REG - FireAngel SafetyTech - Unaudited Results & Temporary Suspension on AIM
28/06/2024 07:00
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RNS Number : 2497U FireAngel Safety Technology Group 28 June 2024
28 June 2024
FireAngel Safety Technology Group plc
("FireAngel", the "Company" or the "Group")
Unaudited preliminary results
and
Temporary suspension of trading on AIM
FireAngel (AIM: FA.), a leading developer and supplier of home safety
products, announces its unaudited preliminary results for the year ended 31
December 2023.
Pursuant to Rule 19 of the AIM Rules for Companies (the "AIM Rules"), the
Company is required to publish its audited annual accounts for its financial
year ended 31 December 2023 ("2023 Audited Accounts") by 30 June 2024. The
Company confirms, however, that its auditor, RSM UK Audit LLP ("RSM"), has
informed the Company that it requires additional time to complete its audit
for the year ended 31 December 2023, due to resource availability within the
audit team.
Accordingly, the Company no longer expects to be able to publish the 2023
Audited Accounts by 30 June 2024. The Company is now targeting the publication
of the 2023 Audited Accounts in early July 2024.
Trading in the Company's ordinary shares on AIM will be suspended with effect
from 7.30 a.m. on 1 July 2024, pending publication of its 2023 Audited
Accounts. Suspension from trading is expected to be lifted in due course with
the publication of the 2023 Audited Accounts.
Business Highlights
· In June 2023, the Company successfully raised £6.1m (before expenses) via
existing and new shareholders, funds which have been used to pay down net debt
and to drive improvements in business momentum.
· Alongside the fundraise, Neil Radley was appointed as Chief Executive Officer
in June 2023 and the senior management team was restructured to improve
operational and financial performance.
· In parallel, a strategic review was commenced to focus on affirming the
direction and focus of the Company.
· Significant progress was made on the Group's project with Techem Energy
Services GmbH ("Techem") to develop a new generation smoke alarm primarily for
the German market:
· All design and engineering milestones have been completed on
schedule
· Firmware development and validation testing milestones were 100%
and 85% completed at the end of May 2024
· The Group will commence ramp production in July 2024 and is
planning to start serial production in August 2024
· Planned shipments for 2024 significantly exceed the original
targets with a knock-on benefit to future revenue and cash generation.
Financial Highlights
· Revenue declined by 29% to £40.9 million (2022: £57.5 million).
· Gross profit of £7.8 million (restated 2022: £8.3 million).
· Gross margin of 19.2% (restated 2022: 14.4%).
· Operating loss of £8.8 million (restated 2022: £7.7 million).
· Adjusted operating loss(1) of £7.0 million (restated 2022: £6.6 million).
· Adjusted LBITDA(2) of £3.6 million (restated 2022: £3.6 million).
· Adjusting items(3) of £1.8 million before tax (restated 2022: £1.1 million).
· Loss before tax of £9.1 million (restated 2022: £7.9 million).
· Net debt (before lease obligations) at 31 December 2023 of £3.1 million
(2022: £4.8 million).
(1)Adjusted operating loss is operating loss before adjusting items
(2)Adjusted EBITDA is loss before tax, depreciation and amortisation, finance
costs, adjusting items, other operating income and expenses
(3)Adjusting items include costs in relation to restructuring and fundraising,
strategic review, legal advice on the Offer, dilapidation, impairment on
intangible and tangible assets and share based charges (see note 7 of the
preliminary announcement)
*See note 4 to the preliminary announcement for further details on the 2022
restatement.
Recommended Cash Offer by Intelligent Safety Electronics Ptc. Ltd ("ISE")
· On 27 October 2023, the boards of ISE and FireAngel announced that they had
reached agreement on the terms and conditions of a recommended cash offer to
acquire the issued and to be issued share capital of FireAngel not already
owned or controlled by ISE.
· On 30 May 2024, FireAngel and ISE confirmed that following approval by the
Secretary of State in respect of the NSIA Conditions, FireAngel and ISE
considered the Approval Conditions and determined them to be reasonably
acceptable to them and confirmed that both parties considered the Approval
Conditions to be satisfied.
· On 17 June 2024, the boards of FireAngel and ISE confirmed that the offer had
been declared unconditional in all respects.
· On 18 June 2024, the Company confirmed that cancellation of the admission to
trading on AIM of FireAngel Shares is expected to take effect at or shortly
after 7.00am on 17 July 2024 and, accordingly, the final day of trading on AIM
of FireAngel Shares will be 16 July 2024.
· 25 June 2024, FireAngel and ISE, confirmed that ISE had received valid
acceptances under the Offer in respect of more than 90 per cent. of the
FireAngel Shares to which the Offer relates, and ISE indicated that it intends
to compulsorily acquire all of the outstanding FireAngel Shares in respect of
which it has not already received valid acceptances pursuant to the Offer.
Neil Radley, Chief Executive Officer of FireAngel, commented:
"2023 was a challenging year for FireAngel, however the Group demonstrated
true resilience. As the year unfolded, we took all necessary steps to weather
these difficulties, and despite the fall in sales compared with the previous
year, we started 2024 with renewed optimism. Trading for the first five months
of 2024 have on the whole met the Board's expectations with strong performance
in European sales, our customers in the Utilities sector and the Fire &
Rescue Services.
The progress the new leadership team has made on inventory, cash and expense
management has also resulted in lower net debt than expected and a level of
inventory much more appropriate for the size of the business. Excellent
progress has also been made in relation to the Group's partnership with Techem
and major development milestones have now been completed.
From 1 July 2024, the Group will have new owners and I would like to
congratulate ISE on their acquisition and thank all teams for their patience
during what has been a particularly prolonged process. Both ISE and FireAngel
share very similar goals, with a commitment to savings lives and providing
customers with quality products and services, and no doubt the partnership
will significantly benefit customers and consumers in the future."
For further information, please contact:
FireAngel Safety Technology Group plc 024 7771 7700
Neil Radley, Chief Executive Officer
Adrian Wilding, Chief Finance Officer
Shore Capital (Nominated adviser and broker) 020 7408 4050
Tom Griffiths/David Coaten/Tom Knibbs
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
(https://url.avanan.click/v2/___http:/www.fireangeltech.com/___.YXAxZTpzaG9yZWNhcDphOm86YjNjMzIxM2EyMjJhOTVjYzg2NTYyZGZiODE5NWZlOTY6Njo4YzU4OjNkMDQ1YmU1NDc5OThhOWIwYzZkNWEyNjQ3MDRhYTViZjNhODE2YTRlZjM4YzIyMmQ2MmRlOTNiZTI1NWQ0YTI6cDpGOk4)
CHAIRMAN'S STATEMENT
During a challenging year of change the Company has demonstrated true
resilience, delivering a diversified range of high-quality products to both
our consumer and professional customers. We are proud of the contribution we
continue to make towards ensuring residential homes are safe and we remain
committed to our goal of saving lives.
Introduction
In announcing our unaudited results for the year ended 31 December 2023 it is
worth noting the vastly different nature of the first six months versus the
second six months of the year. During the first six months significant
management energy was focussed on the £6.1 million fundraise. Following the
fundraise in June, the Company commenced a strategic review comprising of two
phases: firstly, to refocus the Company under a new management team and
secondly to optimise the business to deliver sustainable growth. On top of
these objectives, the Company has needed to adjust to the ever-changing
marketplace where the traditional boundaries between our retail and wholesale
customers have become increasingly blurred and consumer purchasing behaviour
continues to ebb and flow between bricks and mortar outlets and buying
on-line. There is no doubt that the Company's ability to deal with immediate
and medium-term challenges has improved whilst retaining its focus on
improving its margins and providing value-for money pricing during the current
cost of living challenges.
Our immediate priorities, including the improvement in the sales process and
reduction in inventory levels, have been achieved. The Company has worked hard
to ensure that the change in manufacturing partner, which was announced in
September 2023, progresses smoothly to ensure continuity of supply. We expect
such changes will further enhance product quality and improve margins. In
addition, we have reviewed our overall product proposition and rationalised
certain product category contents. In stark contrast to the position the
Company was in last year, enhanced sales forecast and inventory management
processes have been put in place to ensure that working capital remains in
line with market demand. This has been especially critical whilst dealing with
the current interruptions in supply chains caused by the war in the Middle
East.
With regards delivering sustainable growth, great progress has been made in
furthering the Company's product roadmap. Progress on the new generation smoke
alarm being developed for Techem accelerated during the last part of 2023 and
we are now in the final stages of delivery, far earlier this year than
anticipated. Despite prioritising work with Techem, the Home Environment
Gateway is currently undergoing trials and will be available for sale at the
beginning of the third quarter of 2024. Improved focus on delivery has enabled
work to start on a new range of smoke detectors which will utilise the
learnings and IP from the Techem partnership.
Overview
The difficulties the Group faced last year and into the first half of 2023
have been well publicised. The momentum that we lost due to global supply
issues which ultimately caused intermittent supplies to our end customers at
the end of 2022 and start of 2023 eventually materialised in the results for
the Group this year. We achieved sales revenue of £40.9 million, a decrease
of £16.6 million on the previous year (2022: £57.5 million). UK sales
totalled £30.8 million (2022: £36.2 million), a decline of £5.4 million and
sales to international customers totalled £10.1 million (£2022: £21.3
million) a fall of £11.2 million, despite new sales of £1.0 million to the
Middle East. The changes were largely due to the Group benefitting from the
high demand caused by legislative changes in both the UK and Europe during
2022 which was not repeated in 2023.
While gross margins improved during the second half of 2023 as a result of
price increases to offset inflationary increases in our product and
administrative cost base, sales volumes were insufficient to increase gross
profits which declined by £0.5 million to £7.8 million (restated 2022: £8.3
million). Our restructuring efforts saved £0.4 million during the year as
adjusted operating expenses fell to £15.0 million (2022: £15.4 million) and
adjusted operating losses, excluding the impact of adjusting items totalling
£1.8 million (2022: £1.1 million), increased by £0.3 million to £7.0
million (restated 2022: £6.7 million). Losses before tax increased by £1.2
million to £9.1 million (restated 2022: £7.9 million).
LBITDA, after adjusting items (see note 7) amounted to a loss of £3.6 million
(restated 2022: loss of £3.6 million) and basic and diluted EPS for the year
was a loss of 3.7 pence per share (2022 restated: loss of 4.2 pence per
share).
