For the year ended
31 December 2021
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INTRODUTION:
Overview
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 with its growing proprietary
connected home products proposition. Its principal
products are smoke alarms, carbon monoxide (‘CO’)
alarms and accessories sold under the principal brand
of FireAngel. The Group has an extensive portfolio of
patented intellectual property. Barriers to entry are high with
considerable costs of product certifi cation and signifi cant
know-how required to sell home safety products.
The introduction of new technologically more-advanced
products and new safety legislation, together with
increasing levels of awareness of the dangers of smoke and
CO, continue to drive the Group’s sales.
FireAngel manufactures CO sensors at its subsidiary, Pace
Sensors, for use in its CO alarms. All other manufacturing
and product assembly is outsourced and almost all of
the Group’s product cost base is sourced in US dollars.
FireAngel’s smoke, heat and accessory products are
manufactured by Flex in Poland. Other ranges of smoke
products are sourced from a leading supplier in the Far
East. The Group’s CO detectors are manufactured at Pace
Technologies in China.
FireAngel enjoys the leading sales footprint of any home
products supplier across UK Retail and is the largest
supplier to the UK’s Fire & Rescue Services (‘UK F&RS’),
both of which are a strong endorsement of the quality and
technical capability of its products. The Group also supplies
the UK Utilities sector with British Gas as its key customer.
FireAngel has a well-established but low market share of
the UK Trade sector and is seeking to signifi cantly expand
this with its range of Trade products. The Group also makes
signifi cant sales into Continental Europe, mainly selling
in euros through a network of independently owned, third-
party distributors.
In this report
Introduction
Overview
FireAngel at a glance
Strategic review
Executive Chairman’s statement
Our proprietary technology
Environmental, Social and Governance Report
Performance review
Group fi nancial result
Section 172 Companies Act statement
Risks and risk management
Governance
Board of Directors and Company Secretary
Corporate governance report
Audit Committee report
Remuneration Committee report
Statutory Directors’ report
Financial statements
Statement of Directors’ responsibilities
Independent auditor’s report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated and Company statement of fi nancial position
Consolidated and Company cash fl ow statement
Consolidated statement of changes in equity
Company statement of changes in equity
Notes to the fi nancial statements
Other information
Corporate directory
Shareholder information
Index
02
06
09
14
16
19
26
29
33
36
42
44
49
57
58
63
63
64
65
66
66
68
97
97
The Statutory Strategic Report comprises the Executive Chairman’s
Statement, the Strategic Review, the Performance Review, the Section
172 Companies Act Statement and the Risks and Risk Management
sections.
Visit our investor website for the latest news and announcements:
www.fi reangeltech.com
4
FIREANGEL SAFETY TECHNOLOGY GROUP PLC FINANCIAL RESULTS YEAR ENDED 31 DECEMBER 2021
Operational
headlines
• Demand, especially for connected products, was much higher than the Company’s ability to supply,
which has continued in the fi rst few months of 2022
• The Company was pleased with its revenue growth over 2021 (2021: £43.5 million, 2020: £39.9
million)
• Severe supply chain disruption and infl ation in H2, especially in Q4, of 2021 prevented an even better
performance for the year
• 2021 started to benefi t from the delivery of the gross margin improvement plan with gross margin of
23.2% (2020: 19.8%)
• Valuable agreement announced on 28 March 2022 with Techem Energy Services GmbH (“Techem”)
to develop a new generation smoke alarm primarily for the German market. Completion of phase 1 of
this project, which has been paid for by Techem, has enabled the transition to a second development
phase under an extended agreement with Techem
Revenue:
Adjusted Gross Margin
£43.5 million
(2020: £39.9 million)
9%
up to 23.2%
(2020: 19.8%)
3.4%
Techem Partnership
28th March 2022
Agreement Announced
5
Financial
headlines
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• Revenue £43.5 million (2020: £39.9 million)
• Underlying LBITDA¹ £0.1 million (2020: LBITDA¹ £1.5 million)
• Underlying operating loss² £3.4 million (2020: underlying operating loss² £5.4 million)
• Gross profi t³ £10.1 million (2020: £6.2 million); adjusted gross profi t³ £10.1 million (2020: £7.9 million)
• Gross margin 23.2% (2020: 15.9%) on track with gross margin improvement plan; adjusted gross
margin³ 23.2% (2020: 19.8%)
• Non-underlying items totalling £0.3 million before tax (2020: £3.6 million)
• Underlying loss before tax4 £3.4 million (2020: underlying loss before tax4 £5.7 million)
• Loss before tax £3.7 million (2020: loss before tax £9.3 million)
• Basic and diluted EPS (2.0p) (2020: (7.7p))
• Net cash (before lease obligations) at 31 December 2021 £0.1 million (cash £3.3 million, invoice
discounting drawdowns £nil, Coronavirus Business Interruption Loan Scheme (“CBILS”) loan £3.2
million) (2020: net debt (before lease obligations) £3.7 million)
• Equity fundraising of £9.0 million (net of expenses) and refi nancing of Coronavirus Large Business
Interruption Loan Scheme (“CLBILS”) into CBILS to generate an additional £1.7 million of cash
strengthened the balance sheet in support of the Company’s aim to improve margins substantially
• Financial performance improved compared with 2020 and in line with market expectations
Loss Before Tax
Underlying LBITDA
Equity Fundraising
£3.7 million
(2020: £9.3 million)
60%
£0.1 million
(2020: £1.5 million)
92%
(net of expenses)
£9 million
1 Underlying LBITDA in 2020 of £1.2 million is loss before tax before depreciation and amortisation, fi nance costs, unrealised mark-to-
market losses and non-underlying items (2019: underlying EBITDA of £0.2 million).
2 Underlying operating loss in 2020 of £5.4 million is before non-underlying items (2019: underlying operating loss of £3.8 million before
non-underlying items). A reconciliation of ‘alternative performance measures’ to measures prescribed in fi nancial standards is given in
the Performance Review section.
3 Adjusted gross profi t is stated before non-underlying items. Adjusted gross margin is adjusted gross profi t as a percentage of revenue.
4 Underlying loss before tax in 2020 of £5.7 million is before non-underlying items (2019: underlying loss before tax of £4.1 million before
non-underlying items; for comparative purposes the underlying loss before tax includes the impact of changing to a more appropriate
amortisation approach of £0.9 million in 2019).
Post-balance
sheet events
and outlook
• The Company announced on 28 March 2022 the formal conclusion of the agreement with Techem
for developement phase 2, with a detailed specifi cation to develop a new generation alarm (“NGSA”)
primarily for the German market
• Delivering a step change in gross margin enhancement from Q2 2022 onwards as planned
• A positive EBITDA forecast for 2022
6
INTRODUCTION:
FireAngel at a glance
The FireAngel story started in
1998 when the business model was
conceived by Nick Rutter, one of the
two founders, who wanted to design
and sell products:
1.
Where existing product solutions did not meet
customer needs;
2.
Which had global sales potential;
3.
4.
Manufactured using plastics and electronics
(as this was the area most familiar to Nick); and
Which would provide an opportunity to take advantage
of economies of scale of manufacture with low cost
manufacturers.
After a huge amount of product testing and validation work, the
business, with Nick as Managing Director, launched the world’s fi rst
plug-in smoke alarm. Since that ground-breaking design, the Company
has gradually extended its product range and expanded to become
the business it is today with a comprehensive range of smoke, CO and
wireless products sold under its principal FireAngel brand.
Our customer-centric approach, combined with a comprehensive
product range, world-class third-party manufacturing capabilities and
high barriers to entry through product certifi cation, make our business
model robust and defensible. In turn, this enables us to build strong, long-
lasting partnerships with key customers to maintain and gain market
share. Over time, we want to become the European market leader selling
FireAngel branded products of choice in each of the markets we serve.
The product and brand advocacy we have from supplying smoke and
hearing-impaired alarms to the UK F&RS is illustrated through strong
customer loyalty across our business. This philosophy shapes our
business model as we continue to listen to our customers’ needs to
develop the products they want in the future. Sourcing of our own smoke,
heat and accessory products from Flex in Poland has enabled us to
consolidate our product range, reduce lead times and allowed us to bring
manufacturing closer to our core markets.
FireAngel at a glance
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Enabling fi re prevention
with PredictTM insight
Our own advanced,
scalable SaaS platform
Enhanced sensing
technology
70m+ alarms sold
worldwide
80+ registered patents
Trusted by UK fi re &
rescue services
Societal & environmental
contribution
We save lives
9
Executive Chairman’s statement
STRATEGIC REVIEW:
Executive Chairman’s statement
Overview
We entered 2021 with strong momentum and, despite it being another unprecedented year
shaped by the COVID-19 pandemic and its knock-on effects to global supply chains, the Board
is pleased with how FireAngel has navigated these. The Company delivered improved fi nancial
performance through ongoing careful management of costs and changes to pricing. We are
grateful for the support received from shareholders both old and new in the equity fundraising
undertaken in April 2021, which raised £9.8 million (before expenses) and I am pleased that we
have been able to deliver against our commitments made at that time.
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“We have made excellent progress in 2021 against our primary
goal, to drive margin expansion and, in doing so, return to
profi tability, with the aim of becoming cash generative at the
end of 2022.”
Our primary goal at the start of 2021 was to drive margin expansion and, in doing so, return to profi tability
and become cash generative by the end of 2022. This goal remains unchanged. We have made excellent
progress through the improvement of underlying gross margin from 19.8% to 23.2%, delivering next
generation products and connected homes technology, whilst maintaining our leading position in each
of our UK Retail, UK Trade and International business units. It has been encouraging to see the excellent
progress, providing a strong platform for further improvement.
In April 2021, we were delighted to sign a strategically important partnership agreement with Techem
Energy Services GmbH (“Techem”), a leading service provider for green and smart buildings and a major
supplier of technical solutions to the European rental market. Under the agreement, FireAngel is developing
a new generation smoke alarm initially for the German rental market. This agreement is expected to be
transformational for the Group and fi nancial contributions are expected from 2021 and to be signifi cant
from 2024, especially, from FY 2025 onwards.
We saw further relevant legislation announced in 2021 that is expected to take effect in 2022. Crucially, the
Department for Levelling Up, Housing and Communities announced in November 2021 changes that would
require carbon monoxide alarms to be fi tted in all UK rental properties with gas boilers or fi res, as part of
social housing reforms intended to improve standards. Precise details of timing and commitments are still
under consideration, but we would expect to step up to meet any additional opportunity for the Company
during the remainder of 2022 and 2023.
During the lockdowns of each of the last two years, as an essential business, we successfully maintained
a balance between colleagues working from home and attending our sites in Coventry and Gloucester in
person. There were no days in any lockdown where at least some of FireAngel’ s staff did not attend the
Company’s UK locations in person to maintain the Company’s mission to protect and save lives. However,
we did not fully overcome the effects of product shortages which impacted customer satisfaction during
the fourth quarter of 2021, and in the earlier part of this year. We experienced daily and unpredictable
changes in expected supply, which stretched our teams and processes, and caused frustration to some
customers for which I am truly sorry. The overall ledger is much to the credit of our colleagues and the
Company, whose goodwill and commitment in the face of so many headwinds enabled us to still ship
products to hundreds of thousands (if not millions) of customers last year.
I remain proud of the Company and of its staff for their achievements last year, and I thank my colleagues
sincerely for their commitment.
John Conoley
Executive Chairman
Strategic review
Executive Chairman’s statement
Our proprietary technology
Environmental, Social and Governance Report
09
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11
Executive Chairman’s statement
Executive Chairman’s statement
Financial performance
The revenue outturn for 2021 was £43.5 million, an
increase from £39.9 million in the prior year, which, whilst
in line with our expectations, was restricted due to the
effects of COVID-19 on the global supply chain.The gross
margin for the year at 23.2% (2020: 15.9%) benefi tted
from planned internal improvements, but there were
some additional product costs caused by the shortage of
components.
The Group’s balance sheet was further strengthened in
the year through the refi nancing of the Coronavirus Large
Business Interruption Loan Scheme (“CLBILS”) loan and
replacing it with a Coronavirus Business Interruption Loan
Scheme (“CBILS”) introducing a further £1.7 million of
cash in the year and, as set out above, raising £9.0 million
(net of expenses) through an issue of new equity.
With gross margin and underlying operating profi t above
both the 2019 and 2020 comparables, several strategically
important deals signed over the year, and the successful
fundraising referred to above strengthening the Group’s
balance sheet and providing working capital for the next
phase of our development, we are extremely pleased
with our performance over the year. We believe that
FireAngel is in an excellent position to capitalise on growth
opportunities going forward.
Strategy
Our medium-term objectives remain unchanged from last
year and, as has been previously outlined, the core target
for the business is to continue improving gross margin
year-on-year, by focusing on three key strands:
• Migrating to higher value activities and cut out lower
value, lower impact activities;
• Commercialising our investment in Connected
technology; and
• Streamlining our value chain of end-to-end
administrative and production activities.
We are pleased with the progress made against each of
these objectives.
The funds raised from the equity fundraising in April
2021 have been deployed to improve effi ciencies and
capabilities across the business, reducing costs, and
further expanding our gross margin as part of the above
strategic objectives. The funds have also been particularly
helpful as we seek to mitigate the current global supply
chain challenges and allowed us to forward procure more
components.
Strategic progress
Moving to Higher Value Activities
As we confi rmed in 31 January 2022’s trading update, the Group’s
project to source entry level products, which are uneconomic to
design and produce in Europe, from an existing Chinese partner, has
been successful. Deliveries of these products to customers started
In 2021, we unveiled our new Connected Homes technology, the “New
Generation Cellular Gateway”, which will enable predictive safety
data to be passed onto social housing landlords, meaning that they
are better able to offer protective and preventative measures for their
tenants. We expect to produce this in volume in Q3 of this year.
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this month and are expected to be margin enhancing from Q2 2022.
Our initial trials with such initiatives have either been delayed or
This newer product set has, to date, not been materially affected by
knocked off course by the immediate imperatives of our own
component issues.
In April 2021, we announced our agreement with Techem, as outlined
above. Following a £1.4 million fee for use of our IP payable over
the development period, a royalty fee per product will be payable
to FireAngel, with 7 million devices forecast to be produced once
manufacturing of the new alarms begins in 2024.
We are scaling up our activities to deliver on this agreement, with the
second phase (Development Phase 2) having commenced in late
2021. Billing originally commenced in Q2 2021 with approximately
£1.0 million having been invoiced by the Company in the year for
development work and for use of existing Company IP in the project.
Commercialising connected technology
In February 2021, we announced an agreement with a social housing
customer in Scotland to provide approximately 4,000 properties with
connected smoke, heat, and carbon monoxide alarms. This contract
was of strategic importance as we believe we can be a key supplier
of safety equipment for new homes and see excellent potential
in supplying the social housing market, particularly given the UK
Government’s target of building 300,000 new homes each year.
Our expertise in connected technology was also a material factor in
securing our partnership with Techem. The world of green and smart
buildings is a connected world and we have long been pioneers in
connected alarms for safety.
business these past two years, and by the COVID-19 related priorities
and/or concerns in turn of our customers. However, we expect to be
able to regain momentum this year, and we remain confi dent that
safety and care data will be an important contributor to our success in
the medium to long term.
At the end of 2021, there were 32,000 devices registered on our
mobile app, showing continued strong growth in the uptake of these
products and it is pleasing to see that our customers are using them
to their full potential.
Value Chain Improvements
We continued to make improvements to the Group’s value chain over
the course of the year, particularly against our strategy to review the
economic potential of our Stock Keeping Units (“SKUs”). This review
highlighted that several of our lower value alarms were uneconomic
and led us to reduce our SKUs by a third. The aim has been to reduce
complexity and increase effi ciency, while lowering risks on stock
obsolescence.
Effi ciencies across the business have improved from increasing our
electronic data interchange (“EDI”) capabilities to development of our
IT and software systems to provide automated improved processes
and communications and reducing the need to increase headcount
in line with the increased volumes of the business. The move over to
cardboard packaging for our products has not only removed 10 tons
of plastics waste from the supply chain in 2021, but also added 1% to
Overall, during the year, and, in particular, the latter part, we could
our gross margin for 2021 and in future years.
not meet demand for connected products in all sectors due to the
supply chain issues and component shortages referred to above. In
addition, in 2021, we absorbed infl ation which, despite the improving
gross margin overall, restricted our gross margin performance. Good
gross margin overall, restricted our gross margin performance. Good
performances in many areas were in spite of the issues faced.
We were pleased to announce that we had been re-selected as one of
We were pleased to announce that we had been re-selected as one of
the offi cial suppliers of smoke alarms and associated products to the
the offi cial suppliers of smoke alarms and associated products to the
UK Fire and Rescue Service (“UK F&RS”) for four years. This contract
UK Fire and Rescue Service (“UK F&RS”) for four years. This contract
was awarded in March 2021 and, with a greater focus on connected
was awarded in March 2021 and, with a greater focus on connected
products, was testament to the quality and reliability of FireAngel’s
products, was testament to the quality and reliability of FireAngel’s
products as the selection process was concluded following rigorous
products as the selection process was concluded following rigorous
price, quality, and social impact evaluations.
In 2020, we sold approximately 500,000 connected alarms. Despite
In 2020, we sold approximately 500,000 connected alarms. Despite
our supply problems in 2021, we still managed to sell 665,000
connected alarms, a 33% increase on the preceding year. I am
pleased with that of course, but we had unsatisfi ed demand for far
more, especially in UK Retail and UK Trade.
Increase in connected
products sold vs 2020
33 %
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Executive Chairman’s statement
“Underpinning our excellent progress
is our proposition to protect and save
lives with innovative, cutting-edge home
safety technology.”
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Environmental, Social
Environmental, Social
& Governance (“ESG”)
As a fi re safety focused technology company,
Environmental, Social and Governance (“ESG”) issues are
already at the heart of our business. In order to put a more
deliberate focus on the Company’s ESG activities, we have
established an ESG Committee. The committee, which is
chaired by me, has been put in place to provide oversight
and measurement of our ESG related activities across the
business.
The committee is comprised of employees at various
levels from across the business. Whilst we will develop
a longer-term journey, we have decided on some clear
initial goals for this year which include carbon footprint
measurement and commencing implementation of the
environmental standard ISO 140001. We will update on
progress in future results announcements.
Management team
The Group was delighted to promote Zoe Fox in April
2021 to the Board as Chief Finance Offi cer having been
Company Secretary since 2019 and Finance Director of
the Group’s principal subsidiary since 2010. Prior to this,
she was Finance Director of BRK Brands Europe Limited,
part of the Jarden Corporation. Jon Kempster who was the
Company’s interim CFO from December 2020 until April
2021 remains on the Board as a Non-Executive Director.
Jon is a chartered accountant whose career has included
various CFO plc Board positions. Jon’s broad fi nancial
knowledge and experience bring additional support and
input to the Board.
Outlook
Outlook
We are confi dent that the middle part of this year will see a step change in gross margin performance, as
planned. We have recently begun to ship our new entry level products, a project we initiated in 2020, which
will add to the gross margin performance of the overall business beginning Q2 2022. We have reviewed our
pricing arrangements, particularly to offset the strong infl ationary pressures, and our actions here will begin
to have an impact as Q2 2022 progresses.
With the return of an adequate supply of components and products, we expect to see a continuation of the
shift of our product mix towards higher margin connected products. We will also continue to put measures
in place to safeguard our growth and meet the strong demand we are seeing for our connected products,
while developing initiatives focused on growing the core business.
We are particularly excited to have begun the second and major phase of our partnership with Techem.
This is a transformational opportunity, from which I expect the Company and its shareholders will derive
signifi cant value, potentially across the next ten years. We will continue to update investors on this project’s
progress as we cross key milestones and, in due course, we hope to expand the already signifi cant
opportunity with this partner.
“Techem is of long-term value and great signifi cance for FireAngel.
This opportunity has crystallised further with the formal signing of DP2.”
We are in an improved fi nancial position and are well capitalised following our April 2021 fundraising
and remain comfortable with market expectations for FireAngel to be EBITDA positive in 2022. We will
continue to support our near-term fi nancial performance with cost mitigations and price adjustments where
necessary or prudent to position ourselves to take full advantage of future growth opportunities.
Whilst we do not underestimate the current challenges and uncertainties facing us, we believe that our
business model, the strong demand for our products, our ability to adapt to changing circumstances and the
increasing regulation around safety standards, leaves us in a good position to continue to grow and prosper.
Underpinning our excellent progress is our proposition to protect and save lives with innovative, cutting-edge
home safety technology. We are excited about the potential in our business pipeline and believe that we are
well placed to deliver attractive growth and shareholder returns.
John Conoley
Executive Chairman
28 March 2022
Our proprietary technology
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STRATEGIC REVIEW:
Our proprietary technology
Our range of products is
comprehensive, allowing the Group
to tailor its smoke and CO alarms and
accessories to suit its customers’
needs at various price points under the
following brands:
A market-leading and innovative battery-operated range of smoke and
CO alarms principally targeted at UK Retail and the UK Fire & Rescue
Services (FR&S).
Launched in 2012, FireAngel sells smoke alarms and CO detectors
principally into the French market under the AngelEye brand which has
become a leading brand targeted at the DIY channel in France.
FireAngel Specifi cation and FireAngel Pro are our ranges of smoke, heat
and CO alarms which feature Smart RF technology enabling all devices
to connect wirelessly, signifi cantly removing the time-consuming
requirement for wiring, channelling or trunking. These are the only
alarms with proven low carbon footprints producing on average 95%
less carbon dioxide compared with other leading mains-powered
alarms. These ranges allow their connectivity to be upgraded to
communicate information outside the property by installing a FireAngel
Connect Gateway. The system features ‘FireAngel PredictTM’, patented
technology to identify and highlight dangerous patterns of behaviour
that increase fi re risk. A network including a FireAngel Connect Gateway
can provide real-time fi re and CO safety notifi cations via remote
monitoring of the alarms for more accurate risk management.
CO sensors used within FireAngel’s CO products are developed by
FireAngel and Pace Sensors, FireAngel’s wholly-owned subsidiary
in Canada. Pace Sensors’ CO sensors are used within all FireAngel,
AngelEye and Pace Sensors’ CO alarms.
16
STRATEGIC REVIEW:
Environmental, Social
and Governance Report
Jigsaws ordered to
teach school children
on fi re safety hazards
at home
120
Waste recycle programme
at our Pace Sensors factory
1st
Appointment of female
director to the Board
19
Technical support
staff graduating
from new training
academy
23
Redundant company
laptops sold on to
employees for charity
7
of workforce now trained in
mental health fi rst aid
We have reduced
our packaging
usage by more
than
10
Tonnes
49%
of people tested their
fi re alarm in 2020/21,
following the Fire Kills
national campaign
9 million
People reached during
Project SHOUT media day
in 2021, up 38% from 2020
17
Environmental, Social and Governance Report
Introduction
Corporate Social Responsibility is integral to the success of our business and the actions we have
undertaken in the environmental, social and governance arenas seek to build on that responsibility. Whilst
our mission is to protect and save lives by making innovative, leading edge technology home safety
products it is also important that our business activities are carried out to high ethical standards and
interact positively with all our stakeholders be it shareholders, employees or customers.
Environmental
report
Protecting and supporting the environment are both important and crucial to our continuing success.
To support the environment, FireAngel have embraced a number of initiatives be it active recycling at the
Coventry, Gloucester and Pace Canada offi ces to encouraging staff to cycle to work through a tax effi cient
cycle to work scheme.
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Our commitment to protecting our planet and environment can also be seen in other activities and actions
we have undertaken in 2021. These include the consolidation of our UK warehouses into one premises
based in Gloucester reducing the requirement for internal UK transfer shipments and will have a positive
impact on offsetting and reducing our carbon footprint as will adopting a hybrid working pattern leading to
less business travel. FireAngel have also removed all ionisation alarms from all its UK warehouse facilities
through accredited disposal channels which has allowed FireAngel to terminate the radiation permits held
with the Environment Agency.
The Group also ensures its operating activities are undertaken in an environmentally conscious manner and
currently reports on scope 1 and 2 as required of the Streamlined Energy & Carbon reporting requirements
with enhanced reporting on Scope 3 to be developed in the next 12 months. A carbon reduction plan will
also be implemented.
In the next 12 months FireAngel’s carbon footprint will be measured more formally and actions will be taken
to reduce it.
Social
Our commitment to high ethical standards includes positively supporting our stakeholders be they
employees, customers, investors, suppliers or the community in which we operate.
Our employees are very important to us and a number of initiatives were launched in 2021 to ensure
they feel supported. These included the introduction of a hybrid working pattern following employee
consultation and was approved by the Board. The COVID pandemic has, also, highlighted the importance of
mental health and has led to FireAngel training a number of people in mental health and wellbeing issues.
Our customers, likewise, are very important with feedback being encouraged through contact with the
Business unit directors and the marketing, product management and new product introduction teams.
Customer communications and contact is also available via our call centre, social media channels or on the
company’s website.
For our shareholders, our goal is to build and develop a business sustainably to secure its future for the long
term.
Governance
A key focus has been on maintaining FireAngel’s Board as a well- functioning team led by the Executive
Chairman and ensuring it has the necessary skills, experience and capabilities to support it in achieving its
corporate goals and assisting it on its ESG journey. Its commitment to diversity, together with recognition of
her experience, skill set and expertise, is shown by the appointment of Zoe Fox as its fi rst female director.
An ESG committee was established in quarter one of 2022 and several initial meetings have been held and
the committee will meet regularly over the next year. The initial commitments include drawing up its terms
of reference to ensure it meets its responsibilities and promotes the success of the business, and a plan
to measure the company’s carbon footprint this year with the aim of reducing it. A further commitment by
FireAngel will be to formalise its current Environmental Management activities with the implementation
of a fully certifi ed ISO 14001:2015 Environmental Management system expected in the next 12 months .
Implementation will cover UK operations directly together with our associated supply chain activities and
will fi t with existing accreditations held by our key contract manufacturing partners.
5.7%
of revenue invested in
Research & Development
250
trees planted in Madagascar,
funded by the company
Health
and Safety
We regard health and safety as an important element to our success. We view the standards of health and
safety required by law as being only the minimum standards to be met and we endeavour to follow best
practice at each of our sites.
18
19
Group financial results
PERFORMANCE REVIEW:
Group fi nancial results
Overview
2021 started with strong momentum in sales which continued through the year, but the impact
of COVID-19 on the global supply chain reduced the ability to achieve all of the Group’s full sales
potential, especially in H2. Excellent progress was made within the year in the Company’s gross
margin improvement plan with improved margins starting to be achieved across all business units.
Underlying Group
performance
2021
2020
Before non-
underlying
items
Non-
underlying
items
Total Before non-
underlying
items
Non-
underlying
items
Revenue
Cost of sales
Gross profi t
Operating expenses
Other operating income
Operating loss
Add back:
Depreciation and
amortisation
Underlying LBITDA
£m
43.5
(33.4)
10.1
(13.6)
0.1
(3.4)
3.3
(0.1)
£m
-
-
-
(0.3)
-
(0.3)
£m
43.5
(33.4)
10.1
(13.9)
0.1
£m
39.9
(32.0)
7.9
(13.6)
0.3
(3.7)
(5.4)
£m
-
(1.7)
(1.7)
(1.9)
-
(3.6)
3.9
(1.5)
Total
£m
39.9
(33.7)
6.2
(15.5)
0.3
(9.0)
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Total revenue increased by 9.0% to £43.5 million (2020: £39.9 million) resulting in an underlying
LBITDA¹ of £0.1 million (2020: £1.5 million). The adjusted gross profi t² was £10.1 million (2020:
£7.9 million), which represented an adjusted gross margin² of 23.2% (2020: 19.8%). The underlying
operating loss³ was £3.4 million (2020: underlying operating loss of £5.4 million). The underlying
loss before tax4 was £3.4 million (2020: underlying loss before tax £5.7 million).
1 Underlying LBITDA of £0.1 million is loss before tax ,depreciation and amortisation, fi nance costs
and non-underlying items (2020: underlying LBITDA of £1.5 million).
2 Adjusted gross profi t is stated before non-underlying items. Adjusted gross margin is adjusted
gross profi t as a percentage of revenue.
3 Underlying operating loss of £3.4 million is before non-underlying items (2020: underlying
operating loss of £5.4 million before non-underlying items)
4 Underlying loss before tax of £3.4 million is before non-underlying items (2020: underlying loss
before tax of £5.7 million before non-underlying items)
The key drivers for changes in revenue and adjusted gross margin are detailed above in the Executive
Chairman’s statement (below).
