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RNS Number : 1470G
FireAngel Safety Technology Group
28 March 2022
This announcement is deemed to contain inside information as
stipulated under the Market Abuse Regulations (EU) NO. 596/2014
(MAR) which is part of UK law by virtue of the European Union
(withdrawal) Act 2018. Upon the publication of this announcement,
this inside information is now considered to be in the public
domain.
28th March 2022
FireAngel Safety Technology Group plc
("FireAngel", the "Group" or the "Company")
Commercial agreement signed with Techem and selection of
FireAngel CO Sensors
Further to its Trading Update released on 31 January 2022,
FireAngel (AIM: FA.), a leading developer and supplier of home
safety products, is pleased to announce the conclusion of the next
significant stage of its agreement with Techem Energy Services GmbH
("Techem"), one of the leading service providers for green and
smart buildings, to develop a new generation alarm primarily for
the German market. Techem's focus is on energy efficiency along the
entire real estate value chain. It supports over 12 million
properties in 20 countries with efficient ways of energy and water
consumption and has been doing so for more than 70 years.
FireAngel first entered into a Development Agreement with
Techem, which was announced on 7 April 2020, to undertake a
research phase (Development Phase 1 or "DP1") and to define and
agree a development phase ("DP2") to develop a new generation smoke
alarm ("NGSA"). The NGSA will combine multiple innovative sensor
technologies to produce a state-of-the-art product for installation
in Techem's customers' properties.
The Company successfully completed the fully funded DP1 of its
partnership, which was announced on 20 December 2021, and has now
formally concluded the agreement with Techem for DP2, with a
detailed specification. It is expected that the development period
will last until the end of 2024 and the NGSA will be available for
sale in H2 2024. Since DP1 concluded, work has been ongoing and
paid on an informal basis pending signing the DP2 agreement. As a
result, DP2 is already over 10 per cent. complete on a planned
man-days basis.
Selection of FireAngel CO Sensors
Importantly, Techem has selected the FireAngel CO sensor to be
incorporated exclusively into the new alarm, which is expected to
significantly increase the medium-term financial opportunity for
the Company. FireAngel has its own CO sensor factory in
Mississauga, Canada, currently making approximately 1 million
sensors per annum. Whilst minor investments will be made in due
course by the Company to increase capacity and efficiency at its
factory to support this opportunity, the Board believes that the
Company's existing capability and factory footprint will enable
more than a doubling of throughput, which should be sufficient to
cope with the planned production of the CO sensor for the NGSA. The
wider FireAngel business will also benefit from these improvements
in efficiency.
Financial opportunity
DP2 development will be fully funded by Techem by way of certain
fixed pricing of more than GBP2 million, plus other external open
book pricing to Techem, including the Contract Equipment
Manufacturer ("CEM") set up costs. This is in addition to the funds
which have already been paid by Techem to the Company which, during
DP1, amounted to just over GBP1 million in 2021. The goal of the
commercial arrangements is that they are cash neutral to FireAngel,
prior to the sales phase becoming materially cash positive in
2025.
Furthermore, the original agreement with Techem provides for
payments for inclusion of existing FireAngel IP within the new
development. The next of these for GBP279k will fall due in June
2022. The final payment for existing IP, and outside the scope of
the funded development work, of GBP558K will come at the end of
DP2, which is expected in 2024.
Once sales of the NGSA commence in H2 2024, the Company expects
to earn over EUR5 per product comprised of the agreed royalty,
manufacturing fee, service support fees and the price for each CO
Sensor.
The initial forecast of nearly 7 million units of the NGSA
includes a commitment from one major end customer of Techem's.
Whilst this forecast may vary in future and will depend on the
precise delivery date and other factors, Techem and FireAngel will
co-operate to assess the overall opportunity and work jointly on
marketing the product.
The next stage in parallel with DP2 development is the CEM
partner selection, which is expected to conclude in H1 of this
year.
IFRS 15 treatment of initial costs and revenue
IFRS 15, which covers matching revenue recognition with
contractual provisions, is expected to govern how the Company
treats DP2 and the original agreement with Techem going forward. At
the signing of the original agreement, a minimum royalty fee of
EUR3 million over up to 30 months was agreed which will be charged
to Techem once sales of the NGSA commence. The Company is currently
completing the audit of its final results for the year ended 31
December 2021 and will comment further on IFRS 15 implications in
its full year audited results announcement due to be released on 29
March 2022.
Nicolai Kuß, CSO of Techem, commented:
"Techem sees this project as a major opportunity to extend the
value of its offering to our customers. I'm delighted to see how
closely and co-operatively the teams in each of FireAngel and
Techem are working together, and I am excited to see the continued
progress."
John Conoley, Executive Chairman of FireAngel, commented:
"This transformational partnership with Techem is of long-term
value and great significance for FireAngel. This opportunity has
crystallised further with the formal signing of DP2. We are pleased
that the financial opportunity from late 2024 onwards is more
substantial, due to the inclusion of our own CO Sensors, than
previously anticipated. Techem has proved to be a committed and
reliable partner and we look forward to our shared success in the
future."
- Ends -
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/Joe Burgess
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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