Balance sheet management improved during the second half of 2023 with net debt
falling by £1.7 million to £3.1 million (2022: £4.8 million) largely
financed by a fall in working capital of £1.8 million to £1.0 million (2022:
£2.8 million). Of note was the management of inventory levels which had risen
from £8.1 million at the end of 2022 to £10 million by the middle of the
year but ended the year at £5.3 million as new management got to grips with
the business.
Team
Throughout the year the Group employed an average of 111 people (2022: 124) in
the UK and a further 3 (2022: 3) in Europe. In Canada the average was 30
(2022: 34). To address the issues faced by the Group, a significant amount of
change has been experienced by the team and I am hugely grateful for the
adaptability and fortitude of our employees as we work towards a more
sustainable future and I am delighted that we have entered 2024 with a
reinvigorated and motivated team who have the right breadth of talent and
expertise to deliver on our strategy.
Board
Alongside my appointment as Chair on 6 June 2023, the Company announced the
appointment of Neil Radley as Chief Executive Officer and the resignation of
its former Executive Chairman, John Conoley. Neil brings tremendous strategic,
M&A and change experience in a number of sectors. Previously the CEO of
Universe Group PLC, an AIM quoted provider of payment products and services to
the retail industry, Neil has already brought to bear his experience to lead
the Group through its next phase. On 25 July 2023, the Company announced that
Simon Herrick, its senior Independent Director, had resigned with immediate
effect due to the increased commitment of his other business interests. On 30
September 2023, Jon Kempster resigned as a Non-Executive Director. Graham Bird
was appointed as Senior Independent Director on 26 September 2023. Graham is
currently Chief Financial Officer of XP Factory PLC and brings a wealth of
experience to the Board. Post the year-end, Zoe Fox resigned as Chief
Financial Officer on 12 March 2024 and was replaced by Adrian Wilding. Adrian,
previously the Company's Commercial Director, is an experienced CFO, having
worked in both listed and private equity-led businesses, and has held multiple
senior leadership positions in B2B and B2C financial services and technology
companies.
Summary and outlook
As 2023 unfolded, the Group took all necessary steps to weather the number of
challenges it was faced with, and despite the fall in sales compared with the
previous year, we have started 2024 with renewed optimism. The competitive
environment in the UK remains strong and as a premium product provider, we are
mindful of the challenges from low-priced market entrants. Trading for the
first five months of 2024 has on the whole met the Board's expectations with
strong performance in European sales, our customers in the Utilities sector
and the Fire & Rescue Services. Sales in UK Retail and Trade experienced a
satisfactory first quarter but progress during the second quarter has been
challenging and we see a slight contraction in these two market sectors. In
addition, we are exploring some interesting opportunities with new partners
both in the UK and in the Middle East and looking to take advantage of the
various replacement cycles in both France and Germany. Group margins remain
robust and the business has experienced higher gross margins across our
sectors than the comparative period in 2023.
The progress the new leadership team has made on inventory, cash and expense
management has resulted in lower net debt than expected and a level of
inventory much more appropriate for the size of the business.
Excellent progress has been made in relation to the Group's partnership with
Techem Energy Services GmbH ("Techem") and major development milestones have
now been completed. We are now preparing for production readiness and have
already received our first orders for the next generation smoke alarms
("NGSA") significantly surpassed expectations. The partnership with Techem is
considered key to the Group's revenue and liquidity positions in the coming
months.
Finally, I am delighted that the Group will have new owners from 1 July 2024.
I would like to congratulate ISE on their acquisition and thank all teams for
their patience during what has been a particularly prolonged process. Both ISE
and FireAngel share very similar goals, with a commitment to savings lives and
providing customers with quality products and services, and no doubt the
partnership will significantly benefit customers and consumers in the future.
Andrew Blazye
Non-executive Chairman
28(th) June 2024
STRATEGIC REPORT
Strategy and business plan
Following the announcement of the Company's £6.1 million fundraising (see
Financial Review for details) and the appointment of a new non-executive
Chairman, Andrew Blazye, and new Chief Executive Officer Neil Radley, the
Company commenced a strategic review to explore options to realise improved
value for shareholders. The strategic review is focussed on future proofing
the Group and returning it to profitability as soon as possible.
Notwithstanding the recommended cash offer for the Company by ISE, the new
management team has continued to pursue its underlying aims of firstly
stabilising the business to create a platform for sustainable growth,
secondly, ensuring the strategic direction of the Company is clear and
thirdly, delivering the pipeline of new products which will be the bedrock of
future growth and success.
In summary, the strategy and business plan for 2024 was structured with
business stability in mind and delivering on five business-critical
imperatives:
I. Complete the delivery of Techem products
II. Launch of the Home Environment Gateway product
III. Transferring the manufacturing currently undertaken in Poland
to a new partner
IV. Improving sales and margins to return the business to
profitability and positive cash flow, and
V. Significantly reducing our new product time to market through
a better understanding of what intellectual property we wish to own.
The Company's partnership with Techem Energy Services GmbH ("Techem")
continued to progress well during the year. On 18 April 2023, the Group
announced the signing of production and delivery contracts with Techem and its
long-term manufacturing partner. Estimates for the initial shipments of the
next generation smoke alarm have significantly exceeded prior plans and such
deliveries will commence at the start of the third quarter 2024 and will be
materially cash-generative for the Group thereafter. Final milestones for
firmware development and validation testing are in the final stages of
completion and the Group has started its ramp production in May 2024 and is
due to start serial production in August 2024.
The Board believes that the Home Environment Gateway will significantly
enhance the Company's position in the UK Trade market. The solution allows
private and public landlords the ability to monitor fire risk and
environmental factors over a range of properties via gateway connectivity.
Development has been largely completed by the end of the first quarter of 2024
and the Group is now undertaking pilot trials with supportive housing
associations, with sales likely during the third quarter of 2024.
Progress on transferring the manufacturing capacity currently undertaken in
Poland to a new partner is on schedule. Whilst announcements on the new
partner will be made once the tender has been awarded, we remain positive that
risks around cost and continuity of supply will be minimised.
Plans are being developed for the next generation of products based on the
learnings and IP from the Techem partnership. Whilst work on both delivering
for Techem and finalising the development on the Home Environmental Gateway
remain the priority, launching a new range of products in 2025 based on
improved technology will significantly enhance our position in both the UK and
European markets.
Environmental, Social and Governance ("ESG")
Our continuing commitment to protecting our planet and environment can be seen
in various activities and actions undertaken in 2023. A key achievement during
the year was obtaining Third Party Certification to ISO 14001 Environmental
Management Systems across our three UK sites from the British Standards
Institute. This certifies that we have a framework in place for measurement
and continual improvement of the environmental aspects of our operations.
The Group also ensures its operating activities are undertaken in an
environmentally conscious manner and currently reports on scope 1 and 2 as
required of the Streamlined Energy & Carbon reporting requirements.
The Group is a passionate advocate of maintaining the highest quality in terms
of British Safety Standards, especially in light of Grenfell and the Hackitt
Review and continues to develop and introduce technologically advanced
products in light of new safety legislation and increased awareness of the
dangers of smoke and CO in the UK and across Europe.
The Social Housing Act, which includes Awaab's Law, gives tenants greater
powers to hold their landlord to account. FireAngel is developing solutions
that can support landlords with identifying properties at the risk of
developing damp and mould and which have been incorporated into our general
fire safety product suite.
Current trading and outlook
Trading for the first five months of 2024 has on the whole met the Board's
expectations, with strong performance in European sales, our customers within
the Utilities sector and the Fire & Rescue Services. Sales in UK Retail
and Trade sectors experienced a satisfactory first quarter but progress during
the second quarter has been challenging and we see a slight contraction in
these two market sectors. In addition, we are exploring some interesting
opportunities with new partners both in the UK and in the Middle East and
looking to take advantage of the various replacement cycles in both France and
Germany. Group margins remain robust and the business has experienced higher
gross margins across our sectors than the comparative period in 2023.
As announced in its trading statement on 5 February 2024, the Company has made
strong progress with increasing inventory turnover and improving sales margin.
The improvements to sales forecasting have also enabled plans to have been
quickly executed to minimise operational impacts of delays caused by the
re-routing of shipping related to the war in the Middle East.
With reference to the Business Highlights section above, in particular post
balance sheet events, The Board ais delighted that the acquisition by ISE will
take place on 1 July 2024 and has commenced the process to cancel admission of
the shares to trading on AIM. The Board believe that there are significant
synergies to be achieved by the combination of the two businesses for the
benefit to customers and consumers alike.
Financial review
2023 2022*
unaudited restated
Summary Consolidated Summary of Comprehensive Income £000 £000
Revenue 40,916 57,461
Cost of sales (33,074) (49,178)
Gross profit 7,842 8,283
Adjusted operating expenses (15,034) (15,362)
Other operating income 176 834
Other operating expenses - (358)
Adjusted operating loss (7,016) (6,603)
Adjusted administrative items:
Restructuring and fundraising costs (772) -
Strategic review (141) -
Legal advice on The Offer (481) -
Dilapidations provision (298) -
Impairment of intangible assets (104) (916)
Impairment of tangible assets (38) (30)
Share-based payment charges 19 (181)
(1,815) (1,127)
Administrative expenses (16,849) (16,489)
Operating loss (8,831) (7,730)
Finance income 505 227
Finance expense (782) (422)
Loss before taxation (9,108) (7,925)
Income tax credit 167 262
Loss and total comprehensive income for the year (8,941) (7,663)
19.2% 14.4%
Gross profit margin
Adjusted (LBITDA) / EBITDA (£m) (3.6) (3.6)
Earnings per share Pence Pence*
restated
Basic earnings per share (3.7) (4.2)
Diluted earnings per share (3.7) (4.2)
2023 2022*
restated
Balance sheet extract £000 £000
Non-current assets 10,779 13,733
Current assets 16,318 23,986
Current liabilities (15,304) (21,190)
Non-current liabilities (2,928) (3,708)
Net assets 8.865 12,821
Working capital** 1,014 2,796
2023 2022
Net cash £000 £000
Cash and cash equivalents 1,703 1,431
Debt (4,818) (6,248)
Net (debt) / cash (3,115) (4,817)
*further details of the prior year restatement are provided in note 4
** working capital represents the aggregate of current assets and current
liabilities
Income statement
Revenue by business unit
Revenue split between each of the Group's business units, Techem and Pace
Sensors was as follows:
2023 2022 Inc/(dec) Inc/(dec) 2023 % of 2022 % of
unaudited total total
£m £m £m %
UK Trade 6.4 9.6 (3.2) (33) 16% 17%
UK Retail 17.4 19.8 (2.4) (12) 43% 34%
UK F&RS 3.4 3.3 0.1 3 8% 6%
UK Utilities & Leisure 3.6 3.5 0.1 3 9% 6%
Total revenue in the UK 30.8 36.2 (5.4) (15) 76% 63%
International 6.6 16.4 (9.8) (60) 16% 28%
Techem 2.2 2.5 (0.3) (12) 5% 4%
Pace Sensors 1.3 2.4 (1.1) (46) 3% 4%
Total revenue 40.9 57.5 (16.6) (29) 100% 100%
From 1 January 2023, certain customers previously reported within the UK Trade
business unit are now reported through UK Utilities & Leisure. The 2022
comparatives have been adjusted accordingly.
