FireAngel (AIM: FA.), one of Europe's leading developers and suppliers of home safety products, issues the following trading update for the six months ended 30 June 2019 ('H1 2019' or the 'period').
The Company expects to report H1 2019 sales of approximately £20.7m (H1 2018: £17.7m) with results in the period ahead of budget.
Within the overall revenue growth of 17% in H1 2019, as detailed in the Company's AGM statement released on 25 June 2019, sales of interconnected alarms grew over 30% year-on-year and accounted for 15% of total sales.
The growth in UK Trade revenue, which is expected to be more than 30% above the same period last year, together with continued recovery in the Group's German market, are particularly pleasing and indicate that the Company's market strategies and new product propositions are gaining traction.
These signs of sales recovery augur well for medium to longer-term growth and mark important first steps in the Group's transition from a pure standalone hardware safety products supplier to a provider of connected safety solutions.
At 30 June 2019, both cash and inventory balances reflected the improved processes and controls within the business. The Group had £1.5m of cash and £3.3m of debt through its invoice discounting facility (2018: £3.4m of cash and £nil debt) following the Company's successful fundraising announced on 29 March 2019 and the consequential repayment of its £7m revolving credit facility with HSBC.
The Group's inventory position reduced by approximately 22% to £8.5m at 30 June 2019 (2018: £11.0m) through the implementation of new supply chain processes, more rigorous sales management and enhanced management reporting.
During the period, production at the Group's primary smoke alarm and connected devices manufacturing partner increased to meet the growth in demand. The Company continues to work with its manufacturing partners to improve efficiencies where possible in the production process.
With sales momentum continuing into the second half of 2019, and gross margins expected to improve based on the mix of revenue, the Board expects results for the full year will be in line with market expectations. With approximately 55% of the expected full year revenue to be generated in the second half, full-year performance is dependent on securing several exciting pipeline opportunities which are well-advanced in negotiations and trials. The Company is focused on continuing to drive operational improvements through the ongoing review of business operations and margin enhancement.
The Company's technology-driven product portfolio is providing the opportunity to increase penetration within existing markets and is opening up newly addressable market segments.
The Board will provide a further update on trading and prospects in its Half Year Report expected to be released on 24 September 2019.