Overall cash infl ow in the year was £1.8 million (2020: outfl ow of £0.6 million) and net cash (before
lease obligations) at 31 December 2021 was £0.1 million. This compared with net debt (before lease
obligations) of £3.7 million at 31 December 2020. The net movement of £3.8 million comprised
an increase in cash and cash equivalents of £1.8 million. There was a net decrease in bank debt of
£1.9 million through an equity fundraise of £9.0 million (net of fees), the repayment of £2.5 million
under the Company’s invoice discounting facility, a repayment of £2.6 million of loans under the
Coronavirus Large Business Interruption Loan Scheme (‘CLBILS’) and a drawdown of £3.2 million of
loans under the Coronavirus Business Interruption Loan Scheme (‘CBILS’).
Performance Review
Group fi nancial result
Section 172 Companies Act statement
Risks and risk management
19
26
29
20
Group fi nancial results
Income statement
Revenue by
business unit
Gross profi t and
gross margin
Revenue split between each of the Group’s business units and Pace Sensors was as follows:
UK Trade
UK Retail
UK F&RS
UK Utilities & Leisure
Total sales in the UK
International
European Partner
Pace Sensors
Total revenue
2021
£m
11.1
15.6
2.4
0.8
29.9
10.9
1.0
1.7
43.5
2020
Inc/(dec)
Inc/(dec) Proportion Proportion
2021
2020
£m
8.0
16.6
2.9
0.9
28.4
9.2
-
2.3
39.9
£m
3.1
(1.0)
(0.5)
(0.1)
1.5
1.7
1.0
%
39%
(6%)
(17%)
(11%)
5%
18%
N/A
(0.6)
(26%)
%
26%
36%
5%
2%
69%
25%
2%
4%
%
19%
42%
7%
3%
71%
23%
-
6%
3.6
9%
100%
100%
As of 1 January 2021, the business reassigned a number of customers to different business units.
Four customers with a combined revenue of £0.4 million in 2020 which were previously reported
within the Utilities business unit are now reporting through the Trade business unit. The 2020 sales
comparatives have been adjusted accordingly.
Overall, the Group’s revenue increased by 9.0% to £43.5 million (2020: £39.9 million). The £3.6 million
increase in sales was largely due to stronger international sales, legislation, increased connected
sales and relaxing of COVID-19 lockdown restrictions.
UK Trade sales, one the higher margin business units, had a 39% increase on prior year, H1 2021
saw strong performance across UK Trade as lockdown restrictions were lifted and the market fully
reopened, demand continued into H2, but due to supply chain constraints could not be completely
fulfi lled. New business was won and an uplift in sales was seen as a result of Scottish legislation.
UK Retail was another business unit which had a strong start to the year and continued with strong
demand into H2 which was not all fulfi lled. Margins increased with the improved mix of Connected
sales. Sales in the full year retracted slightly by 6%, but would have outperformed 2020 sales had it not
been for the supply chain challenges in H2.
International sales were up 18% over the prior year. The impact of the COVID-19 lockdown restrictions
continued to signifi cantly hamper international retail sales in the earlier part of the year but recovered
in H2 with sales growing in Amazon in multiple countries and, in particular, Benelux Trade which grew,
with sales up 47% on 2020 and 65% up on 2019 driven by Dutch legislation.
UK F&RS and UK Utilities & Leisure business units continued to be impacted by COVID-19 with
restricted access to properties and COVID-19 priorities for the customers. The Group was also
pleased to announce in March 2021 that it had been re-selected as one of the offi cial suppliers of
smoke alarms and associated products to the UK F&RS, which continues FireAngel’s long standing
relationship with UK F&RS and is the second time the Group has been included in such a framework
agreement.
As set out in the Chairman’s statement above, the increase in demand for our products was not met in
full during H2 2021 as the global supply chain challenges impacted our ability to supply. However, the
Group was able to sell more Connected alarms in 2021 than in the previous two years for UK Trade, UK
Retail, International, UK F&RS, and Utilities & Leisure, which improve the Group’s margins.
The revenue of £1.0 million from our European partner, Techem, is recognised under IFRS15
accounting standards, adopting the input methodology approach to phase revenue recognition as this
is based upon direct efforts to satisfy the dominant component of the performance obligation which
is the product design. The total revenue associated with this contract amalgamates the background
IP, minimum royalty amounts and the charges for the product development phases. To determine the
correct accounting treatment the Group has looked at the individual elements of the contract and has
concluded that there is one central non-distinct performance obligation. See note 7 for further details.
Revenue at Pace Sensors, the Group’s manufacturer of CO sensors, decreased to £1.7 million (2020:
£2.3 million), refl ecting the higher stock levels in the supply chain.
Adjusted gross profi t increased to £10.1 million (2020: £7.9 million) and represented an improved
adjusted gross margin of 23.2% (2020: 19.8%).
During the year, overall gross profi t was impacted by additional purchase price variances caused
from the global supply chain challenges, predominantly increasing costs due to securing
components on the open market. This added an additional £0.8 million to the cost of sales. The non-
underlying costs for the year within gross margin was a small net credit of £22,000. Non-underlying
items impacting gross profi t in the prior year amounted to £1.7 million.
21
Group financial results
Exchange rates
The overall gross profi t increased from £6.2 million to £10.1 million, representing a gross margin of
23.2% (2020: 15.9%). The increase in gross profi t was largely due to the reduction in non-underlying
items to a credit of £22,000 (2020: charge of £1.7 million), described below, the increase in revenue
and the progress made in improving the Group’s gross profi t by delivering connected technology and
moving to higher value activities as part of the Company’s gross margin improvement plan.
During the year, on average the value of sterling against the US dollar remained largely the same with
the peak in May and June 2021 where sterling strengthened against the US Dollar by 3% from the
average rate for the year. Sterling strengthened against the Euro with a 6% increase over the course
of the year. The Group has a forward hedging policy, which aims to mitigate the risk of currency
fl uctuations by locking into current rates for future periods on a set percentage of expected future
currency fl ows. The weakening or strengthening of sterling against the US dollar or Euro during
the year increases or decreases the committed sterling cost of forward contracts entered into in
accordance with the Group’s policy to hedge future US dollar purchase and Euro sale requirements.
This mark-to-market decrease or increase in sterling cost is required to be recognised in cost of
sales for the year and, to the extent that this was not mitigated, by the retranslation of other US
dollar or Euro denominated monetary items. The Group had a £1.0 million positive impact on the
gross margin for the year, in 2020 there was a £0.3 million increase in the sterling cost which was
detrimental to the gross profi t.
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Overheads
The Group’s overhead costs comprise of the distribution and administrative costs of running
the business. Excluding non-underlying items totalling £0.3 million (2020: £1.9 million), further
details of which are given below, and depreciation and amortisation of £3.3 million (2020: £3.9
million), overheads of £10.3 million were 6.1% higher than the prior year’s £9.7 million, due largely
to the increased distribution costs impacted by global supply chain challenges and the continued
investment in people to improve processes across the organisation and to deliver the Company’s
strategic objectives.
Total overhead costs amounted to £13.9 million (2020: £15.5 million).
Non-underlying
items in 2021
Non-underlying costs totalling £0.3 million were incurred in the year as follows:
Within cost of sales:
Included a credit of £22,000 which included as follows:
Non-underlying
items in 2020
• An amount of £66,000 was expensed in relation to the settlement of warranty issues with certain
distributors (2020: £0.3 million)
• The Group was able to sell stock lines that had previously been impaired which resulted in a non-
underlying credit of £88,000
Within operating expenses:
• Share-based payment charges of £0.3 million were incurred during the year (2020: £0.2 million)
Non-underlying costs totalling £3.6 million were incurred in the year as follows:
Within cost of sales:
• Provision for warranty costs: the FireAngel battery warranty provision, an isolated historical issue
relating to a third-party supplier fi rst identifi ed in April 2016, was increased by £1.2 million to refl ect
an increase in the terminal volume of units expected to be impacted by the issue based on the level
of returns currently being seen; in addition, an amount of £0.3 million was expensed in relation to
the settlement of warranty issues with certain distributors.
• Stock impairment and disposal costs: £0.2 million net was provided in the year as a result of a
further review of product lines and future development plans in line with the Group’s strategy
to become a more technology-led connected home solutions provider. This comprised gross
impairment charges of £0.4 million offset by proceeds of £0.2 million from stock previously
impaired.
Within operating expenses:
• Intangible capitalised development assets of £1.4 million were impaired during the year as a result
of a thorough review of product lines and future development costs.
• Tangible assets of £0.2 million were impaired during the year as a result of a thorough review of
tooling required for ongoing product lines.
• Restructuring costs of £0.1 million were incurred in the year.
• Share-based payment charges of £0.2 million were incurred during the year.
22
Group fi nancial results
Result for the
year
Statement of
fi nancial position
The Group’s underlying LBITDA for the year amounted to £0.1 million compared with underlying
LBITDA of £1.5 million in 2020.
The underlying operating loss for the year amounted to £3.4 million compared to an underlying
operating loss of £5.4 million in 2020. After taking account of non-underlying items of £0.3 million
(2020: £3.6 million) and fi nance charges of £nil (2020: £0.3 million) as a result of interest on borrowings
in the year, the Group reported a loss before tax of £3.7 million (2020: loss before tax £9.3 million).
The Group booked a tax credit of £0.4 million (2020: tax credit of £0.6 million) due largely to the
recognition of tax losses and the surrender of taxable losses for a research and development tax credit.
Basic and diluted EPS for the year was a loss of 2.0 pence per share (2020: loss of 7.7 pence per share).
The net assets of the Group amounted to £20.2 million at 31 December 2021 (2020: £14.2 million)
and can be summarised as follows:
Goodwill
Plant and equipment
Capitalised development costs
Purchased software costs
Non-current assets
Net cash balances
Loans and borrowings
Net cash / (debt)
Lease liabilities
Net working capital
Net tax asset (including deferred tax)
Net derivative fi nancial assets/ (liabilities)
Warranty provision
Net assets
2021
£m
0.2
3.3
11.8
1.6
16.9
3.3
(3.2)
0.1
(1.0)
5.0
0.5
0.3
(1.6)
20.2
2020
£m
0.2
4.3
11.7
2.0
18.2
1.5
(5.2)
(3.7)
(1.4)
3.8
0.7
(0.7)
(2.7)
14.2
Non-current assets at 31 December 2021 amounted to £16.9 million compared with £18.2 million at
31 December 2020. The most signifi cant components of this were capitalised development costs,
with a net book value of £11.8 million, plant and equipment of £3.3 million and purchased software
costs of £1.6 million. Capitalised development assets of £0.1 million were impaired during the year
as a result of a thorough review of product lines and future development costs.
Total capital expenditure (excluding right of use assets) decreased to £2.0 million compared to £2.8
million in 2020. Of this total, £1.5 million represented capitalised development expenditure to further
enhance the Group’s connected homes and wider technology portfolio as described in note 18 to the
fi nancial statements (2020: £2.6 million). All research and development costs associated with the
development of the new generation smoke alarm for Techem was charged to the customer.
Total capital expenditure of £2.0 million (2020: £2.8 million) compares with depreciation,
amortisation and impairment charges totalling £3.3 million (2020: £5.4 million).
Working capital increased by £1.2 million to £5.0 million at 31 December 2021. While stock
decreased by £2.9 million to £3.7 million (2020: £6.6 million) at 31 December 2021, the build-up of
stock was hindered due to the ongoing effect of COVID-19 impacting the global supply chain thereby
reducing our supply of stock from some suppliers.
Trade and other receivables decreased by £0.6 million to £9.4 million (2020: £10.1 million) as a result
of reduced revenue in the fi nal quarter of the year due to supply chain challenges resulting in lower
stock being available for sale in the last few months of the year. In the year, average debtor days
decreased from 62 to 53 due to a change in the mix of sales and lower UK Retail sales as a proportion
of the total revenue in Q4 2021.
Trade and other payables decreased by £4.7 million to £8.1 million (2020: £12.8 million). Average
creditor days reduced signifi cantly to 21 days (2020: 72 days) due to the increased pressure to
support our manufacturing partners with extended working capital exposure from longer component
lead times resulting in increased credit exposure in addition to purchasing components on the open
market with minimal credit terms.
Net tax assets at 31 December 2021 amounted to £0.4 million (2020: £0.7 million) and comprised a
current tax asset of £0.4 million (2020: £0.7 million), deferred tax assets of £3.1 million (2020: £2.4
million) and deferred tax liabilities of £3.1 million (2020: £2.4 million). Deferred tax assets refl ect
temporary timing differences in the treatment for tax and accounting of the Group’s trading losses
and share-based payments charge. Deferred tax liabilities largely refl ect timing differences in the
treatment of accelerated research and development tax credits on product development costs.
23
Cash
Group financial results
The Group’s warranty provision at 31 December 2021 amounted to £1.6 million (2020: £2.7 million)
of which £1.0 million is expected to be utilised within twelve months of the balance sheet date. This
provision predominantly covers the expected costs of replacing smoke alarm products over the next
two to three years where an issue in certain batteries provided by a third-party supplier, announced
in April 2016, may cause a premature low battery warning chirp. While the utilisation of the provision
has broadly tracked to the revised 31 December 2020 estimates, the amounts provided are the
Board’s best estimate of the ongoing liability (refer to note 3).
The Group had net cash (before lease obligations) ¹ of £0.1 million at 31 December 2021 (2020: net
debt (before lease obligations) ¹ £3.7 million). The movement in net debt (before lease obligations)
during the year is refl ected in the statement of fi nancial position as follows:
Increase in cash balances and net cash infl ow
Reduction of invoice discounting drawdown
Repayment of CLBILs
Drawdown of CBILS loan
Reduction in net debt (before lease obligations)
£m
(1.8)
(2.5)
(2.6)
3.2
(3.7)
The net cash infl ow of £1.8 million in the year is summarised in the table below. The most signifi cant
non-operating cash fl ow items include the costs of the warranty provision and other non-underlying
items totalling £1.3 million, capital expenditure of £2.0 million (as described above), the draw
down on the Coronavirus Business Interruption Loan Scheme (“CBILS”) loan of £3.2 million and the
repayment of the Coronavirus Large Business Interruption Loan Scheme (“CLBILS”) of £2.6 million
and the cash fl ows in relation to the equity fundraising described below.
In March 2021, the Group refi nanced its existing CLBILS. As the Group’s revenue dropped below
£45.0 million, the CLBILS (which had reduced to £2.0 million at the end of March 2021) was
refi nanced under the CBILS with HSBC UK. The new loan of, in aggregate, £3.7 million (“New Loan”)
comprises a CBILS loan of £3.2 million and an additional Receivables Finance CBILS of £0.5 million.
The New Loan, which was used to partially to pay off the balance of the CLBILS, has a term of 6 years
with the fi rst year being free of interest and capital repayments and an interest rate thereafter of 3.99
per cent. over the Bank of England’s base rate. While the full £3.2 million CBILS loan was drawn down
in full in March 2021, the £0.5 million additional Receivables Finance CBILS as at the date of this
announcement has not been drawn on. The Group maintains its existing Invoice Discounting Facility
of £7.5 million, which at 31 December had not been drawn on.
In April 2021, the Group raised £9.8 million (gross) through the issue of 54,444,444 new ordinary
shares of 2p nominal value at an issue price of 18p per share. Share issue expenses amounted to
£0.8 million. The net proceeds of £9.0 million were to provide the Group with the resources to deliver
the strategy and return to profi tability.
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Underlying operating loss²
Depreciation and amortisation charges
(Increase)/ decrease in working capital
Decrease in fair value of derivatives
(Used by)/from operations before non-underlying payments
Cash cost of warranty provision and other non-underlying items
Cash used by operations
Interest paid (net)
Taxation received
Capital expenditure
Proceeds from share issue (net)
(Repayment) of invoice fi nance
Drawdown of loan
Repayment of loan
Loan restructuring costs
Lease payments
Net cash fl ow
2021
£m
(3.4)
3.3
(1.0)
(1.0)
(2.1)
(1.3)
(3.4)
(0.1)
0.6
(2.0)
9.0
(2.5)
3.2
(2.6)
-
(0.4)
1.8
2020
£m
(5.4)
3.9
2.1
0.3
0.9
(2.3)
(1.4)
(0.3)
0.7
(2.8)
5.5
(4.4)
3.2
(0.6)
-
(0.5)
(0.6)
1 Net cash (before lease obligations) in 2021 of £0.1 million is calculated as cash and cash
equivalents, loans and borrowings and invoice discounting facilities (2020: net debt (before lease
obligations): £3.7 million)
2 Underlying operating loss in 2021 of £3.4 million is before non-underlying items (2020: underlying
operating loss of £5.4 million before non-underlying items).
25
Group financial results
Net cash before
lease obligations
Net cash before lease obligations is considered to be a non-GAAP measure as it is not defi ned in
IFRS. The most directly comparable IFRS measure is the aggregate of loans and other borrowings
(current and non-current) and cash and cash equivalents. This is the calculation used by the Group to
measure net cash.
Dividend
Post balance
sheet events
As a result of the loss reported for the year, and consistent with the decision not to declare an interim
dividend (2020: nil pence per share), the Directors do not recommend the payment of a fi nal dividend
(2020: nil pence per share). The total dividend payable for 2021 is therefore nil pence per share
(2020: nil pence per share).
As announced on 28 March 2022 the Group successfully completed the fully funded Development
Phase 1 (DP1) of its partnership with Techem and has now formally concluded the agreement
with Techem for Development Phase 2 (DP2), with a detailed specifi cation. It is expected that the
development period will last until the end of 2024 and the new generation smoke alarm will be
available for sale in H2 2024. Techem has also selected the FireAngel CO sensor, manufactured by
FireAngel’s CO sensor factory in Canada, to be incorporated exclusively into the new alarm, which is
expected to signifi cantly increase the medium-term fi nancial opportunity for the Group.
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Zoe Fox
Chief Finance Offi cer
28 March 2022
24
Group fi nancial results
Use of non-
GAAP fi nancial
performance
measures
Underlying profi t
measures
Adjusted
gross margin
percentage
Certain disclosures and analyses set out in this annual report include measures, which are not
defi ned by generally accepted accounting principles (‘GAAP’) under international accounting
standards in conformity with the Companies Act 2006. We believe this information, along with
comparable GAAP measurements, is useful to investors. Management uses these fi nancial
measures, along with the most directly comparable GAAP fi nancial measures, in evaluating our
operating performance. Non-GAAP measures should not be considered in isolation from, or as a
substitute for, fi nancial information presented in compliance with GAAP.
In the following table, we provide a reconciliation of this and other non-GAAP measures, as defi ned in
this Performance Review, relevant GAAP measures:
Adjusted gross profi t
Reported gross profi t
Non-underlying items:
- Provision for warranty costs
- Provision against stock and disposal costs (net)
Adjusted gross profi t
2021
£m
2020
£m
10.1
-
0.1
(0.1)
10.1
6.2
1.5
0.2
7.9
Adjusted gross margin percentage is the adjusted gross profi t (as defi ned above) as a proportion of
revenue.
Underlying operating losas
Reported operating loss
Non-underlying items:
- Provision for warranty costs
- Provision against stock and disposal costs (net)
- Restructuring costs
- Impairment of intangible assets
- Impairment of tangible assets
- Share-based payments charge
Underlying operating loss
Underlying loss before tax
Reported loss before tax
Non-underlying items:
- Provision for warranty costs
- Provision against stock and disposal costs (net)
- Restructuring costs
- Impairment of intangible assets
- Impairment of tangible assets
- Share-based payments charge
Underlying loss before tax
Underlying LBITDA
Reported loss before tax
Finance costs
Depreciation and amortisation
Non-underlying items:
- Provision for warranty costs
- Provision against stock and disposal costs (net)
- Restructuring costs
- Impairment of intangible assets
- Impairment of tangible assets
- Share-based payments charge
Underlying LBITDA
2021
£m
2020
£m
(3.7)
(9.0)
0.1
(0.1)
-
-
-
0.3
(3.4)
2021
£m
1.5
0.2
0.1
1.4
0.2
0.2
(5.4)
2020
£m
(3.7)
(9.3)
0.1
(0.1)
-
-
-
0.3
(3.4)
2021
£m
(3.7)
-
3.3
0.1
(0.1)
-
-
-
0.3
(0.1)
1.5
0.2
0.1
1.4
0.2
0.2
(5.7)
2020
£m
(9.3)
0.3
3.9
1.5
0.2
0.1
1.4
0.2
0.2
(1.5)
26
PERFORMANCE REVIEW:
Section 172 Companies Act statement
The Board of Directors in undertaking their roles recognise their responsibilities to comply with the statutory duties under the Companies Act
2006. This includes complying with S.172 and the duty to promote the success of the company for the benefi t of its members as a whole.
These provisions form part of the Company’s long term strategic decision making, including the desirability of the company to maintain a
reputation for high standards of business conduct in all its actions and endeavours and to act fairly between all members. This is shown
by engaging in regular dialogue with our investors and customers, supporting the Community by sponsoring conferences and awards,
paying suppliers promptly or increase training relating to the wellbeing of our employees. The statement required under the Companies
(Miscellaneous Reporting) Regulations 2018 setting out how the Board of Directors of FireAngel have performed their duty under S. 172 with
regard to the stakeholder factors listed in S.172 (1) are set out below.
Who was engaged? Why were they engaged?
How were they engaged?
What was discussed and what were the outcomes
and actions?
The Board’s approach to investor
engagement is detailed in the Corporate
Governance Report on page 36.
Key interactions included through:
The Directors regularly engage with investors
through the cycle of presentations linked to results
announcements during which the topics of strategy,
governance and performance are discussed.
Investors
The Company’s
major shareholders
are set out on page
52 of the Statutory
Directors’ Report.
The Board believes it is
important to have open
communications with
shareholders to continue to
access capital to ensure the
long-term success of the
business.
Through its engagement
activities the Board seeks to:
• broaden the investor base to
encourage long-term support
and increased liquidity in the
market for the Company’s
shares
• obtain investor buy-in into the
Group’s strategic objectives
and how they are executed
• Physical and virtual meetings with
major institutional investors
• One-to-one investor meetings with the
Executive Chairman, Chief Finance
Offi cer and Chair of the Audit and
Remuneration Committees
• Videos and interviews
In addition to this, specifi c matters on which the Board
engaged and the outcomes and actions that followed,
included:
• Mitigation against the impact of COVID-19: the
Directors discussed with certain major institutional
shareholders the impact of COVID-19 on the
Company’s fi nancial position and challenges on
supply chains and component shortages and
agreed proposed actions to conserve cash and
protect the fi nancial result
• Long-Term Incentive Plan considerations: feedback
and input around the quantum and performance
criteria of a LTIP award to Senior managers was
sought from certain major institutional shareholders
• Board appointments: feedback and input was
provided by certain major institutional shareholders
around the appointment of a Chief Financial Offi cer
and a Non-Executive Director
• Fundraising in May 2021: certain existing
shareholders were consulted as to their appetite
for participating in a fundraising in April 2021, the
outcome of which was a Firm placing ,Conditional
Placing and Open Offer of the fundraising amount
subject to clawback under the open offer
• Close sharing of quality data led to improvements
to production processes which reduced waste and
increased yields through improved quality
• Collaboratively sharing the impact of COVID-19
disruption on forecast demand, capacity and cash
fl ows led to mutually agreed changes to production
and delivery schedules and temporary extensions to
payment terms and conditions
• Tri party conversation and collaborations with the
Group’s suppliers and their critical component
suppliers
Suppliers
The Group has a
limited number
of international
suppliers who
manufacture
products designed
by the Group.
With all its production
outsourced, the performance of
the Group’s suppliers is crucial
to the continued success of the
business.
In some cases production of
the Group’s products represents
a signifi cant proportion of the
supplier’s total output. It is
therefore vital that the Group
engages with these suppliers to
ensure the continuity of supply in
the longer term.
The global impact of COVID-19
on both the availability and cost
of products meant that close
co-operation with key suppliers
was crucial to ensure continuity
of supply and appropriate credit
terms in the face of uncertain
demand.
Key interactions included through:
• Regular operational workshops held
virtually between key staff at the
Group’s facilities and the suppliers’
manufacturing facilities
• Presentation of strategic and product
roadmaps
• Sharing detailed COVID-19 impact
assessments including variation in
expected demand through reforecasts,
production and delivery issues and
COVID-19 risk assessments
• Visits to key production centres (when
restrictions lifted) to foster closer
working relationships and discuss
supply chain and production issues
• Supporting waste reduction initiatives
in global supply chain and purchase of
components
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27
Who was
engaged?
Employees
The Group
employs
staff with key
managerial,
engineering
and technical
skills.
Customers
The
Group has
customers of
varying size
across its
divisions both
in the UK and
internationally.
Lenders
The Group
has access to
debt fi nance
through its
banking
relationships.
Why were they engaged?
How were they engaged?
The Group’s approach to Employees engagement is detailed in
the Environment, Social and Governance section of the Strategic
Review report on page 16.
Key interactions included through:
• Regular communication, guidance and feedback throughout
the COVID-19 pandemic as to measures being taken to
ensure a safe working environment, recommended working
practices and the fi nancial impact on the Company
• Company Briefi ng Updates delivered throughout the year by
the Executive Chairman
• Presentation of the Group’s strategic and fi ve-year plan to its
senior management team through a Strategy days
• Cost of living increase
• Monthly newsletter The Smoke Signal circulated internally to
ensure all employees can remain connected wherever their
place of work
• Employee surveys
• Training by St. John’s ambulance in First Aid for Mental
Health
Key interactions included through:
• Regular account management meetings with key customers
during 2021 including discussing stock availability
• Sharing detailed COVID-19 impact assessments including
variation in expected demand through reforecasts, production
and delivery issues and COVID-19 risk assessments
• Supporting waste reduction initiatives by proactively updating
product repackaging from PET to cardboard
• Partnership and engagement with German energy and
effi ciency service provider for real estate sector (Techem)
Key interactions included through:
•
Input into the Group’s fundraising plans in April 2021
• Applying for and securing a Coronavirus Business Interruption
Loan Scheme (‘CBILS’) loan for £3.2 million and an additional
£0.5 million Receivables Finance CBILS with extended
payment terms to replace the Coronavirus Large Business
Interruption Loan Scheme
• Performance review meetings throughout the year including
presentation of the Group’s budget for the year ahead
•
Independent audit of the Group’s compliance with the terms
of the invoice discounting facility and Group’s forecasts
The contribution of the
Group’s dedicated staff
and management team
is critical to the Group’s
success. Should the Group
be unable to attract new
employees, or retain existing
staff, this could have a
material adverse effect on
the Group’s ability to grow or
maintain its business.
The Board’s duty to ensure
a safe working environment
for the Company’s
employees is its top priority
and continues to be the
fi rst consideration in all
decisions made during the
COVID-19 pandemic.
The Group is dependent
upon its customers and
distribution channels to sell
and promote its products in
its chosen markets.
The Group’s products form
part of range strategies
and long-term rollout plans
for many of its customers.
Customer feedback and
communication is therefore
vital to ensure that the
Group’s products evolve as
part of a planned, thought-
through strategy such
that supply meets future
demand.
In addition to equity funding,
the Group uses debt fi nance
to provide short-term funds.
The Group must
demonstrate the future
viability of the business in
order to ensure that debt
fi nance continues to be
available at acceptable rates
of interest.
The impact of COVID-19
lockdown restrictions
led to an immediate and
material reduction in
sales and debtors, with a
corresponding reduction
in funding available
through the Group’s invoice
discounting facility.
Section 172 Companies Act statement
What was discussed and what were the
outcomes and actions?
