Fireangel Safety Technol... Share Discussion Threads

[nico115] 23/4/2019 13:19

Thx v much Appreciate it

[speedsgh] 23/4/2019 11:48

O/T @nico115

From the latest DSM investor letter on Redhall (RHL)...

Redhall continues to be a challenging situation. Despite parts of the thesis, such as revenue visibility and structural demand from infrastructure projects, materialising as expected, Redhall finds itself in a poor situation with its customers who are facing their own cash constraints. This has made collecting cash for project work difficult, and shareholders were required to provide short term financing in January to allow the business to trade through a working capital pinch-point. The Trust participated in the form of a £0.7 million short term loan for a nine-month term. This loan will earn a 12.5% exit fee and therefore generate an IRR on the Trust’s investment of just over 19%.

This is an unusual situation where delivery against our investment case is damaging the liquidity of the business. Evidently, not all contracts are created equal and not all customers are good payers. The effects for small and micro companies of customers squeezing credit are often outsized and negative. The management team has identified this problem and we are confident that it is something which can be written into future legal agreements – it does appear to be contained to only two major contracts. This gives us some confidence that the business can trade profitably going forwards, but ultimately this is a business that should be part of a larger entity. We are encouraged that Joe Oatley, previously NED, has stepped up as chairman. Given his knowledge of infrastructure contracting with Hamworthy Plc and Cape Plc, we believe the company to be in capable hands, and he has our support.

[the big fella] 23/4/2019 11:38

Thanks GFH. Interesting times ahead. If the company can deliver on improved sales and margins (and I see no reason why they shouldn't) then we should be in for a pleasant ride.

[glasshalfull] 23/4/2019 11:24

Good morning folks,

Nice to see the share price responding positively. Makes a change!

I speculated last week that BRK may not have taken up their entitlement under the open offer...but I reckon I was incorrect.

The significant shareholding’s have been updated on the FireAngel web site which indicates that BRK remain on 23.4%



However, while disappointing if the case I’m comforted that Downing & British Growth Fund (BGF) have a combined holding in excess of 25% with management also holding 10%, so I’d be surprised if any opportune bid by BRK would gain much traction.

Disclosure

After the open offer I retain a holding >1% of the equity.

Kind regards,
GHF

[bullet aunt] 23/4/2019 11:08

That’s a thought. That Malta fund didn’t take up so maybe GFH maths out a fraction.Clearly some institutional orders behind the scene.

[wanbissaka] 23/4/2019 11:04

No holdings notification yet post open offer from BRK. I suppose it is always possible they did in fact take up their rights and are now mopping up shares in advance of a TKO? Just a thought.... especially given the strong rise.

[nico115] 23/4/2019 10:18

What they say about redhall please?

[robow] 23/4/2019 10:07

thanks both

[the big fella] 23/4/2019 09:58

Thanks for the post. They are bidding for significant amount of shares above mid, so I suspect there are institutions looking to buy at these levels.

[speedsgh] 23/4/2019 09:51

From the latest Downing Strategic Micro-Cap Investment Trust (DSM) investor letter...



FireAngel’s results were in-line with revised expectations given the annus horriblus of 2018, albeit well behind those on which we initiated our investment. Alongside these results, the company announced an open offer to raise up to £6 million to reduce indebtedness; for investment in the connected homes proposition; and for working capital. While it is disappointing for what we believe to be such a promising business to experience these operational challenges and poor execution during 2018, we have stated our intention to remain supportive, underwriting the placing. There has been significant management change, with a new chairman joining the board, a new COO and a restructuring of the product development function. Without this, we would not have continued to support the company.

The investment case remains focused on a business which has continued to generate high gross margins; where demand is driven by regulation; and where structurally growing markets underlie the products. The most recent news flow has been centred around contract wins from social housing and there are additional drivers in markets such as Germany and the UAE which we expect to drive sales further. Margins have been heavily depressed due to a bundled production move and exiting a legacy distribution agreement. However, the adoption of Flex production in Poland should yield benefits over the medium to long term. Prior to the placing, the company had already announced a strengthening of the management team, and we visited the new production facility in Poland in January to understand more about the changes and risks going forward.

We are confident that this is a business which can return to, and hopefully exceed, previously reported levels of profitability. We think that there is very material upside to follow-on monies and significant upside on blended monies, with a greater degree of strategic control afforded by our higher equity weighting.

