparation
These consolidated interim financial statements of the Group are
for the six months ended 30 June 2020.
The comparative figures for the financial year ended 31 December
2019 are not the Group's statutory accounts for that financial
year. Those statutory accounts have been reported on by the Group's
auditor and delivered to the Registrar of Companies. The report of
the auditor was (i) unqualified, (ii) included, without qualifying
its report, a reference to the existence of a material uncertainty
around the potential impact of COVID-19 which might cast doubt on
the Group's ability to continue as a going concern and (iii) did
not contain a statement under Section 498 of the Companies Act
2006.
The condensed consolidated interim financial statements for the
six months to 30 June 2020 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 2019 which are available at
www.fireangeltech.com/investors .
The condensed consolidated interim financial statements for the
six months to 30 June 2020 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 2020 have been prepared on the basis of the
accounting policies expected to be adopted for the year ending 31
December 2020. These are anticipated to be consistent with those
set out in the Group's latest annual financial statements for the
year ended 31 December 2019. These accounting policies are drawn up
in accordance with adopted International Accounting Standards
('IAS') and International Financial Reporting Standards ('IFRS') as
issued by the International Accounting Standards Board and adopted
by the EU.
As detailed in the audited statutory accounts for the year ended
31 December 2019, a prior period adjustment was recorded to
increase the FireAngel battery warranty provision. Full details are
given in those statutory accounts. As a result, the consolidated
statement of financial position as at 30 June 2019 has been
restated as detailed in note 5 below.
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)
Six months ended 30 June 2020 Six months ended Year ended
GBP000 30 June 2019 31 Dec 2019 GBP000
GBP000
---------------------------------- --------------------------------- ------------------- --------------------
Revenue from continuing
operations:
UK Trade 2,920 3,365 7,486
UK Retail 6,008 7,540 18,283
UK Fire & Rescue Services 1,530 2,249 4,718
UK Utilities 519 1,317 2,173
----------------------------------- --------------------------------- ------------------- --------------------
Total sales in the UK 10,977 14,471 32,660
International 4,630 5,404 11,140
Pace Sensors 848 866 1,686
----------------------------------- --------------------------------- ------------------- --------------------
Total revenue 16,455 20,741 45,486
----------------------------------- --------------------------------- ------------------- --------------------
From 1 January 2020, certain customers previously reported
within the UK Trade business unit are now reported through the UK
Retail and UK Utilities business units. The 2019 comparatives have
been adjusted accordingly.
4. Non-underlying items
(Unaudited) (Unaudited) (Audited)
Six months ended Six months ended Year ended
30 June 2020 GBP000 30 June 2019 31 Dec 2019
GBP000 GBP000
-------------------------------------------- --------------------- ---------------------------- -------------
Within cost of sales
Provision for warranty costs - 1,400 2,605
Provision against stock and disposal costs - - 1,703
- 1,400 4,308
Within operating expenses
--------------------------------------------- --------------------- ---------------------------- -------------
Restructuring and fundraising costs - 300 746
Impairment of intangible assets - - 1,825
Share-based payment charges 176 - 37
176 300 2,608
-------------------------------------------- --------------------- ---------------------------- -------------
Total non-underlying items 176 1,700 6,916
--------------------------------------------- --------------------- ---------------------------- -------------
5. Restatement of consolidated statement of financial position as at 30 June 2019
As detailed in the audited statutory accounts for the year ended
31 December 2019, a prior period adjustment of GBP1.5 million was
recorded to increase the FireAngel battery warranty provision. Full
details are given in the audited statutory accounts for the year
ended 31 December 2019.
As a result, the consolidated statement of financial position as
at 30 June 2019 has been restated as follows:
As previously stated Prior period
adjustment Restated
GBP000 GBP000 GBP000
------------------------- -------------------- ------------ ----------
Current liabilities
Provisions (1,094) (727) (1,821)
Net current assets 5,680 (727) (4,953)
Non-current liabilities
Provisions (558) (805) (1,363)
Deferred tax liabilities (2,459) 260 (2,199)
Total liabilities (19,025) (1,272) (20,297)
Net assets 24,975 (1,272) 23,703
------------------------- -------------------- ------------ ----------
Total equity 24,975 (1,272) 23,703
------------------------- -------------------- ------------ ----------
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 2020.