• Discussions around safe working
practices and attendance at the
workplace led to a number of changes
to the workplace environment to ensure
the safety of employees and those
visiting our sites
•
Introduction of hybrid working with a
mixture of home working and offi ce
working
• Employee responses to the Company
Briefi ng Updates helped focus future
briefi ngs on specifi c areas of current
product development and feature
sets, future strategy and remuneration
policies
• Cost of living increase should
encourage employee retention and
recruitment whilst also refl ecting
marketplace trends
• Key customers and industry groups
provided feedback on proposed future
range strategies and evolving feature
sets which impacted the Group’s
connected homes technology product
design and market positioning plans
• Customer feedback on future demand
as a result of prolonged COVID-19
lockdown restrictions
• Supporting of waste recycling initiatives
has saved 1.9 million PET boxes from
landfi ll
• Fully funded research and development
programme for a new generation
smoke alarm. Design phase 1 defi ned
specifi cation for new generation alarm.
design phase 2 develops new alarm for
sale from 2024
• The Group discussed with its primary
lender the intention to raise £9.8 million
through a Conditional placing, Firm
placing and open offer
• The Group discussed the impact of
COVID-19 lockdown restrictions on
demand and short-term funding with its
primary lender which led to it securing
a CBILS loan of £3.2 million and an
additional £0.5 m Receivables Finance
CBILS in March 2021
Communities
and
Environment
Provide unique insight
into community to ensure
FireAngel’s mission being
met.
Protect vulnerable members
of Society.
Protect and save lives and
properties.
Support and be engaged in
our local communities.
Support students with
career progression and
work placements.
Fund and support Trauma
Teddy Community initiative.
• Ongoing and frequent collaboration with customers
• Ongoing and frequent dialogue with the Fire and Rescue
Service to protect lives and property
• Sale of pioneering Connected Homes Technology in Social
• Reduced maintenance visits
• Environmental benefi ts of data
being accessed remotely and taking
appropriate action when required
Housing
• Partnering with Fire and Rescue Services to produce videos
on gas safety to educate the wider community
• Donations to various charities including CO and fi re fi ghter
charities
• Giving presentations and providing work experience
• Partnered with Derbyshire FRS to fund their Trauma Teddy
Community Initiative . Buddy Bear issued by front line staff
and police colleagues to young children who have witnessed
an incident that may cause trauma
• Sponsoring NFCC Prevention and Protection Conference
Exhibition at UK’s largest Fire Safety event
• Headline sponsor of ASCP Safety and compliance awards.
• Project SHOUT
• Partnership with Ealing Council 18,000
devices now installed across 11
blocks with rollout of hardware and
connectivity continuing.
• Buddy Bear supports the children
(and by extension the Community)
through the ordeal and is a keepsake of
the emergency staff who helped them
through it and is a positive infl uence.
It also, helps break down barriers
• Raise awareness of importance of gas
appliances being serviced by a Gas
Safe registered engineer
28
Section 172 Companies
Act statement
Principal
decisions
Principal
decision 1:
Fundraising in
May 2021
Principal decisions are defi ned as those material to both the Group and any of its key stakeholder
groups. In making the following principal decisions the Board considered the outcome from
its stakeholder engagement as well as the need to maintain a reputation for high standards of
business conduct and the need to act fairly between the members of the Company. The standards
expected of a listed public company provide an excellent framework for governance and behaviours
which are taken very seriously and endorsed by the Board and senior Executive management. The
Board Executives have regular contact with our various stakeholders including our shareholders,
bank, suppliers and customers. We have through COVID-19 undertaken regular communications
to employees as many have been remote working since the fi rst lockdown in March 2020 and
subsequent release of restrictions. This has been very important to maintain a positive dialogue and
to recognise that all employees are vital in assisting the Group deliver the strategic transformation
that has begun, is continuing and represents the future of the Group.
29
Risks and risk management
PERFORMANCE REVIEW:
Risks and risk management
The Group faces a variety of risks undertaking its day-to-day operations whilst in pursuit of its longer-term objectives.
Further information on those risks and how they are managed by the Group are set out in the following pages. It is recognised that the Group is
exposed to a number of risks which are wider than those identifi ed here. The risks disclosed are those of most concern to the Board and, also,
those that have been the subject of debate at recent Board or Audit Committee meetings. However, no risk management strategy can provide
absolute assurance against loss.
Through their management of the business units, the Group has an established risk management process for identifying, assessing, evaluating
and managing signifi cant risks whereby the Executive Directors, in conjunction with the Board and Audit Committee, seek to identify, assess and
In March 2021, the Board concluded that it was in the best interests of the Company, and was most
manage risk.
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likely to promote its success, for it to enter into a fundraising process to raise £9.8 million (gross). In
particular, the Board considered its engagement with certain major institutional shareholders and
its lender in assessing the quantum and method of fundraising. Further details of the fundraising are
given in note 31 to the fi nancial statements.
Principal
decision 2:
Throughout 2021 the Board closely monitored and reacted to the continued impact of COVID-19,
prolonged lockdown restrictions and impact on Global supply chain. The most signifi cant decisions
taken by the Board in this area involved employee safety and fi nancial management. Employee
Principal
decision 3:
safety and wellbeing remained a key consideration.
The Board continued with its pattern of safe working practices to ensure the safety of the Company’s
employees including working from home as required. They also implemented a hybrid working
environment. Challenges continued from the Covid 19 pandemic including in the global supply chain
and component shortages. The Board took appropriate steps to deal with these challenges including
securing a new Coronavirus Business Interruption Loan Scheme of £3.2 million and an additional
£0.5 million Receivables Finance CBILS. It also furloughed some staff at Pace Sensors in Canada
and according to Canadian regulations.
In complying with S.172 the duty to promote the success of FireAngel The Board has recognised the
need to migrate to higher value activities. This action should benefi t company employees and other
stakeholders including investors. A principal decision was taken in April 2021 to sign a long term
partnership agreement with Techem Energy Services GmbH one of the leading service providers for
green and smart buildings. The agreement was to provide a fully funded research and development
programme for a new generation smoke alarm. In so doing it consolidated its position for being
innovative and a market leader in the European home safety products markets. The development
of these new smoke alarms whilst generating revenue for the business, establishes FireAngel’s
market position in providing high quality home safety products to ensure the protection and safety
of its customers and vulnerable members of society whilst ensuring employment for our talented
employees.
Zoe Fox
Chief Finance Offi cer
28 March 2022
The Chairman of the Board has overall responsibility for the establishment and oversight of the Group’s risk management framework. His role is
to set the tone and infl uence the culture of risk management within the Group, determine the Group’s risk priorities and monitor and manage the
fundamental risks which the business faces through clear delegation of responsibility to each member of the Executive team.
All the Executive Directors are responsible for identifying, evaluating and mitigating risk in a timely manner, ensuring that there is an open and
receptive approach to solving risk problems in the Group, embedding risk management as part of the system of internal controls within the Group
and regularly updating the Board on the status of risks and controls where important issues are identifi ed.
Signifi cant risks, which are defi ned with reference to magnitude of impact and likelihood of occurrence, are escalated to the Executive Chairman
and Group Finance Director and, if appropriate, formally reviewed by the Board to assess the potential fi nancial impact on the Group and to
determine the optimum course of action to address these risks. The Risk register is regularly reviewed by the Executive Team to assess the
signifi cance of each risk and what mitigating action may be required.
Read more about how the Group manages risk in the Corporate Governance report on page 36.
The Audit Committee advises the Board of Directors on matters of risk management. It has its own report, which can be read on pages 42 and 43.
The principal risks facing the Group, and the strategies put in place to mitigate them, are described in the following table.
Risk
Factors that may impact the business
Mitigation
What we are doing to minimise the risk
The impact of
COVID-19.
COVID-19 signifi cantly impacted demand for the Group’s
core products and continued to do so in the fi rst quarter
of 2021 as new lockdown restrictions were imposed.
The Board believes that the medium and long-term
prospects for the Group’s unique technology are strong.
Failure to convert
connected home
opportunities.
Business would not meet strategic priorities for 2022
which could affect market perception and ultimately
cashfl ow in 2022.
Product prices from
the Group’s primary
smoke alarm and
connected products
manufacturer
cannot be reduced.
Inability to multi-
source production.
The relationship with the Group’s primary smoke alarm
and connected products manufacturer is now well
established. Whilst satisfactory progress has been made
in increasing production yield and volumes, there remain
challenges in levels of utilisation and effi ciency in the
manufacturing process which continue to impact product
costing in the short term.
Due to the high complexity and certifi cation requirements
of the Group’s products, it is not practical to multi-source
production across a number of suppliers. This weakens
the Group’s negotiating position with its existing suppliers
and increases the concentration risk associated with a
sole source of supply.
Throughout 2021, the Board took mitigating actions to conserve cash
and protect profi t, whilst maintaining capability. These included placing a
number of employees on furlough in Canada, further savings through a
reassessment of R&D project deliverables.
To conserve cash, the Group took advantage of the Government’s tax
payment deferral arrangements.
In March 2021 the Group refi nanced its existing CLBILS loan to a combined
CBILS and receivables fi nance CBILS to provide further headroom and to
support the revenue growth expected in 2021.
Further measures could include deeper structural cost savings and
tougher working capital management through negotiation of payment
terms with key suppliers.
Whilst the supply chain situation restricted the ability to meet market
demand for connected products in 2021, the company continued to
maintain its presence with customers and the market generally through the
close relationships of the sales force and by continuing the sponsorship of
Housing Technology magazine. Demand outstripped the ability to supply
in 2021, and such demand remains high at the start of 2022. The company
has built a backlog of orders which will support growth as supply chain
issues ease, and the move of our new Cellular Ceiling Mount Gateway into
volume production this year will increase the relevance and ease of rollout
of the connected product portfolio in general.
The Group’s supply chain and technical teams are working with its primary
manufacturing partner to ensure that effi ciency is improved to reduce the
future production costs. The renewed ability to physically visit factories
in anywhere in the world is seen as a very important and welcome
development. In addition the streamlining of product lines is helping with
creating economies of scales within manufacturing.
This is being addressed through future modularity of product design and
regular dialogue around forecast requirements and fi nancial stability as
well as bringing in new suppliers.
30
Risks and risk management
Continued
31
Staff
recruitment
and retention
risk.
Risk
Factors that may impact the business
Mitigation
What we are doing to minimise the risk
Product
warranty risk.
Exchange rate
risk.
The number of the Group’s smoke and CO
products in the market increases annually and
it is inevitable, given the technology-content of
the Group’s products. Occasionally the Group
will experience product warranty issues. As at
31 December 2021, a provision of £1.6 million
is recognised against the FireAngel battery
warranty provision, a historical legacy issue
relating to a third-party supplier.
The Group operates internationally giving rise
to exposure from changes in foreign currency
exchange rates. The majority of the components
used in the manufacture of the Group’s products
are priced in US dollars. The Group also receives
a signifi cant proportion of its revenues in euros
from sales into Europe.
Working capital
and liquidity
risk.
Recent poor fi nancial results may lead to
reduced credit terms being offered by suppliers.
The requirement to pay suppliers earlier than
anticipated could put short term pressure on the
Group’s cash fl ows risking possible covenant
breaches and deferral of investment decisions.
The Group seeks to ensure that products manufactured by its suppliers comply with
the relevant product specifi cations which are approved by various test houses and
regulatory bodies. If a product is not compliant, the Group would potentially have a
warranty claim on its supplier. Where it becomes clear there are issues with batches of
a certain product, the Group makes specifi c provision to cover 100% of the estimated
warranty costs of providing free of charge replacements with a ‘no quibble’ warranty
policy. Product returns in each market are managed by the Group’s in-house Technical
Support team which records all product warranty by the manufacture date.
The Group manages this risk through the matching of foreign currency receipts
and payments, where possible, and also through a policy of hedging using forward
exchange contracts to guarantee the future exchange rate at which chosen volumes of
currency are exchanged, however, if such levels of uncertainty continue and the value
of sterling against the US dollar remains depressed, this may have a material adverse
effect on the operating results, business, fi nancial condition and prospects of the
Group. The management will also continue to closely manage pricing strategies and
customer expectations.
The Group maintains regular communications with its suppliers around the size and
timing of payment runs and routinely provides updates on the Group’s performance as
part of scheduled account management meetings. The Company also engages with
credit reference agencies to provide updates on funding arrangements and connected
homes ratings.
Changing
trends in the
market place.
The introduction of connected home products
and solutions could potentially reduce the
popularity of the Group’s standalone safety
product range.
The Group is selling its own connected home solutions products and is increasing
its investment in technology and products which connect to the internet. The Group
continues to invest in product technology to reduce the cost of connected home
solutions and to ensure that they are the products of choice for the Group’s customers.
Competition
risk.
Intellectual
property risk.
Distributor
relationships.
New products and technologies may emerge
in the future as more viable alternatives to the
Group’s products.
Several home safety product companies
are considered to be direct competitors of
the Group. These companies vary in the
relative strength of their product offering. As
competitors launch new products, the Group’s
prospects may be impacted which could either
reduce or enhance the Group’s product sales.
Many of the Group’s products are protected
by intellectual property rights and the market
can be characterised as having relatively
high barriers to entry in this regard. Before
introducing new products, the Group carefully
checks that it is not infringing the patented
technology of third parties. Potentially, third
parties could seek to copy or fi nd a workaround
to the Group’s registered technology.
The Group works with third party distributors
of its products in Continental Europe who own
the key customer relationships and undertake
marketing support activities to drive revenue in
the markets they serve. The Group is dependent
upon these distributors to fulfi l these roles in
an effective and effi cient manner to continue
to grow sales in these jurisdictions. Given the
signifi cant concentration of sales through a
small number of distributors, the Group closely
monitors sales by the third-party distributors.
Signifi cant resources are dedicated to product research and development to keep
the business and its products at the forefront of technology. The Group seeks to stay
abreast of emerging market trends to position the Group to exploit and commercialise
such technologies as they appear. The Group regularly reviews other technologies to
ensure that it has the right technology and engineering capability in-house.
The Group monitors competitors’ offerings and regularly reviews competitor products.
The Group’s continued investment in new products and technology provides a barrier to
new entrants in the market. High Certifi cation costs act as a signifi cant barrier to entry.
The Group continues to commit signifi cant resources to research and development.
The Group’s principal protection in the market lies in its business model and patented
intellectual property rights. The breadth of the Group’s product range and its ability to
add new products and leverage its brands across the markets it serves represents a
signifi cant barrier to entry to competitors. New patents continue to be registered to
protect its intellectual property where the Group believed it is appropriate.
The Group may need to take legal action to enforce its intellectual property, to protect
trade secrets or to determine the validity or scope of the proprietary rights of others
which may result in substantial costs and the diversion of resources and management
attention with no guarantees as to the outcome of any litigation.
The Group has contracts with most of its major distributors. Many of these
relationships are well established and, in some cases, the distributor only or mainly
sells the Group’s products. The Group ensures that the contractual relationships with
its customers are fair and commercially benefi cial for both parties and monitors
outstanding credit balances owed by distributors to minimise potential bad debt risk for
the Group.
Product
certifi cation
compliance.
Products are required to comply with the
appropriate certifi cation standards. If products
do not comply, certifi cation bodies could insist
on quarantining the product for further testing,
rework, or, in extreme situations, a recall. This
could affect the Group’s future revenues and
profi ts.
The Group seeks to ensure that all products are manufactured in accordance with the
relevant product certifi cation standards. Detailed compliance records are maintained
for each product which is approved for sale. In addition, detailed testing is performed
on each product with traceability of key components a contractual commitment by
each of the Group’s suppliers. The Group works closely with the standard review bodies
to ensure that its products remain of the highest quality. Suppliers are also audited by
independent third parties to ensure that they maintain the highest quality standards.
Risk
Factors that may impact the business
Mitigation
What we are doing to minimise the risk
Risks and risk management
As with most businesses, particularly those operating in a technical
fi eld, the Group is dependent on engaging employees with key
managerial, engineering and technical skills. The contribution of
the Group’s dedicated staff and management team has been, and
continues to be, critical to the Group’s success. If the Group is
unable to attract new employees, or retain existing employees, this
could have a material adverse effect on the Group’s ability to grow
or maintain its business.
International
trade
regulations.
The Group’s activities involve the import and export of products.
Any changes in the regulations covering such movements might
impact the Group’s trading activities. Increasing geographical reach
and continual expansion of the Group’s customer base, particularly
into Continental Europe, exposes the Group to a potentially wider
set of regulatory restrictions.
Health and
safety risk.
As the Group’s product range evolves and develops, the risk of non-
compliance with health and safety regulations increases.
Cyber &
Information
Security.
Use of IT exposes the Company to cyber and information
security attacks potentially leading to data breaches and loss of
confi dential information. This could hinder competitiveness and
risk reputational damage and subsequent fi nancial loss.
Governance,
legal,
regulatory
and internal
controls.
The Group operates in a complex regulatory environment and
is subject to new/updated legislation which could impact the
business. It is important that all changes are fed through to the
business and internal controls are suffi ciently robust. Failure to
do so could impact the Company’s reputation and erode investor
confi dence.
Environmental,
social and
governance
issues (ESG).
Board and
Leadership.
ESG issues are at the forefront of any Company’s thinking. ESG
impacts FireAngel be it environmentally from waste pollution or
GHG emissions in its supply chain, socially through employee
relations in the UK or through its third-party supply chain. FireAngel
can also be impacted through its governance processes, for
example, through its board structure and governance frameworks,
business ethics and culture. A failure to address these correctly and
properly could affect the Company’s reputation and its fi nances.
One of the keys to the success of the Company is to ensure that the
Board is a well functioning balanced team led by the Chair. Failure
to comply with statutory duties and governance processes could
affect the Company’s reputation and fi nancial position.
Manufacturing
and Supply
Chain.
The Company is dependent on a limited number of international
manufacturers to produce the goods designed by the Group. The
Covid pandemic and lockdown has highlighted risks to the supply
chain and component shortages threatening production.
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The Group places great importance on open communication with its
employees, including regular staff updates. The Group aims to offer
appropriate remuneration packages and incentive arrangements in
order to mitigate this risk and seeks to create a supportive working
environment where employees are encouraged to learn and develop
in their roles through personal development plans. Group provided a
4% cost of living rise for all staff (excluding the Executives) in January
of 2022, and is reviewing continually pay levels to attract and retain
staff. For recruitment the company works with a range of recruiters
now to maximise reach, and accommodates a wider range of working
pattern preferences. The deliberate focus on ESG by the Group is also
felt to be an attractive part of our offer to potential staff.
The Group closely monitors international import and export
regulations and adapts its procedures to minimise duty costs while
remaining compliant.
The Group places the greatest importance on maintaining the highest
standards of health and safety compliance. The Group’s procedures
comply with the requirements of ISO audits and detailed records are
maintained to ensure that products are correctly stored and disposed.
Increased investment in technology and training to prevent cyber
and security attacks and educating about cyber security dangers
and being alert to potential cyber security attacks. A mitigigating
action is that our Anti virus software has both malware and spyware
protection included.
Regular attendance on appropriate training courses, horizon scanning
and engagement with professional advisers to ensure the Company
is kept abreast of all new and updated legislative and governance
changes. This information can be circulated to the Board and key
members of the Executive team. Regular reviews by the Board and
professional advisers of internal controls and processes to ensure the
Company is compliant with current legislation and regulations.
The key to ensure ESG is taken seriously by FireAngel has been the
buy-in from the FireAngel Board. This ensures alignment between
ESG and strategy and identifes the key ESG issues impacting the
Company ensuring they are embedded in the Company in a positive
manner. Establishing an ESG commiittee comprised of members
from different business units and levels has been a key action.
The Company seeks to minimise this risk by ensuring that Directors
appointed have the necessary up -to date skills , experience and
knowledge required to run it.
To minimise this issue the Company has proactively engaed with
the manufacturers to ensure the risk to the supply of components is
minimised.
Tool
replacement.
Failure or wear of tools is a risk in any production environment.
Key tools on the production lines in Poland are ageing. Increased
failures at peak production periods could impact production,
especially if multiple failures coincided.
The Company has conducted an assessment of wear and tear and
has developed a schedule of tool duplication and replacement across
the next 18 months. The costs will be within normal budgeting
expectations.
Russia/
Ukraine
Confl ict.
The risks from this confl ict are developing constantly. This could
impact supply of materials into all parts of global supply chains,
and is in a country adjacent to our factories in Poland. The situation
may slightly impact infl ation further through for example fuel
rises. By its nature however, this is a very fl uid and unpredictable
situation.
We are maintaining frequent dialogue with Flex in Poland and with
component suppliers as to how this is impacting them and what
mitigations they have. Impact to date has been invisible to FireAngel
but we will continue to monitor the situation. FireAngel has the ability
to adjust prices later in the year should further unexpected infl ation
begin to affect margins.
The Statutory Strategic Report comprises the Strategic Review, the Performance Review, the Section 172 Companies Act Statement and the
Risks and Risk Management section.
The Statutory Strategic Report has been approved by the Board.
On Behalf of the Board
Zoe Fox
Chief Finance Offi cer
28 March 2022
33
Board of Directors and Company Secretary
GOVERNANCE
Board of Directors and Company Secretary
Executive
Directors
At the date of this report, FireAngel’s Board of Directors comprises four Non-Executive Directors
and two Executive Directors, including the Executive Chairman. Membership of the Audit and
Remuneration Committees is made up solely of certain of the Independent Non-Executive Directors.
The Board has the breadth and depth of skills necessary to guide the Group as it seeks to take full
advantage of new opportunities and contend with new challenges. A brief biography of each of the
current Directors is set out below:
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John Conoley,
Executive Chairman
Appointed to the Board 22 January 2019, Executive Chairman 01 August 2019
Years on Board - 3
Committee Membership - Environmental, Social and Governance, Nominations
John brings signifi cant executive and non-executive experience Board level experience in
both fully listed and AIM quoted businesses. He began his career in the IT industry and has
worked in a range of industries in technical, sales and manufacturing roles. Since then John
has held general management and director level roles in small and medium-sized pivate and
public companies. Recent public company roles include Chief Executive Offi cer of Psion PLC,
the fully listed international mobile device company, from April 2008 to October 2012 when it
was acquired by Motorola; Non-Executive Director of NetDimensions (Holdings) Limited, the
AIM -quoted human capital management software company from October 2016 to April 2017
when it was acquired by Learning Technologies plc.
Non-Executive Chairman of Wameja Limited, the AIM and ASX quoted innovative mobile
fi nancial services company that was acquired by MasterCard in 2021.
Zoe Fox,
Chief Finance Offi cer
Appointed to the Board - 30 April 2021
Years on Board -1
Committee Membership - Environmental, Social and Governance, Nominations
Zoe has extensive experience of working as a Finance Director. She was previously Finance
Director of the Group’s principal subsidiary, a role she had held since 2010 and prior to her
appointment to the Board of Directors. Previously she was the Finance Director at BRK Brands
Europe Limited which was partt of the Jarden Corporation. She was the Company Secretary
until 30th November 2021.
Governance
Board of Directors and Company Secretary
Corporate governance report
Audit Committee report
Remuneration Committee report
Statutory Directors’ report
33
36
42
44
49
35
Board of Directors and Company Secretary
Graham Whitworth,
Non-Executive Director
Appointed to the Board - 22 May 2000
Years on Board - 22 years
Committee Memberships - Nomination
Graham has worked in a number of technology businesses initially in engineering and
then IT based design technology roles which has led to the development of a diverse set of
international business skills. Graham led the original Sprue Aegis (now FireAngel) IPO and was
Group Chief Executive and Chairman until February 2015. He then became Executive Chairman
until 22 January 2019 on which date he transitioned to the role of Executive Director. Since 27
May 2020 Graham has been a Non-Executive Director of the Company and continues to be
actively engaged in business development responsibilities. Graham’s specifi c responsibility
has been to lead the successful engagement with Techem in which role he continues.
Company
Secretary
Dawn Williams,
Company Secretary
Dawn joined FireAngel in May 2021 on an interim basis and was appointed Company
Secretary on 30th November 2021. She brings Company Secretarial and governance
experience which has been gained in various FTSE 250 Companies. Dawn has also
held the position of Company Secretary at Eldon Insurance Services Limited.and is now
responsible for all corporate governance activities for the group and provides advice and
support to the Board and its committees.
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34
Board of Directors and
Company Secretary
Non-Executive
Directors
Glenn Collinson,
Independent Non-Executive Director
Appointed to the Board - 01 August 2020
Years on Board - 1
Committee Memberships - Audit, Nomination, Remuneration
Glenn started his career at Racal and worked for Motorola and Texas Instruments before
co-founding Cambridge Silicon Radio (CSR) in 1998 where he served as an Executive Director.
He helped it grow from a concept to a $3 billion market capitalisation entity in 2006 and a big
player in the Bluetooth market. Since leaving CSR he has held a number of executive and non-
executive directorships in both public and private companies that specialise in technology.
This specialisation is a tremendous asset to FireAngel in developing and promoting
Connected Homes Technology. He holds a BSc. In Physics and MSc. In Electronics from
Durham University together with an MBA from Cranfi eld University.
Other key appointments
Glenn is non-executive chairman of Aquis Exchange PLC and a Non-Executive Director of
Aquis Exchange Europe SAS, pureLiFi Limited, Vsora SAS and Glenn Collinson Consulting
Limited.
Simon Herrick,
Senior Independent Non-Executive Director
Appointed to the Board - 24 September 2019
Years on Board - 2
Committee Memberships - Audit, Nomination, Remuneration
Simon has over twenty years experience in fi nancial and operational roles at a senior level.
His previous roles include being Chief Financial Offi cer at Debenhams plc and Chief Executive
Offi cer Northern Foods plc. Simon is a Fellow of the Institute of Chartered Accountants
of England and Wales and holds an MBA from Durham University. He chairs the Audit and
Remuneration Committees at FireAngel Safety Technology Group plc.
Other key appointments
He is a Non-Executive Director of Biome Technologies PLC, Ramsdens Holdings PLC and
Christie Group plc and a Director of Sports Punk Limited and Herrick Inc Limited.
Jon Kempster,
Non-Executive Director
Appointed to the Board - 17 December 2020, Non-Executive Director 30 April 2021
Years on Board - 1
Committee Memberships - Nomination, Remuneration
Jon is a Chartered Accountant and his career has included CFO Board positions at Frasers
Group PLC and Wincanton plc. Jon qualifi ed as a Chartered Accountant at PWC and has a BA
(Hons) in Business Studies from Liverpool University. Jon’s broad fi nancial knowledge and
experience bring additional support to the Board.
Other key appointments
Jon is a Non-Executive Director and Chair of the Audit and Risk Committee at Ted Baker plc, a
NED and Chair of the Audit Committee at Redcentric plc, Bonhill plc and Serinus Energy plc.
He is also a Trustee of the Delta plc pension scheme.
36
GOVERNANCE
Corporate governance report
Introduction
The Board of FireAngel places great importance on effective corporate governance. This is refl ected
in our governance principles, policies and practices. We believe that effective governance, not only
in the boardroom but right across the business, ultimately supports an organisation in improving
long-term fi nancial performance. Central to this is the Group’s culture. We work hard across the
organisation to ensure that we operate with high standards of moral and ethical behaviour and that
this expectation is clear at all levels, in the way we work, in the way we reward, and in everything we
do. An example of this is the establishment of the ESG committee which comprises of managers and
employees who have specifi c knowledge or engagement in the 3 ESG pillars.
We are rightly proud of our culture and the high standards with which our employees and the
business acts. We also recognise that culture does not stand still. It must evolve as the business
grows and as the environment changes to ensure our behaviours remain aligned with our size,
structure and interests of our stakeholders. Culture is a continuous journey and we must invest in
our people and structures to ensure this remains central to driving behaviours as the business grows.
During 2018 the Board conducted its fi rst review of the Company’s corporate governance policies
and procedures to ensure it was compliant with the reporting changes that came into effect in
September 2018. The Board has fully adopted, and is working towards full compliance with, the QCA
Code’ for small and mid-size quoted companies.
The extent of compliance with the ten principles that comprise the QCA Code was most recently
reviewed by the Board on 23rd March 2022. The results of this review, together with an explanation
of any areas of non-compliance, and any steps taken or intended to be taken to move towards full
compliance, are set out below:
Principle
Deliver growth
Current
compliance
Comment and disclosures
1
2
3
4
Full.
Full.
Full.
Full.
Establish a
strategy and
business model
which promote
long-term value for
shareholders.
Seek to
understand and
meet shareholder
needs and
expectations.
Take into account
wider stakeholder
and social
responsibilities
and their
implications for
long-term success.
Embed effective
risk management,
considering both
opportunities and
threats, throughout
the organisation.
The Group’s business model and strategy, together with the key risks which impact on achieving these
goals, and the mitigating actions being taken to address these risks are documented in the Introduction,
Strategic review and Risks and risk management sections of this Annual Report. These disclosures are
supplemented by information in the About Us section of our website www.fi reangeltech.com.