[mr hangman] 18/4/2019 13:26

Agreed, 24p middle I'm already making 20% on my Open offer shares, that's enough for
me to fly away somewhere exotic over this long Easter break

[the big fella] 18/4/2019 12:50

Thanks GHF. It feels like we are back where we started. If we have half the ride we did last time we will do well. Good to see some decent volume and a small rise. Hopefully the shape of things to come

[glasshalfull] 16/4/2019 19:16

FA. - FireAngel Safety Tech 🔥

Interesting to read this afternoons RNS & perhaps a very credible take up by existing holders....if you follow my line of thinking below & make a few assumptions.



The level of acceptance suggests (to me) that Newall have not taken up their entitlement of 6,967,416 shares under open offer (or £1.4m). We also know that GW did not intend to apply for his entitlement of 2,198,189 under the open offer. Therefore those numbers combined would equate to 30% of the 48% not subscribed for straight away.

As I also mentioned in my previous post, Downing agreed to subscribe for 17.75m shares & as a result of the open offer only 14.3m are therefore available for Downing and the “other” investor that underwrote the subscription.

Hopefully there will be a few Holding RNSs over the next few days to confirm how it’s all shaken out.

If my assumption correct on Newall not taking up, this would dilute them to 14.0% which would provide confidence that they are not intent on mounting another opportune takeover attempt & provide FireAngel with an opportunity to deliver improved results in the core business & begin demonstrating that the 4/5 years spent on their Connected Home strategy was the right one.

It’s all about increased sales & improving margins for me now. Nothing else will do!

Kind regards,
GHF

[tiswas] 16/4/2019 16:35

Valid acceptances have been received from Qualifying Shareholders in respect of 15,652,053 Open Offer Shares. This represents approximately 52.1 per cent. of the Open Offer Shares available under the Open Offer which, at the Issue Price, has raised approximately GBP3.1 million.

[briggs1209] 08/4/2019 04:27

I'm not sure about the UAE contracts.

hxxps://www.thenational.ae/uae/smart-fire-alarm-systems-to-be-installed-in-homes-across-abu-dhabi-1.743162

It's a federal thing so will be rolled out across all of the emirates. Very expensive though. I think the quoted cost was about 1000 pounds for installation and then a 100 quid a year maintenance.

website is here
hxxps://building.moi.gov.ae/en-US/Hassantuk%20Overview/

[davidosh] 07/4/2019 21:13

Just to advise you all that FireAngel will be exhibiting and presenting at the Mello2019 event on Thursday 16th May and Friday 17th May



They will almost certainly be doing two presentations

More info and tickets here...

If you want a 30% discount you can use this code in the box ADVFN30

[dangersimpson2] 07/4/2019 20:39

Might be overly optimistic thinking, but I'm hoping the equity raise enables them to win some decent-sized UAE contracts. It is a great opportunity, and their main competitors for connected systems for the villas are much more expensive industrial building systems. Should be highly profitable if they get some of this business but the working capital requirement could be significant, and they wouldn't win any business if they were financially weak.

[deanowls] 07/4/2019 16:30

Good summary ghf. Hoping that book is leather bound.

[glasshalfull] 07/4/2019 12:23

Interesting take spannferkel

FA. - FireAngel Safety Technology 🔥

I’ve mentioned previously that the shares have come off just a touch in the last 3 years.

The shares hit 352p & m/cap c. £162m in Dec 2015. Fast forward to Friday, they closed at 23.5p mid & with 45,935,365 shares in issue this provides a m/cap of £10.8m. This represents a share price fall of (-93%) in 40 months. Quite an astonishing collapse!

With a further 30,034,661 to be issued per the open offer this will results in a share count of 75,970,026 following the placing and a m/cap of £15.2m at the 20p placing price.

Where will the share price go from here?

Having considered the open offer, spoken at length with management & other significant FireAngel shareholders I believe it will be very supportive of FireAngels recovery & expedite the company’s return to profitability. That in turn should translate into a recovery in the share price (...typed with crossed fingers🤞7995;).

The placing provides a significant injection of cash which removes the uncertainty which has seen the shares continue their downward trajectory incessantly over recent months. The raise reassures customers, suppliers, HSBC & shareholders at a stroke with a recapitalised balance sheet...especially when the open offer is aligned to FireAngels stronger Q1 performance with sales ahead of budget.

It’s important to consider the open offer in context of the current backdrop.