Total revenue in the UK decreased by £5.4 million, or 15% to £30.8 million
(2022: £36.2 million) primarily due to sales from one-off legislative changes
that took place during 2022, which enhanced sales during the latter half of
that year, and from weaker than expected sales during H2 2023. As part of the
Board's strategic review, the business introduced price changes at the end of
the first half of 2023 in response to increases in underlying inflation that
were impacting the Company's cost base and exchange rate volatility. The price
increases had a dampening effect on demand and hence revenue growth,
especially within the Trade and Retail sectors of our UK markets.
Revenues generated from international customers decreased by £9.8 million, or
60%, to £6.6 million, which was primarily the result of the impact of new
legislation in Benelux which led to a surge in demand for products during 2022
and significantly less demand in the current year as customers looked to
reduce inventory value. The Group was pleased to secure a new contract with a
government agency in the Middle East which was largely fulfilled during the
year.
Revenue from Techem is recognised in line with product design milestones and
is recognised under IFRS 15 (See note 6 for further details). The decrease
of £0.3 million to £2.2 million (2022: £2.5 million) is due to the change
in development milestones in comparison with the previous year.
Revenue from Pace Sensors in 2022 benefitted by increased demand for CO
sensors in the UK following enactment of legislation in 2022 and revenues
declined by £1.1 million, or 46% to £1.3 million.
Gross profit decreased by £0.4 million, or 5%, to £7.8 million (restated
2022: £8.3 million) but gross margin increased to 19.2% (restated 2022:
14.4%). The gross margin during 2022 was significantly impacted by warranty
costs of £1.8m (refer to note 4), purchase price variance ("PPV") costs of
£1.9 million which arose due to global supply chain challenges in 2022 and
mark-to-market ("MTM") losses on forward currency contracts expiring post
balance sheet date of £1.6 million. There were no PPV costs and no material
warranty provision costs during 2023. As at December 2023, the net MTM
hedging loss was £1.1 million (2022: £0.1 million loss), comprised of £1.3
million unrealised gains (2022: £1.9m unrealised losses) and £2.4 million
realised losses (2022: £1.8 million realised gains).
Other operating income decreased by £0.6 million to £0.2 million (2022:
£0.8 million).
Operating expenses, after adjusting items, decreased by £0.4 million, or 3%,
to £15.0 million (2022: £15.4 million) largely due to actions taken
following the strategic review and mainly related to headcount savings, offset
by lower capitalisation of internal costs.
Operating losses increased by £1.1 million to £8.8 million (restated 2022:
£7.7 million).
Finance income increased by £0.3 million to £0.5 million (2022: £0.2
million) and was comprised on interest received on discounted cash flows of
£0.2 million (2022: £0.2 million) and finance gains arising on a
debt-to-equity swap with one of the Company's major suppliers. As part of the
fund raise on 6 June 2023, trade payables due within one year with a carrying
value of £2.1 million were derecognised in exchange for the issue of Ordinary
shares. The gain arising on extinguishing the liability amounted to £0.3
million. Finance expenses increased by £0.4 million to £0.8 million (2022
restated: £0.4 million) due to increased borrowings in the period.
Adjusting items totalled £1.8 million (2022: £1.1 million) and primarily
related to restructuring costs of £0.8 million, legal costs related to the
Offer of £0.5 million, impairment of intangible assets of £0.1 million and
dilapidation provisions of £0.3 million associated with the Company's leased
premises.
Exchange rates
The Group has exposure to US Dollars, Euros and Canadian Dollars with 99% of
purchases and 7% of revenue being made in US Dollars and 13% of revenue being
in Euros. The Group hedges to smooth the impact of currency fluctuations and
suffered losses of £2.4 million on forward contracts maturing within the year
(2022: £1.7 million gain). After deducting a £0.3 million loss in respect
of the Mark to Market of forward contracts that mature beyond the balance
sheet date, the net impact of exchange rates on operating profit in the year
compared to 2022's exchange rates is estimated as a net unfavourable debit of
approximately £0.5 million, representing approximately 1% of gross margin.
The average exchange rates against GBP are summarised below:
Average for year Average for H1 Average for H2
2023 2022 2023 2022 2023 2022
Euro 1.15 1.18 1.14 1.19 1.16 1.16
US Dollar 1.24 1.24 1.23 1.31 1.25 1.18
Canadian $ 1.68 1.61 1.66 1.66 1.69 1.56
This table shows that on average in 2023, GBP weakened against the Euro by 3%,
thereby increasing FireAngel's revenue and profit on its Euro denominated
income. Over the same period, GBP remained largely unchanged against the
USD.
Result for the year
The Group's loss before tax increased by £1.2 million to £9.1 million
(restated 2022: £7.9 million).
The Group's adjusted LBITDA for the year amounted to £3.6 million (restated
2022: £3.6 million). The operating loss for the year amounted to £8.8
million (restated 2022: £7.7 million). After taking account of net finance
charges of £0.3 million (2022: £0.2 million) representing interest on
borrowings in the year and the gain arising on the debt to equity swap, the
Group reported a loss before tax of £9.1 million (restated 2022: loss before
tax £7.9 million).
The Group booked a tax credit of £0.2 million (2022: tax credit of £0.3
million) due largely to the recognition of tax losses and the surrender of
taxable losses for a research and development tax credit. The prior period
adjustment for the warranty provision had no impact on the prior period tax
credit as the increase in taxable losses was offset by increased deferred tax
not recognised.
Basic and diluted EPS for the year was a loss of 3.7 pence per share (restated
2022: loss of 4.2 pence per share).
Balance sheet
Non-current assets at 31 December 2023 amounted to £10.8 million (2022:
£13.7 million). The most significant components of this were capitalised
development costs, with a net book value of £8.5 million, plant and equipment
of £1.4 million and purchased software costs of £0.8 million. Capitalised
development assets of £0.2 million were impaired during the year following a
thorough review of product lines and future development costs by the new
management team. The majority of the impairment relates to changes in
assumptions regarding the procurement cycles and thus future sales of the
Group's Home Environment Gateway product.
Total capital expenditure (excluding right of use assets) decreased to £0.4
million (2022: £1.4 million). Of this total, £0.1 million represented
capitalised development expenditure to further enhance the Group's connected
homes and wider technology portfolio (2022: £0.9 million). All research and
development costs associated with the development of the new generation smoke
alarm for Techem was charged to the customer.
Total capital expenditure of £0.4 million (2022: £1.4 million) compares with
depreciation, amortisation and impairment charges totalling £3.5 million
(2022: £3.5 million).
Current assets decreased by £7.7 million to £16.3 million (2022: £24.0
million) at 31 December 2023 due to improved inventory which decreased by
£2.8 million to £5.3 million (2022: £8.1 million) and a decrease in trade
and other receivables of £5.1 million to £8.7 million (2022: £13.8
million). High inventory during 2022 arose from a build-up of inventory
following the severe shortage earlier in 2022 and the high trade and other
receivables position arose from a significant increase in demand in UK retail
sales during the final quarter of 2022. At 31 December 2023, current tax
assets amounted to £0.6 million (2022: £0.7 million).
Current liabilities decreased by £5.9 million to £15.3 million (restated
2022: £21.2 million) due to the extinguishing of a liability due within one
year from one of the Company's major suppliers amounting to £2.1 million in
exchange for the issue of ordinary shares during the June 2023 fundraise,
coupled with a decrease in derivative financial liabilities as USD rates
weakened against sterling relative to the position in 2022.
The Group's warranty provision at 31 December 2023 amounted to £2.3 million
(restated 2022: £2.8 million) of which £1.1 million is expected to be
utilised within twelve months of the balance sheet date. This provision
covers not only the expected costs of replacing smoke alarm products relating
to the battery issues announced in April 2016, but also to general warranty
claims which have arisen from improved data quality within our warranty
returns process, which has allowed management to further assess future
liabilities and the amounts provided are the Board's best estimate of the
ongoing liability. Detail of this prior year error is given in note 4.
Working capital decreased by £1.8 million to £1.0 million (restated 2022:
£2.8 million).
Non-current liabilities decreased by £0.8 million to £2.9 million (restated
2022: £3.7 million). The Group's warranty provision expected to be paid more
than twelve months from the balance sheet date decreased by £0.3 million to
£1.2 million (restated 2022: £1.5 million), loans payable under the
Coronavirus Business Interruption Loan Scheme ("CBILS") decreased by £0.6
million to £1.5 million (2022: £2.1 million) and lease liabilities increased
by £0.2 million to £0.3 million (2022: £0.1 million).
Cash flow and financing
Overall cash inflow in the year was £0.3 million (2022: outflow of £1.9
million) and net debt (before lease obligations) at 31 December 2023 was £3.1
million (2022: net debt (before lease obligations) of £4.8 million). The
overall cash inflow during the year was as a result of:
· Net cash generated by operating activities of £0.1 million
(2022: net cash used £2.8 million)
· Net cash used in investing activities of £0.4 million (2022:
£1.4 million) and
· Net cash generated from financing activities of £0.6 million
(2022: £2.1 million)
On 23 June 2023, the Company raised £6.1 million from the issuance of
120,711,091 ordinary shares at a price of £0.0505 each.
Cash generated from financing activities included £3.2 million (2022: £NIL)
of the £5.3 million total net proceeds with the balance being a £2.1 million
debt to equity swap. This is offset by net repayments to the Company's
invoice finance facility of £0.8 million (2022: net drawdown £3.5 million),
repayment of the CBILS loan of £0.6 million (2022 £0.4 million), repayment
of lease obligations of £0.4 million (2022: £0.5 million) and interest paid
of £0.7 million (2022: £0.4 million).