The Group’s commitment and approach to engagement with its shareholders, be it institutional or private
investors is documented in the Investor relations section of this Corporate governance report of this
Annual Report. The success of this engagement is measured through approval of shareholder resolutions
recommended by the Board. This is communicated in the Regulatory announcements section of the
Investors area of the Group’s website www.fi reangeltech.com.
The Group takes its responsibilities to its different stakeholder groups both internally, its employees, and
externally, its suppliers, customers and the community in which it operates seriously. It recognises that
these relationships are crucial to its long term success in fulfi lling its mission which is to protect and
save lives by making innovative, leading -edge technology home safety products which are simple and
accessible. Further details on its approach and actions in relation to wider stakeholder involvement and
social responsibilities are detailed in the Environmental, Social and Governance section and Section 172
Companies Act Statement of this Annual Report.
The Board in developing and reviewing its Risk management framework seeks to identify,assess and
mitigate all risks in order to execute and deliver its strategy. In so doing it considers its wider stakeholder
responsibilities and duties to its supply chain.The Group’s internal control environment and system of risk
management, including the key risks to which the Group is exposed, are documented in this Corporate
governance report and the Risks and risk management section of this Annual Report.
37
Principle
Current
compliance
Comment and disclosures
Maintain a dynamic management framework
Corporate governance report
Partial.
The role, composition and independence of the Board are documented in this Corporate governance report
of this Annual Report and supplemented by information in the Directors section of the Investors area of our
website www.fi reangeltech.com.
The Board recognises that the primary responsibility of the chair is to lead the Board effectively and to
oversee the adoption, delivery and communication of the Group’s corporate governance model. There
should be adequate separation from the day-to-day business to be able to make independent decisions.
The chair should not normally also fulfi l the role of chief executive. This separation of roles existed in
the Group from John Conoley’s appointment as Non-Executive Chairman on 22 January 2019 until his
appointment as Executive Chairman on 1 August 2019 after the departure of the Chief Executive. The
Nominations Committee considered carefully the appropriateness of the joint role and concluded that
John’s skillset and experience were well matched to the current requirements of the Group as it transitioned
to become a provider of safety-critical connected home solutions. The joint role, discussed beforehand
with major shareholders, is still expected to be short to medium term in tenure until the Group has moved
further in its transition described above, at which point it is the intention to appoint a Chief Executive with
skills appropriate for the challenges of the transitioned business. In addition, Board independence and
structure, are considered to be suffi ciently robust to ensure that independent decisions can be made despite
increased day-to-day involvement by the chair.
The Board believes that the current composition of Directors have the necessary up to date experience,
skills and capabilities needed to deliver the strategy of the Company for the benefi t of shareholders and
the wider stakeholder community over the medium to long term. The experience and skills of each Director
are described in the Board of Directors section of the Governance section of this Annual Report and
supplemented by information in the Directors section of the Investors area of our website
www.fi reangeltech.com. The roles of the Senior Independent Non-Executive Director and the Company
Secretary, together with a description of the ongoing education of the Directors, are detailed in this
Corporate governance report of this Annual Report.
Given the continued changes in Board composition during 2021, it was again concluded that a formal
process for evaluating the Board would be undertaken by the Nominations Committee when new structures
and relationships had been established. However, the understanding, effectiveness and contribution of each
Director is kept under constant review by the Chairman with each Director’s performance being reviewed
before any proposal for re-election at the Annual General Meeting.
The Group’s corporate culture permeates everything the Group does. It is evident in the Business Model set
out in the Introduction section of this Annual Report, in the Environment, Social and Governance section and
addressed specifi cally in the Chairman’s Introduction.
It is incumbent on the Group to maintain governance structures and processes which fi t with its corporate
culture and are appropriate to their size, complexity and capacity, appetite and tolerance for risk.The Board
structure, its committees, their roles and members, and the roles of Directors with specifi c remits, are
described in this Corporate governance report and in the individual committee reports of this Annual Report.
The terms of reference of the committees are detailed in the Resources section of our website
www.fi reangeltech.com. These governance structures will evolve and be updated in parallel with its
objectives, strategy and business model to refl ect the development and transformation of the Company.
The Group’s approach and actions in relation to wider stakeholder engagement are detailed in the Section
172 statement of this Annual Report. Details of all shareholder communications are provided on the Group’s
website, including historical annual reports, general meetings and the outcome of all general meeting
votes. The Group’s regulatory RNS and RNS Reach announcements are also listed in the Regulatory
announcements section of the Investors area of our website www.fi reangeltech.com.
Full.
Partial.
Full.
Full.
Full.
5
6
7
8
9
Maintain the
Board as a
well-functioning,
balanced team led
by the chair.
Ensure that
between them the
directors have the
necessary up-to-
date experience,
skills and
capabilities.
Evaluate board
performance
based on clear
and relevant
objectives, seeking
continuous
improvement.
Promote a
corporate culture
that is based on
ethical values and
behaviours.
Maintain
governance
structures and
processes that
are fi t for purpose
and support good
decision-making
by the board.
Build trust
10
Communicate
how the Group
is governed and
is performing
by maintaining
a dialogue with
shareholders and
other relevant
stakeholders.
The Group’s corporate governance disclosures include the Corporate Governance Report, the Audit Committee Report and the Remuneration
Committee Report.
Leadership and
operation of the
Board
The Board usually have ten full meetings scheduled in a year, with attendance in person expected
where possible, although meetings during 2021 have largely been held via video conference due
to COVID-19 restrictions. In more normal times, Board members may occasionally join by video
conference if other commitments prevent attendance in person. In addition, ad hoc board meetings
are called to address exceptional or administrative matters.
All Directors are expected to devote such time as is necessary for the proper performance of their
duties. After taking into consideration the availability and time commitment demanded of individual
members, the Chairman was satisfi ed that the members of the Board were able to devote suffi cient
time and resource to perform their roles for the Group.
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38
Corporate governance report
Leadership and
operation of the
Board
Continued
The Board
agenda
The ‘chief operating decision making’ authority is the Board which delegates day-to-day
responsibility for managing the Group to the Executive Management Team (‘EMT’) led by the
Executive Chairman. The Executive Chairman leads the trading review and senior leadership
meetings of the Group to ensure operational targets are met or exceeded. Details of the EMT and
trading review meetings are set out below.
The EMT is responsible for developing and implementing the strategy approved by the Board and led
by the Executive Chairman. In particular, it is responsible for ensuring that the Group’s budget and
forecasts are properly prepared, that targets are met, and for generally managing and developing
the business within the overall budget. Any changes in strategy or signifi cant deviation from budget
require explanation to, and approval of, the Board.
The EMT typically meets weekly and comprises the two Executive Directors, with other senior
managers attending as appropriate.
Two business unit directors collectively manage 5 of the Group’s business units, the other 2
business units are managed by two senior managers. They report into, and meet with, the Executive
Chairman. Trading review meetings are also held weekly and include key managers from each of
the departments across the business. Business unit reviews are typically held once per quarter
and together with the trading review meetings, this provides the forum for the Executive Chairman
to ensure a consistent implementation of FireAngel’s business agenda across the organisation.
Business unit meetings are also attended by other senior departmental managers as required.
All Directors have access to the advice and services of the Company Secretary. Both the
appointment and removal of the Company Secretary are matters reserved for the Board. All Directors
have the benefi t of directors’ and offi cers’ liability insurance and are entitled to take independent
professional advice at the Group’s expense. The Directors keep their skills up-to-date through
regular updates from the Group’s advisory team, review of relevant publications, and attendance at
appropriate seminars and market updates.
Simon Herrick is the Senior Independent Non-Executive Director of the Group and provides a
communication channel between the Chairman and the Non-Executive Directors and is available to
discuss matters with shareholders when required.
The Board’s responsibilities include:
• setting and monitoring the strategic objectives of the Group and reviewing individual management
performance;
• monitoring the risks to achieving the strategic objectives;
• providing entrepreneurial leadership within a framework of prudent and effective controls for risk
assessment and management;
• ensuring that appropriate resources are in place and being managed effectively for the Group to
create long-term shareholder value; and
• approving annual budgets and investments in the Group’s technology roadmap.
The agenda for each Board meeting is reviewed by the Chairman to ensure that suffi cient time is
given to consideration of the most signifi cant issues. The Board receives the minutes of all Board
Committee meetings at the next Board meeting following the Board Committee meeting. The culture
of the Board is such that Non-Executive Directors are encouraged to constructively challenge the
performance of management through rigorous discussion and debate in meeting the goals and
objectives agreed to achieve the Group’s strategy.
Board
meetings
During 2021 matters dealt with by the Board included:
• approval of the Group’s equity fundraising documentation in April 2021;
• reviewing the Group’s response to COVID-19 including approval of documentation around the
Group’s CBILS facility;
• review and monitoring of Group strategy and progress against business objectives;
• operational and fi nancial performance of the Group;
• approval of the Group’s budget;
• approval of fi nancial statements and dividend policy;
39
Corporate governance report
• risk management oversight;
• Board and senior management succession planning;
• approval of large contracts and bids;
• consideration of Audit and Remuneration Committee reports and recommendations;
• review of corporate governance matters and reporting including a review of compliance with the
QCA Code for small and mid-size quoted companies, fi rst adopted during 2018;
• review and update the Group’s plans in relation to Brexit;
• the re-appointment of RSM UK Audit LLP as external auditor, upon the recommendation of the
Audit Committee; and
• review of the Group’s product development roadmap and technological developments in the
industry.
Excluding ad hoc Board meetings for general administrative matters, the number of Board and Board
Committee meetings during 2021 attended in person or by video conference or telephone is set out
as follows:
JR Conoley¹
Executive Chairman
Jon Kempster
Zoe Fox²
G Collinson
SE Herrick
Chairman of Audit and Remuneration Committees
J Kempster³
GRA Whitworth
Total number of meetings
Board
Audit
Committee
Remuneration
Committee
12
6
6
12
12
6
12
-
4
1
5
5
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-
-
3
3
2
-
1 Number of Remuneration Committee meetings eligible to attend: 3
2 Number of meetings eligible to attend after appointment, Board: 6; Audit Committee: 1
3 Number of meetings eligible to attend after appointment as a Non-Executive Director, Board: 6;
Audit Committee:0 Remuneration Committee: 2
Board
Committees
The Group has two standing Board Committees: an Audit Committee and a Remuneration
Committee. The roles and activities of those Committees are included in the respective Committee
reports on pages 42 to 48.
Directors’
confl icts of
interest
The functions of a nominations committee have generally been undertaken by the Group Board as
a whole due to the size of the Group and the size and composition of its Board. A formal process
for evaluating the Board will be undertaken by the Nominations Committee when new structures
and relationships are established.In the meantime, the effectiveness and contribution of each
Director is monitored and kept under constant review by the Executive Chairman with each Director’s
performance being reviewed before any proposal for re-election at the Annual General meeting.
Training on the Companies Act 2006 has been given to all Directors on the provisions within, and
Directors are reminded of their duties at each Board meeting. All Directors maintain confl icts of
interest declarations and any planned changes in their interests, including directorships outside
the Group, are notifi ed to the Board. None of the relationships declared are considered to be
of a detrimental nature to FireAngel’s business and as such none are deemed to impact on the
independence of the Directors. Any confl icts are declared at the fi rst Board meeting at which the
Director becomes aware of a potential confl ict.
The benefi cial interests of all Directors in the share capital of the Company are set out on page 52 of
the Annual Report.
40
Corporate governance report
Effectiveness
and ensuring the
Board is effective
The Board has considered the overall balance between Executive and Non-Executive Directors
and believes that the structure of the Board, with two Executive and four Non-Executive Directors,
ensures that there is no one individual or interest group dominating the decision-making process.
The independence of all Non-Executive Directors is reviewed and evaluated annually as part of the
appraisal of each Director. Simon Herrick and Glenn Collinson have served on the Board between
two and three years and between one and two years respectively and are all considered independent.
Jon Kempster has served on the Board as a Non-Executive Director but is not considered to be
independent as he previously served for a short period as the Interim Chief Financial Offi cer. Graham
Whitworth has served on the Board as a Non-Executive Director for less than two years. The Board
does not view Graham Whitworth as independent as he had served in executive roles within the
Company. Each Non-Executive Directors has different and complementary skills and experiences
which allow each issue facing the Board to be viewed and addressed from a variety of perspectives.
The Board considers that its size and composition are appropriate and that the balance of
qualifi cations and experience appropriately refl ects the fi nancial, sector specifi c, technology and
general international business skills required for it to discharge its duties and responsibilities
effectively.
In advance of each meeting, Board members are provided with accurate, timely and clear information
including operational updates and details of the fi nancial performance and position of the Group.
In this way, informed decisions and discussions can take place which enable the Board to properly
discharge its duties.
Should they wish to, Non-Executive Directors are able to infl uence agendas for Board discussions
and to ensure the amount of time spent reviewing strategic and operational issues is appropriately
balanced. From time to time, the Board meets off site to review and discuss specifi c business issues.
In the event that Directors are unable to attend a meeting or a conference call, they receive and read
the papers for consideration and have the opportunity to relay their comments to the Chairman.
All new Directors undertake a formal and comprehensive induction to the Group which is designed
to develop their knowledge and understanding of the Group’s culture and operations. Non-Executive
Directors have regular opportunities to meet with senior managers to ensure they have a thorough
understanding of the Group, its operations and markets.
All Directors are expected to devote such time as is necessary for the proper performance of their
duties. With the exception of Graham Whitworth, whose time commitment is longer, the Non-
Executive Directors’ commitment approximates to two days per month. Executive Directors are
expected to work full time.
Performance
evaluation
The Remuneration Committee regularly reviews and evaluates the performance of Directors and
senior managers. The most recent review concluded that the Board and its individual members
continue to operate effectively with robust constructive challenge from the Non-Executive Directors.
Subjects covered during the most recent review included a general overview as to the operation
of the Board, opinions on shareholder relationships, views on the Board’s input into strategy
discussions, governance and compliance, risk management and succession planning. The Board
culture and relationships with senior management were also considered.
Where required, the Executive Chairman holds meetings with the Non-Executive Directors without
the other Executive Director present. The Non-Executive Directors, led by the Senior Non-Executive
Director, meet without the Chairman present at least once annually to appraise the Chairman’s
performance.
Internal control
The Board acknowledges its responsibility for safeguarding the investment of shareholders and the
Group’s assets. It has established processes for identifying, evaluating and managing the signifi cant
risks facing the Group.
The Board has overall responsibility for ensuring the Group maintains an adequate system of internal
control and risk management, whilst the Audit Committee reviews its effectiveness on behalf of the
Board. The implementation of internal control systems is the responsibility of management.
The Group’s system of internal control is designed to help ensure:
• the effective and effi cient operation of the Group by enabling management to respond
appropriately to signifi cant risks to achieving the Group’s business objectives;
41
Corporate governance report
• the safeguarding of assets from inappropriate use or from loss or fraud and ensuring that
liabilities are identifi ed and managed;
• there is high quality of internal and external fi nancial reporting;
• compliance with applicable laws and regulations and with internal policies on the conduct of the
Group’s business; and
• the ability to recover in a timely manner from the effects of disasters or major accidents which
originate from outside the Group’s direct control.
The Directors believe the internal control environment is generally adequate and appropriate given
the size and complexity of the Group.
The principal risks and uncertainties facing the Group, together with mitigating actions taken to
address those risks, are set out on pages 29 to 31. These refl ect the risks of most concern to the
Group, as considered at recent Board and Audit Committee meetings.
Given the Group’s size and complexity, it does not have a separate internal audit function. The
external auditor reports to the Audit Committee (and to the Board) on any controls which, during the
course of its audit work, it has identifi ed as requiring improvement. The Group then takes prompt
action to address any control defi ciencies. The Audit Committee reviews the need for a separate
internal audit function on an annual basis. Its most recent review concluded that the reporting lines
within the Group, and the level of control exercised by the management team, are both suffi ciently
robust to make an internal audit function neither necessary nor cost effective at this time. The
Directors have taken steps to ensure that the Group has an appropriate control environment for
its size and complexity. The management team will ensure that the internal control environment
develops appropriately with the size of the Group, with respect to the identifi cation, evaluation and
monitoring of risk.
The Board believes it is important to have open communications with shareholders and seeks
to ensure that these are informative and transparent. The Executive Directors make themselves
available to, and expect to meet with, major institutional shareholders at least twice per year
to discuss the published fi nancial results. In line with the Company’s commitment to ensuring
appropriate communication structures are in place for all sections of its shareholder base, the
Executive Directors will deliver a live investor presentation of its 2021 Final results via the Investor
Meet Company platform on 29 March 2022 This will allow the Executive Directors to address
questions from its shareholders submitted pre-event and during the live presentation.
The Executive Directors also attend private investor seminars and events. From time to time, where
appropriate, the Group may consult with major shareholders on any signifi cant issues.
Members of the Board develop an understanding of the views of major shareholders through direct
contact that may be initiated by the Group’s broker or through shareholder feedback following
investor roadshows, and through analysts’ and brokers’ briefi ngs. The Group also regularly hosts
investor days at its Coventry head offi ce and seeks investor feedback on its performance. Where
voting decisions are not in line with the Group’s expectations, the Board will engage with any
dissenting major shareholders to understand and address any issues. The Senior Independent Non-
Executive Director is the main point of contact for such matters.
The Board has adopted a whistleblowing policy which provides a mechanism for all employees
to raise concerns to the Non-Executive Directors, in strict confi dence and without recrimination,
regarding any unethical business practices, fraud, misconduct or wrongdoing. Any such incident
would be addressed confi dentially by the Audit Committee. There were no whistleblowing reports
during 2021 nor to the date of this report.
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Investor
relations
Whistleblowing
procedures
Anti-bribery and
anti-corruption
policy
The Board is committed to the fundamental values of integrity, transparency and accountability. As
such it seeks to prohibit bribery and corruption in any form, whether direct or indirect. The Group aims
to create and maintain a trust-based and inclusive internal culture in which bribery and corruption is
not tolerated.
The Group would cease to trade with any third party it had reasonable grounds to suspect was
involved in bribery or corruption. It would not hesitate to take legal and/or disciplinary action against
employees or third parties who breach the Group’s bribery and corruption policy.
By Order of the Board
John Conoley
Executive Chairman
28 March 2022
42
GOVERNANCE
Audit Committee report
On behalf of the Board, I am pleased to present the Audit Committee report for the year ended 31
December 2021 which provides information about the Audit Committee, its principal duties, and the
specifi c matters it has considered during the year.
The Group’s Audit Committee comprises:
• Simon Herrick, Chairman of the Committee, Senior Independent Non-Executive Director; and
• Glenn Collinson, Independent Non-Executive Director.
All the Committee members are Independent Non-Executive Directors and have no personal or
fi nancial interests, other than as shareholders, in the matters considered by the Committee.
The Audit Committee operates within the remit delegated by the Board, which is set out in formal
terms of reference. A copy of the terms of reference can be obtained from the Corporate Governance
section within the Investors area of the Group’s website (www.fi reangeltech.com).
Neither the Chairman nor any other Executive Director attend meetings other than by invitation of the
Committee members. The Committee invites the auditor to attend certain meetings.
In accordance with best practice, the Audit Committee is required to comprise at least one fi nancially
qualifi ed member (as recognised by the Consultative Committee of Accountancy Bodies). I am
deemed by the Board to have recent and relevant fi nancial experience as a qualifi ed chartered
accountant with extensive experience in the fi nancing and management of businesses generally.
The Committee’s key objective is the provision of effective fi nancial governance and assistance to
the Board in ensuring the integrity of the Group’s fi nancial reporting. The Committee oversees the
external audit process and reviews the Group’s risk management framework, the effectiveness of its
risk management processes and the system of internal control. Its principal duties are to:
• monitor the integrity of the fi nancial statements of the Group and any formal announcements
relating to the Group’s fi nancial performance and review signifi cant fi nancial reporting judgements
contained therein;
• consider whether in its view the Annual Report taken as a whole is fair, balanced and
understandable and provides the information necessary to assess the Group’s performance,
business model and strategy, the ultimate approval of which is decided by the Board;
• review the effectiveness of the Group’s fi nancial reporting and the internal control and risk
management policies and systems;
• review annually, the need for an internal audit function;
• make recommendations to the Board for a resolution to be put to shareholders for their approval in
general meeting, on the appointment of the external auditor and approval of its remuneration and
terms of engagement;
• review the external auditor’s independence and objectivity and the effectiveness of the audit
process, taking into consideration relevant UK professional and regulatory requirements;
• review the appropriateness of accounting policies;
• develop and implement a policy on the engagement of the external auditor to supply non-audit
services, taking into account relevant guidance regarding the provision of non-audit services by
the external audit fi rm; and
• review the arrangements by which staff may in confi dence raise concerns about possible
improprieties.
Key considerations
in 2021
During the year the Committee met fi ve times and considered the following matters:
• the suitability of the Group’s accounting policies and practices;
• the half-year and full-year fi nancial results, including the appropriateness of using the going
concern concept;
• the auditor’s report for 2020;
• the evaluation of the performance and independence of RSM UK Audit LLP as the Group’s external
auditor;
43
Audit Committee report
• the review and approval of the external auditor’s plan and costs for 2021, which detailed the
proposed audit scope and risk and governance assessment;
• the review and approval of the external auditor’s fees for 2021; and
• the internal control environment across the Group.
• Review of the Executive Finance Team.
• Review of the Business Risk register.
Signifi cant fi nancial
statement reporting
issues
The Audit Committee looks carefully at those aspects of the fi nancial statements which require
signifi cant accounting judgements or where there is estimation uncertainty. The Audit Committee also
reviews the draft of the external Auditor’s Report on the fi nancial statements, with particular reference
to those matters reported as carrying risks of material misstatement. The Audit Committee discusses
the range of possible treatments both with management and with the external auditor and satisfi es
itself that the judgements made by management are robust and should be supported.
Internal controls
The Board of Directors, advised by the Audit Committee, has overall responsibility for the Group’s
system of internal control and for reviewing its effectiveness. Details of the system of internal
control, the principal risks facing the Group, and the strategies put in place to mitigate them, are set
out in the Risk and Risk Management section on pages 29 to 31.
Audit independence The Audit Committee and the Board place great emphasis on the objectivity of the external auditor in
its reporting to shareholders.
The Audit Partner is present at Audit Committee meetings as required to ensure full communication
of matters relating to the audit. The overall performance of the auditor is reviewed annually by
the Audit Committee, taking into account the views of Committee members and senior fi nance
personnel covering overall quality, independence and objectivity, business understanding, technical
knowledge, quality and continuity of personnel, responsiveness and cost effectiveness. The Audit
Committee also has discussions with the auditor, without management being present, on the
adequacy of controls and on any judgemental areas. The scope of the forthcoming year’s audit is
discussed in advance by the Audit Committee. Audit fees are approved by the Audit Committee.
RSM UK Audit LLP was appointed as auditor in 2001. This appointment has not been subject to a
tender process since that date although, from time to time, the Board has benchmarked the audit
cost with third parties. The Committee has concluded that RSM UK Audit LLP continues to provide
an effective audit and the Committee and Board will recommend their reappointment at the 2022
Annual General Meeting. The Group Audit Partner is required to rotate after a maximum period of
fi ve years in the role. Mr. Michael Thornton having reached the end of his term was replaced as Audit
Partner by Mr. Graham Bond as the new Group Audit Partner in 2021.
Other than the audit, the Audit Committee is required to give prior approval of all work carried out by
the auditor and its associates. Part of this review is to determine that other potential providers of
the services have been adequately considered. These controls provide the Audit Committee with
confi dence in the independence of the auditor in its reporting on the audit of the Group.
RSM UK Audit LLP provides non-audit services to the Group, which are governed, so as to safeguard
its independence and objectivity, by the Group’s non-audit services policy. Compliance with the policy
is actively managed and an analysis of non-audit services is reviewed throughout the year. Due to the
change in Ethical Standards during 2020 RSM resigned from providing the Group with corporation
tax services. However, they have continued to provide services relating to VAT advice. During the year
ended 31 December 2021, 20 per cent. of services provided to the Group were non-audit services and
related predominantly to VAT advice (see note 9 to the fi nancial statements).
By Order of the Board
Simon Herrick
Chairman of the Audit Committee
28 March 2022
Non-audit services
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GOVERNANCE
Remuneration Committee report
45
Remuneration
policy framework
Introduction
On behalf of the Board, I am pleased to present the Remuneration Committee report for the year
ended 31 December 2021, which provides information about the Remuneration Committee, the
remuneration policies approved and applied by the Board, and the actual remuneration of Directors
earned during the year. The report is divided into two sections: a policy report, which sets out the
approach to remuneration, and a remuneration report, which details amounts paid to the Directors
during 2021.
Basis of
preparation
This report follows the principles of the Companies Act 2006. The Directors have chosen to apply
these principles as best practice and in order to provide greater transparency to shareholders. This
includes details of the Committee’s policy on Directors’ remuneration, which will be put to an advisory
vote at the 2022 Annual General Meeting.
Remuneration
Committee
Remuneration
philosophy
The Group’s Remuneration Committee comprises:
• Simon Herrick, Chairman of the Committee, Senior Independent Non-Executive Director; and
• Glenn Collinson, Independent Non-Executive Director.
• Jon Kempster, Non-Executive Director.
All the Committee members are Independent Non-Executive Directors, with the exception of
Jon Kempster who is not independent,and have no personal or fi nancial interests, other than as
shareholders, in the matters considered by the Committee.
The Remuneration Committee operates within the remit delegated by the Board, which is set out in
formal terms of reference. The remuneration of Non-Executive Directors is a matter for the Chairman
and the other Executive member of the Board. No Director or manager is involved in any decision
regarding their own remuneration. A copy of the terms of reference can be obtained from the
Corporate Governance section within the Investors area of the Group’s website
(www.fi reangeltech.com).
The Executive Directors do not attend meetings other than by invitation of the Committee members
and are not present at any discussion of their own remuneration.
The Remuneration Committee’s policy is to attract and retain individuals of the highest calibre by
offering remuneration packages competitive with comparable publicly quoted companies, and to
drive the Group’s fi nancial performance by providing arrangements which fairly and responsibly
reward individuals for their contribution to the success of the Group. Performance-related bonuses
and long-term equity-based remuneration linked to a demanding profi t target represent a signifi cant
proportion of Executive Directors’ potential remuneration, which aligns the interests of the
individuals with those of the shareholders.
The Committee continues to seek to ensure that the remuneration of Executive Directors, as well as
the wider senior management team, is suffi cient to attract, retain and motivate quality individuals.
The principal duties of the Remuneration Committee are to:
• consider and make recommendations to the Board on the policy for the remuneration package of
the Executive Directors;
• determine the whole remuneration package for senior executives;
• recommend to the Board the remuneration package for the Chairman;
• determine the terms and conditions of service contracts for senior executives;
• determine the design, conditions and coverage of the annual long-term incentive schemes for
senior executives and to approve total and individual payments under these schemes;
• determine targets for any annual and long-term incentive schemes;
• determine the issue and terms of all share-based plans available to all employees; and
• determine compensation in the event of termination of service contracts of any senior executive.
Remuneration Committee report
The Group is committed to achieving sustained improvements in performance. This depends
crucially on the individual contributions made by the executive team and by employees at all levels.
The Board believes that an effective remuneration strategy plays an essential part in the future
success of the Group. Accordingly, the remuneration policy refl ects the following broad principles:
• the remuneration of Executive Directors and senior managers refl ects their responsibilities and
contains incentives to deliver the Group’s performance objectives without encouraging excessive
risk taking;
• remuneration must be capable of attracting and retaining the individuals necessary for business
success;
• remuneration should be based on both individual and Group performance, both in the short and
long term;
• the system of remuneration should establish a close alignment of interest between senior
executives and shareholders by ensuring a signifi cant proportion of senior executive remuneration
is generated from equity-based incentives; and
• when determining remuneration, the Committee will take into account pay and employment
conditions in the market.
The Group has a clearly defi ned strategy to drive the business forward by understanding the product
needs of our customers, focussing on product innovation and working to develop market-leading
positions in each of the markets we serve. Our remuneration policy supports the delivery of this
strategy and aligns the interests of Directors and shareholders. This is achieved by short-term profi t-
based bonus incentives and longer-term share-based incentive plans which focus on delivering key
business objectives, profi table growth and strong shareholder returns.
The Committee monitors the market competitiveness of the overall remuneration package for each
member of the Group’s senior management team in order to ensure the Group is able to retain and
attract new talent as required.