7. Dividends
As a result of the loss reported for the period, the Directors
do not propose payment of an interim dividend for 2020 (2019: 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
2020 2019 2019
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) (2,616) (2,918) (9,420)
-------------------------------- --------------- --------------- ------------
Number of shares '000 '000 '000
-------------------------------- --------------- --------------- ------------
Weighted average number
of ordinary shares - basic
earnings calculation 99,300 58,336 67,219
Dilutive potential ordinary
shares from share options - - -
-------------------------------- --------------- --------------- ------------
Weighted average number
of ordinary shares - diluted
calculation 99,300 58,336 67,219
-------------------------------- --------------- --------------- ------------
2020 2019 2019
pence pence pence
---------------------------- ------ ------ -------
Basic earnings per share (2.6) (5.0) (14.0)
Diluted earnings per share (2.6) (5.0) (14.0)
----------------------------- ------ ------ -------
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
2019.
9. Loans and borrowings
(Unaudited) (Unaudited) (Audited)
30 June 31 Dec
30 June 2020 2019 2019
GBP000 GBP000 GBP000
----------------- ---------------- --------------- ------------ ----------
Canadian government COVID-19 24 - -
loan
Invoice discounting facilities 2,515 3,173 6,985
----------------------------------- --------------- ------------ ----------
2,539 3,173 6,985
----------------------------------- --------------- ------------ ----------
To further strengthen its balance sheet, as announced on 22 June
2020, the Company secured a GBP3.2 million loan under the
Coronavirus Large Business Interruption Loan Scheme, which remained
undrawn at the period end. The full amount was subsequently drawn
in August 2020 to fund the temporary increase in working capital
due to COVID-19.
10. Cash and cash equivalents
(Unaudited) (Unaudited) (Audited)
30 June 31 Dec
30 June 2020 2019 2019
GBP000 GBP000 GBP000
-------------- ------------- --------------- ------------ ----------
Cash at bank and in hand 1,073 1,522 2,062
----------------------------- --------------- ------------ ----------
11. Provisions
FireAngel BRK Brands
warranty warranty
provisions provisions Total
GBP000 GBP000 GBP000
------------------------------ ------------ ------------ --------
At 1 January 2019 (Restated) 2,932 134 3,066
Charge in period 1,400 - 1,400
Utilisation (1,246) (36) (1,282)
-------------------------------- ------------ ------------ --------
At 30 June 2019 (Restated) 3,086 98 3,184
-------------------------------- ------------ ------------ --------
At 1 January 2020 3,465 28 3,493
Utilisation (897) (28) (925)
-------------------------------- ------------ ------------ --------
At 30 June 2020 2,568 - 2,568
-------------------------------- ------------ ------------ --------
The total warranty provision is classified between less than one
year and greater than one year as follows:
(Unaudited)
30 June
(Unaudited) 2019 (Audited)
31 Dec
30 June 2020 Restated 2019
GBP000 GBP000 GBP000
-------------- ------------- --------------- ------------ ----------
Current provision 1,319 1,821 1,496
Non-current provision 1,249 1,363 1,997
----------------------------- --------------- ------------ ----------
Total warranty provision 2,568 3,184 3,493
----------------------------- --------------- ------------ ----------
As detailed in note 5, a prior period adjustment of GBP1.5
million was recorded to increase the FireAngel battery warranty
provision. As a result, the disclosures in relation to the
provision as at 30 June 2019 have been restated as above.
12. Share capital and reserves
On 8 April 2020, the Company raised GBP6.1 million (gross)
through the issue of 50,623,480 new ordinary shares of 2p nominal
value each at an issue price of 12p per share.
The premium on issue was 10p per share amounting to GBP5.1
million. This was credited to the share premium account. Share
issue expenses amounted to GBP0.6 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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