Net debt decreased by £1.7 million during the year to £3.1 million (2022:
£4.8 million) as a result of an increase in cash and cash equivalents of
£0.3 million, repayment of the CBILS loan of £0.6 million and repayments of
the Company's invoice finance facility of £0.8 million).
On 20 June 2022, the Group announced that it had signed an agreement with its
bank, HSBC UK Bank plc, for a standby letter of credit facility which is
supported by UK Export Finance, up to a combined sum of £3.5 million, for an
initial term of 12 months (the "Facility"). The Facility will attract a
quarterly charge of 0.55% on the total amount available under the Facility.
The drawings on the Facility do not add to the Group's net debt position. The
Facility supports the variability of working capital arrangements with certain
suppliers, which is driven by longer lead times on components and the expected
growth of the Group. No drawings on the Facility had been made by the balance
sheet date and the facility will expire on 30 June 2024.
Net cash / (debt) before lease obligations
Net cash / (debt) before lease obligations is considered to be a non-GAAP
measure as it is not defined in IFRS. The most directly comparable IFRS
measure is the aggregate of loans and other borrowings (current and
non-current) and cash and cash equivalents. This is the calculation used by
the Group to measure net cash.
Use of non-GAAP financial performance measures
Certain disclosures and analyses set out in this annual report include
measures, which are not defined by generally accepted accounting principles
('GAAP') under UK-adopted International Accounting Standards. We believe
this information, along with comparable GAAP measurements, is useful to
investors. Management uses these financial measures, along with the most
directly comparable GAAP financial measures, in evaluating the Group's
operating performance. Non-GAAP measures should not be considered in
isolation from, or as a substitute for, financial information presented in
compliance with GAAP.
In the following table, we provide a reconciliation of this and other non-GAAP
measures, as defined in this Performance Review, relevant GAAP measures:
2023 2022
unaudited
£m £m
Adjusted LBITDA
Reported loss before tax (9.1) (7.9)
Net finance costs 0.4 0.2
Depreciation, amortisation and impairment 3.5 3.5
Net other operating income/ expenses (0.2) (0.5)
Adjusting items:
Restructuring and fundraising costs 0.8 -
Strategic review 0.1 -
Legal advice on Siterwell acquisition 0.5 -
Dilapidations provision 0.3 -
Impairment of intangible / tangible assets 0.1 0.9
Share-based payment charges - 0.2
Adjusted LBITDA (3.6) (3.6)
2023 2022
Net debt £m £m
Cash and cash equivalents 1.7 1.4
Loans and borrowings (2.2) (2.8)
Invoice discount facility (2.6) (3.4)
Net debt (3.1) (4.8)
Going concern
The Directors have reviewed the forecast sales growth, budgets and cash
projections for the period to June 2025 including sensitivity analysis on the
key assumptions such as the potential impact of reduced sales and margins for
the next twelve months. The base case scenario does not reflect any synergies
arising from the Offer and integration strategies will take several months to
implement. However, the Directors have received reassurances from Siterwell
Electronics Co. Limited, the parent company of ISE, that the key risks facing
the business will be supported in a timely fashion and the Group will be able
to meet its obligations as they fall due. Specifically, risks for which
support will be provided include:
Costs involved in transferring manufacturing capabilities from its partner in
Poland to a new partner;
Maintaining supplies to the Group's customers and minimising any disruption
that the manufacturing transfer may cause;
Providing alternative financial facilities for replacing the stand-by letter
of credit which expires on 30(th) June 2024;
Repayment of the Group's invoice discount facility;
Providing sufficient cash headroom to support banking covenants in relation to
the Group's Coronavirus Business Interruption Loan; and,
Providing sufficient support for the Group to meet any other financial
obligations as they fall due arising from requirements to deliver the agreed
strategy and higher growth for the business.
The Directors have reasonable expectations that the Group and the Company have
adequate resources to continue operations for the period of at least one year
from the date of approval of these financial statements. The Directors are
aware that the reassurances received from Siterwell Electronics Co. Limited
are not legally binding but are satisfied that such assurances are sufficient
to remove any material uncertainties that may cast doubt over the ability of
the Group and the Company to continue as a going concern.
The Directors continue to adopt the going concern basis in preparing the full
year accounts for 2023.
Dividend
As a result of the loss reported for the year, and consistent with the
decision not to declare an interim dividend (2022: nil pence per share), the
Directors do not recommend the payment of a final dividend (2022: nil pence
per share). The total dividend payable for 2023 is therefore nil pence per
share (2022: nil pence per share).
Post balance sheet events
Update on the recommended cash offer for FireAngel by Intelligent Safety
Electronics Pte. Ltd ("ISE")
On 27 October 2023, the boards of ISE and FireAngel announced that they had
reached agreement on the terms and conditions of a recommended cash offer to
acquire the issued and to be issued share capital of FireAngel not already
owned or controlled by ISE (the "Offer"). ISE is a company incorporated in
Singapore and is wholly-owned by Siterwell Electronics Co., Ltd ("Siterwell"),
a leading manufacturer of intelligent security protection for life and
property which utilises an advanced smart security ecosystem technology. ISE
currently holds approximately 17.46 per cent. of FireAngel's issued share
capital.
The Offer was conditional upon, among other things, satisfaction of a
condition relating to a material official authorisation or regulatory
clearance (the NSIA Condition"), in this instance being the National Security
and Investment Act 2021 (the "Act"). As announced on 21 December 2023, the
Secretary of State has written to ISE and FireAngel to inform them that it has
considered the notification made by ISE under the Act in relation to the Offer
and had chosen to issue a call-in notice.
As announced on 17 May 2024 (the "17 May Announcement") in respect of the NSIA
Condition, the Secretary of State gave notice of a final order in relation to
the Offer ("Order"). The Order approved the Offer subject to the satisfaction
of certain conditions (the "Approval Conditions") the terms of which are set
out in the 17 May Announcement. FireAngel and ISE considered the Approval
Conditions and determined them to be reasonably acceptable to them (as is
specifically required in order for the condition set out at paragraph 2.1 of
Section A of Part 3 of the Offer Document ("NSIA Condition"). Both FireAngel
and ISE now consider the Approval Conditions to be satisfied.
Furthermore on 17th June 2024, FireAngel and ISE announced that The Offer had
been declared unconditional in all respects in accordance with its terms, and
as ISE had received valid acceptances in respect of 75 per cent. or more of
FireAngel's issued share capital, ISE request-ed the FireAngel Board to apply
for the cancellation of the admission to trading on AIM of FireAngel shares.
The Offer will remain open for acceptance until 1.00 p.m. on 1 July 2024,
being the Unconditional Date.
On 25 January 2024, the Group announced it had drawn down, and received from
ISE, £1.0 million, which has been used for general working capital purposes
(the "Facility"). The availability of the Facility was subject to the Offer
not being completed by 31 December 2023 or having been withdrawn, lapsed or
terminated and it continuing to be recommended by the directors of FireAngel
and usual events of default not continuing. The draw down is in accordance
with the terms of the facility as detailed in the announcement of 27 October
2023.
On 28 March 2024 legal proceedings were commenced against FireAngel Safety
Technology Limited, a wholly-owned subsidiary of the Company by Zenner
International GmbH & Co KG and Minol Messtechnik W.Lehman GmbH & Co KG
relating to the supply of alleged defective detectors between 2011 and 2019.
The claim for damages, with a maximum value of €7.3 million was issued at
the High Court of Justice, England and Wales on 20 March 2024. The Board has
taken legal advice and believes the claim is without merit. The Company will
robustly defend the proceedings.
On Behalf of the Board
Adrian Wilding
Chief Financial Officer
28(th) June 2024
Consolidated income statement
For the year ended 31 December 2023
2023 unaudited 2022
restated*
Note
£000 £000
Revenue 5 40,916 57,461
Cost of sales (33,074) (49,178)
Gross profit 7,842 8,283
Operating expenses (16,849) (16,489)
Other operating income 176 834
Other operating expenses - (358)
Loss from operations (8,831) (7,730)
Interest received on discounted cash flows 233 227
Finance income 8 272 -
Finance costs 8 (782) (422)
Loss before tax (9,108) (7,925)
Income tax credit 9 167 262
Loss attributable to equity owners of the Parent (8,941) (7,663)
Basic earnings per share 11 (3.7) (4.2)
Diluted earnings per share 11 (3.7) (4.2)
All amounts stated relate to continuing activities.