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Group employee
considerations
The Group employs people across fi ve countries with the majority of staff based in the UK. Inevitably
remuneration arrangements differ to refl ect local markets, but a common theme applied to
employees at all levels is the Group’s aim to offer competitive levels of remuneration, benefi ts and
incentives to attract and retain employees. At more senior levels, remuneration has a larger variable
proportion dependent on the Group’s fi nancial performance.
Shareholder views
The Committee has considered the guidance provided by shareholder advisory groups in preparing
this policy and has followed this insofar as it is appropriate in the context of the Group’s business.
The Committee continues to welcome an open dialogue and input from shareholders on the
remuneration policies of the Group.
Key
considerations
in 2021
During the year the Committee 3 times and considered the following matters:
• consideration of the terms and conditions for Executive Director and Non-Executive Director
appointments; and
• approval of the performance criteria and share option awards under the FireAngel Safety
Technology Group 2015 Long-Term Incentive Plan.
The following tables set out the key elements of the Group’s remuneration policy for Directors.
46
Remuneration Committee report
Remuneration policy for Executive Directors
Element
Fees.
Salary.
Purpose and link to
strategy
To reward individuals for
fulfi lling the relevant role
and to attract individuals
with the skills and calibre
required.
It is essential that the
Group pays competitive
salaries to attract and
retain individuals of
the right calibre to
develop and execute the
business strategy.
Benefi ts.
Pension.
Annual
performance-
related
bonus.
Share
Schemes.
To provide market
competitive benefi ts
suffi cient to recruit and
retain.
To provide market
competitive pension
arrangements suffi cient
to recruit and retain.
To incentivise and
reward execution of
the business strategy,
delivery of fi nancial
performance targets and
the Group’s strategic
plan.
To incentivise and
reward execution of
the business strategy,
delivery of fi nancial
performance targets and
the Group’s strategic
plan.
Operation
Maximum opportunity
The Committee makes recommendations
to the Board on the remuneration of the
Non-Executive Directors. The level of
remuneration is set within a limit approved
from time to time by shareholders.
Non-Executive Directors are paid a base fee
covering Board and committee membership.
Salary levels are set using careful
judgement, taking into account the scope of
the role and responsibilities, performance,
experience, potential, retention issues
and salaries elsewhere in the Group and
in the market place. Judgement will be
informed, but not led, by reference to
companies of similar size and complexity.
Salaries are reviewed annually either in
March or October taking into account the
fi nancial performance of the Group. Salary
increases are not automatic. In exceptional
circumstances, salaries may be increased
on other dates in the year.
Fees are set at a level appropriate for the
role and are reviewed regularly, taking into
account fees payable to Non-Executive
Directors of companies of a similar size and
complexity.
Annual salary increases will not normally
exceed average increases for employees
in other appropriate parts of the Group.
On occasion, increases may be larger
where the Committee considers this to
be necessary to align with market rate or
exceptional performance. Circumstances
where this may apply include: growth
into a role to refl ect a change in scope of
role and responsibilities or where market
conditions indicate lack of competitiveness
and the Committee judges that there is
a risk in relation to attracting or retaining
Executives. Where the Committee exercises
its discretion to award increases above the
average for other employees, the resulting
salary will not exceed the competitive
market range.
Performance
measures
Evaluation of overall
contribution to the
Board.
Overall contribution
to the Group.
Individual
performance
is the primary
consideration
in setting salary
alongside overall
affordability
and market
competitiveness.
Benefi ts include life assurance and medical
insurance.
Benefi ts will be market competitive taking
into account the role and the local market.
None.
New Executive Directors of the Group
are offered membership of the Group’s
defi ned contribution pension plan. Pension
contributions are based only on an
individual’s salary.
In line with the scheme covering other
senior members of staff, performance-
related bonuses for the Executive Directors
are based on the achievement of specifi c
fi nancial targets for the Group and agreed
personal objectives.
Under the Long-Term Incentive Plan,
selected employees are entitled to exercise
an option to receive a certain number of
shares at any time after a three-year vesting
period, at a cost to the employee of the
nominal value of the shares. The number of
shares awarded at the end of the three-year
period is dependent on the achievement of
certain performance criteria.
The maximum employer contribution to
the Group’s defi ned contribution pension
arrangements is 10% of gross salary.
None.
Bonus potential is capped at an appropriate
level to encourage outperformance of
budgeted targets.
Value of shares at time of vesting less
nominal value.
Bonus payments
are at the discretion
of the Remuneration
Committee and
take into account
the overall fi nancial
performance of the
Group.
Vesting of
the awards is
dependent on
achievement of
total shareholder
return on a pro-rata
basis.
47
Remuneration Committee report
Details of the Directors’ emoluments are given below.
a) Remuneration
Salary, fees and
car allowances
£000
Benefi ts
£000
Bonuses¹
£000
Pension
allowance²
£000
2021
Total
£000
2020
Total
£000
Executive Directors
JR Conoley
Z Fox³ ( appointed 30 April 2021)
NA Rutter (resigned 5 February 2020)
MJ Stilwell (resigned 17 December 2020)
Non-Executive Directors
G Collinson (appointed 1 August 2020)
SE Herrick (appointed 24 September
2019)
J Kempster4 (appointed 30 April 2021)
J Shepherd (resigned 1 August 2020)
AV Silverton (resigned 30 June 2020)
GRA Whitworth5
Total
251
127
-
-
36
36
119
-
-
115
684
3
4
-
-
-
-
-
-
-
7
14
-
-
-
-
-
-
-
-
-
-
-
14
13
-
-
-
-
-
-
-
-
27
268
144
-
-
36
36
119
-
-
122
725
253
-
20
194
15
35
6
18
17
177
735
1 Bonuses are paid or accrued based on the achievement of agreed personal objectives and
corporate performance metrics
2 Pension allowance includes both contributions to the Group’s defi ned contribution pension
scheme and cash payments in lieu of contributions
3 Zoe Fox was appointed as Chief Finance Offi cer on 30 April 2021
4 Jon Kempster was appointed as Chief Finance Offi cer on 17 December 2020 and stepped down
from this position on 30 April 2021 and was immediately appointed as Non-Executive Director
5 On 27 May 2020, Graham Whitworth’s role changed from Executive Director to Non-Executive
Director of the Board
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b) Share schemes
Directors’ interests in unvested and vested share option awards.
Awards
granted in
the year
Awards
waived in
the year
Number of
awards over
shares at
1 January
2021
Awards
exercised
in the
year
Number of
awards over
shares at 31
December
2021
Expiry date Exercise
price
(pence)
2014 EMI
GRA Whitworth
125,000
2015 LTIP
JR Conoley
JR Conoley
JR Conoley
ZA Fox
1,500,000
5,000,000
-
-
1,821,272
1,311,316
Share matching scheme
JR Conoley
JR Conoley
JR Conoley
281,514
25,000
49,660
-
-
-
-
1,500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
125,000
28/04/2024
200
-
02/08/2029
5,000,000
30/11/2030
1,821,272
08/07/2031
1,311,316
08/07/2031
281,514
01/06/2030
25,000
03/07/2030
49,660
18/12/2030
2
2
2
2
2
2
2
Further information on the Group’s share schemes is given in note 33 of the fi nancial statements.
The employee share matching incentive scheme was closed following the release of the Company’s
audited fi nal results for the year ended 31 December 2020. John Conoley cancelled his 1,500,000
LTIP shares on 8th July 2021.
48
49
Statutory Directors’ report
c) Service contracts
There are no service contracts for Directors with notice periods in excess of twelve months. The
notice periods under the service agreements for Executive Directors and letters of appointment for
Non-Executive Directors are as follows:
GOVERNANCE
Statutory Directors’ report
Policy on exit
payments
Policy on new
appointments
G Collinson
JR Conoley
ZA Fox
SE Herrick
J Kempster
GRA Whitworth
Notice period
3 months
6 months
6 months
3 months
3 months
*
* Graham’s contract expires on 29 January 2023 and can be extended by mutual consent.
The notice periods the Group is required to give to Executive Directors under their contracts of
employment is as set out above. Payment in lieu of notice includes the value of salary in the notice
period, bonus, benefi ts, car allowance and pension contributions. Both mitigation and the staggering
of payments through the notice period will be considered by the Committee where appropriate,
as will the funding of professional fees. Should additional compensation matters arise, such as
a settlement or compromise agreement, the Committee would exercise judgement and take into
account the specifi c commercial circumstances.
The Committee has the discretion to preserve incentive awards pro-rated to service. In exercising its
discretion on incentive awards, the Committee will have regard to performance, the circumstances
of the Director leaving the Group and the terms of the relevant service agreement.
For share options, the rules state that unvested awards may be preserved at the Committee’s
discretion according to the circumstances. In such cases, vesting will be at the normal date,
subject to the established performance conditions, and pro-rata to the duration of employment in
the performance period. In cases such as death and terminal illness, the Committee also has the
discretion to vest the awards immediately.
In the event of a change of control of the Group, all share option awards may be permitted to vest in
full at the discretion of the Remuneration Committee.
Newly appointed Executive Directors will be awarded a remuneration package which is consistent
with the policy and principles as set out in this report. Base salary may be set at a level higher or lower
than previous incumbents and in certain circumstances, to facilitate the recruitment of individuals
of the required calibre, the Committee may use its discretion to make individual additional incentive
awards. This level of discretion is considered appropriate given the Group’s growth strategy.
By Order of the Board
Simon Herrick
Chairman of the Remuneration Committee
28 March 2022
The following matters are reported by the Directors in accordance with the Companies Act 2006
requirements in force at the date of this Annual Report.
Principal activities
The principal activities of FireAngel Safety Technology Group plc (the ‘Company’) and its subsidiary
companies (the ‘Group’) are set out within the Statutory Strategic Report, which comprises the
Strategic Review, the Performance Review, the Section 172 Companies Act Statement and the Risks
and Risk Management section, on pages 9 to 31.
Review of business
and future
developments
The consolidated income statement for the year ended 31 December 2021 is set out on page 63.
A review of the Group’s business activities during the year and its prospects for the future can
be found in the Strategic Review and the Performance Review on pages 9 to 31. The information
required by Schedule 7 of the Large and Medium sized Companies and Groups (Accounts and
Reports) Regulations 2008 including likely future developments and trading outlook has been
included in the Separate Strategic Report on pages 9 to 25 in accordance with section 414C (11) of
the Companies Act 2006 (Strategic Report and Directors’ Reports) Regulations 2013.
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The board understands the need to forge constructive relationships with suppliers, customers and
other key stakeholders. Details of this are supplied in the Section 172 statement on page 26.
Engagement
with suppliers,
customers
and others in
a business
relationship
Key performance
indicators
The Board’s principal objective is to increase shareholder value. The Directors measure the Group’s
progress in achieving this objective principally using the following indicators (as refl ected in this
Annual Report):
• Sales performance. Sales are reviewed each week to assess individual business unit performance
against budget and to ensure all sales opportunities are being appropriately pursued. The Group
seeks to build long-term customer relationships and maximise the sales mix of its higher margin
products
• Gross margin percentage. Gross margins are reviewed each week to assess individual business
unit performance and to identify areas to improve the profi tability of the Group. Different market
segments have varying gross margin opportunities, depending on the level of competition in that
market and the positioning of the Group’s products and brands
• Adjusted gross margin percentage. The adjusted gross margin of the Group is measured to
understand underlying business performance before the impact of non-underlying items
• Operating result. The fi xed costs of the business are carefully managed to ensure that, in
conjunction with the gross profi t generated, the Group can return an acceptable operating result
• Underlying operating result. The operating performance of the Group before the impact of non-
underlying items is monitored to better understand the underlying trends in operating results
• Underlying EBITDA. The underlying cash generation of the business is measured through
operational cash fl ows represented by underlying EBITDA
• Basic EPS. The Group seeks to reward its shareholders with an annual dividend where possible
• Net working capital. The Group seeks to proactively manage its working capital to ensure that it
minimises its asset base to maximise cash fl ow from which to pay dividends
50
Statutory Directors’ report
Key performance
indicators
Continued
Streamlined
Energy and Carbon
Reporting (SECR)
• Investment in research and development. The Group’s principal source of product differentiation
is through investment in its technology base, rather than simply price. The Board regularly reviews
the Group’s product roadmap to ensure its internal investment is focussed on the right areas and
that products come to market on time
• Staff turnover. Turnover is reviewed as part of the monthly management information pack and is
reviewed to highlight underlying trends and resources
• Order fulfi llment (in time and in full deliveries). Reviewed in the monthly management pack where
orders performance regarding delivery times and fulfi llment vs the customer expectations are
monitored
• Returns. The Group collects and records various data around the product customer returns such
as batch codes and reported faults this is reviewed monthly looking for trends
Commentary on the key performance indicators above is set out in the Performance Review on
pages 19 to 25.
The group appreciates its responsibility to ensure operating activities are undertaken in an
environmentally conscious manner. Therefore, the group ensures all relevant environmental
legislation is compiled with and, where possible exceeded. Actions and initiatives have been
implemented to reduce energy consumption such as Hybrid working patterns leading to less travel,
consolidation of Uk warehouses into one premises based in Gloucester reducing the requirements
for internal transfers and shipments and we are in talks with our customers to reduce the number of
deliveries.
This report was produced in accordance ‘GHG Reporting Protocol - Corporate Standard’ methodology
and have used the 2021 UK Government’s conversion factors for company reporting.
SECR regulations came into force 1 April 2019, requiring companies to disclose UK energy use and
greenhouse gas emissions. Details of the group SECR results have been reported in the tables below.
Energy consumption used to calculate emissions
Gas (kWh)
Electricity (kWh)
Transport fuels (kWh)
Total energy consumption
2021
KWh
2020
Change
kWh
%
119,244
217,335
(45%)
195,098
193,007
155,159
182,198
469,501
592,540
1%
(15%)
(21%)
Business Carbon Footprint
2021
2020
Change
Emissions from combustion of gas (Scope 1)
Emissions from other activities the company owns or controls including
operation of facilities (Scope 1)
Emissions from purchased electricity (Scope 2)
Emissions from business travel in rental cars or employee-owned vehicles
where company is responsible for purchasing of the fuel (Scope 3)
Emissions from other activities (Scope 3): Transport – other
Total gross Scope 1, Scope 2 & Scope 3 emissions
Total gross GHG emissions per unit turnover/revenue (tCO2e/£M)
Total gross GHG emissions tCO2e by FTE – Full time equivalent
employees (tCO2e/FTE)
tCO2e
tCO2e
21.8
4.7
41.4
34.1
3.7
105.7
2.43
0.85
40.0
6.1
45.0
41.3
3.9
136.3
3.42
1.12
%
(46%)
(23%)
(8%)
(17%)
(5%)
(22%)
(29%)
(24%)
Scope 1: Direct Greenhouse Gas emissions are emissions issued from sources directly controlled by
FireAngel, such as stationary combustion equipment used for building heating.
Scope 2: Indirect Energy Emissions are emissions issued from electricity production, or from the
imported heat or vapor consumed in the buildings and equipment operation, provided by an external
entity (sources out of the organizational boundaries).
Scope 3: Other indirect Greenhouse Gas emissions are emissions issued from Fire Angel activities
but from sources controlled by external enterprises, such as waste disposal (transport and
processing) and the transportation means of employees.
51
Principal risks and
uncertainties
Group results and
dividends
Statutory Directors’ report
Details of the principal risks and uncertainties considered by the Board to affect the Group, and the
related risk mitigation actions, are given on pages 29 to 31.
The fi nancial results for the year and fi nancial position of the Group and the Company are as shown
on pages 63 and 66. The consolidated loss after tax for the year was £3.3 million (2020: loss after tax
of £8.7 million).
As a result of the loss reported for the year, and consistent with the decision not to pay an interim
dividend (2020: nil pence per share), the Directors do not recommend payment of a fi nal dividend for
the year (2020: nil pence per share). The total dividend payable for 2021 was therefore nil pence per
share (2020: nil pence per share).
Financial
instruments
The Group’s fi nancial risk management objectives and policies, including the policy for hedging
future foreign exchange rate risk, are outlined in note 4 to the fi nancial statements. The Group does
not adopt hedge accounting and all future contracts beyond the balance sheet date are marked-
to-market at the balance sheet date with the net gain or loss on those contracts taken through the
income statement in the period.
Research and
development
expenditure
The Group has continued to invest in research and development of both software and hardware
products during the year. The people and non-people costs of product development on specifi c
identifi able projects are capitalised in accordance with the accounting policy set out on page 70.
General research costs undertaken in respect of the Group’s principal activities are charged through
the income statement as incurred.
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Share capital and
voting rights
The Company’s issued share capital comprises a single class of ordinary shares of 2p each, with
181,066,637 shares in issue and listed on AIM of the London Stock Exchange as at 31 December
2021. No shares were held in treasury. Details of movements in the issued share capital can be found
in note 31 to the fi nancial statements.
Each share carries the right to one vote at general meetings of the Company. Holders of the shares
are entitled to receive the Company’s annual report. They are also entitled to attend and speak
at general meetings of the Company, to appoint one or more proxies or, if they are corporations,
corporate representatives, and to exercise voting rights. They have the right to ask questions at
the Annual General Meeting relating to the business of the meeting and for these to be answered,
unless such answer would interfere unduly with the business of the meeting, involve the disclosure
of confi dential information, if the answer has already been published on the Group’s website or if it is
not in the interests of the Group or the good order of the meeting that the question be answered.
All issued shares are fully paid up and carry no additional obligations or special rights. The full rights
are set out in the Company’s Articles of Association (the ‘Articles’), the latest copy of which can be
found in the Incorporation section of the Investors area of the Group’s website at
www.fi reangeltech.com. There are no restrictions on transfers of shares in the Company, or on
the exercise of voting rights attached to them, other than those which may from time to time be
applicable under existing laws and regulations.
Control and share
structure
Details of the issued share capital, together with details of the movements in the Company’s issued
share capital during the year, are shown in note 31 to the fi nancial statements. The Company has one
class of ordinary share which carries no right to fi xed income.
There are no specifi c restrictions on the size of a holding nor on the transfer of shares, which are
both governed by the general provisions of the Articles and prevailing legislation. The Directors are
not aware of any agreements between shareholders of the Company’s shares that may result in
restrictions on the transfer of securities or voting rights.
Details of employee share schemes are set out in note 33 to the fi nancial statements. No person has
any special rights of control over the Company’s share capital and all issued shares are fully paid.
52
Statutory Directors’ report
Directors’ interests
in shares
Interests of the Directors and their connected persons in the issued share capital of the Company as
at 31 December 2021 were as follows:
G Collinson
JR Conoley
ZA Fox
SE Herrick
J Kempster
GRA Whitworth
2021 number of
shares held
2021 interests in
share schemes
62,832
1,189,463
52,417
-
31,417
3,730,781
5,066,910
-
7,177,446
1,443,260
-
-
125,000
8,745,706
2021 Total
interests
in shares
62,832
8,366,909
1,495,677
-
31,417
3,855,781
13,812,616
2020 Total
interests in shares
-
7,280,529
-
-
-
3,685,398
10,965,927
Since the year end to 25 March 2022, the interests of the Directors and their connected persons in the
issued share capital of the Company have not changed.
Signifi cant
shareholdings
As at 25 March 2022, the Company was aware of the following holdings, excluding holdings of
Directors and their connected persons, of 3% or more of the Company’s total issued share capital:
Number of shares % of total voting rights Nature of interest
BRK Brands (UK)
Downing LLP
Canaccord Genuity Group Inc
BGF Investment Management Limited
Killik & Co LLP
42,307,931
29,381,591
20,862,500
18,250,965
10,400,798
23.4
16.2
11.5
10.1
5.7
Direct
Indirect
Indirect
Indirect
Direct
Agreements
affected by change
of control
Other than some customer and supplier contracts that have an option to be terminated, the Company
is not a party to any agreements which take effect, alter or terminate upon a change of control of
the Company following a takeover bid. There are no agreements between the Company and its
Directors or employees providing compensation for loss of offi ce or employment (whether through
resignation, purported redundancy or otherwise) that occurs because of a takeover bid.
Board of Directors
All Directors were in offi ce throughout the year ended 31 December 2021 with the exception of the
following appointments and resignations during the year:
• Zoe Fox (appointed 30 April 2021)
• Jon Kempster (appointed 30 April 2021)
Details and biographies of the current Directors and Company Secretary are shown on page 33.
The powers of the Company’s Directors and rules that apply to changes in the Directors are set out
in the Company’s Articles. Any changes to the Articles would require the consent of the Company’s
shareholders.
The Board may delegate to a Director holding any executive offi ce any of the powers, authorities and
discretions exercisable by the Board for such time and on such terms and conditions as it thinks fi t.
The Board may revoke or alter the terms and conditions of the delegation and may retain or exclude
the right of the Board to exercise the delegated powers, authorities or discretions collaterally with the
Executive Director.
The Company’s Articles require that a minimum of one-third of the Directors must retire by rotation
at each Annual General Meeting, or if their number is not three or a multiple of three, then the
number nearest to but not exceeding one-third shall retire from offi ce, excluding Directors who are
retiring and standing for election at the fi rst Annual General Meeting following their appointment
to the Board. If the number of Directors subject to retirement by rotation is fewer than three, one of
such Directors shall retire. At the forthcoming Annual General Meeting, John Conoley and Graham
Whitworth will retire and stand for re-election.
The Company’s shareholders may by ordinary resolution appoint any person to be a Director. The
Company must not have less than two directors holding offi ce at any time. The Company may by
ordinary resolution from time to time vary the minimum and/or the maximum number of directors.
53
Confl icts of
interest
Statutory Directors’ report
The Group has procedures in place for managing confl icts of interests. If a Director becomes aware
that they, or a connected party have an interest in an existing or proposed transaction with the Group,
they should notify the Company Secretary as soon as possible. Directors have a continuing obligation
to update any changes to confl icts and the Board formally reviews any such confl icts periodically.
Directors’ and
offi cers’ liability
insurance
The Group maintains a management protection policy including directors’ and offi cers’ liability
insurance which is reviewed annually. The insurance covers the Directors and offi cers of the ultimate
holding company of the Group, FireAngel Safety Technology Group plc, and its subsidiaries, against
the costs of defending themselves in civil proceedings taken against them in their capacity as a
director or offi cer of a Group company and in respect of damages or civil fi nes or penalties resulting
from the unsuccessful defence of any proceedings. The indemnity was in force throughout the
fi nancial year and is currently in force.
No indemnity is provided for the Group’s auditor.
Employment
policies
The Group employed an average of 153 people in 2021 (2020: 153).
The Group has established employment policies that comply with current legislation and codes of
practice, including in the areas of health and safety and equal opportunities. The Group consults
employees on developments and changes to take account of their views when making decisions
that may impact their interests.
The Group has in place a Diversity and Equality Policy which sets out the Group’s approach to
equal opportunities and avoidance of discrimination at work. This policy confi rms the Group’s
commitment to treating employees fairly and inclusively, ensuring that all decisions on recruitment,
selection, training, promotion, career opportunities, pay and other terms and conditions are based
solely on objective and job-related criteria. The Group is committed to offering employment to
suitably qualifi ed people with disabilities and making reasonable adjustments to the working
environment to accommodate their needs.
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Policy on payment
of suppliers
The Group’s policy during the year was to pay suppliers in accordance with agreed terms. At 31
December 2021, the Group had 21 days’ purchases outstanding in trade payables (2020: 72 days’).
The reduction was due to the increased pressure to support our manufacturing partners with
extended working capital exposure from longer component lead times resulting in increased credit
exposure in addition to purchasing components on the open market with minimal credit terms.
Going concern
The Group has been loss making in recent years and absorbed cash at an operational level.
The Group has raised fresh equity and support from its bank through the government backed loan
schemes. The impact of COVID-19 has been material to the Group due to the knock-on effect of
COVID-19 on global supply chains. The Company has navigated these well, but shortage of inventory
and components has prevented the growth originally planned. In H1 2021 the business saw good
expansion and improvements in its underlying trading, this was curtailed in H2 by the supply chain
restrictions experienced, but the Group started to deliver on the gross margin improvement plan
improving adjusted margins from 19.8% in 2020 to 23.2% in 2021 which, along with new pricing
strategies has provided a strong platform to protect and improve margins in 2022.
The Group is anticipated to absorb cash in FY 2022 but will start to generate cash from H2 2022 and
continue in full year 2023. The forecasts show the Group has suffi cient cash to deliver the strategy
and return the Group to profi tability and cash generative activity levels.
The Directors have reviewed the forecast sales growth, budgets and cash projections for the period
to June 2023 including sensitivity analysis on the key assumptions such as the potential impact of
reduced sales for the next twelve months and beyond. The base case scenario refl ects the remaining
uncertainty regarding the timing of the return to normal trading circumstances. Various plausible but
severe downside scenarios were then applied to the base case linked to the trading conditions seen
in the 2021 fi nancial year, assuming revenues would not see the expected growth and that margins
may deteriorate. The results showed suffi cient cash headroom throughout the outlook period. The
base case was then reverse stress tested and the level of deterioration required for the Group to
exceed the banking headroom was deemed to be highly unlikely.
54
Statutory Directors’ report
Going concern
Continued
The Directors have assessed both the discretionary and the non-discretionary cash requirements
of the Group during this period. In determining whether the Group and Parent Company’s fi nancial
statements can be prepared on a going concern basis, the Directors considered the Group’s business
activities, together with the factors likely to affect its future development, performance and position.
The Group has continued to benefi t from a supportive relationship with its bank and reviewed the
fi nancial position of the Group, its cash fl ows, borrowing facilities and banking covenants. The key
factors considered by the Directors were:
• the implications of the current economic environment and future uncertainties around the Group’s
revenues and profi ts by undertaking forecasts and projections on a regular basis;
• the impact of the competitive environment within which the Group operates;
• the impact of COVID-19 and related global supply chain issues;
• the potential actions that could be taken in the event that revenues or gross profi ts are worse than
expected, to ensure that operating profi t and cash fl ows are protected.
The Directors have reasonable expectations that the Group and the Company have adequate
resources to continue operations for the period of at least one year from the date of approval of these
fi nancial statements. The Directors have not identifi ed any material uncertainties that may cast
doubt over the ability of the Group and Company to continue as a going concern and the Directors
continue to adopt the going concern basis in preparing these fi nancial statements.
Annual General
Meeting
The notice convening the Annual General Meeting is distributed separately to shareholders at least
20 working days before the meeting. Separate resolutions are proposed on each substantially
separate issue. Details of the resolutions passed at the 2022 Annual General Meeting will be made
available on the Company’s website after the meeting.
Post balance
sheet events
Information on any events occurring after the balance sheet date is described in note 35 to the
fi nancial statements.
Auditor
RSM UK Audit LLP has indicated its willingness to continue in offi ce and a resolution that it be
reappointed as auditor will be proposed at the forthcoming Annual General Meeting.
Statement as
to disclosure of
information to the
auditor
The Directors who were in offi ce on the date of approval of these fi nancial statements have
confi rmed, that as far as they are aware, there is no relevant audit information of which the
Company’s auditor is unaware.
Each Director has confi rmed that they have taken all the steps that they ought to have taken as
Directors in order to make themselves aware of any relevant audit information and to establish that it
has been communicated to the Company’s auditor.
Forward-looking
statements
This report may contain certain statements about the future outlook for FireAngel Safety Technology
Group plc. Although the Directors believe their expectations are based on reasonable assumptions,
any statements about future outlook may be infl uenced by factors that could cause actual outcomes
and results to be materially different.
The Directors’ Report has been approved by the Board.
On Behalf of the Board
Zoe Fox
Chief Finance Offi cer
28 March 2022
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Statement of Directors’ responsibilities
FINANCIAL STATEMENTS:
Statement of Directors’ responsibilities
The Directors are responsible for preparing the Statutory Strategic Report, the Directors’ Report and
the fi nancial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Company fi nancial statements for each
fi nancial year. The Directors have elected under company law and are required by the AIM rules of the
London Stock Exchange to prepare the Group fi nancial statements in accordance with UK-adopted
International Accounting Standards and have elected under company law to to prepare the company
fi nancial statements in accordance with UK-adopted International Accounting Standards and
applicable law.
The Group and Company fi nancial statements are required by law and UK-adopted International
Accounting Standards to present fairly the fi nancial position of the Group and the Company and the
fi nancial performance of the Group. The Companies Act 2006 provides in relation to such fi nancial
statements that references in the relevant part of that Act to fi nancial statements giving a true and
fair view are references to their achieving a fair presentation.
