Shares drop after smoke alarm business sounds warning
Shares in listed home safety products supplier FireAngel are trading almost 20% lower this morning after the company warned that it expects that delays in the completion of certain “significant trials” to negatively impact its full year performance.
Announcing its results results for the six months ended 30 June 2019 and updating on trading for the year ending 31 December 2019, the Coventry-based company said it is “cautious” regarding the timing of completion of certain “strategically significant” trials now committed or in progress.
FireAngel’s shares are currently trading at 20 pence, down 4.5p or 18.37% on the back of the announcement.
“These are now expected to generate revenue in 2020 and beyond. As a result, despite sales expected to be ahead of last year, the board now expects that the underlying operating result for the year ending 31 December 2019, before the increase in amortisation charge, to be a loss in the range of £1m to £1.5m, or £1.9m to £2.4m including the increase in amortisation,” the company said.
John Conoley, executive chairman of FireAngel, said: “We have continued to make progress in repositioning the business during the first half of 2019. The board’s focus over the next 18 months is on leveraging the investment made in differentiating our technology and establishing the processes to deliver the large and more strategic opportunities this investment is opening up.
“Although the completion of certain significant trials is now likely to take longer than originally expected, thereby negatively impacting the final results for 2019, the trials represent an important commercial validation of the group’s strategy and investment in differentiating technology. The company will seek actively to execute on the range of opportunities it sees for gross margin progression in the short, medium, and long term.”
In the first half of 2019, the company saw revenue increase from £17.7m to £20.7m while an underlying operating loss £1.7m was reported, including a £500,000 impact from a change to more prudent amortisation approach.
The group reported exceptional charges of £1.7m comprising £1.4m to increase provision for an isolated legacy issue relating to a third-party supplier first identified in April 2016 and£300,000 of restructuring and fundraising costs.
In the period, FireAngel’s losses widened, with a loss before tax £3.6m compared to £2m in the corresponding period last year.
However, UK trade sales increased by 32% to £7.1m, while total UK sales increased by 17% to £14.5m.
“The second half of 2019 is expected to deliver a profitable trading result with improved gross margins based on the revenue mix,” FireAngel said.