*Further details of the prior year restatement are included in Note 4
Consolidated statement of comprehensive income
For the year ended 31 December 2023
2023 2022
unaudited restated*
£000 £000
Loss for the year (8,941) (7,663)
Items that may be reclassified subsequently to profit and loss:
Exchange differences on translation of foreign operations (net of tax) (62) 85
Total comprehensive loss for the year (9,003) (7,578)
Consolidated statement of financial position
As at 31 December 2023
Note 2023 unaudited 2022 restated*
Non-current assets £000 £000
Goodwill 169 169
Other intangible assets 8,501 10,197
Purchased software costs 758 1,192
Property, plant and equipment 1,351 2,175
Trade and other receivables - -
Shares in subsidiaries - -
10,779 13,733
Current assets
Inventories 12 5,325 8,061
Trade and other receivables 8,673 13,804
Current tax asset 617 690
Cash and cash equivalents 1,703 1,431
16,318 23,986
Total assets 27,097 37,719
Current liabilities
Bank overdrafts - -
Trade and other payables (10,435) (13,805)
Lease liabilities (166) (397)
Provisions (1,112) (1,310)
Invoice discounting facilities (2,632) (3,451)
Loans and borrowings (693) (664)
Derivative financial liabilities (266) (1,563)
(15,304) (21,190)
Net current assets / (liabilities) 1,014 2,796
Non-current liabilities
Loans and borrowings (1,493) (2,133)
Lease liabilities (254) (94)
Provisions (1,181) (1,481)
(2,928) (3,708)
Total liabilities (18,232) (24,898)
Net assets 8,865 12,821
Equity
Called up share capital 6,046 3,621
Share premium account 31,405 30,009
Warrant reserve 1,517 -
Currency translation reserve 176 238
Retained earnings (30,279) (21,047)
Total equity attributable to equity holders of the Parent Company 8,865 12,821
*Further details of the prior year restatement are found in Note 4
Consolidated cash flow statement
For the year ended 31 December 2023
Note 2023 unaudited 2022
restated*
£000 £000
Loss before Loss before tax (9,108) (7,925)
Finance expense 549 195
Operating loss for the year (8,559) (7,730)
Adjustments for:
Depreciation and impairment of property, plant and equipment, and right-of-use 1,409 1,497
assets
Amortisation and impairment of intangible assets 2,261 2,985
Loss on disposal of non-current assets 7 19
Non-cash net finance cost 186 227
Gain on extinguishment of financial liability (272) -
Share based payments charge/(credit) (19) 181
Income tax credit (176)
(Increase)/Decrease in fair value of derivatives 8 (1,297) 1,854
Provision against intercompany receivables - -
Operating cash flow before movements in working capital (6,460) (967)
Movement in inventories 2,736 (4,328)
Movement in receivables 5,131 (4,375)
Movement in provisions (498) 1,237
Movement in payables (1,253) 5,673
Cash (used in)/ generated by operations (344) (2,759)
Income taxes received 410 39
Net cash (used in)/ generated by operating activities 66 (2,720)
Investing activities
Capitalised development costs (131) (928)
Purchase of property, plant and equipment (244) (436)
Net cash used in investing activities (375) (1,364)
Financing activities
Repayment of loan (611) (426)
Repayment of invoice finance 14 42,904 55,854
Drawdown of invoice finance 14 (43,723) (52,403)
Proceeds from issue of ordinary shares (net of expenses) 3,221 -
Repayment of lease obligations (415) (455)
Interest paid (735) (422)
Net cash generated by/(used in) financing activities 641 2,148
Net (decrease)/ increase in cash and cash equivalents 332 (1,936)
Cash and cash equivalents at beginning of year 1,431 3,294
Non-cash movements - foreign exchange (60) 73
Cash and cash equivalents at end of year 1,703 1,431
*Further details of the prior year restatement are found in Note 4
Consolidated statement of changes in equity
For the year ended 31 December 2023
Share Warrant Currency translation
Share premium account unaudited Reserve unaudited Reserve unaudited Retained
Capital unaudited Earnings unaudited Total unaudited
£000 £000 £000 £000 £000 £000
Balance at 1 January 2022 3,621 30,009 - 153 (13,565) 20,218
Loss for the year (restated) - - - - (7,663) (7,663)
Net foreign exchange gains from overseas subsidiaries - - - 85 - 85
Total comprehensive loss for the year - - - 85 (7,663) (7,578)
Transactions with owners in their capacity as owners:
Credit in relation to share-based payments - - - - 181 181
Total transactions with owners in their capacity as owners - - - - 181 181
Balance at 31 December 2022 (restated) 3,621 30,009 - 238 (21,047) 12,821
Loss for the year - - - - (8,941) (8,941)
Net foreign exchange gains from overseas subsidiaries - - - (62) - (62)
Total comprehensive loss for the year - - - (62) (8,941) (9,003)
Transactions with owners in their capacity as owners:
Issue of equity shares 2,425 - - - - 2,425
Premium arising on issue of equity shares - 1,893 - - - 1,893
Share issue expenses - (769) - - - (769)
Debt to equity valuation adjustment - 272 - - (272) -
Warrant reserve - - 1,517 - - 1,517
Credit in relation to share-based payments - - - - (19) (19)
Total transactions with owners in their capacity as owners 2,425 1,396 1,517 - (291) 5,047
Balance at 31 December 2023 6,046 31,405 1,517 176 (30,279) 8,865
*Further details of the prior year restatement are found in Note 4
Notes to the financial statements
For the year ended 31 December 2023
General information
FireAngel Safety Technology Group plc (the 'Company') is registered and
domiciled in England and Wales, having been incorporated under the Companies
Act, company registration number 3991353. The Company is a public company
limited by shares and is listed on the Alternative Investment Market ('AIM')
of the London Stock Exchanges. The Company's registered office and the
address of its principal place of business is The Vanguard Centre, Sir William
Lyons Road, Coventry, West Midlands, CV4 7EZ.
The Company and its subsidiary undertakings (the 'Group') are in the business
of the design, sale and marketing of smoke, heat and CO alarms and accessories
sold under the brands of FireAngel, FireAngel Pro and Specification, AngelEye
and Pace Sensors. The Group also operates its own CO sensor manufacturing
facility in Canada.
The unaudited preliminary financial announcement does not constitute statutory
accounts within the meaning of Section 434 of the Companies Act 2006 but is
derived from unaudited accounts for the year ended 31 December 2023 and
audited accounts for the year ended 31 December 2022.
The unaudited preliminary financial announcement is prepared on the same basis
as will be set out in the statutory accounts for the year ended 31 December
2023, the audit of which is not yet complete.
The statutory accounts for the year ended 31 December 2023 will be delivered
to the Registrar of Companies following the Company's annual general meeting.
Statutory accounts for the year ended 31 December 2022 have been filed with
the Registrar of Companies. The auditor's report on those 2022 accounts was
unqualified and did not contain any statement under Section 498 (2) or (3) of
the Companies Act 2006.
Whilst the financial information included in this unaudited preliminary
announcement has been prepared on the basis of UK-adopted International
Accounting Standards, it does not contain sufficient information to comply
with UK-adopted International Accounting Standards.
The unaudited preliminary financial information was approved for issue by the
Board of Directors on 27 June 2024.
The Group's accounting reference date is 31 December.
2. Summary of significant accounting policies
Basis of consolidation
The consolidated financial statements of the Group incorporate the financial
statements of the Company and entities controlled by the Company (its
subsidiaries) made up to 31 December each year.
Going concern
The Directors have reviewed the forecast sales growth, budgets and cash
projections for the period to June 2025 including sensitivity analysis on the
key assumptions such as the potential impact of reduced sales and margins for
the next twelve months. The base case scenario does not reflect any synergies
arising from the Offer and integration strategies will take several months to
implement. However, the Directors have received reassurances from Siterwell
Electronics Co. Limited, the parent company of ISE that the key risks facing
the business will be supported in a timely fashion and the Group will be able
to meet its obligations as they fall due. Specifically, risks for which
support will be provided include:
· Costs involved in transferring manufacturing capabilities from
its partner in Poland to a new partner;
· Maintaining supplies to the Group's customers and minimising any
disruption that the manufacturing transfer may cause;
· Providing alternative financial facilities for replacing the
stand-by letter of credit which expires on 30th June 2024;
· Repayment of the Group's invoice discount facility;
· Providing sufficient cash headroom to support banking covenants
in relation to the Group's Coronavirus Business Interruption Loan; and,
· Providing sufficient support for the Group to meet any other
financial obligations as they fall due arising from requirements to deliver
the agreed strategy and higher growth for the business.
The Directors have reasonable expectations that the Group and the Company have
adequate resources to continue operations for the period of at least one year
from the date of approval of these financial statements. The Directors are
aware that the reassurances received from Siterwell Electronics Co. Limited
are not legally binding but are satisfied that such assurances are sufficient
to remove any material uncertainties that may cast doubt over the ability of
the Group and the Company to continue as a going concern.
The Directors continue to adopt the going concern basis in preparing the full
year accounts for 2023.
Changes in accounting policies and disclosures
New standards, amendments and interpretations adopted by the Group
The following new standards and amended standards, none of which have had a
material impact on these financial statements, are mandatory and relevant to
the Group for the first time for the financial period commencing 1 January
2023:
· Amendments to IAS 12 - Deferred tax related to Assets and
Liabilities arising from a Single Transaction
· Amendments to IAS 8 - Definition of Accounting Estimates
· Amendments to IAS 1 - Disclosure of Accounting Policies
Accounting standards in issue but not yet effective
At the date of authorisation of these financial statements the following
standards and interpretations, which have not been applied in these financial
statements and which are considered potentially relevant, were in issue but
not yet effective:
· Amendments to IAS 7 & IFRS17- Statement of Cash Flows and
Financial Instruments: Disclosures, Supplier Finance Arrangements
· Amendments to IAS 1 - Presentation of Financial Statements
The Directors anticipate that the adoption of the amendments to standards in
future periods will have no material impact on the recognition and measurement
of assets, liabilities and the associated performance of the Group or the
Company when the relevant standards and interpretations come into effect.
Revenue recognition
Revenue is recognised when revenue and associated costs can be reliably
measured and future economic benefits are probable. Revenue is measured at
the fair value of the consideration received or receivable for goods and
services provided in the normal course of business, net of rebates and
settlement discounts, VAT and other sales related taxes.
Revenue represents income derived from contracts for the provision of goods
and services, over time or at a point in time, by the Group, to customers in
exchange for consideration in the ordinary course of the Group's activities.
Contracts with customers are assessed to identify performance obligations for
both the transfer of goods or for the provision of services. Goods and
services are distinct and accounted for as separate performance obligations if
the customer can benefit from them either on their own or together with other
resources that are readily available to the customer and they are separately
identifiable in the contract. The Group has determined that all of these
contracts include a single performance obligation as the promises within the
contracts are not separately identifiable.
Revenue is recognised as performance obligations are satisfied as control of
the goods and services is transferred to the customer. For each performance
obligation within a contract, the Group determines whether it is satisfied
over time or at a point in time.
Performance obligations are satisfied over time if one of the following
criteria is satisfied:
· the customer simultaneously receives and consumes the benefits
provided by the Group's performance as it performs;
· the Group's performance creates or enhances an asset that the
customer controls as the asset is created or enhanced; or
· the Group's performance does not create an asset with an
alternative use to the Group and it has an enforceable right to payment for
performance completed to date.
For each performance method to be recognised over time, the Group recognises
revenue using an input method, based on costs incurred or as a proportion of
estimated total contract costs or physical proportion of contract work
completed in relation to the total. Revenue and attributable margin are
calculated by reference to reliable estimates of transaction price and total
expected costs and are therefore recognised progressively as costs are
incurred or work is completed.
When it is considered probable that total contract costs will exceed total
contract revenue, the expected loss is recognised as an expense immediately.
The Group has determined that most of its contracts satisfy the point in time
criteria as the sales of goods are recognised when control has been
transferred to the customer. For the majority of customers this is when
goods are delivered and title has passed. For others it is when goods are
delivered for shipment by our contract manufacturers, depending upon the terms
and conditions of the sales contract as to when the risks and rewards of
ownership are transferred.
Inventories
Inventories are stated at the lower of historical cost and net realisable
value. Cost comprises direct material cost and, where applicable, direct
labour costs and those overheads that have been incurred in bringing the
inventories to their present location and condition. Cost is calculated
using the first-in first-out method. Net realisable value represents the
estimated selling price in the ordinary course of business less all estimated
costs to completion and selling costs to be incurred.
