Fireangel Safety Technol... Share Discussion Threads

[speedsgh] 02/11/2018 15:43

Downing Strategic Micro-Cap Investment Trust (DSM), which has a relatively small holding of FA. in its portfolio, released their Interim Results today & gave the following overview of the performance of their FA. holding...

Half-year Report -

FireAngel Safety Technology PLC (FireAngel) (1.8% of net assets)

Cost: £2.88m. Value as at 31 August 2018, £0.85m.

• Termination Notice of Distribution Agreement; March 2018
• Outcome of Distribution Agreement Dispute; May 2018
• Appointment of New FD to start in November 2018
• Trading below market expectations
• NED buys shares; August 2018
• Mears Partnership agreed in September 2018
• St Ledger Homes preferred supplier; September 2018

Progress against investment case

It has been a challenging six months for FireAngel (formerly Sprue Aegis), the manufacturer and distributor of fire safety products. Management faced an aggressive legal challenge over the termination of a distribution agreement, took its eye off the ball in one of its main markets (Germany) and lost sales, faced manufacturing issues, issued a profit warning, and lost an FD - none of this was in our initial investment case. Although we understand that businesses don't always run smoothly and often face external challenges, we expect our management teams to adapt and plan accordingly, and we have not seen much evidence of that in this case. We love the regulated markets in which FireAngel operates, and its barrier to entry through IP. We don't like its inability to be flexible and adapt to challenges, and management has been serially 'unlucky' in its ability to execute. We feel it is a business that has grown very quickly financially, however has not adopted best practice and processes for a business of its size. We are disappointed that progress has been stalled, however we believe that there is a very interesting strategic plan that will get the business back on track, perhaps with a refined cost base and renewed focus. The board has stated that the current executive chairman will be replaced with a new chair and we support this move.

We would expect to advise in our next report and accounts, that the new chair has been appointed, and that a review of operations of the business has been undertaken.

We are reassured that a new FD has been appointed, and is someone known to Downing.

[plasybryn] 03/10/2018 19:38

Does anyone have an email for William Payne please?

[davidosh] 03/10/2018 14:27

Just to let you all know that FireAngel will be exhibiting and presenting at our MelloLondon investor event in Chiswick W4 next month. MelloLondon is a two day event and starts on Monday 26th November. You can find out more here...



There will be 60 quality companies exhibiting and presenting plus some very well known investors, entrepreneurs, fund managers and market commentators providing excellent keynote talks on a range of investment subjects. A number of investment workshops will be available each day and a ShareSoc MasterClass on the final day.

[the big fella] 25/9/2018 12:20

Hopefully some more contract news and confirmation of Flex issues resolved in Q4 should see us build a platform to move forward. Anyone seen revised Stockdale numbers for next year yet?

[wanttowin] 25/9/2018 11:31

Small top up for me at 67.5p, nothing in this report we didn't already know about, so the drop seems excessive.

[the big fella] 25/9/2018 08:00

Yes in line with August guidance and no other surprises. At least we have some basis for the jam via the Mears agreement and yesterday’s contract announcement. They have the product suite just need to go sell it. Also encouraged by q4 timeline for resolving Flex issues. Should be a Stockdale note out later so will post some snippets

[pugugly] 25/9/2018 07:52

Curates egg - Very much jam tomorrow

but looks as though they may be able to trade successfully through their problems (imo)

[the big fella] 24/9/2018 07:54

Nice contract win and importantly it is for the higher margin mains powered unit. 3 units per property. Very nice.

[balcony] 17/9/2018 12:07

25k at 84.5p interesting

[why always me] 14/9/2018 12:15

Holding out on this one. GHF, your figures on market penetration are a little outdated. B&Q and Screwfix both have competitor products on their websites, including having introduced Aico, Fireangel now promote that 90% of the Fire and Rescue Services use their products and not 98% and Tesco are known as a fickle beast.
I have no doubt FA will bounce back but I envisage a bit more hurt yet.

[mr hangman] 12/9/2018 11:45

Glad i braved this one out, when most where pushing their sell buttons

[dangersimpson2] 12/9/2018 10:49

I think he most interesting part of today's announcement is the potential to earn recurring revenues. Once this kit is installed and operational then no one is going to want to change system. With 10-year lifespans, what was a long hardware replacement cycle becomes 10 years of additional high margin revenue.

Fire Angel were always convinced that connected home was the place to be, the market (including me at times) had doubts. Although they have been pretty accident prone operationally in the past, their product development has always been good and it seems those doubts are starting to be dispelled.

With the share price simply back to where it was 3 months ago and additional products in the pipeline there should be plenty more good news to come.

[masurenguy] 12/9/2018 08:21

A critical development which should set them on course for mainstream adoption of this technology. Topped up this morning to dilute my historic average cost.