Under company law the Directors must not approve the fi nancial statements unless they are
satisfi ed that they give a true and fair view of the state of affairs of the Group and the Company and
of the profi t or loss of the Group for that period.
In preparing the Group and Company fi nancial statements, the Directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
•
•
state whether they have been prepared in accordance with UK-adopted International
Accounting Standards; and
prepare the fi nancial statements on the going concern basis unless it is inappropriate to
presume that the Group and the Company will continue in business.
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The Directors are responsible for keeping adequate accounting records that are suffi cient to show
and explain the Group’s and the Company’s transactions and disclose with reasonable accuracy
at any time the fi nancial position of the Group and the Company and enable them to ensure that
the fi nancial statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Group and the Company and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the corporate and fi nancial
information included on the FireAngel Safety Technology Group plc website.
Legislation in the United Kingdom governing the preparation and dissemination of fi nancial
statements may differ from legislation in other jurisdictions.
On Behalf of the Board
Zoe Fox
Chief Finance Offi cer
28 March 2022
Zoe Fox
Chief Finance Offi cer
Financial statements
Statement of Directors’ responsibilities
Independent auditor’s report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated and Company statement of fi nancial position
Consolidated and Company cash fl ow statement
Consolidated statement of changes in equity
Company statement of changes in equity
Notes to the fi nancial statements
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58
63
63
64
65
66
66
68
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FINANCIAL STATEMENTS:
Independent auditor’s report
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FIREANGEL SAFETY TECHNOLOGY GROUP PLC
Opinion
Basis for
opinion
Summary
of our audit
approach
We have audited the fi nancial statements of FireAngel Safety Technology Group plc (the ‘parent
company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2021 which comprise
the consolidated income statement, the consolidated statement of comprehensive income, the
consolidated and company statements of fi nancial position, the consolidated and company cash
fl ow statements, the consolidated statement of changes in equity, the company statement of
changes in equity and notes to the fi nancial statements, including signifi cant accounting policies.
The fi nancial reporting framework that has been applied in their preparation is applicable law and
UK-adopted International Accounting Standards and, as regards the parent company fi nancial
statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
•
•
•
•
the fi nancial statements give a true and fair view of the state of the group’s and of the parent
company’s affairs as at 31 December 2021 and of the group’s loss for the year then ended;
the group fi nancial statements have been properly prepared in accordance with UK-adopted
International Accounting Standards;
the parent company fi nancial statements have been properly prepared in accordance with UK-
adopted International Accounting Standards and as applied in accordance with the Companies
Act 2006; and
the fi nancial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK))
and applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the fi nancial statements section of our report. We are independent
of the group and parent company in accordance with the ethical requirements that are relevant
to our audit of the fi nancial statements in the UK, including the FRC’s Ethical Standard as applied
to listed entities and we have fulfi lled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is suffi cient and appropriate to
provide a basis for our opinion.
Key audit matters Group
• Revenue recognition
• Going concern
•
Impairment of product development costs
Parent Company
•
Impairment of intercompany receivables
Materiality
Group
• Overall materiality: £195,000 (2020: £400,000)
• Performance materiality: £146,000 (2020: £300,000)
Parent Company
• Overall materiality: £97,500 (2020: £200,000)
• Performance materiality: £73,100 (2020: £150,000)
Scope
Our audit procedures covered 96% of revenue, 95% of total assets and 99% of loss before tax.
Key audit
matters
Key audit matters are those matters that, in our professional judgment, were of most signifi cance in
our audit of the group and parent company fi nancial statements of the current period and include the
most signifi cant assessed risks of material misstatement (whether or not due to fraud) we identifi ed,
including those which had the greatest effect on the overall audit strategy, the allocation of resources
in the audit and directing the efforts of the engagement team. These matters were addressed in
the context of our audit of the group and parent company fi nancial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
59
Revenue
recognition
Going concern
Independent auditor’s report
Key audit matter
description
The group has entered into a new contract in the year which involves the development of
a new generation smoke alarm. This contract involves judgement in the identifi cation of
performance obligations and signifi cant estimation in measuring revenue to be recognised
in the period.
The revenue recognised from this contract in the year of £1.0m has been detailed in notes 6
and 7, and the summary of signifi cant accounting policies in note 2 and critical accounting
estimates and areas of judgement in note 3.
How the matter
was addressed in
the audit
Our work has included, but was not restricted to:
• Obtaining and reviewing the contract which the group has entered into during the year
•
•
•
•
•
Reviewing management’s assessment of the contract and treatment under IFRS 15
Revenue from contracts with customers and assessment of management’s use of an
expert
The use of an auditor’s expert to assess the treatment of the contract adopted by
management
Consideration of whether the contract represented a joint arrangement under IFRS 11
Joint arrangements
Review of the key judgements in respect of the recognition of revenue, including the
performance obligations and the determination of the transaction price
Review of the disclosures in respect of revenue and critical accounting estimates and
judgements
Key audit
matter
description
It is the responsibility of the directors to form an opinion on whether the going concern basis of
accounting is appropriate and to identify and disclose any material uncertainties that may cast
signifi cant doubt on the group’s or parent company’s ability to continue as a going concern.
When planning our current year audit we identifi ed a signifi cant risk that there may be material
uncertainties regarding the availability of funds required to meet the group’s operational cash
requirements and to deliver the group’s strategy.
The directors have set out their assessment of going concern in the summary of signifi cant
accounting policies in note 2.
How the matter
was addressed
in the audit
Our audit work included, but was not restricted to:
•
Obtaining and reviewing the cash fl ow forecasts prepared by management for the period to
30 June 2023
• Checking the mathematical accuracy of the cash fl ow forecasts
•
•
•
Reviewing the cash fl ow forecasts in light of our understanding of the business to identify
and challenge the key assumptions therein, to assess the level of cash headroom and to
assess likely covenant compliance
Considering the impact of management’s sensitivities on the forecast cash fl ows and
covenant compliance (including downside scenarios relating to revenue and gross
margins)
Adjusting the cash fl ow forecasts for our own sensitivities to consider potential
uncertainties within management’s forecasts
• Reviewing the key terms of banking facilities
•
Review of the disclosures within the fi nancial statements to assess whether they accurately
refl ect management’s assessment of going concern, including any uncertainties
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Impairment of
development
costs
Key audit
matter
description
The group continues to develop new products and has capitalised product development
costs with a carrying value of £13.4 million at the reporting date, of which £7.2 million relates
to projects where amortisation has not yet commenced. In accordance with the stated
accounting policy, management only capitalises these costs on the basis that it is probable
that the asset created will generate future economic benefi ts and management is required to
consider whether or not there are any indicators of impairment for each asset at each reporting
date. As a result of these considerations, the group has recorded an impairment charge of
£0.1m as disclosed in note 18.
The recovery of these assets in future periods is dependent upon the successful completion
and product sales from each project. The potential for impairment is one of the most
signifi cant risks of material misstatement due to the quantum of the costs capitalised in
respect of certain individual projects and also due to the exercise of management judgement
regarding inherently uncertain future outcomes relating to the adoption of new technologies
and future sales performance.
The directors have explained the estimation uncertainties relevant to their impairment
considerations in note 3, and detailed analysis of the amounts capitalised is set out in note 18.
60
Independent auditor’s report
Impairment of
development
costs
Impairment of
intercompany
receivables
(parent company only)
How the matter
was addressed
in the audit
Our audit work included, but was not restricted to:
•
•
•
•
Discussing product development expenditure during the year with management to
understand progress and to identify areas of greater potential risk
Obtaining and reviewing management’s impairment assessment for all projects within
capitalised product development costs and performing audit work as follows:
o For projects where amortisation has not yet commenced, we challenged management’s
assessment, corroborated explanations to supporting evidence where available including
key assumptions relating to future revenue and considered any contradictory evidence
o For projects where amortisation has commenced, we reviewed the sales and margin
achieved on products using this technology and compared the margins achieved with
unamortised capitalised costs at the reporting date to assess the period over which the
capitalised costs will be recovered
Reperforming management’s impairment calculations and assessing whether the
impairment in the period was accurately calculated
Considering the adequacy of disclosures and whether they are in accordance with the
applicable fi nancial reporting framework
Key audit matter
description
As at 31 December 2021 the parent company statement of fi nancial position includes
amounts owed by subsidiary undertakings of £35.0 million. The balance is interest free and
repayable on demand. The subsidiary undertakings does not have suffi cient liquid assets to
make repayment should the parent company demand repayment.
Due to the size of the balance owed by the subsidiary undertaking and the degree of
judgement and estimation needed to calculate an appropriate expected credit loss provision
this matter is one of the most signifi cant risks of a material misstatement for the parent
company.
At 31 December 2021, the gross amount owed by subsidiary undertakings was £42.3 million
and the ECL recorded was £7.3 million as detailed in notes 3 and 22.
How the matter
was addressed in
the audit
We obtained management’s calculation of the Expected Credit Loss (“ECL”) and the
underlying calculations prepared to support the carrying value of the balance and performed
work as follows:
•
Assessed the reasonableness of the recovery scenarios considered by management and
the probabilities assigned thereon
• Reviewed and challenged the assumptions and estimates utilised in the model.
• Recalculated the computation of the ECL
•
Considered the adequacy of the disclosures and whether they were in accordance with
the applicable fi nancial reporting framework
Our application of
materiality
When establishing our overall audit strategy, we set certain thresholds which help us to determine
the nature, timing and extent of our audit procedures. When evaluating whether the effects of
misstatements, both individually and on the fi nancial statements as a whole, could reasonably
infl uence the economic decisions of the users we take into account the qualitative nature and the size
of the misstatements. Based on our professional judgement, we determined materiality as follows:
Overall materiality
£195,000 (2020: £400,000)
£97,500 (2020: £200,000)
Group
Parent company
Basis for determining
overall materiality
Rationale for
benchmark applied
Performance
materiality
Basis for determining
performance
materiality
Reporting of
misstatements to the
Audit Committee
5% of loss before tax
5% of net assets (restricted for purposes of
providing a Group opinion)
Loss before tax is considered the
most appropriate benchmark for the
users of the fi nancial statements.
Net assets are considered to be the most
appropriate benchmark for the parent
company as it is primarily a holding company.
£146,000 (2020: £300,000)
£73,100 (2020: £150,000)
75% of overall materiality
75% of overall materiality
Misstatements in excess of
£9,750 and misstatements below
that threshold that, in our view,
warranted reporting on qualitative
grounds.
Misstatements in excess of £5,000 and
misstatements below that threshold that, in
our view, warranted reporting on qualitative
grounds.
The group consists of 3 components, located in the United Kingdom and Canada. The coverage
achieved by our audit procedures was:
Number of
components
Revenue
Total assets
Loss before tax
Full scope audit
Total
2
2
96%
96%
95%
95%
99%
99%
Analytical procedures at group level were performed for the remaining component.
An overview of
the scope of our
audit
61
Conclusions
relating to going
concern
Other information
Opinions on other
matters prescribed
by the Companies
Act 2006
Matters on which
we are required to
report by exception
Responsibilities of
directors
Independent auditor’s report
In auditing the fi nancial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the fi nancial statements is appropriate. Our evaluation of
the directors’ assessment of the group’s and parent company’s ability to continue to adopt the going
concern basis of accounting is set out above in our Key Audit Matters section entitled ‘Going concern’.
Based on the work we have performed, we have not identifi ed any material uncertainties relating to
events or conditions that, individually or collectively, may cast signifi cant doubt on the group’s or the
parent company’s ability to continue as a going concern for a period of at least twelve months from
when the fi nancial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report.
The other information comprises the information included in the annual report, other than the
fi nancial statements and our auditor’s report thereon. The directors are responsible for the other
information contained within the annual report. Our opinion on the fi nancial statements does not
cover the other information and, except to the extent otherwise explicitly stated in our report, we do
not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the fi nancial statements or our knowledge obtained in
the course of the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether this
gives rise to a material misstatement in the fi nancial statements themselves. If, based on the work
we have performed, we conclude that there is a material misstatement of this other information, we
are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic Report and the Directors’ Report for the fi nancial year for
which the fi nancial statements are prepared is consistent with the fi nancial statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable
legal requirements.
In the light of the knowledge and understanding of the group and the parent company and their
environment obtained in the course of the audit, we have not identifi ed material misstatements in the
Strategic Report or the Directors’ Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for
our audit have not been received from branches not visited by us; or
the parent company fi nancial statements are not in agreement with the accounting records and
returns; or
• certain disclosures of directors’ remuneration specifi ed by law are not made; or
• we have not received all the information and explanations we require for our audit.
As explained more fully in the directors’ responsibilities statement set out on page 57, the directors
are responsible for the preparation of the fi nancial statements and for being satisfi ed that they give a
true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of fi nancial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the fi nancial statements, the directors are responsible for assessing the group’s and the
parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no realistic alternative but
to do so.
Auditor’s
responsibilities
for the audit of the
fi nancial statements
Our objectives are to obtain reasonable assurance about whether the fi nancial statements as a
whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not
a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to infl uence the
economic decisions of users taken on the basis of these fi nancial statements.
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Consolidated income statement / Consolidated statement of comprehensive income
FINANCIAL STATEMENTS:
Consolidated income statement
For the year ended 31 December 2021
Revenue
Cost of sales
Gross profi t
Operating expenses
Other operating income
Loss from operations
Finance costs
Loss before tax
Income tax credit
Loss attributable to equity owners of the Parent
Basic earnings per share
Diluted earnings per share
All amounts stated relate to continuing activities.
£000
43,472
(33,393)
10,079
(13,580)
82
(3,419)
(33)
(3,452)
430
(3,022)
Note
6
9
9
10
9
12
13
15
15
2021
Before non-
underlying
items
Non-
underlying
items (note 8)
Total Before non-
underlying
items
2020
Non-
underlying
items (note
8)
£000
-
(1,717)
(1,717)
(1,924)
-
(3,641)
-
(3,641)
-
Total
£000
39,928
(33,749)
6,179
(15,530)
291
(9,060)
(278)
(9,338)
630
£000
-
22
22
£000
43,472
£000
39,928
(33,371)
(32,032)
10,101
7,896
(280)
(13,860)
(13,606)
-
82
(258)
(3,677)
-
(33)
(258)
(3,710)
-
430
291
(5,419)
(278)
(5,697)
630
(258)
(3,280)
(5,067)
(3,641)
(8,708)
(2.0)
(2.0)
(7.7)
(7.7)
Consolidated statement of comprehensive income
For the year ended 31 December 2021
Loss for the year
Items that may be reclassifi ed subsequently to profi t and loss:
Exchange differences on translation of foreign operations (net of tax)
Total comprehensive loss for the year
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2021
£000
(3,280)
32
2020
£000
(8,708)
(22)
(3,248)
(8,730)
62
Independent auditor’s report
The extent to
which the audit
was considered
capable of
detecting
irregularities,
including fraud
Use of our report
Irregularities are instances of non-compliance with laws and regulations. The objectives of our audit are
to obtain suffi cient appropriate audit evidence regarding compliance with laws and regulations that have
a direct effect on the determination of material amounts and disclosures in the fi nancial statements, to
perform audit procedures to help identify instances of non-compliance with other laws and regulations
that may have a material effect on the fi nancial statements, and to respond appropriately to identifi ed or
suspected non-compliance with laws and regulations identifi ed during the audit.
In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement
of the fi nancial statements due to fraud, to obtain suffi cient appropriate audit evidence regarding the
assessed risks of material misstatement due to fraud through designing and implementing appropriate
responses and to respond appropriately to fraud or suspected fraud identifi ed during the audit.
However, it is the primary responsibility of management, with the oversight of those charged with
governance, to ensure that the entity’s operations are conducted in accordance with the provisions of
laws and regulations and for the prevention and detection of fraud.
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud,
the group audit engagement team:
•
•
•
obtained an understanding of the nature of the industry and sector, including the legal and regulatory
framework that the group and parent company operates in and how the group and parent company
are complying with the legal and regulatory framework;
inquired of management, and those charged with governance, about their own identifi cation and
assessment of the risks of irregularities, including any known actual, suspected or alleged instances
of fraud;
discussed matters about non-compliance with laws and regulations and how fraud might occur
including assessment of how and where the fi nancial statements may be susceptible to fraud.
The most signifi cant laws and regulations were determined as follows:
Legislation / Regulation
Additional audit procedures performed by the audit engagement team
included:
UK-adopted IAS, Companies
Act 2006 and AIM Rule 19
relating to the preparation of
annual accounts
Review of the fi nancial statement disclosures and testing to supporting
documentation;
Completion of disclosure checklists to identify areas of non-compliance.
Tax compliance regulations
Inspection of advice received from external tax advisors.
Consideration of whether any matter identifi ed during the audit required reporting
to an appropriate authority outside the entity.
Product certifi cation
requirements
Inquiry of management and those charged with governance.
The areas that we identifi ed as being susceptible to material misstatement due to fraud were:
Risk
Audit procedures performed by the audit engagement team:
Revenue recognition
The audit procedures performed in relation to revenue recognised over time are
documented in the key audit matters section of our audit report.
In respect of other elements of revenue our procedures included but were not
limited to the use of data analytics and substantive testing to test assertions over
revenue (including cut off) and to identify and investigate any transactions outside
of the normal revenue cycle, a review of journal entries affecting revenue items
and reviewing the completeness and accuracy of rebate arrangements.
Impairment of product
development costs
The audit procedures performed in relation to impairment of product
development costs are documented in the key audit matters section of our audit
report.
Management override of
controls
Testing the appropriateness of journal entries and other adjustments;
Assessing whether the judgements made in making accounting estimates are
indicative of a potential bias; and
Evaluating the business rationale of any signifi cant transactions that are unusual
or outside the normal course of business.
A further description of our responsibilities for the audit of the fi nancial statements is located on
the Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities. This
description forms part of our auditor’s report.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of
Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to
the company’s members those matters we are required to state to them in an auditor’s report and for
no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
GRAHAM BOND FCA (Senior Statutory Auditor)
For and on behalf of RSM UK Audit LLP, Statutory Auditor
Chartered Accountants
14th Floor, 20 Chapel Street, Liverpool L3 9AG
28 March 2022
64
65
Consolidated and Company cash flow statement
Consolidated and Company statement of financial position
Consolidated and Company cash flow statement
As at 31 December 2021
For the year ended 31 December 2021
Loss before tax
Finance expense
Operating loss for the year
Adjustments for:
Depreciation of property, plant and equipment, and right-of-use assets
Amortisation of intangible assets
Loss on disposal of non-current assets
Non-underlying items
Cash flow relating to non-underlying items
Decrease in fair value of derivatives
Provision against intercompany receivables
Operating cash flow before movements in working capital
Movement in inventories
Movement in receivables
Movement in provisions
Movement in payables
Cash used in by operations
Income taxes received
Net cash used in by operating activities
Investing activities
Capitalised development costs
Purchase of property, plant and equipment
Net cash used in investing activities
Financing activities
Repayment of loan
Drawdown of loan
Repayment of invoice finance
Proceeds from issue of ordinary shares (net of expenses)
Repayment of lease obligations
Interest paid
Net cash generated by financing activities
Net increase/ (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
Non-cash movements – foreign exchange
Cash and cash equivalents at end of year
Note
8
24
Consolidated
Company
2021
£000
(3,710)
33
(3,677)
1,420
1,876
47
258
(1,242)
(984)
-
(2,302)
2,909
732
-
(4,714)
(3,375)
645
(2,730)
(1,529)
(434)
(1,963)
(2,600)
3,200
(2,539)
8,995
(441)
(124)
6,491
1,798
1,466
30
3,294
2020
£000
(9,338)
278
(9,060)
1,429
2,482
-
3,641
(2,287)
264
-
(3,531)
(479)
1,911
(28)
683
(1,444)
680
(764)
(2,554)
(277)
(2,831)
(600)
3,223
(4,445)
5,499
(381)
(278)
3,018
(577)
2,062
(19)
1,466
2021
£000
(3,883)
-
(3,883)
-
-
-
-
-
-
2020
£000
(1,591)
5
(1,586)
-
-
-
-
-
-
3,883
1,586
-
-
-
-
(8,995)
(5,496)
-
-
(8,995)
-
(8,995)
-
-
-
-
-
-
8,995
-
-
8,995
-
2
-
2
-
-
(5,496)
-
(5,496)
-
-
-
-
-
5,499
-
(5)
5,494
(2)
4
-
2
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Non-current assets
Goodwill
Other intangible assets
Purchased software costs
Property, plant and equipment
Shares in subsidiaries
Current assets
Inventories
Trade and other receivables
Current tax asset
Derivative financial assets
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Lease liabilities
Current tax liabilities
Provisions
Invoice discounting facilities
Loans and borrowings
Derivative financial liabilities
Net current assets /(liabilities)
Non-current liabilities
Loans and borrowings
Lease liabilities
Provisions
Total liabilities
Net assets
Equity
Called up share capital
Share premium account
Currency translation reserve
Retained earnings
Total equity attributable to equity holders of the Parent Company
Note
17
18
18
19
20
21
22
23
28
24
27
24
24
23
24
24
27
31
Consolidated
2021
£000
169
11,825
1,625
3,242
-
16,861
3,737
9,430
464
291
3,294
17,216
34,077
(8,135)
(456)
-
(1,012)
-
(480)
-
(10,083)
7,133
(2,743)
(492)
(541)
(3,776)
(13,859)
20,218
3,621
30,009
153
(13,565)
20,218
2020
£000
169
11,738
2,059
4,263
-
18,229
6,558
10,071
711
-
1,466
18,806
37,035
(12,834)
(440)
(32)
(1,491)
(2,539)
(2,600)
(693)
(20,629)
(1,823)
(23)
(941)
(1,254)
(2,218)
(22,847)
14,188
2,531
22,104
121
(10,568)
14,188
Company
2021
£000
-
-
-
-
675
675
2020
£000
-
-
-
-
392
392
-
34,969
-
29,857
-
-
2
-
-
2
34,971
35,646
29,859
30,251
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34,971
29,859
-
-
-
-
-
-
-
-
-
-
35,646
30,251
3,621
30,009
-
2,016
35,646
2,531
22,104
-
5,616
30,251
The Company has taken advantage of the exemption contained within section 408 of the Companies Act 2006 not to present its own statement
of comprehensive income. The result for the year dealt with in the financial statements of the Company was a loss of £3,882,562 (2020: loss of
£1,591,000).
The financial statements and notes to the accounts on pages 63 to 96 were approved and authorised for issue by the Board of Directors on 28
March 2022 and were signed on its behalf by:
John Conoley
Executive Chairman
Zoe Fox
Chief Financial Officer
Company registered number: 3991353
66
Consolidated statement of changes in equity
For the year ended 31 December 2021
Share capital
Share premium
account
Currency translation
reserve
Balance at 1 January 2020
Loss for the year
Net foreign exchange gains from overseas subsidiaries
Total comprehensive loss for the year
Transactions with owners in their capacity as owners:
Issue of equity shares
Premium arising on issue of equity shares
Share issue expenses
Credit in relation to share-based payments
Total transactions with owners in their capacity as owners
Balance at 31 December 2020
Loss for the year
Net foreign exchange gains from overseas subsidiaries
Total comprehensive loss for the year
Transactions with owners in their capacity as owners:
Issue of equity shares
Premium arising on issue of equity shares
Share issue expenses
Credit in relation to share-based payments
Total transactions with owners in their capacity as owners
Balance at 31 December 2021
£000
1,519
-
-
-
1,012
-
-
-
1,012
2,531
-
-
-
1,090
-
-
-
1,090
3,621
£000
17,617
-
-
-
-
5,062
(575)
-
4,487
22,104
-
-
-
-
8,711
(806)
-
7,905
30,009
Retained
earnings
£000
(2,103)
(8,708)
-
Total
£000
17,176
(8,708)
(22)
(8,708)
(8,730)
-
-
-
243
243
(10,568)
(3,280)
-
1,012
5,062
(575)
243
5,742
14,188
(3,280)
32
(3,280)
(3,248)
-
-
-
283
283
1,090
8,711
(806)
283
9,278
£000
143
-
(22)
(22)
-
-
-
-
-
121
-
32
32
-
-
-
-
-
153
(13,565)
20,218
Company statement of changes in equity
For the year ended 31 December 2021
Share capital
Share premium account
Retained earnings
Balance at 1 January 2020
Loss for the year
Total comprehensive loss for the year
Transactions with owners in their capacity as owners:
Issue of equity shares
Premium arising on issue of equity shares
Share issue expenses
Credit in relation to share-based payments
Total transactions with owners in their capacity as owners
Balance at 31 December 2020
Loss for the year
Total comprehensive loss for the year
Transactions with owners in their capacity as owners:
Issue of equity shares
Premium arising on issue of equity shares
Share issue expenses
Credit in relation to share-based payments
Total transactions with owners in their capacity as owners
Balance at 31 December 2021
£000
1,519
-
-
1,012
-
-
-
1,012
2,531
-
-
1,090
-
-
-
1,090
3,621
£000
17,617
-
-
-
5,062
(575)
-
4,487
22,104
-
-
-
8,711
(806)
-
7,905
30,009
£000
6,964
(1,591)
(1,591)
-
-
-
243
243
5,616
(3,883)
(3,883)
-
-
-
283
283
2,016
Total
£000
26,100
(1,591)
(1,591)
1,012
5,062
(575)
243
5,742
30,251
(3,883)
(3,883)
1,090
8,711
(806)
283
9,278
35,646
Company statement of changes in equity
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FINANCIAL STATEMENTS:
Notes to the fi nancial statements
For the year ended 31 December 2021
69
1. Principal activities
2. Summary
of signifi cant
accounting policies
FireAngel Safety Technology Group plc (the ‘Company’) is registered and domiciled in England and
Wales, having been incorporated under the Companies Act, company registration number 3991353.
The Company is a public company limited by shares and is listed on the Alternative Investment
Market (‘AIM’) of the London Stock Exchanges. The Company’s registered offi ce and the address
of its principal place of business is The Vanguard Centre, Sir William Lyons Road, Coventry, West
Midlands, CV4 7EZ.
The Company and its subsidiary undertakings (the ‘Group’) are in the business of the design, sale
and marketing of smoke, heat and CO alarms and accessories sold under the brands of FireAngel,
FireAngel Pro and Specifi cation, AngelEye and Pace Sensors. The Group also operates its own CO
sensor manufacturing facility in Canada.
The Group has adopted the accounting policies set out below in preparation of the consolidated
fi nancial statements. All of these policies have been applied consistently throughout the periods
presented.
Basis of preparation
These consolidated fi nancial statements are prepared in accordance with UK – adopted
International Accounting Standards. The fi nancial statements are presented in thousands (£’000)
unless otherwise indicated.
The preparation of fi nancial statements requires management to exercise its judgement in the
process of applying the Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where the Group’s assumptions and estimates are signifi cant to
the consolidated fi nancial statements, are disclosed in note 3.
Basis of consolidation
The consolidated fi nancial statements of the Group incorporate the fi nancial statements of the
Company and entities controlled by the Company (its subsidiaries) made up to 31 December each
year.
Subsidiaries
Subsidiaries are entities over which the Group has power to govern the fi nancial and operating policies
so as to obtain economic benefi ts from their activities. Subsidiaries are consolidated from the date on
which control is obtained (the acquisition date) up until the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the
Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments
issued, contingent consideration and liabilities incurred or assumed at the date of exchange. Costs
directly attributable to the acquisition are expensed as incurred. Identifi able assets acquired and
liabilities assumed in a business combination are initially measured at fair value at the acquisition date.
Where necessary, adjustments are made to the fi nancial statements of subsidiaries to bring the
accounting policies used into line with those used by the Group.
Intra-group transactions, balances, and unrealised gains and losses on transactions between Group
companies are eliminated on consolidation.
Going concern
The Group has been loss making in recent years and absorbed cash at an operational level. The
Group has raised fresh equity and support from its bank through the government backed loan
schemes. The impact of COVID-19 has been material to the Group due to the knock-on effect of
COVID-19 on global supply chains. The Company has navigated these well, but shortage of inventory
and components has prevented the growth as originally planned. In H1 2021 the business saw good
expansion and improvements in its underlying trading, this was curtailed in H2 by the supply chain
restrictions experienced, but the Group started to deliver on the gross margin improvement plan
improving adjusted margins from 19.8% in 2020 to 23.2% in 2021 which, along with new pricing
strategies has provided a strong platform to protect and improve margins in 2022.