Forward currency derivatives
The Group enters into derivative foreign currency forward contracts which are
classified as financial instruments at fair value through profit and loss.
They are initially recognised at fair value on the date a derivative contract
is entered into and are subsequently re-measured at their fair value. Fair
value gains and losses are recognised in profit and loss.
The Group does not have the right of offset between such derivatives, and so
all derivatives that are financial assets are shown separately from all
derivatives that are financial liabilities, at each period end.
Adjusting items
The Group discloses certain financial information both including and excluding
adjusting items. The presentation of information excluding adjusting items
allows a better understanding of the underlying trading performance of the
Group and provides consistency with the Group's internal management reporting.
Adjusting items are identified by virtue of their size, nature or incidence
and the Directors consider that these items should be separately identified so
as to facilitate comparison with prior periods and to assess the underlying
trends in the financial performance of the Group.
3. Critical accounting estimates and areas of judgement
Impacting the Group
Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The
resulting accounting estimates and assumptions will, by definition, seldom
equal the related actual results. The estimates and assumptions at the end
of the accounting period that have a significant risk of resulting in a
material adjustment to the carrying amounts of assets and liabilities within
the next financial year are discussed below.
European Partner Revenue recognition (judgement)
In April 2021 the Group signed a long-term partnership agreement with, Techem,
to provide a fully funded research and development programme for a new
generation smoke alarm.
Consideration has been given as to whether to adopt IFSR15 revenue recognition
accounting principles or IFRS 11 joint venture accounting treatment. The
Group has concluded that Techem are in control of the design phase and thus do
not require a unanimous consent of both parties which is required to adopt
IFRS 11 treatment.
The assessment of the dominant factor in the contract requires significant
judgement. The Group have looked at the promises within the contract
(product design phases, licences and warranties) on their own merit to analyse
if they are distinct or whether they need to be treated as one combined
performance obligation. The Group has concluded that as the product design,
development, prototypes and licences are not distinct in the context of the
contract, there is a single combined performance obligation.
The assessment of the dominant factor also requires significant judgement and
on the balance of evidence the Group has taken the view that the development
services are dominant looking at both the contractual prices and level of
effort required to deliver the development services to the customer. The
Group has considered how the performance obligation is satisfied by analysing
the transfer of control of the intellectual property to the customer. The
asset created has no alternative use for FireAngel, that is only Techem can
use the product prototype and designs and FireAngel has an enforceable right
to payment for performance completed. As such the Group has concluded that
the Group's performance creates an asset that Techem controls as it is
created. Therefore, the licences (Background IP and Foreground IP) should be
evaluated under paragraphs 31-38 of IFRS 15, rather than the licence guidance
in paragraphs B58- B61. The Group has decided that the most appropriate
methodology to recognise revenue over time is the input methodology which is
based upon the Group's efforts to satisfy the performance obligation.
Using the input methodology, the Group have needed to consider the accuracy of
forecasted development costs. These forecasts are built from the ground up
and are the Group's best estimate of costs to complete the development
phase. Any changes in the total design phase costs will have an impact of
the timing of revenue recognition.
The Group has also had to consider the value prescribed to the royalty fees
earned during the contract. The contract between the two parties guarantees
a minimum royalty fee of €3 million. The minimum royalty fee of €3m has
been included in the initial contract consideration which is being recognised
as described above. This amount will be payable as products are sold and
therefore the contract includes a significant financing element. Once the
minimum royalty fee has been received the intellectual property transfers to
the German service provider and FireAngel is granted a licence to use this IP
for the development, manufacture and sale of FireAngel's own products. No
value has been attributed to the non-cash consideration represented by the
Group's future rights over this IP as until development is completed no
reliable assessment of fair value can be made and therefore it is not yet
probable that there will not be a significant reversal of any amount
recognised.
As at 31 December 2023, the Group has now recognised £5.8 million (81%) of
the total consideration of the contract and expects to recognise the remaining
£1.4 million in 2024.
Impairment of non-financial assets (estimate)
At each reporting date, the Group reviews the carrying amounts of its tangible
and intangible assets (including goodwill) to determine whether there is any
indication that those assets have suffered an impairment loss. If any such
indication exists, the recoverable amount of the asset is estimated to
determine the extent of the impairment loss (if any). Where it is not
possible to estimate the recoverable amount of an individual asset, the Group
estimates the recoverable amount of the cash-generating unit to which the
asset belongs. Where a reasonable and consistent basis of allocation can be
identified, corporate assets are also allocated to individual cash-generating
units, or otherwise they are allocated to the smallest group of
cash-generating units for which a reasonable and consistent allocation basis
can be identified.
Intangible assets with indefinite useful lives and other intangible assets not
yet available for use are tested for impairment annually and whenever there is
an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in
use. If the recoverable amount of an asset (or cash-generating unit) is
estimated to be less than its carrying amount, the carrying amount of the
asset (or cash-generating unit) is reduced to its recoverable amount. An
impairment loss is recognised immediately through the income statement, unless
the relevant asset is carried at a revalued amount, in which case the
impairment loss is treated as a revaluation decrease.
During 2023, the Group recognised an impairment charge of £0.2 million
against its capitalised intangible product development costs.
As a result of the planned cessation of production with Flextronics in 2024
the Group has undertaken a thorough review of product lines and has decided
not to transfer certain models to the new supplier thus shortening their
useful economic life and included impairment charges of £0.2 million within
comprehensive income.
Connected home intangible assets with a net book value of £1.6 million are
being amortised. The Board expects that in future an increasing proportion
of products sold will be connected and given that the Group already has a
connected homes technology product offering in the market, the Board believes
that the carrying value of connected homes technology intangibles is not
impaired. In reaching this conclusion, the Board also acknowledges the
losses incurred by the Group over the past three years and the heightened risk
of impairment that this leads to.
Warranty provisions (estimate)
As discussed under Significant Accounting Policies above, provisions for
product warranty claims are recognised when the Group has a present obligation
arising from past event which it is probable will result in an outflow of
economic benefits that can be reliably estimated. The Group has recently
enhanced its data capture and monitoring capabilities which has allowed
management to further analyse warranty claims that had previously been
expensed in the period notified to the business. Enhancements to customer
services and finance databases has allowed management to broaden its
determination of provisions for product warranty claims. At 31 December 2023
the provision for warranty claims totalled £2.0 million (2022 restated: £2.4
million). Refer to note 4 for further information.
Issue of warrants (judgement)
Management has made the judgement that the issue of the share warrants was a
cost of placing the new ordinary shares. As such, the fair value cost has been
expensed.
Deferred tax recognition (judgement)
At 31 December 2023 there is a deferred tax asset of £4.3 million (2022:
£2.8 million) which has not been recognised as the timing of utilisation is
uncertain. Deferred tax assets should only be recognised where they are more
likely than not to be realised. Whilst the Group expects a return to
profitability in the future, the generous deduction available for research and
development expenditure means that it is likely to be several years before
these losses will need to be accessed.
4. Prior year adjustment
Provisions for product warranty claims are recognised when the Group has a
present obligation arising from a past event which it is probable will result
in an outflow of economic benefits that can be reliably estimated. Following
further refinement of customer and production databases, data previously
available to management has been constructed to quantify more accurately the
full extent of the outflow of economic benefits. The improvement of data
quality has largely taken place during 2022 and 2023, but sufficient data now
exists to ensure that future obligations can be accurately estimated and was
available in 2022. Previously the costs of such warranty claims had been
expensed to profit and loss in the period notified. The refined data shows
that such claim costs should have been provided for in previous periods,
resulting in the correction of this error by way of a prior period adjustment.
The financial impact of the restatement is to decrease shareholders' equity by
£1.8 million from £14.6 million as at 31 December 2022 as previously stated.
As the information was not available at 31 December 2021, the whole of the
adjustment has been passed through the comparative period of 2022. Table below
shows the impact of the restatement on the appropriate line items. The
restatement has no impact on cash or cash equivalents.
Extract from restated consolidated income statement for the year ended 31
December 2022
As previously stated Adjustment Restated
£000 £000 £000
Cost of sales (47,360) (1,818) (49,178)
Gross profit 10,101 (1,818) 8,283
Loss from operations (5,912) (1,818) (7,730)
Loss before tax (6,107) (1,818) (7,925)
Loss attributable to equity owners of the Parent (5,845) (1,818) (7,663)
Extract from restated consolidated statement of financial position as at 31
December 2022.
As previously stated Adjustment Restated
£000 £000 £000
Current liabilities
Provisions (502) (808) (1,310)
Net current assets 3,604 (808) 2,796
Non-current liabilities
Provisions (471) (1,010) (1,481)
Total liabilities (23,080) (1,818) (24,898)
Net assets 14,639 (1,818) 12,821
Total equity 14,639 (1,818) 12,821
5. Revenue and segmental reporting
The Group sells and distributes home safety products and accessories in the
UK, Continental Europe and certain other countries and undertakes
manufacturing activities in Canada. Its major customers are based throughout
the UK, Continental Europe and in other countries outside Continental
Europe. Financial information is reported to the Board on a consolidated
basis with revenue and operating profit stated for the Group.
IFRS 8 requires the presentation of segmental information in relation to the
Group in the Annual Report on the same basis as information reported to the
Board. The Chief Operating Decision Maker ('CODM') has been determined to be
the Board which delegates day-to-day responsibility for managing the Group to
the Executive Management Team ('EMT') led by the Executive Chairman.
Based on the information on which strategic and operating decisions are made,
the CODM considers that there is one identifiable operating segment as there
are no separately identifiable business segments that are engaged in providing
individual products or services, or a group of related products and services,
that are subject to risks and returns that are different to the core business
of the home safety products market in Europe.
Revenue and gross profit for each of the Group's business units are reviewed
by the Board and rolled up into consolidated financial information with
non-business unit costs included to arrive at the results that investors
see. Business unit reporting to the Board generally excludes information on
overheads by business and other income statement information, which is all
reported on a consolidated basis. Assets and liabilities are also generally
reported to the Board on a consolidated basis.
2023 Restated
unaudited 2022
Revenue from continuing operations £000 £000
Business Units:
UK Trade 6,453 9,610
UK Retail 17,414 19,776
UK Fire & Rescue Services 3,366 3,266
UK Utilities 3,581 3,532
International 6,642 16,349
Techem 2,200 2,517
Pace Sensors 1,260 2,411
Total revenue from external customers 40,916 57,461
All business units, excluding Pace Sensors and our European Partner, earn
revenue from the sale of smoke, heat and CO alarms and accessories to end
customers. Pace Sensors earns revenue from the manufacture and sale of CO
sensors to a third-party CO detector assembler based in China. Revenue from
our European Partner is derived from a research and development programme for
a new generation smoke alarm, for further details see note 6.
