FireAngel sees sales pick up, announces big council order
The AIM-traded firm, which was holding its annual general meeting, said that reflected the short-term impact of the "unprecedented and wide-ranging measures" the UK and international governments had taken to combat the spread of the coronavirus.
It explained that, while the impact of Covid-19 over the period as a whole had been material, June had seen demand returning, which led to its sales team returning from furlough in the second week of the month.
Retail sales in June were expected to be ahead of last year, with pricing enquiries in its higher-margin sectors increasing "markedly", with demand now expected to return across July and August.
The company said the recovery of sales in higher-margin sectors would restore the momentum of its self-help gross margin improvement plan which - given its link to sales levels - had been similarly held back by lockdown restrictions.
It said the plan, allied to an expected improvement in margin mix, still remained central to the company's improved performance towards the end of 2020 and "markedly so" beyond that.
"The temporary reduction in sales has caused a short-term increase in stock levels," FireAngel said in its statement.
"The company has mitigated the consequential impact of higher working capital by securing a loan of £3.2m through the Coronavirus Large Business Interruption Loan Scheme, as announced on 22 June.
"Together with the net proceeds of the equity fundraising received in April, this further strengthens the company's financial position."
Further planned changes had also been made to the board's composition to provide it with the skills and experience required to assist in guiding the transition to a "connected homes technology provider", the directors said.
"We hope to announce shortly the appointment of a new non-executive director with a track record of maximising the types of opportunity with which the company is currently presented."
The board said it still believed that the medium and long-term prospects for the company's technology were strong.
It said it had taken a number of actions to minimise the impact of Covid-19 on the company, and was still monitoring the impact of ongoing restrictions, in order to "react appropriately" to emerging events to protect staff, customers and the core business.
Additionally on Tuesday, FireAngel said a large, unnamed London borough council, with which it had been in discussions since before the onset of Covid-19, has placed an initial purchase order of more than £1m with its chosen electrical contractor partner, for the firm's connected home technology.
A corresponding purchase order had been placed with the company, which was expected to be called off over the 12 months to July 2021.
The board said the order represented the first phase of the council's planned rollout of FireAngel's connected homes technology.
It said it was a "material commitment" to its connected 10-year hardware, which was expected to be followed in due course by a software licence agreement between the council and the company, comprising an element of recurring revenue, required to realise the full connected capabilities and benefits of the solution.
"The board believes that this is one of the largest connected home 'internet of things' rollouts in the UK," it said.
"While other pre-existing commercial opportunities continue to be progressed, commitments have been received for other new connected trials expected to take place in the third quarter.
"New enquiries from social housing providers have been received over the lockdown period and we expect the momentum of the first part of 2020 to return after the summer."
At 1451 BST, shares in FireAngel Safety Technology Group were up 9.31% at 15.03p.