The Group is anticipated to absorb cash in FY 2022 but will start to generate cash from H2 2022 and
continue in full year 2023. The forecasts show the Group has suffi cient cash to deliver the strategy
and return the Group to profi tability and cash generative activity levels.
The Directors have reviewed the forecast sales growth, budgets and cash projections for the period
to June 2023 including sensitivity analysis on the key assumptions such as the potential impact of
reduced sales for the next twelve months and beyond. The base case scenario refl ects the remaining
uncertainty regarding the timing of the return to normal trading circumstances. Various plausible but
severe downside scenarios were then applied to the base case linked to the trading conditions seen
in the 2021 fi nancial year, assuming revenues would not see the expected growth and that margins
may deteriorate.
Notes to the financial statements
The results showed suffi cient cash headroom throughout the outlook period. The base case was
then reverse stress tested and the level of deterioration required for the Group to exceed the banking
headroom was deemed to be highly unlikely.
The Directors have assessed both the discretionary and the non-discretionary cash requirements
of the Group during this period. In determining whether the Group and Parent Company’s fi nancial
statements can be prepared on a going concern basis, the Directors considered the Group’s business
activities, together with the factors likely to affect its future development, performance and position.
The Group has continued to benefi t from a supportive relationship with its bank and reviewed the
fi nancial position of the Group, its cash fl ows, borrowing facilities and banking covenants. The key
factors considered by the Directors were:
•
•
•
•
the implications of the current economic environment and future uncertainties around the Group’s
revenues and profi ts by undertaking forecasts and projections on a regular basis;
the impact of the competitive environment within which the Group operates;
the impact of COVID-19 and related global supply chain issues;
the potential actions that could be taken in the event that revenues or gross profi ts are worse than
expected, to ensure that operating profi t and cash fl ows are protected.
The Directors have reasonable expectations that the Group and the Company have adequate
resources to continue operations for the period of at least one year from the date of approval of these
fi nancial statements. The Directors have not identifi ed any material uncertainties that may cast
doubt over the ability of the Group and Company to continue as a going concern and the Directors
continue to adopt the going concern basis in preparing these fi nancial statements.
Changes in accounting policies and disclosures
New standards, amendments and interpretations adopted by the Group
The following new standards and amended standards, none of which have had a material impact on
these fi nancial statements, are mandatory and relevant to the Group for the fi rst time for the fi nancial
period commencing 1 January 2021:
•
Interest rate benchmark reform – Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS
16)
Accounting standards in issue but not yet effective
At the date of authorisation of these fi nancial statements the following standards and
interpretations, which have not been applied in these fi nancial statements and which are considered
potentially relevant, were in issue but not yet effective:
•
Amendments to IAS 12 – Deferred tax related to Assets and Liabilities arising from a Single
Transaction
• Amendments to IAS 8 – Defi nition of Accounting Estimates
• Amendments to IAS 1 – Disclosure of Accounting Policies
• Annual Improvements to IFRS 2018-2020
• Amendments to IAS 37 – Onerous Contracts – Cost of Fulfi lling a Contract
• Amendments to IAS 16 – Property, Plant and Equipment: Proceeds before Intended Use
• Amendments to IFRS 3 – Reference to Conceptual Framework
• Amendments to IAS 1 – Classifi cation of Liabilities as Current or Non-Current
The Directors anticipate that the adoption of the amendments to standards in future periods
will have no material impact on the recognition and measurement of assets, liabilities and
the associated performance of the Group or the Company when the relevant standards and
interpretations come into effect.
Revenue recognition
Revenue represents income derived from contracts for the provision of goods and services, over
time or at a point in time, by the Group, to customers in exchange for consideration in the ordinary
course of the Group’s activities.
Contracts with customers are assessed to identify performance obligations for both the transfer of
goods or for the provision of services. Goods and services are distinct and accounted for as separate
performance obligations if the customer can benefi t from them either on their own or together
with other resources that are readily available to the customer and they are separately identifi able
in the contract. The Group has determined that all of these contracts include a single performance
obligation as the promises within the contracts are not separately identifi able.
Revenue is recognised as performance obligations are satisfi ed as control of the goods and
services is transferred to the customer. For each performance obligation within a contract, the Group
determines whether it is satisfi ed over time or at a point in time.
Performance obligations are satisfi ed over time if one of the following criteria is satisfi ed:
•
•
•
the customer simultaneously receives and consumes the benefi ts provided by the Group’s
performance as it performs;
the Group’s performance creates or enhances an asset that the customer controls as the asset is
created or enhanced; or
the Group’s performance does not create an asset with an alternative use to the Group and it has
an enforceable right to payment for performance completed to date.
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Notes to the fi nancial statements
2. Summary
of signifi cant
accounting policies
Continued
For each performance method to be recognised over time, the Group recognises revenue using an
input method, based on costs incurred or as a proportion of estimated total contract costs or physical
proportion of contract work completed in relation to the total. Revenue and attributable margin are
calculated by reference to reliable estimates of transaction price and total expected costs and are
therefore recognised progressively as costs are incurred or work is completed.
When it is considered probable that total contract costs will exceed total contract revenue, the expected
loss is recognised as an expense immediately.
The Group has determined that most of its contracts satisfy the point in time criteria as the sales of
goods are recognised when the risks and rewards of ownership have been transferred to the customer.
For the majority of customers this is when goods are delivered and title has passed. For others it is
when goods are delivered for shipment by our contract manufacturers, depending upon the terms and
conditions of the sales contract as to when the risks and rewards of ownership are transferred.
Revenue is recognised when revenue and associated costs can be measured reliably and future
economic benefi ts are probable. Revenue is measured at the fair value of the consideration received
or receivable for goods and services provided in the normal course of business, net of rebates and
settlement discounts, VAT and other sales related taxes.
Revenue recognition – warranty obligations
IFRS 15 ‘Revenue from customer contracts’ provides guidance on the treatment of warranties
provided on the sale of goods. The Group sells products with warranties ranging from one to ten
years.
The longer-term warranties are usually applicable to products with either long-term sealed batteries
or sealed CO sensors that degrade over time. The performance of either the battery or the sensor for
the warranted period of time is integral to the overall performance of the product and is a key feature
of the product at the point of sale.
The Directors have considered the guidance within IFRS 15 as to whether these warranties are
assurance type or service type. Assurance warranties solely warrant that the product will function
as sold, whilst service warranties provide a higher level of assurance. Assurance warranties are not
separate performance obligations, whilst service warranties are considered separate performance
obligations and revenue attributes to the service element should be spread over the service period.
On the basis that the majority of warranties provided by the Group solely warrant that the product will
operate as sold, the Directors have concluded that these warranties are assurance type warranties
and do not represent a separate performance obligation.
Government Grants
The Group has received grant funding from the UK and Canadian Governments. Government income
is recognised within other income in profi t or loss on a systematic basis over the periods in which the
Group recognises costs for which the grants are intended to compensate.
Interest income
Interest income is accrued on a time-apportioned basis, by reference to the principal outstanding and
at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash
receipts through the expected life of the fi nancial asset to that asset’s net carrying amount.
Accounting for discretionary payments made to customers
The Group made discretionary payments in total amounting to £0.5million (20120: £0.5million) to
certain UK retailers in respect of maintaining the ongoing relationship with these customers and to
secure promotional activities during the year. Such costs are taken to the income statement in the
year to which they relate and are recorded in operating expenses.
Goodwill
Goodwill arising on consolidation represents the excess of the consideration transferred and the
fair value of any previous interest in the acquired entity over the fair value of the identifi able assets
and liabilities of a subsidiary at the date of acquisition. Goodwill on acquisition of subsidiaries is
separately disclosed.
Goodwill is recognised as an asset and reviewed for impairment at least annually. It is allocated
to cash-generating units which represent the Group’s investment in each country of operation.
Impairment losses are recognised immediately in profi t or loss and are not subsequently reversed.
Other intangible assets – internally-generated intangible assets
Expenditure on research activities is recognised through the income statement as incurred.
Expenditure arising from the Group’s development of future products is capitalised only if all the
following conditions are met:
• an asset is created that can be identifi ed;
•
•
it is probable that the asset created will generate future economic benefi ts;
the development cost of the asset can be measured reliably;
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Notes to the financial statements
•
•
the Group has the intention to complete the asset and the ability and intention to use or sell it;
the product or process is technically and commercially feasible; and
• suffi cient resources are available to complete the development and to either sell or use the asset.
Where these criteria have not been achieved, development expenditure is recognised through the
income statement in the period in which it is incurred.
Development expenditure is written off, except where the Directors are satisfi ed as to the innovative
nature and technical, commercial and fi nancial viability of clearly defi ned projects whose outcome
can be assessed with reasonable certainty. In such cases, identifi able people and non-people costs
by product/technology are capitalised and carried forward to be amortised over the expected life of
the product over which the Group is expected to benefi t from sales of such products.
The Directors estimate that the useful economic lives of these various intangible assets are between
seven and 15 years. Amortisation commences from the date of fi rst sale of the related product.
Intangible assets are described in note 18 to the fi nancial statements.
Directly attributable costs in bringing the Group’s manufacturing assets in to use at Flex and our Far
East based supplier have been amortised using a straight-line method as the Board believes this is
most appropriate given forecast production volumes. These assets are being amortised over fi ve
years.
Other intangible assets – computer software
Software capitalised is amortised at rates calculated to write off the cost, less estimated residual
value, of each asset on a straight-line basis over its estimated useful life of four years.
Plant, equipment and tooling
All plant, equipment, tooling, fi xtures and fi ttings, motor vehicles, offi ce equipment and right-of-use
assets are stated at cost less accumulated depreciation and any recognised impairment loss. A
right-of-use asset is recognised at commencement of the lease and initially measured at the amount
of the lease liability, plus any incremental costs of obtaining the lease and any lease payments made
at or before the leased asset is available for use by the Group. The right-of-use asset is subsequently
measured at cost less accumulated depreciation and any accumulated impairment losses. Right-of-
use assets are depreciated on a straight-line basis over the lease term.
Subsequent costs, including replacement parts and major inspections, are capitalised only when
it is probable that such costs will generate future economic benefi ts. Any replaced parts are
derecognised. All other costs of repairs and maintenance are charged through the income statement
as incurred.
Depreciation is charged so as to write off the cost or valuation of assets, other than land and
properties under construction, over their estimated useful lives, using the straight-line method, on the
following bases:
Manufacturing tooling
5 years
Fixtures and fi ttings
Motor vehicles
Offi ce equipment
4 years
4 years
3 years
Right-of-use assets
over the period of the lease
The gain or loss arising on the disposal or retirement of an asset is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognised in the income
statement.
Investment made in manufacturing tooling at Flex, the Group’s primary manufacturing partner
for smoke alarms and connected products, is depreciated over fi ve years. Regular reviews are
conducted to ensure that any obsolete assets are appropriately recognised in the fi nancial
statements.
Impairment of plant and equipment and intangible assets
At each reporting date, the Group reviews the carrying amounts of its property, plant and equipment
and intangible assets to determine whether there is any indication that those assets have suffered
an impairment loss. Intangible assets with an indefi nite useful life and other intangible assets not
yet available for use are tested for impairment annually and whenever there is an indication that the
asset may be impaired.
If any such indication exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any). Where the asset does not generate cash fl ows that are
independent from other assets, the Group estimates the recoverable amount of the cash-generating
unit to which the asset belongs. Recoverable amount is the higher of fair value less costs to sell
and value in use. In assessing value in use, the estimated future cash fl ows are discounted to their
present value using a pre-tax discount rate that refl ects current market assessments of the time
value of money and the risks specifi c to the asset (or cash-generating unit) for which the estimates
of future cash fl ows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its
carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised as an expense immediately, unless the
relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a
revaluation decrease.
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Notes to the financial statements
Notes to the fi nancial statements
2. Summary
of signifi cant
accounting policies
Continued
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-
generating unit) is increased to the revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that would have been determined
had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A
reversal of an impairment loss is recognised in profi t or loss immediately, unless the relevant asset
is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a
revaluation increase.
Leases
On commencement of a contract which gives the Group the right to use assets for a period of time
in exchange for consideration, the Group recognises a right-of-use asset and a lease liability unless
the lease qualifi es as a ‘short-term’ lease (where the term is twelve months or less with no option to
purchase the lease asset) or a ‘low-value’ lease (where the underlying asset is £4,000 or less when
new).
The lease liability is initially measured at the present value of the lease payments during the lease
term discounted using the interest rate implicit in the lease, or the incremental borrowing rate if the
interest rate implicit in the lease cannot be readily determined. The lease term is the non-cancellable
period of the lease plus extension periods that the Group is reasonably certain to exercise and
termination periods that the Group is reasonably certain not to exercise. Lease payments include
fi xed payments, less any lease incentives receivable, variable lease payments dependent on an index
or a rate and any residual value guarantees.
The lease liability is subsequently increased for a constant periodic rate of interest on the remaining
balance of the lease liability and reduced for lease payments. Interest on the lease liability is
recognised in profi t or loss. Variable lease payments not included in the measurement of the lease
liability as they are not dependent on an index or rate, are recognised in profi t or loss in the period in
which the event or condition that triggers those payments occurs.
Functional and presentation currency
Items included in the fi nancial information of each of the Group’s entities are measured using
the currency of the primary economic environment in which the entity operates (‘the functional
currency’). The consolidated fi nancial statements are presented in sterling, which is the functional
currency of the Group and the Group’s presentational currency.
Foreign currency transaction and balances
Foreign currency transactions are translated at the exchange rate prevailing on the date of the
transaction. At each reporting date, monetary assets and liabilities that are denominated in foreign
currencies are retranslated at the exchange rate prevailing at the reporting date. Non-monetary
assets and liabilities carried at values that are denominated in foreign currencies are translated
at the rates prevailing at the date when the values were determined. Gains and losses arising on
retranslation are included in the income statement for the period, except for exchange differences
on non-monetary assets and liabilities, which are recognised directly in other comprehensive income
when the changes in fair value are recognised directly in other comprehensive income.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated into
the Group’s presentational currency at exchange rates prevailing at the reporting date. Income and
expense items are translated at the average exchange rates for the period. All resulting exchange
differences are recognised in other comprehensive income. All exchange differences arising, if
any, are transferred to the Group’s foreign exchange reserve and are recognised as income or as
expenses in the period in which the operation is disposed of, or when control, signifi cant infl uence or
joint control is lost.
The Group has elected to treat goodwill and fair value adjustments arising on acquisitions before the
date of transition to IFRS as sterling denominated assets and liabilities.
Retirement benefi t costs
For defi ned contribution schemes the amount charged through the income statement in respect
of pension costs and other post retirement contributions is the contribution payable in the year.
Differences between contributions payable in the year and contributions actually paid are shown as
either accruals or prepayments in the statement of fi nancial position.
Taxation
The tax expense represents the sum of the current tax expense and deferred tax expense.
Current tax
The tax currently payable is based on taxable profi t for the year. Taxable profi t differs from
accounting profi t as reported through the income statement because it excludes items of income
or expense that are taxable or deductible in other years and it further excludes items that are never
taxable or deductible. The Group’s liability or asset for current tax is measured using tax rates that
have been enacted or substantively enacted by the reporting date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on temporary differences between
the carrying amount of assets and liabilities in the fi nancial statements and the corresponding tax
bases used in the computation of taxable profi t, and is accounted for using the balance sheet liability
method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred
tax assets are recognised to the extent that it is probable that taxable profi ts will be available
against which deductible temporary differences can be utilised. Such assets and liabilities are not
recognised if the temporary difference arises from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets and liabilities in a transaction
which affects neither the taxable profi t nor the accounting profi t.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset
is realised or the liability is settled based upon tax rates that have been enacted or substantively
enacted by the reporting date. Deferred tax is charged or credited through the income statement,
except when it relates to items credited or charged directly to equity, in which case the deferred tax
is also dealt with in equity, or items charged or credited directly to other comprehensive income,
in which case the deferred tax is also recognised in other comprehensive income. Tax assets and
liabilities are offset when there is a legally enforceable right to set off tax assets against tax liabilities
and when they relate to income taxes levied by the same taxation authority, and the Group intends to
settle its tax assets and liabilities on a net basis.
Financial instruments
Financial assets and fi nancial liabilities are recognised when the Group has become a party to the
contractual provisions of the instrument.
a) Financial assets
The Group categorises its fi nancial assets as: fair value through profi t and loss or at amortised
cost. The classifi cation depends on the purpose for which the fi nancial assets were acquired.
Management determines the classifi cation of its fi nancial assets at initial recognition.
Financial assets include ‘trade receivables’ and ‘cash and cash equivalents’.
b) Trade receivables
Trade receivables are initially measured at their transaction value and are subsequently measured
at amortised cost. Under IFRS 9 the expected credit loss model requires the Group to consider
expectations of future events when determining its expectations of impairment.
c) Borrowings
Group borrowings, namely bank loans, are initially recognised at fair value and are subsequently
carried at amortised cost. Fees paid on the arrangement of the loan facility are recognised as
transaction costs and spread over the life of the arrangement.
d) Financial assets at fair value through profi t and loss
Financial assets at fair value through profi t and loss are fi nancial assets held for trading. Assets
in this category are classifi ed as current assets if expected to be settled within twelve months,
otherwise they are classifi ed as non-current. The only assets/liabilities currently held in this category
are forward currency derivatives (described further below) and cash and cash equivalents.
e) Financial liabilities and equity
Financial liabilities and equity instruments are classifi ed according to the substance of the
contractual arrangements entered into.
An equity instrument is any contract that gives a residual interest in the assets of the Group after
deducting all its liabilities.
Derivative fi nancial liabilities are measured at fair value through profi t and loss; all other fi nancial
liabilities are measured at amortised cost.
f) Recognition and measurement
Gains and losses arising from changes in the fair value of the ‘fi nancial assets at fair value through
profi t and loss’ category are presented in the income statement within ‘Cost of sales’ in the period in
which they arise as these assets relate to the purchase of goods.
g) Impairment of fi nancial assets
The Group and Company recognise an impairment loss on fi nancial assets using the expected credit
loss model by assessing the probability that the counterparty will be unable to settle their contractual
cash fl ow at the contractual due dates.
The likelihood of default and expected recoverable amounts are assessed using reasonable and
supportive past and forward-looking information that is available without undue cost. The output
of the expected credit loss model is a probability-weighted amount determined from a range of
outcomes.
Inventories
Inventories are stated at the lower of historical cost and net realisable value. Cost comprises direct
material cost and, where applicable, direct labour costs and those overheads that have been incurred
in bringing the inventories to their present location and condition. Cost is calculated using the fi rst-in
fi rst-out method. Net realisable value represents the estimated selling price in the ordinary course
of business less all estimated costs to completion and selling costs to be incurred. The Group’s
approach to inventory provisioning is described in note 21.
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Notes to the fi nancial statements
2. Summary
of signifi cant
accounting policies
Continued
Forward currency derivatives
The Group enters into derivative foreign currency forward contracts which are classifi ed as fi nancial
instruments at fair value through profi t and loss. They are initially recognised at fair value on the date
a derivative contract is entered into and are subsequently re-measured at their fair value. Fair value
gains and losses are recognised in profi t and loss.
The Group does not have the right of offset between such derivatives, and so all derivatives that are
fi nancial assets are shown separately from all derivatives that are fi nancial liabilities, at each period
end.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and other short-term deposits held by
the Group with maturities of less than three months.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary
course of business from suppliers. Trade payables are classifi ed as current liabilities if payment is
due within one year.
Provisions
Provisions for product warranty claims are recognised when the Group has a present obligation as
a result of a past event which it is probable will result in an outfl ow of economic benefi ts that can be
reliably estimated. It is the best estimate of the consideration required to settle the present obligation
at the reporting date, taking into account uncertainties surrounding the obligation.
Where the effect of the time value of money is material, the provision is based on the present value of
future outfl ows, discounted at the pre-tax discount rate that refl ects the risks specifi c to the liability.
The increase in the provision due to passage of time is recognised as an interest expense.
Equity instruments
Equity instruments issued by the Company are recorded at fair value on initial recognition net of
transaction costs.
Share-based payment transactions
The Group issues equity-settled share options to certain employees. Equity-settled share-based
payments are measured at fair value at the date of grant by reference to the fair value of the equity
instruments granted. The fair value determined at the grant date of equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate
of the number of instruments that will eventually vest with a corresponding adjustment to equity.
Fair value is measured by use of the Black-Scholes model. The expected life used in the model has
been adjusted, based on management’s best estimate, for the effect of non-transferability, exercise
restrictions, and behavioural considerations.
Non-vesting and market vesting conditions are taken into account when estimating the fair value
of the option at grant date. Service and non-market vesting conditions are taken into account by
adjusting the number of options expected to vest at each reporting date.
Operating segments
IFRS 8 requires the presentation of segmental information in relation to the Group in the Annual
Report on the same basis as information reported to the Board. The Chief Operating Decision Maker
(‘CODM’) has been determined to be the Executive Chairman as he is primarily responsible for the
allocation of resources and the assessment of the performance. Assessment of performance is
based wholly on the overall activities of the Group. The Board considers that there is one identifi able
operating segment as there are no separately identifi able business segments that are engaged in
providing individual products or services, or a group of related products and services, that are subject
to risks and returns that are different to the core business.
Non-underlying items
The Group discloses certain fi nancial information both including and excluding non-underlying
items. The presentation of information excluding non-underlying items allows a better
understanding of the underlying trading performance of the Group and provides consistency with
the Group’s internal management reporting. Non-underlying items are identifi ed by virtue of their
size, nature or incidence and the Directors consider that these items should be separately identifi ed
so as to facilitate comparison with prior periods and to assess the underlying trends in the fi nancial
performance of the Group
3.Critical accounting
estimates and areas
of judgement
Impacting the Group
Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances.
75
Notes to the financial statements
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates and assumptions will, by defi nition, seldom equal the related actual results. The estimates
and assumptions at the end of the accounting period that have a signifi cant risk of resulting in a
material adjustment to the carrying amounts of assets and liabilities within the next fi nancial year are
discussed below.
European Partner Revenue recognition
In April 2021 the Group signed a long-term partnership agreement with, Techem, to provide a fully
funded research and development programme for a new generation smoke alarm.
Consideration has been given as to whether to adopt IFSR15 revenue recognition accounting
principles or IFRS 11 joint venture accounting treatment. The Group has concluded that Techem are
in control of the design phase and thus do not require a unanimous consent of both parties which is
required to adopt IFRS 11 treatment.
The assessment of the dominant factor in the contract requires signifi cant judgement. The Group
have looked at the promises within the contract (product design phases, licences and warranties)
on their own merit to analyse if they are distinct or whether they need to be treated as one combined
performance obligation. The Group has concluded that as the product design, development,
prototypes and licences are not distinct in the context of the contract, there is a single combined
performance obligation.
The assessment of the dominant factor also requires signifi cant judgement and on the balance
of evidence the Group has taken the view that the development services are dominant looking at
both the contractual prices and level of effort required to deliver the development services to the
customer. The Group has considered how the performance obligation is satisfi ed by analysing the
transfer of control of the intellectual property to the customer. The asset created has no alternative
use for FireAngel, that is only Techem can use the product prototype and designs and FireAngel
has an enforceable right to payment for performance completed. As such the Group has concluded
that the Group’s performance creates an asset that Techem controls as it is created. Therefore, the
licences (Background IP and Foreground IP) should be evaluated under paragraphs 31-38 of IFRS
15, rather than the licence guidance in paragraphs B58- B61. The Group has decided that the most
appropriate methodology to recognise revenue over time is the input methodology which is based
upon the Group’s efforts to satisfy the performance obligation.
Using the input methodology, the Group have needed to consider the accuracy of forecasted
development costs. These forecasts are built from the ground up and are the Group’s best estimate
of costs to complete the development phase. Any changes in the total design phase costs will have
an impact of the timing of revenue recognition.
The Group has also had to consider the value prescribed to the royalty fees earned during the
contract. The contract between the two parties guarantees a minimum royalty fee of €3 million. The
minimum royalty fee of €3m has been included in the initial contract consideration which is being
recognised as described above. This amount will be payable as products are sold and therefore the
contract includes a signifi cant fi nancing element. Once the minimum royalty fee has been received
the intellectual property transfers to the German service provider and FireAngel is granted a licence
to use this IP for the development, manufacture and sale of FireAngel’s own products. No value has
been attributed to the non-cash consideration represented by the Group’s future rights over this IP as
until development is completed no reliable assessment of fair value can be made and therefore it is
not yet probable that there will not be a signifi cant reversal of any amount recognised.
Warranty provision for FireAngel products
In April 2016, the Group identifi ed a non-safety critical issue in relation to certain batteries supplied
by a third-party supplier that may cause a premature low battery warning chirp in certain of its smoke
alarm models sold in the UK and in Continental Europe. As a result, to support the Group’s customer
service obligations, the Board increased the Group’s total warranty provisions as at 31 December
2015 to £6.8 million and has continued to provide replacement products in line with the Group’s
contractual obligations. Between 2019 and 2020 the Group provided a further £3.8 million to refl ect
an increase in the terminal volume of units expected to be impacted by the issue based on the level
of returns seen.
With specifi c reference to FireAngel products, the determination of the amount of the provision,
which refl ects the Board’s best estimate of resolving these issues, requires the exercise of signifi cant
judgement. It is necessary, therefore, to form a view on matters which are inherently uncertain, such
as the returns profi le over time, the fi nal return rate, whether the return rate of each year of production
will be similar, whether the return rates from different sales channels will vary and the average cost
of redress. There is a greater degree of uncertainty in assessing these factors when an issue is
fi rst identifi ed. Consequently, the continued appropriateness of the underlying assumptions will be
reviewed on an ongoing basis against actual experience and other relevant evidence, and adjustment
made to the provision over time as required.
The provision relates mainly to the high impedance battery issue and is most sensitive to the
assumption regarding the fi nal return percentage rate. The expected terminal rate of return
percentage for each year of production for each market was estimated by FireAngel’s Technical
team.
To prevent the issue happening again, various product design changes were implemented at both
the supplier of the batteries and to the fi rmware used in fi nished products when manufactured at the
Group’s primary smoke alarm and connected devices manufacturing partner. The Group has also
reviewed its returns processes to reduce the cost of servicing product returns and has identifi ed a
number of signifi cant improvements that will reduce the cost of servicing the warranty in the fi eld
going forwards.
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Notes to the fi nancial statements
Impairment of non-fi nancial assets
3.Critical accounting
estimates and areas
of judgement
Continued
Impacting the
Company only
At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets
(including goodwill) to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in
order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-
generating unit to which the asset belongs. Where a reasonable and consistent basis of allocation can
be identifi ed, corporate assets are also allocated to individual cash-generating units, or otherwise they
are allocated to the smallest group of cash-generating units for which a reasonable and consistent
allocation basis can be identifi ed.
Intangible assets with indefi nite useful lives and other intangible assets not yet available for use are
tested for impairment annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. If the recoverable
amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An
impairment loss is recognised immediately through the income statement, unless the relevant
asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation
decrease.
During 2021, the Group recognised an impairment charge of £0.1 million against its capitalised
intangible product development costs after a thorough review of product lines and future
development costs (see note 18).
The Board notes that the Group has a signifi cant value of intangible assets on the balance sheet at the
year end. Connected homes intangible assets with a net book value of £2.1 million are not yet being
amortised as they are currently being developed for sale. Connected home intangible assets with a
net book value of £3.4 million are being amortised. The Board expects that in future, the vast majority
of products sold will in some way be connected (through Wi-safe 2, Z-wave or Zigbee technology) and
given that the Group already has a connected homes technology product offering which is working,
the Board believes that the carrying value of connected homes technology intangibles is not impaired.
In reaching this conclusion, the Board also acknowledges the losses incurred by the Group over the
past three years and the heightened risk of impairment that this leads to.
Deferred tax recognition
At 31 December 2021 there is a deferred tax asset of £1,500,811 which has not been recognised as
the timing of utilisation is uncertain. Deferred tax assets should only be recognised where they are
more likely than not to be realised. Whilst the Group expects a return to profi tability in the future, the
generous deduction available for research and development expenditure means that it is likely to be
several years before these losses will need to be accessed.