As of 1 January 2023, the business reassigned one customer with revenue of
£44,000 in 2022 which previously reported within the UK Trade business unit
are now reporting through the Utilities business unit. The 2022 sales
comparatives have been adjusted accordingly.
For 2023, revenues of approximately £5.1 million were derived from one
external customer (2022: £6.6 million from one external customer), which
individually contributed over 10% of total revenue of the Group. These
revenues are attributable to the UK Retail business unit. An analysis of the
Group's revenue is as follows:
2023 unaudited 2022
£000 £000
Continuing operations:
UK 30,814 36,184
Continental 7,841 18,542
Europe
Rest of World 2,261 2,735
40,916 57,461
Non-current assets, excluding deferred tax assets, for UK and overseas
territories are as follows:
2023 unaudited 2022
£000 £000
Continuing operations:
UK 10,244 13,491
Canada 535 242
Non-current assets 10,779 13,733
6. Revenue recognition - Techem
In April 2021 the Group signed a long-term partnership agreement with Techem
to provide a research and development programme for a new generation smoke
alarm. The Group has looked at the individual element of the contract and
has concluded that there are no separate performance obligations and as such
the contract forms one central non-distinct performance obligation.
In order to determine the total revenue associated with this contract the
Group has amalgamated the already agreed background IP and minimum royalty
amounts with the forecasted fees for the product development phases. The
payment structure agreed in the contract dictates that consideration will be
received at contract milestones during the development phase and once product
starts to be delivered. As a result of the payment schedule within the
contract it has been determined the contract includes a significant financing
element. Therefore, the expected cash flows have been discounted using the
Group's own borrowing rate at the contract's inception. These discounted
amounts will be recognised as interest earned using the same phasing
methodology as revenue.
To determine the phasing of the revenue recognition the Group has chosen to
adopt the input methodology approach as this is based upon direct efforts to
satisfy the dominant component of the performance obligation which is the
product design element. This methodology dictates that progress be measured
by viewing current spend against total projected development spend. At the
end of 2023 the Group has calculated it is 82% (2022: 56%) of the way through
its development process based on this methodology.
The contract between the two parties guarantees a minimum royalty fee of €3
million. The minimum royalty fee of €3 million has been included in the
initial contract consideration which is being recognised as described above.
This amount will be payable as products are sold and therefore the contract
includes a significant financing element. The Group currently values the
consideration of the design and development phase of the contract at £7.7
million (£7.0 million in revenue and £0.7 million as interest receivable).
The Group has recorded a net contract asset of £2.4 million (2022: £1.3
million) as the contract billing arrangements at specific milestones does not
mirror the accounting treatment of performance obligation satisfaction.
Once the minimum royalty fee has been fully paid the intellectual property
transfers to Techem and FireAngel will be granted a licence to use this IP for
the development, manufacture and sale of FireAngel's own products. No value
has been attributed to the non-cash consideration represented by the Group's
future rights over this IP as until development is completed no reliable
assessment of fair value can be made and therefore it is not yet probable that
there will not be a significant reversal of any amount recognised.
2023 unaudited 2022
£000 £000
Revenue Recognised 2,200 2,517
Costs Recognised (1,384) (1,299)
Gross profit Attributable to contract 816 1,218
Revenue Recognised - cumulative 5,761 3,560
Interest income recognised - cumulative 549 318
Total Consideration 6,310 3,878
Billing to date (3,904) (2,546)
Accrued income 2,406 1,332
7. Adjusting items
2023 unaudited 2022
£000 £000
Within cost of sales
Provision against stock, components and disposal costs (note a) - (54)
- (54)
Within operating expenses
Restructuring and fundraising costs (note b) 772 -
Strategic review (note c) 141 -
Legal advice on the Offer (note d) 481 -
Dilapidations provisions (note e) 298 -
Impairment of intangible assets (note f) 104 916
Impairment of tangible assets (note g) 38 30
Share-based payment charges (19) 181
1,815 1,127
Total adjusting items 1,815 1,073
a. During 2022 the Group was able to sell stock lines that had previously been
impaired which resulted in an adjusting credit of £0.1 million.
b. Restructuring and certain fundraising costs of £0.8 million were incurred
in 2023. The cash impact in 2023 for this was £0.6 million.
c. During 2023 the Group undertook a strategic review using an external party
to not only examine in detail the current markets in which the Group operates
but also to identify operational improvements that would increase margins and
efficiencies. The cash impact of the review was £0.1 million.
d. Legal fees of £0.5 million were incurred by the Group in relation to the
Offer made by ISE on 27(th) October 2023. The cash impact in 2023 was nil.
e. At the end of 2023 several property leases had expired with the Group
moving to a rolling month on month lease. The Group is planning on exiting
these properties during 2024 and so has provided for dilapidations at £0.3
million. There was nil cash impact in 2023. The prior year charge was nil.
f. As a result of the planned cessation of production with Flextronics in
2024 the Group has undertaken a thorough review of product lines and has
decided not to transfer certain models to the new supplier thus shortening
their useful economic life. As a result of this review an impairment charge of
£0.1 million has been included in comprehensive profit and loss during the
year. There was nil cash impact in 2023 (2022: nil).
g. As a result of the planned cessation of production with Flextronics in 2024
the Group has reviewed its tooling and machinery requirements and will not be
transferring all assets to the new manufacturer. This decision has shortened
the useful economic life of these assets and resulted in a one-off additional
impairment charge in the period. There was nil cash impact in 2023. The
prior year charge was nil.
Further to the above, there has been a cash outflow of £0.5 million
associated with prior period adjusting warranty charges to profit or loss.
8. Net finance costs
2023 unaudited 2022 Restated
£000 £000
Interest expense on bank borrowings (712) (398)
Lease liability interest expense (23) (24)
Unwind of discount on warranty provision (47) -
Interest received on discounted cash flows 233 227
Gain on extinguishment of financial liability 272 -
Total net finance costs (277) (195)
Non underlying finance income of £0.3 million was recognised as part of the
capital raise on 28 June 2023 when the company agreed to a debt for equity
swap with one of its major suppliers. Trade payables due within one year
with a carrying value of £2,075,560 were derecognised in exchange for the
issue of Ordinary shares. The gain on extinguishing the financial liability
was treated as adjusting finance income.
9. Income tax
2023 unaudited 2022
£000 £000
Current tax
UK corporation tax credit (197) (307)
UK - adjustments in respect of prior periods (credit)/charge 5 51
Foreign tax charge 25 (6)
(167) (262)
Deferred tax
Origination and reversal of temporary differences - -
Adjustments in respect of prior periods - -
Income tax credit (167) (262)
Domestic income tax is calculated at 23.52% (2022: 19.00%) of the estimated
assessable profit or loss for the year.
The tax credit for the year can be reconciled to the profit per the
consolidated income statement as follows:
2023 unaudited 2022 Restated
£000 % £000 %
Loss before tax (9,108) (7,925)
Tax at the blended domestic income tax rate of 23.52% (2022: 19.00%) (2,142) (1,506)
Tax effect of expenses that are not deductible in determining taxable profit 325 35
Effect of allowance for capitalised development expenditure 21 (169)
Adjustments in respect of prior periods 5 51
Deferred tax not recognised 1,699 1,345
Impact of foreign tax rates 25 (25)
Difference in current and deferred tax rates (96) 19
Effect of tax rate change on opening patent box set-off - -
Other adjustments (4) (12)
Tax credit and effective tax rate for the year (167) 2% (262) 3%
The weighted average applicable tax rate was 2% (restated 2022: 3%). The tax
credit for 2023 is largely due to enhanced research and development tax relief
schemes and operating losses in the year of £8.8 million.
Tax losses are, where possible, realised during the year through surrender for
research and development tax credits. There are no time restrictions on the
utilisation of tax losses going forward.
At 31 December 2023 there is a deferred tax asset of £4.3 million (2022:
£2.8 million) which has not been recognised as the timing of utilisation is
uncertain. This was calculated using a corporation tax rate of 25%.
Deferred tax assets should only be recognised where they are more likely than
not to be realised. Whilst the Group expects a return to profitability in
the future, the generous deduction available for research and development
expenditure means that it is likely to be several years before these losses
will need to be accessed.
10. Dividends
As a result of the loss reported for the year, and consistent with the
decision not to pay an interim dividend (2022: nil pence per share), the
Directors do not recommend payment of a final dividend for the year (2022: nil
pence per share). The total dividend payable for 2023 is therefore nil pence
per share (2022 nil pence per share)
11. Earnings per share
2023 unaudited 2022 Restated
Earnings from continuing operations £000 £000
Earnings for the purposes of basic and diluted earnings per share (loss for (8,941) (7,663)
the year attributable to owners of the Parent)
Number of shares '000 '000
Weighted average number of ordinary shares - basic calculation 243,030 181,067
Dilutive potential ordinary shares from share options - -
Weighted average number of ordinary shares - diluted calculation 243,030 181,067
2023 unaudited 2022 Restated
Pence Pence
Basic earnings per share (3.7) (4.2)
Diluted earnings per share (3.7) (4.2)
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 or warrants. The number of
potentially dilutive share options or warrants 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 added to the warrants in circulation. 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
year ended 31 December 2023 and 31 December 2022.
12. Inventories
2023 unaudited 2022
£000 £000
Raw materials 178 177
Work-in-progress 345 155
Finished goods 5,763 8,086
Total gross inventories 6,286 8,418
Inventory provisions (961) (357)
Total net inventories 5,325 8,061
Pace Sensors Limited, the Group's wholly owned subsidiary in Canada,
manufactures CO sensors for use in the Group's CO alarms. The CO sensors are
shipped to Pace Technologies, an independent third-party supplier based in
China, for assembly into finished CO alarms, which are then purchased by the
Group in the UK. The Group does not maintain a provision for unrealised
profit in CO sensors within finished CO alarm stock, as CO sensors are sold to
an independent third party, Pace Technologies, before being acquired as
finished CO alarm products and put into stock by the Group.
Stock impairment costs of £0.6 million were provided in the year (2022: £0.1
million).