* Refreshed Management - key hires by the company & a re-energised management team with the introduction of a new Chairman, Finance Director & experienced Operations Director in the last 4 months & the overall team now far better structured to deliver.
* Legislative Drivers - beneficiaries of legislative drivers to growth and we are witnessing this in Scotland 🏴󠁧󠁢󠁳[7603;󠁴⏘31; , with the Housing Scotland Act making it mandatory to install interlinked smoke and heat alarms. I’ve commented on this in recent posts but yet again I believe that other countries will implement similar legislation in the medium term...particularly Scotland’s immediate neighbours...England 🏴󠁧󠁢󠁥[7614;󠁧⏘31;
* New Markets/ Geographies - FireAngel also indicated winning new business in Singapore 🇸🇬 that make it mandatory for smoke alarms in all new residential homes

In parallel, development of their Connected Home proposition potentially opens up other markets such as the UAE 🇦🇪 where they have introduced legislation to connect ALL buildings to a centralised fire alarm receiving centre

There is also the potential for their recently developed Connected Home Hub, smart panel & modules to be introduced into other markets that are looking for an IoT solution.
* Mears Partnership - they inked a significant partner agreement with giant Mears in Sep 2018 that is just coming on stream now. This agreement opens up several prospects for the company in becoming the preferred supplier of smoke, heat and CO alarms to Mears UK portfolio of 900,000 properties AND supplying Mears properties with their newly developed Connected Home system that I mentioned above.
* German come-back - it’s the recovery in the important German 🇩🇪 market which could provide a significant uplift to FireAngel in the short/ medium term. This market previously provided FireAngel with material sales at strong margins and I’m hopeful that they will deliver significant growth in this market once again through extension of their distribution networks; benefit from the 10 year replacement cycle (FireAngels first products introduced in 2007-2009 into this market); retrofit legislation and adoption of their connected home technology.
* Reorganisation, Restructure & no D.A. Fee - Ongoing cost-saving initiatives at FLEX and also announced a reorganisation & restructure programme that yielded £400k annualised savings. Remember they will also save on the annual £2.9m distribution agreement fee to Newall from this year & onwards.

As spannferkel mentioned,

“won't it make existing shares harder to sell immediately afterwards as everyone will already have bought en masse at 20p?”

Well only EXISTING shareholders are entitled to subscribe for shares under the open offer, not all will take up their entitlement. However, any NEW investors considering the company as an investment or perhaps those with only a small existing holding which they wish to increase will be left with no other option than to buy in the market.

Now that FireAngel have indicated a stronger performance & with a repaired b/s, this may be on a few radars as a recovery share. Worthwhile reminding that the open offer is fully underwritten. There will be 75,970,026 shares in issue following the placing of 30m shares which is fully subscribed by Downing & a further unnamed investor. The details of the offer indicate Downing have agreed to subscribe for 17,750,000 Placing Shares. Directors (mainly Nick Rutter, Founder) are also committed to taking 900,000. As Downing currently hold 4,930,874 shares they are entitled to subscribe on the same 17 for 26 basis as other existing shareholders for 3,224,033 shares...so would only achieve a subscription of 17,750,000 shares under clawback arrangements should existing holders FAIL to take up their entitlement.

It’s too early to speculate what may/ may not happen via the open offer, but I hold >1% of FireAngel equity and will be taking up my entitlement in FULL and I know several other investors that also own >1% & have intimated that they also intend to take up their entitlement in full. So, we could have an interesting aftermarket as there is absolutely no froth in the share price and I suspect only a small amount of retail investors were left in the stock when the open offer & results were announced last week.

Summary
I never thought the shares would collapse to the current £10.8m m/cap and was too early in re-entering the stock in Summer/ Autumn 2018...far too early! I keep coming back to the historic earnings of the company which suggest they should achieve £5m PBT as a baseline by increasing GM to 30-40% range, of course, with a fair wind from the important German market..and that’s before any contribution from their Connected Home proposition via Mears or any other market opportunities.

I happen to think they now have the right ingredients to potentially multi-bag from here now. For me it’s all about selling and improving margins. Sounds simple!!!

Disclosure
As intimated in my summary above, I hold >1% of equity here & will hold >1% following the open offer as I’ll be taking it up in full and will therefore not suffer any dilution. Please remember, as usual, I’m talking my own book.

Kind regards,
GHF

[grannyboy] 07/4/2019 11:32

It's obvious, if the share price stays around the 23p/24p area, then you will get sellers who has bought in the fundraise or rights issue at 20p.

[spannferkel] 06/4/2019 23:37

With respect to the open offer, won't it make existing shares harder to sell immediately afterwards as everyone will already have bought en masse at 20p? Weighing up whether it might be better to wait and see if there is a sub-20p buying opportunity afterwards.

[johnwig] 04/4/2019 12:23

topvest, you have no idea what you are talking about, do you?

[topvest] 03/4/2019 21:02

I'm watching this now. Looks encouraging. I'm going to await a stronger technical signal on the chart before buying in.

[robow] 03/4/2019 17:07

by the 9th

[deanowls] 03/4/2019 16:36

What date do we have to decide on?