[the big fella] 12/9/2018 07:29

This is a transformational announcement this morning. To land the first agreement in the home connected space is a hugely significant milestone for FA. The fact that this will open the doors on so many other opportunities in this space should not be overlooked. This first deal is the hardest. I look forward to this being just the beginning.

[chriswatts] 07/9/2018 10:42

I also got in too early - thinking the bad news was all priced in by early April :-(

I agree with the comments by GHF and Danger and have just topped up as I can't see how, unless the revenue now collapses, FA. won't make solid profits going forward.

Although this is a fairly high conviction position, I'm now at the limit of my commitment to this share.

[dangersimpson2] 06/9/2018 15:50

At the low point they were trading at the level of investment that they made in product development over the last 2 years alone. Now of course they may not have spent all that wisely but despite a lot of operational hiccups their product development has been a strong point in the past. I can't imagine they would have spent so extensively without some indication that there would be demand from housing associations etc. for connected products.

[glasshalfull] 06/9/2018 13:36

Portfolio Update per recent tweet

FA. - FireAngel (formerly Sprue Aegis). As tweeted, I sold out completely in April 2018 - after holding for 11-years - & should have waited a bit longer before reinvesting!!! I’ve written extensively on the company (see recent tweets with links) & despite all the issues they’ve encountered in recent years I see significant value here. This will make quite a few chuckle & I suppose the company is the ultimate contrarian play, but the £21m m/cap now finds them approaching the 90% club in terms of share price decline from peak value. They’ve had an incredible -87% wiped off the share price in a little over 30 months

So why do I see value I here you ask?

Following all the negative updates investors may have forgetten that they retain a top position in a number of markets. The FireAngel brand is highly regarded with 98% of the UK’s Fire & Rescue installing their alarms; they are number 1 in the UK retail market with exclusive contracts with B&Q, Screwfix & Tesco’s; supply British Gas in the Utility Market; developed a Trade product range; retain over +100 patents; manufacture their own CO sensors (securing supply) & operate in an industry with high barriers to entry with further regulation likely.

Previously FireAngel were a cash-cow for many years, building up close to £30m cash alongside the provision of a generous progressive dividend. Since 2015 this cash has fallen dramatically due to numerous reasons, one of which is the investment of £15m in product development in recent years which has only just been completed & yet to generate material sales. They indicated they had £3.4m net cash at 30.06.2018 & will no longer require to pay BRK/Newall a £2.9m annual distribution fee.

I believe that the shares will rise on one or more of the following: -

(a) They begin winning the contracts in the Connected Homes market with the new tech developed & vindicate their approach, delivering a recurring revenue model, stronger margins, profitability & positive cash flow once again.

(b) A competitor will acquire them for their techology & market position.

(c) The current management team throw in the towel with a new team parachuted in to stabilise the company for sale or delivery on earlier promises.

In other words the continual disappointment has now brought the share price down to a level where I see material upside irrespective of execution. Others may disagree...and probably will!

Regards
GHF

[smithers1] 14/8/2018 21:35

Probably Downing reducing their holding following their comment in July's investor letter which was pre the 6th Aug profit warning:

"there is a great deal of execution risk in this, alongside a transitioning management team, and we must ensure that we have the appropriate controls and assurances in place and that we understand the dynamics well enough before we commit further capital. If we cannot gain these then we will exit the position at a loss and reinvest the proceeds in a better opportunity. Watch this space."

Given the profit warning that followed they could well be unwinding their position and selling on to another institution who has fallen for the ever optimistic sales pitch from the management team. I intend to take out a small short position

[the big fella] 14/8/2018 11:52

Hopefully that 800k is an insti mopping up the overhang. The price move would certainly indicate that. If it's an existing holder then we should see a holdings RNS in the next day or 2. Not from the seller as 800k is under 2%. Lets see what transpires.

Hopefully yesterdays product announcement is a watershed, and the company can move forward from here.

[masurenguy] 14/8/2018 10:52

GHF Re #61. Oops, my mistake. My apologies - have edited his comment accordingly !

[glasshalfull] 14/8/2018 10:39

I covered FireAngel in my portfolio update posted on Twitter at the weekend. Suffice to say delighted to read yesterday’s RNSNON describing the new Connected Home product range as a result of 4 years of investment.

Recognise shareholders frustrations but I still believe those with a medium term outlook will be rewarded. With the share price retracing -87% from highs & valued at only £21m...I’;ve dipped my toe in yet again and picked up stock. This is now back up to a 10% portfolio position for me.

Kind regards
GHF

[glasshalfull] 14/8/2018 10:35

Tiswas - Unfortunately Masurenguy’s update from G Neary is amalgamated with a write-up for another company. Grahams update - in respect of FireAngel - finishes with the sentence, “Shares up 4% as I type.” Disregard the rest.

Kind regards,
GHF

[balcony] 14/8/2018 09:50

Large 800k trade reported