13. Loans and borrowings
2023 unaudited 2022
£000 £000
Bank term loan 2,186 2,797
Invoice discounting facilities 2,632 3,451
The Group maintained a £7.5 million invoice discounting facility, of which
£2.6 million was drawn down at the year end, with HSBC UK Bank plc secured on
UK and international trade debtors which can be accessed as required. This
facility incurs interest charges of 3.75% above the Bank of England base rate
and is repayable on demand. This is a rolling facility with a 3 month notice
period and no fixed expiry date.
The Group also has a Coronavirus Business Interruption Loan Scheme ("CBILS")
loan which incurs interest at 3.99% above the Bank of England base rate and is
repayable up until April 2027. The loan has covenants which are attached to
the Group's minimum available liquidity levels.
All loans and borrowings have a fair value which is equal to their carrying
value.
At 31 December 2023, the Group had the following lease liabilities totalling
£0.4 million:
Land and Plant and
buildings machinery Vehicles Total
£000 £000 £000 £000
At 1 January 2022 902 26 20 948
Accretion of interest 24 - - 24
Payments (459) (10) (12) (481)
At 31 December 2022 467 16 8 491
Accretion of interest 23 - 1 24
Additions 326 - 29 355
Payments (427) (9) (14) (450)
At 31 December 2023 389 7 24 420
Within 6 months
£000 6 months Total at
Maturity analysis of lease liabilities to 1 year 1 to 5 years Over 5 years 31 December 2023
£000 £000 £000 £000
Payments
Land and buildings 137 37 267 - 441
Plant and machinery - 7 1 - 8
Vehicles 3 3 16 - 22
Total payments 140 47 284 - 471
Interest charge
Land and buildings (9) (9) (29) - (47)
Plant and machinery - - - - -
Vehicles (1) (1) (2) - (4)
Total interest charge (10) (10) (31) - (51)
Total lease liabilities at 31 December 2023 130 37 253 - 420
At 31 December 2022, the Group had the following lease liabilities totalling
£0.5 million:
Within 6 months
£000 6 months Total at
Maturity analysis of lease liabilities to 1 year 1 to 5 years Over 5 years 31 December 2022
£000 £000 £000 £000
Payments
Land and buildings 220 169 87 - 476
Plant and machinery 2 8 8 - 18
Vehicles 4 4 - - 8
Total payments 226 181 95 - 502
Interest charge
Land and buildings (6) (2) (1) - (9)
Plant and machinery (1) (1) - - (2)
Vehicles - - - - -
Total interest charge (7) (3) (1) - (11)
Total lease liabilities 219 178 94 - 491
14. Changes in liabilities arising from financing activities
Bank Invoice Lease
Loans discounting liabilities Total unaudited
facility
£000 £000 £000 £000
Balance at 1 January 2022 3,223 - 948 4,171
Drawdown of facility - 55,854 - 55,854
Repayment of facility (426) (52,403) - (52,829)
Capital payments - - (457) (457)
Interest charge 118 155 24 297
Interest payments (118) (155) (24) (297)
Balance at 31 December 2022 2,797 3,451 491 6,739
Drawdown of facility - 42,904 - 42,904
Repayment of facility (587) (43,723) - (44,310)
Capital payments (24) - (415) (439)
Interest charge 217 328 24 569
Interest payments (217) (328) (24) (569)
Acquisition of leases - - 355 355
Foreign exchange difference - - (11) (11)
Balance at 31 December 2023 2,186 2,632 420 5,238
15. Provisions
Battery impedance warranty provision Product warranty claims provision Total unaudited
£000 restated £000
£000
At 1 January 2022 1,553 - 1,553
Charge in year restated - 1,818 1,818
Utilisation in year restated (580) - (580)
At 31 December 2022 restated 973 1,818 2,791
Charge in year - 957 957
Unwind of discounting - 46 46
Utilisation in year (478) (1,023) (1,501)
At 31 December 2023 495 1,798 2,293
The total warranty provision is classified between less than one year and
greater than one year as follows:
2023 unaudited 2022 restated
Battery Product Total Battery Product Total
impedance warranty warranty claims £000 Impedance Warranty £000
provision provision Warranty Claims
£000 £000 provision provision
£000 £000
Current provision 246 866 1,112 502 808 1,310
Non-current provision 249 932 1,181 471 1,010 1,481
Total warranty provisions 495 1,798 2,293 973 1,818 2,791
Review of battery impedance warranty provision
The Group regularly reviews the return rates of affected products and
recalculates the provision based on the changing USD FX rates and supplier
pricing. The Group expects the provision to be exhausted in 2027 when the
final products from 2017 production fall outside of the 10 year warranty
period.
The provision was increased by £40,000 in the year due to the effects of
increased product costs which was offset entirely by amending terminal return
rates in the provision calculation to reflect return patterns seen over the
last 12-18 months.
Product warranty claims provision
Following further refinement of customer and production databases, sufficient
data has been constructed that has allowed management to quantify more
accurately the full extent of the outflow of economic benefits associated with
general product warranty claims. Previously the costs of such warranty claims
had been expensed to profit and loss in the period notified. The refined data
shows that such claim costs should have been provided for in previous periods.
As such a provision is recognised and comparatives restated. Further details
are given in note 4.
16. Post balance sheet events
Update on the recommended cash offer for FireAngel by Intelligent Safety
Electronics Pte. Ltd ("ISE")
On 27 October 2023, the boards of ISE and FireAngel announced that they had
reached agreement on the terms and conditions of a recommended cash offer to
acquire the issued and to be issued share capital of FireAngel not already
owned or controlled by ISE (the "Offer"). ISE is a company incorporated in
Singapore and is wholly-owned by Siterwell Electronics Co., Ltd ("Siterwell"),
a leading manufacturer of intelligent security protection for life and
property which utilises an advanced smart security ecosystem technology. ISE
currently holds approximately 17.46 per cent. of FireAngel's issued share
capital.
The Offer was conditional upon, among other things, satisfaction of a
condition relating to a material official authorisation or regulatory
clearance (the "NSIA Condition"), in this in-stance being the National
Security and Investment Act 2021 (the "Act"). As announced on 21 December
2023, the Secretary of State had written to ISE and FireAngel to inform them
that it has considered the notification made by ISE under the Act in relation
to the Offer and has chosen to issue a call-in notice.
As announced on 17 May 2024 (the "17 May Announcement") in respect of the NSIA
Condition, the Secretary of State gave notice of a final order in relation to
the Offer ("Order"). The Order approved the Offer subject to the satisfaction
of certain conditions (the "Approval Conditions") the terms of which are set
out in the 17 May Announcement. FireAngel and ISE considered the Approval
Conditions and determined them to be reasonably acceptable to them (as is
specifically required in order for the condition set out at paragraph 2.1 of
Section A of Part 3 of the Offer Document. Both FireAngel and ISE now consider
the Approval Conditions to be satisfied.
Furthermore, on 17 June 2024, FireAngel and ISE announced that The Offer had
been declared unconditional in all respects in accordance with its terms, and
as ISE had received valid acceptances in respect of 75 per cent. or more of
FireAngel's issued share capital, ISE request-ed the FireAngel Board to apply
for the cancellation of the admission to trading on AIM of FireAngel shares.
The Offer will remain open for acceptance until 1.00 p.m. on 1 July 2024,
being the Unconditional Date.
On 25 January 2024, the Group announced it had drawn down, and received from
ISE, £1.0 million, which has been used for general working capital purposes
(the "Facility"). The availability of the Facility was subject to the Offer
not being completed by 31 December 2023 or having been withdrawn, lapsed or
terminated and it continuing to be recommended by the directors of FireAngel
and usual events of default not continuing. The draw down is in accordance
with the terms of the facility as detailed in the announcement of 27 October
2023.
On 28 March 2024 legal proceedings were commenced against FireAngel Safety
Technology Limited, a wholly-owned subsidiary of the Company by Zenner
International GmbH & Co KG and Minol Messtechnik W.Lehman GmbH & Co KG
relating to the supply of alleged defective detectors between 2011 and 2019.
The claim for damages, with a maximum value of €7.3 million was issued at
the High Court of Justice, England and Wales on 20 March 2024. The Board has
taken legal advice and believes the claim is without merit. The Company will
robustly defend the proceedings.
Other information
Corporate directory
REGISTERED NUMBER
3991353
COMPANY SECRETARY
Adrian Wilding
REGISTERED OFFICE
Vanguard Centre
Sir William Lyons Road
Coventry
CV4 7EZ
AUDITOR
RSM UK AUDIT LLP
Chartered Accountants
14(th) Floor
20 Chapel Street
Liverpool
L3 9AG
SOLICITORS
Pinsent Masons
30 Crown Place
London
EC2A 4ES
NOMINATED ADVISER AND BROKER
Shore Capital & Corporate Limited/Shore Capital Stockbrokers
Limited
Cassini House
57 St James's Street
London
SW1A 1LD
REGISTRAR
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
BANKER
HSBC UK Bank plc
3 Rivergate
Temple Quay
Bristol
BS1 6ER
Other information
Shareholder information
SHAREHOLDER ENQUIRIES
Any shareholder with enquiries should, in the first instance, contact the
Company's registrar, Neville Registrar, using the address provided in the
Corporate directory.
SHARE PRICE INFORMATION
London Stock Exchange AIM symbol: FA.
Information on the Company's major shareholders is available in the Share
Details section of the Investors area of the FireAngel Safety Technology Group
plc website at www.fireangeltech.com
(https://url.avanan.click/v2/___http:/www.sprueaegis.com___.YXAxZTpzaG9yZWNhcDphOm86ODg3NjFhYzYzNGU0MzQ5M2RjZmEwNjljOTYzMzU0ZDc6NjpjOGJhOjdlYzVkZWJhMjUwYTJlY2RmYzhiOTJmNjk3Y2FlMmYzOGQ0MDFkN2I0ZDVhMDdlNTY2Mzc2YzQwMDdjZWQ4OGU6cDpU)
.
INVESTOR RELATIONS
Vanguard Centre
Sir William Lyons Road
Coventry
CV4 7EZ
Telephone: 024 7771 7700
Email: info@fireangeltech.com
Website: www.fireangeltech.com
(https://url.avanan.click/v2/___http:/www.sprueaegis.com___.YXAxZTpzaG9yZWNhcDphOm86ODg3NjFhYzYzNGU0MzQ5M2RjZmEwNjljOTYzMzU0ZDc6NjpjOGJhOjdlYzVkZWJhMjUwYTJlY2RmYzhiOTJmNjk3Y2FlMmYzOGQ0MDFkN2I0ZDVhMDdlNTY2Mzc2YzQwMDdjZWQ4OGU6cDpU)
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