Last checked at 18 Apr 2023 07:00
RNS
18 April 2023
FireAngel Safety Technology Group plc
('FireAngel' or the 'Company')
Techem Partnership Agreements
Highlights
· | Two delivery and production agreements signed between three parties - FireAngel, its long-term manufacturing partner (the "Manufacturing Partner") and Techem Energy Services GmbH ("Techem").
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· | The total income opportunity for FireAngel has grown significantly to an aggregate of up to c.$7.50 per alarm (comprising fees, royalties, and purchase price of the Company's own CO sensor) based on the same previously announced number of units planned for production. This reflects inflation, the changing bill of materials and changed scope as the project has matured to this crucial point of engaging the Manufacturing Partner.
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· | Shipments of the new alarm expected to start in 2024 with production volume building in 2025.
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· | Increased development and manufacturing set up fees of up to £650k will be received by the Company.
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· | The Manufacturing Partner has begun working on the project with its Partners FireAngel and Techem. |
FireAngel (AIM: FA.), a leading developer and supplier of home safety products, is pleased to announce that it has entered into two complementary agreements that enable the delivery in market of the New Generation Smoke Alarm ("NGSA") which it has been developing with its partner, Techem. These are supplementary to the original development agreement described further below. These new agreements comprise the Delivery Contract ("DC") for manufacturing the NGSA and the Production Framework and Supply Agreement (the "PFSA"), which together comprise a very significant milestone for the Company as it continues to progress its transformational partnership with Techem. This initiative is expected in due course to be highly cash generative for the Group and to generate significant long-term strategic value for its shareholders.
Background
On 7 April 2021, FireAngel announced that it had entered into a development agreement (the "Development Agreement") with Techem to undertake research and define and agree a development phase for the NGSA, which combines multiple innovative sensor technologies to produce a state-of-the-art alarm for installation in Techem's customers' properties. Since then, the partnership with Techem has made very good progress against its agreed milestones and on 20 March 2023, the Company announced the successful delivery of the fourth development milestone of the agreement (now 41 per cent. complete) which sees the delivery of a fully featured product board, which supports all working functions of the NGSA. Under the Development Agreement, Techem is paying the Company for the Research and Development phases as well as further payments for reaching certain pre-agreed milestones in the process. To date, the Company has received cash payments of some £2.5 million against this process.
Overview of the agreements
The DC sees FireAngel and Techem procure the Manufacturing Partner to produce the NGSA at volume. The Company and the Manufacturing Partner have had a long-standing and successful relationship involving product procurement and outsourced manufacturing since 2017. The Manufacturing Partner is a leading electronics manufacturing services company with a large focus on security, IoT, Smart City and smart home development. The PFSA will see the Manufacturing Partner assemble the NGSA with all electronics and mechanical components to an agreed FireAngel design specification. Procurement of specialist production and test equipment will commence immediately to ensure the earliest possible build-up of manufacturing volume.
Pursuant to the terms of the DC, initial shipments of the NGSA are expected to commence in 2024. Volumes are expected to build up further during the first half of 2025. The planned maximum annual throughput would be up to 1.8 million alarms. Actual production volumes will be determined by standard manufacturing considerations and specific demand at any one time.
Through the separate PFSA signed with Techem, FireAngel will become the contracting party for the Manufacturing Partner, taking responsibility for overseeing the production of the NGSA, its certification and delivery into market. Techem will manage marketing, sales and customer relationships.
Financial opportunity
As previously announced, Techem has also selected FireAngel's CO sensor to be part of the product specification, which will be manufactured at the Company's factory in Mississauga, Canada, to be incorporated into the NGSA. The Development Agreement was predicated on an initial forecast of approximately 7 million units of the NGSA being sold. This opportunity has now increased to up to $53m on the same unit forecast. Previously this partnership offered the Company an opportunity for income of about $38m. Whilst this forecast may in future vary up or down and will depend, among other things, on the precise delivery date, Techem and FireAngel will co-operate to assess and maximise the overall opportunity. The Company and Techem have previously agreed on a minimum royalty fee of €3 million which is payable to FireAngel after delivery commences. There is no normal right of cancellation on the contract in the first six years.
John Conoley, Executive Chairman of FireAngel, commented:
"We are delighted to have entered into these agreements with our partners, one of them a long-standing manufacturing partner, which is a leading player within the industry, and Techem, for the production and delivery of this new generation smoke alarm.
"This continues to be a transformational initiative which will create significant long-term strategic value for FireAngel and its shareholders, and which is built around expectation of major revenue, margin and cash generation. This project sits squarely within our vision of increased domestic connectivity and within our objective to deploy the Company's resources on higher value activities. Starting in 2024, and especially in 2025, this will build on the expected improving financial performance of the Company in 2023.
"As evolving policy and legislation continues to develop, FireAngel's connected technology is increasingly well positioned to meet the growing demand for fire safety technology across its markets and the Board is pleased to note that this was further underlined by the recent announcement of the Company's contract win with British Gas."
- Ends -
For further information, please contact:
FireAngel Safety Technology Group plc | 024 7771 7700 |
John Conoley, Executive Chairman | |
Zoe Fox, Chief Finance Officer | |
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Shore Capital (Nominated adviser and broker) | 020 7408 4050 |
Tom Griffiths/David Coaten/Tom Knibbs | |
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Houston (Financial PR) | 0204 529 0549 |
Kate Hoare/Kelsey Traynor/Ben Robinson |
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Notes to Editors
About FireAngel Safety Technology Group plc
FireAngel's mission is to protect and save lives by making innovative home safety products which are simple and accessible. FireAngel is one of the market leaders in the European home safety products market.
FireAngel's principal products are connected smoke alarms, CO alarms, heat alarms and accessories. The Company has an extensive portfolio of patented intellectual property in Europe, the US and other selected territories. Products are sold under FireAngel's leading brands of FireAngel, FireAngel Pro, FireAngel Specification and AngelEye.
For further product information, please visit: www.fireangeltech.com
About Techem
Techem Energy Services GmbH ("Techem"), one of the leading service providers for green and smart buildings, has signed an agreement with FireAngel to develop a new generation alarm primarily for the German market. Techem's focus is on energy efficiency along the entire real estate value chain. It supports over 12 million properties in 19 countries with efficient ways of energy and water consumption and has been doing so for more than 70 years.