Inventory provision
The Group reviews each stock keeping unit (‘SKU’) on a line-by-line basis taking into account sales
and gross margins achieved on every SKU over the past 24 months and the expected sales of each
SKU over the next twelve months (and beyond) and the likely gross margin thereon.
Discontinued SKUs are fully provided against (at 100% of the cost) as future sales are very unlikely. In
addition, where stock is identifi ed as being slow-moving, a 10% provision is typically booked against
the cost of the stock. The Group’s stock provisioning policy reviews unit sales and margins on each
line of stock and considers the level of sales likely to be achieved in the future, and at what margin,
before determining if a stock provision is required.
Historically, on eventual sale of slow-moving SKUs, the Group has not experienced any material
issues where the net realisable value of stock ultimately transpires to be less than the book value of
the stock (plus associated rework costs). Moreover, where stock has been identifi ed as slow-moving,
ten-year life products are typically reworked into seven-year or fi ve-year product packaging and
sold as such still at a positive net margin. Even after rework costs, the net realisable value of slow-
moving SKUs typically exceeds the combined product and rework costs. The Group is fortunate that
products are certifi ed to common European standards (and certain country standards) and many
products are saleable in markets other than the original market destination.
The inventory provision at 31 December 2021 amounted to £0.5 million (2020: £0.6 million).
Recoverability of intercompany receivables
Amounts owed by subsidiary undertakings represent interest-free loans made to the Company’s
main subsidiary undertaking. The gross loan advanced by the Company is £42.3 million.
In accordance with IFRS 9 ‘Financial Instruments’, as the subsidiary undertaking cannot repay the
loan at the reporting date, the Company has made an assessment of expected credit losses. Having
considered multiple scenarios on the manner, timing, quantum and probability of recovery of the
receivables, a lifetime expected credit loss (‘ECL’) of £7.3 million has been provided.
The calculation of the allowance for lifetime expected credit losses requires a signifi cant degree
of estimation and judgment, in particular determining the probability-weighted likely outcome for
each scenario considered. The Directors’ assessment of ECL included repayment through future
cash fl ows over time (which are inherently diffi cult to forecast for the Company given the timing of
take up of its connected homes technology) and also the amount that could be realised through an
immediate sale of the subsidiary undertaking. The Directors’ assessment of repayment through
future cash fl ows included a scenario where the loan was not recovered in full. The provision is
sensitive to the key assumptions inherent in the calculation.
The carrying value of amounts owed by subsidiary undertakings at 31 December 2021, net of
provisions, was £35.0 million (2020: £29.9 million) and is disclosed in note 22 to the fi nancial
statements.
77
Notes to the financial statements
4. Financial risk
management
The Group’s operations expose it to a variety of fi nancial risks that include the effects of changes
in market prices including foreign exchange rate risk, credit risk and liquidity risk. The Group has
in place a risk management programme that seeks to limit the adverse effects on the fi nancial
performance of the Group by monitoring these risks and taking appropriate action where necessary.
Liquidity risk
Management’s objective is to meet its liabilities as they fall due whilst maintaining suffi cient
headroom to enable the Board to react to unexpected changes in market conditions. Management
monitors its cash fl ows through the preparation of forecasts on a weekly and monthly basis.
Cash forecasts are based on historic trading levels, expected settlement of supplier balances and
collection of trade receivables as they fall due. Subject to unforeseen adverse trading conditions,
the cash fl ows from operations are not expected to change signifi cantly from the level of underlying
business performance.
Maturity analysis
The table below analyses the Group’s fi nancial liabilities on a contractual gross undiscounted cash
fl ow basis into maturity groupings based on amounts outstanding at the reporting date up to the
contractual maturity date.
2021
Trade payables
Loans and borrowings
Other payables
Lease liabilities
Financial liabilities
2020
Trade payables
Loans and borrowings
Other payables
Lease liabilities
Derivative fi nancial liabilities
Financial liabilities
Within 6
months
6 months to
1 year
£000
3,465
160
4,265
246
8,136
7,032
3,439
3,654
247
587
£000
-
343
-
251
594
-
1,700
-
252
106
1 to 5
years
£000
-
2,720
-
507
3,227
-
23
-
1,001
-
14,959
2,058
1,024
Over 5
years
£000
-
-
-
-
-
-
-
-
-
-
-
Total
£000
3,465
3,223
4,265
1,004
11,957
7,032
5,162
3,654
1,500
693
18,041
The table below analyses the Group’s fi nancial assets held for managing liquidity risk which are
considered to be readily saleable or are expected to generate cash infl ows to meet cash outfl ows on
fi nancial liabilities.
2021
Trade receivables and other debtors
Cash and cash equivalents
Derivative Financial assets
Financial assets
2020
Trade receivables and other debtors
Cash and cash equivalents
Financial assets
Within 6
months
6 months to
1 year
£000
9,011
3,294
240
12,545
9,430
1,466
10,896
£000
-
-
51
51
-
-
-
1 to 5
years
£000
Over 5
years
£000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total
£000
9,011
3,294
291
12,596
9,430
1,466
10,896
The Group would normally expect that suffi cient cash is generated in the operating cycle to meet
the contractual cash fl ows as disclosed above through effective cash management. In addition,
the Group maintained a £7.5 million invoice discounting facility, of which £nil was drawn down at
the year end, with HSBC UK Bank plc secured on UK and international trade debtors which can be
accessed as required.
Foreign currency risk
The Group operates in a number of markets across the world and is exposed to foreign exchange
risk arising from various currency exposures in particular, with respect to the US dollar and euro.
The Group is exposed to foreign currency risk arising from recognised assets and liabilities as well
as commitments arising from future trading transactions. The Group has a forward hedging policy,
which aims to mitigate the risk of currency fl uctuations by locking into current rates for future
periods on a set percentage of expected future currency fl ows. The weakening or strengthening of
sterling against the US dollar or Euro during the year increases or decreases the committed sterling
cost of forward contracts entered into in accordance with the Group’s policy to hedge future US dollar
purchase and Euro sale requirements.
The notional principal amounts of the outstanding foreign currency forward contracts at 31
December 2021 were US $18.5 million (2020: US $15.5 million).
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a
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i
F
78
Notes to the fi nancial statements
4. Financial risk
management
Continued
5. Capital
management
6. Revenue
and segmental
reporting
Sensitivity analysis
The Group derived the following sensitivities based on the forward rates readily available for the US
dollar and euro. Management believes that these most closely refl ect the probable performance of
the various economies in which the Group’s fi nancial assets and liabilities are located.
The approximate impact on the Group’s operating result in 2021 from a one cent change in the value
of the US dollar and euro against sterling on a full year basis is approximately £0.2 million and £0.1
million respectively.
Interest rate risk
The Group regularly reviews its exposure to fl uctuations in underlying interest rates and will take
appropriate action if required to minimise the impact on the performance and fi nancial position of
the Group.
Credit risk
Group credit risk predominantly arises from trade receivables and cash and cash equivalents. The
Company’s credit risk arises solely from amounts receivable from subsidiary undertakings.
Credit exposure is managed on a Group basis. External credit ratings are obtained for new customers
and the Group’s policy is to assess the credit quality of each customer internally before accepting
any terms of trade. Internal procedures take into account the customer’s fi nancial position as well as
their reputation within the industry and past payment experience where relevant. There are continued
monitoring of existing customers external credit rating to help mitigate future possible credit losses.
Cash and cash equivalents and derivative fi nancial instruments are all held with an AA- rated bank,
HSBC UK Bank plc.
The Group’s maximum exposure to credit risk relating to its fi nancial assets is equivalent to their
carrying value as disclosed below. All fi nancial assets have a fair value which is equal to their
carrying value.
Maximum exposure to credit risk
Trade receivables and other debtors
Cash and cash equivalents
2021
£000
9,011
3,294
2020
£000
9,430
1,466
12,305
10,896
The Group did not have any fi nancial instruments that would mitigate the credit exposure arising
from the fi nancial assets designated at fair value through profi t or loss in either the current or the
preceding fi nancial year.
The Company’s credit risk arises exclusively through its intercompany balances which stand at £35.0
million (2020: £29.9 million). For the Company, impairment losses on fi nancial assets measured at
amortised cost relate solely to amounts due from fellow group companies and total £7.3 million at
31 December 2021 (2020: £3.5 million). The impairment loss recorded against amounts due from
fellow group companies is calculated based on lifetime expected credit losses.
The Group’s main objective when managing capital is to protect returns to shareholders by ensuring
the Group will continue to trade profi tably in the foreseeable future and cash is managed on a
conservative basis.
The Group manages its capital with regard to the risks inherent in the business and the sector within
which it operates by monitoring its cash balances on a daily basis.
The Group considers its capital to include called up share capital, share premium account, currency
translation reserve and retained earnings.
The Group sells and distributes home safety products and accessories in the UK, Continental Europe
and certain other countries and undertakes manufacturing activities in Canada. Its major customers
are based throughout the UK, Continental Europe and in a number of other countries outside
Continental Europe. Financial information is reported to the Board on a consolidated basis with
revenue and operating profi t stated for the Group.
IFRS 8 requires operating segments to be determined based on the Group’s internal reporting to
the Chief Operating Decision Maker (‘CODM’). The CODM has been determined to be the Executive
Chairman as he is primarily responsible for the allocation of resources and the assessment of the
performance.
Based on the information on which strategic and operating decisions are made, the CODM considers
that there are no identifi able business segments that are engaged in providing individual products
or services or a group of related products and services that are subject to risks and returns that are
different to the core business of the home safety products market in Europe.
Revenue and gross profi t for each of the Group’s business units are reviewed by the Board and
rolled up into consolidated fi nancial information with non-business unit costs included to arrive at
the results that investors see. Business unit reporting to the Board generally excludes information
on overheads by business and other income statement information, which is all reported on a
consolidated basis. Assets and liabilities are also generally reported to the Board on a consolidated
basis.
79
Notes to the financial statements
Revenue from continuing operations
Business Units:
UK Trade
UK Retail
UK Fire & Rescue Services
UK Utilities
International
European Partner
Pace Sensors
Total revenue from external customers
2021
£000
11,054
15,614
2,367
826
10,891
1,043
1,677
43,472
2020
£000
8,000
16,603
2,875
923
9,198
-
2,329
39,928
All business units, excluding Pace Sensors and our European Partner, earn revenue from the sale of
smoke, heat and CO alarms and accessories to end customers. Pace Sensors earns revenue from
the manufacture and sale of CO sensors to a third-party CO detector assembler based in China.
Revenue from our European Partner is derived from a research and development programme for a
new generation smoke alarm, for further details see note 7.
As of 1 January 2021, the business has reassigned a number of customers to different business
units. Four customers with a combined revenue of £0.4m in 2020 which were previously reported
within the Utilities business unit are now reporting through the Trade business unit. The 2020 sales
comparatives have been adjusted accordingly.
For 2021, revenues of approximately £4.7 million were derived from one external customer (2020:
£9.4 million from two external customers), which individually contributed over 10% of total revenue
of the Group. These revenues are attributable to the UK Retail business unit. An analysis of the
Group’s revenue is as follows:
Continuing operations:
UK
Continental Europe
Rest of World
2021
£000
29,861
11,839
1,772
43,472
2020
£000
28,400
8,961
2,567
39,928
s
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m
e
t
a
t
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l
a
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n
a
n
i
F
Non-current assets, excluding deferred tax assets, for UK and overseas territories are as follows:
Continuing operations:
UK
Canada
Non-current assets
2021
£000
2020
£000
16,671
18,050
190
179
16,861
18,229
In April 2021 the Group signed a long-term partnership agreement with a Techem to provide a
research and development programme for a new generation smoke alarm. The Group has looked at
the individual element of the contract and has concluded that there are not separate performance
obligations and as such the contract forms one central non-distinct performance obligation.
In order to determine the total revenue associated with this contract the Group has amalgamated
the already agreed background IP and minimum royalty amounts with the forecasted fees for
the product development phases. The payment structure agreed in the contract dictates that
consideration will be received at contract milestones during the development phase and once
product starts to be delivered. As a result of the payment schedule within the contract it has been
determined the contract includes a signifi cant fi nancing element. Therefore, the expected cash fl ows
have been discounted using the Group’s own borrowing rate. These discounted amounts will be
recognised as interest earned using the same phasing methodology as revenue.
To determine the phasing of the revenue recognition the Group has chosen to adopt the input
methodology approach as this is based upon direct efforts to satisfy the dominant component of
the performance obligation which is the product design element. This methodology dictates that
progress be measured by viewing current spend against total projected development spend. At the
end of 2021 the Group has calculated it is 17% of the way through its development process based on
this methodology.
The contract between the two parties guarantees a minimum royalty fee of €3 million. The minimum
royalty fee of €3m has been included in the initial contract consideration which is being recognised
as described above. This amount will be payable as products are sold and therefore the contract
includes a signifi cant fi nancing element. The Group currently values the consideration of the design
and development phase of the contract at £6.7 million (£6.2 million in revenue and £0.5 million as
interest receivable). The Group has recorded a net contract asset of £0.1m as the contract billing
arrangements at specifi c milestones does not mirror the accounting treatment of performance
obligation satisfaction.
7. Revenue
recognition
– European
Partner
80
Notes to the fi nancial statements
7. Revenue
recognition –
European Partner
Continued
8. Non-underlying
items
9. Loss from
operations
Once the minimum royalty fee has been fully paid the intellectual property transfers to the German
service provider and FireAngel will be granted a licence to use this IP for the development,
manufacture and sale of FireAngel’s own products. No value has been attributed to the non-cash
consideration represented by the Group’s future rights over this IP as until development is completed
no reliable assessment of fair value can be made and therefore it is not yet probable that there will
not be a signifi cant reversal of any amount recognised.
Revenue recognised
Costs recognised
Gross profi t attributable to contract
Revenue recognised
Interest income recognised
Total consideration
Billing to date
Accrued income
Within cost of sales
Provision for warranty costs (note a)
Commercial distributer settlements (note b)
Provision against stock and disposal costs (note c)
Within operating expenses
Restructuring and fundraising costs (note d)
Impairment of intangible assets (note e)
Impairment of tangible assets (note f)
Share-based payment charges
2021
£000
1,043
(437)
606
1,043
91
1,134
(1,060)
74
2020
£000
1,168
324
225
1,717
77
1,416
188
243
1,924
2021
£000
-
66
(88)
(22)
-
-
(3)
283
280
Total non-underlying items
258
3,641
a. In 2020, the FireAngel battery warranty provision, an isolated legacy issue relating to a third-party
supplier fi rst identifi ed in April 2016, was increased by £1.2 million. The additional provision was
made to refl ect an increase in the terminal volume of units expected to be impacted by the issue
based on the level of returns being seen. The cash impact of the warranty provision in 2021 was £1.2
million.
b. Customer settlements relating to the battery impedance totalled £0.1m for the year (2020: £0.3
million). There was no cash impact in 2021 relating to these settlements.
c. During 2021 the Group was able to sell stock lines that had previously been impaired which
resulted in a non-underlying credit of £0.1 million (2020: £0.2 million charge). The cash impact in
2021 for disposing of stock previously provided for was £50,000.
d. Restructuring and certain fundraising costs of £0.1 million were incurred and paid in the 2020.
e. No non-underlying intangible impairment charge was recorded in 2021 after a thorough review of
product lines and future development costs. The prior year charge was £1.4 million.
f. Tangible assets of £0.2 million were impaired during the 2020 as a result of a thorough review of
tooling required for ongoing product lines.
The following table analyses the nature of expenses:
Staff costs (note 11)
Depreciation and amortisation (notes 18 and 19)
- Owned assets
- Right-of-use assets
Premises costs
2021
£000
6,932
2,851
445
920
2020
£000
6,005
3,424
395
841
Cost of inventories recognised as an expense
29,785
27,928
Inventory provision recorded in year, excluding non-underlying charges
Techem costs recognised (note 7)
Distribution costs
Marketing and trade contributions
Professional fees, excluding Non-Executive Directors
Research and development costs
Non-underlying items excluding staff costs (note 8)
Foreign exchange revaluations and mark-to-mark movements
Other net expenses/costs
Total cost of sales and operating expenses
100
437
1,075
1,008
722
177
(25)
(430)
3,234
112
-
977
953
890
283
3,398
717
3,356
47,231
49,279
81
Notes to the financial statements
Loss from operations has been arrived at after charging:
Net foreign exchange losses/ (gains) excluding foreign currency forward transactions
Research and development costs
Amortisation and impairment of intangible assets
Depreciation of owned assets
Depreciation on right-of-use assets
2021
£000
589
177
2020
£000
477
283
1,876
3,898
975
445
1,033
396
Amounts payable to RSM UK Audit LLP and its associates in respect of both audit and non-audit
services are set out below:
Fees payable to the Company’s auditor and their associates for the audit of the Company’s
annual accounts.
Fees payable to the Company’s auditor and their associates for other services to the Group:
The audit of the Company’s subsidiaries
Other audit related services
Total audit fees
Taxation services
Accounting services
Total non-audit fees
2021
£000
2020
£000
39
36
81
-
73
-
120
109
30
-
30
5
-
5
10. Other
operating income
Furlough payments of £nil were received under the UK Government’s Coronavirus Job Retention
Scheme and £0.1million under the Canadian Emergency Wage Subsidy. The scheme enabled
employers to retain staff despite the economic impact of COVID-19 through government
grants relating to wage subsidies. As per the accounting policies adopted, the grant received
was recognised in the profi t and loss in ‘other income’ as the related salaries for the furloughed
employees were recognised.
11. Staff costs
The average monthly number of employees (including Executive and Non-Executive Directors) within
the Group was as follows:
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m
e
t
a
t
s
l
a
i
c
n
a
n
i
F
Manufacturing (Pace Sensors)
Technology
Administration
Sales and marketing
Executive and Non-Executive Directors
Warehousing
2021
2020
Number
Number
22
41
49
27
6
7
26
40
49
26
7
5
152
153
The aggregate remuneration for the above persons (excluding Non-Executive Directors) comprised:
Wages and salaries
Social security costs
Other pension costs
Share-based payment expense
Total remuneration
Less:
Capitalised product development costs (note 18)
Total remuneration charged to the income statement
Throughout 2021 the Company had no employees (2020: nil)
2021
£000
6,787
674
238
283
2020
£000
6,612
613
224
243
7,982
7,692
(1,050)
(1,687)
6,932
6,005
82
Notes to the fi nancial statements
12. Finance costs
13. Income tax
Interest expense on bank balance
Lease liability interest expense
Interest received on discounted cash fl ows
Total fi nance costs
Current tax
UK corporation tax credit
UK – adjustments in respect of prior periods (credit)/charge
Foreign tax charge
Deferred tax (note 29)
Origination and reversal of temporary differences
Adjustments in respect of prior periods
Income tax credit
2021
£000
(84)
(40)
91
2020
£000
(227)
(51)
-
(33)
(278)
2021
£000
2020
£000
(434)
(711)
16
(12)
(49)
130
(430)
(630)
-
-
-
-
(430)
(630)
Domestic income tax is calculated at 19% (2020: 19.00%) of the estimated assessable profi t or loss
for the year.
The tax credit for the year can be reconciled to the profi t per the consolidated income statement as
follows:
Loss before tax
Tax at the domestic income tax rate of 19.00% (2020: 19.00%)
Tax effect of expenses that are not deductible in determining taxable profi t
Effect of allowance for capitalised development expenditure
Adjustments in respect of prior periods
Deferred tax not recognised
Impact of foreign tax rates
Difference in current and deferred tax rates
Effect of tax rate change on opening patent box set-off
Other adjustments
2021
£000
(3,710)
(705)
60
(187)
16
544
(30)
(351)
279
(56)
2020
% £000 %
%
(9,338)
(1,774)
52
(306)
(49)
1,428
59
-
-
(40)
Tax credit and effective tax rate for the year
(430) 12%
(630)
7%
The weighted average applicable tax rate was 12% (2020: 7%). The tax credit for 2021 is largely due
to enhanced research and development tax relief at a rate of 230% and operating losses in the year of
£3.7 million.
Tax losses are, where possible, realised during the year through surrender for research and
development tax credits.
At 31 December 2021 there is a deferred tax asset of £1,500,811 which has not been recognised as
the timing of utilisation is uncertain. Deferred tax assets should only be recognised where they are
more likely than not to be realised. Whilst the Group expects a return to profi tability in the future, the
generous deduction available for research and development expenditure means that it is likely to be
several years before these losses will need to be accessed.
The income tax charged to equity during the year was as follows:
Deferred tax
Share-based payments
Income tax charge
2021
£000
2020
£000
-
-
-
-
83
15. Earnings per
share
16. Financial
instruments
Notes to the financial statements
Earnings from continuing operations
Earnings for the purposes of basic and diluted earnings per share (loss for the year
attributable to owners of the Parent)
Number of shares
Weighted average number of ordinary shares – basic calculation
Dilutive potential ordinary shares from share options
Weighted average number of ordinary shares – diluted calculation
Basic earnings per share
Diluted earnings per share
2021
£000
2020
£000
(3,280)
(8,708)
‘000
‘000
160,308 112,865
-
-
160,308 112,865
2021
2020
Pence
Pence
(2.0)
(2.0)
(7.7)
(7.7)
Basic EPS is calculated by dividing the earnings attributable to ordinary owners of the parent by the
weighted average number of shares outstanding during the period.
Diluted EPS is calculated on the same basis as basic EPS but with a further adjustment to the
number of weighted average shares in issue to refl ect the effect of all potentially dilutive share
options. The number of potentially dilutive share options is derived from the number of share options
and awards granted to employees and Directors where the exercise price is less than the average
market price of the Company’s ordinary shares during the period. Under IFRS no allowance is made
for the dilutive impact of share options which reduce a loss per share. The basic and diluted EPS
measures are therefore the same for the year ended 31 December 2021.
2021 Financial assets
Trade receivables and other debtors
Cash and cash equivalents
Derivative fi nancial assets
Total
2020 Financial assets
Trade receivables and other debtors
Cash and cash equivalents
Total
2021 Financial assets
Trade payables
Loans and borrowings
Other payables
Lease liabilities
Derivative fi nancial liabilities
Total
2020 Financial assets
Trade payables
Loans and borrowings
Other payables
Lease liabilities
Derivative fi nancial liabilities
Total
s
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m
e
t
a
t
s
l
a
i
c
n
a
n
i
F
Assets at fair value
through profi t and loss
Financial assets at
amortised cost
Total
£000
-
3,294
291
3,585
£000
£000
9,011
9,011
-
-
3,294
291
9,011 12,596
Assets at fair value
through profi t and loss
Financial assets at
amortised cost
Total
£000
-
1,466
1,466
£000
£000
9,430
9,430
-
1,466
9,430 10,896
Liabilities at fair value
through profi t and loss
£000
-
-
-
-
-
-
Financial
liabilities held at
amortised cost
Total
£000
£000
3,464
3,464
3,223
3,223
4,266
4,266
948
948
-
-
11,901 11,901
Liabilities at fair value
through profi t and loss
Financial
liabilities held at
amortised cost
Total
£000
-
-
-
-
693
693
£000
£000
7,032
7,032
5,162
5,162
3,654
3,654
1,381
1,381
-
693
17,229 17,922
14. Dividends
As a result of the loss reported for the year, and consistent with the decision not to pay an interim
dividend (2020: nil pence per share), the Directors do not recommend payment of a fi nal dividend
for the year (2020: nil pence per share). The total dividend payable for 2021 is therefore nil pence per
share (2020: nil pence per share).
At 31 December 2021 the Company held fi nancial assets held at amortised cost in the form of
intercompany balances to the value of £35.0 million (2020: £29.9 million). At the same date the
Company had a fi nancial liability held at amortised cost in the form of borrowings to the value of £nil
(2020: £nil).
84
Notes to the fi nancial statements
16. Financial
instruments
Continued
17. Goodwill
Credit risk management
The Group’s exposure to credit risk is limited to the carrying amount of fi nancial assets recognised at
the balance sheet date, which are set out below.
Trade and other receivables
Total
2021
2020
£000
9,011
9,011
£000
9,430
9,430
The Group has applied the IFRS 9 simplifi ed approach in measuring the lifetime expected credit
losses for trade receivables. The credit loss provision has been calculated using a provision matrix
based on the Group’s historic default rates over the expected life of the asset and is adjusted where
needed for forward looking estimates. The expected losses are based on the experience over the
past twelve months with trade receivables grouped together on similar credit risk and aging.
As at 31 December 2021 a credit loss provision of £56,000 (2020: £66,000) was held against the
exposure of potential bad debts.
Cost and carrying value
Cost and carrying value of goodwill at 31 December 2021 and 2020
The goodwill above relates solely to Pace Sensors.
Group impairment test
£000
169
At times during the year, the market capitalisation of the Group approached the value of Group net
assets. IAS 36, Impairment of Assets, states that if the market capitalisation falls below the value
of Group net assets this may be an indicator of impairment and accordingly the Directors have
performed an impairment test on the primary cash-generating unit of the Group (being FireAngel
Safety Technology Limited). The test did not indicate any such impairment and the key disclosures
relating to the test are set out below.
The carrying amount of the cash-generating unit assets and liabilities at 31 December 2021
amounted to £20.1 million. The recoverable amount of the cash-generating unit is determined based
on a value-in-use calculation which uses cash fl ow projections based on fi nancial budgets and
business plans approved by the Directors covering a four-year period. Cash fl ows beyond that period
have been extrapolated using a steady 2.0% per annum growth rate, which the Directors consider to
be specifi c to the business and does not exceed the UK long-term average growth rate.
The key inputs to the cash fl ow forecasts are:
•
•
forecasted changes in revenue taking into account future expectations of revenue streams and
sales mix linked to the Board’s strategic plans;
forecasted changes in gross margin taking into account expected improvements in production
effi ciencies and sales mix;
• future anticipated capital expenditure; and
• requirements for working capital based on revenue growth.
The key assumptions used in the cash fl ow projections are a terminal value applied after fi ve years
assuming a 7.5 times multiple and pre-tax weighted average cost of capital of 12% cross-referenced
to comparable companies operating within the sector. The other key assumptions have been
assigned values by the Directors using estimates based on past experience and expectations of
future performance.
Based on these assumptions, the value-in-use calculation amounted to £105.6 million compared
with the carrying amount of £20.1 million. The Directors believe that, based on the sensitivity analysis
performed and described below, any reasonably possible change in the key assumptions on which
the recoverable amounts are based would not cause the Group’s net asset value to exceed the
recoverable amount. As a result, there is no impairment in the period (2020: no impairment).
In assessing the impact on the value-in-use calculation of changes in the assumptions used, the
Directors considered the following sensitivities:
• a restriction in the gross margin in 2023 and thereafter to that expected to be achieved in 2022;
• an increase in overheads in 2023 and in each year thereafter;
• an increase in capital expenditure in 2023 and in each year thereafter; and
•
an increase in working capital required as a percentage of revenue in 2022 and maintained
thereafter.
In performing this sensitivity analysis, the Directors noted the signifi cant headroom of the value-in-
use calculation compared with the carrying value in each of the scenarios above.
85
18. Other
intangible assets
Cost
At 1 January 2020
Additions
Disposals
At 31 December 2020
Additions
At 31 December 2021
Amortisation
At 1 January 2020
Amortisation for the year
Impairment for the year
Disposals
At 31 December 2020
Amortisation for the year
Impairment for the year
At 31 December 2021
Carrying amount
At 31 December 2020
At 31 December 2021
Notes to the financial statements
Product
development
costs
Purchased
software
costs
Computer
software
costs
£000
£000
£000
Total
£000
18,848
2,519
(1,597)
19,770
1,465
21,235
6,344
1,925
1,416
(1,597)
8,088
1,328
86
2,899
-
-
2,899
-
2,899
407
433
-
-
840
434
-
9,502
1,274
430 22,177
35
2,554
(141) (1,738)
324 22,993
64
1,529
388 24,522
374
7,125
35
2,393
-
1,416
(141) (1,738)
268
9,196
28
1,790
-
86
296 11,072
11,682
11,733
2,059
1,625
56 13,797
92 13,450
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
i
F
The amortisation charge of £1,790,000 (2020: £2,393,000) and impairment charge of £86,000 (2020:
£1,416,000) have been recognised within operating expenses. There were no disposal during the
year.
A summary of intangible costs as at 31 December 2021 is given in the table which follows.
Except as outlined below, intangible assets are typically amortised over seven to twelve years
depending on the Group’s assessment of the likely period of time over which the benefi t from the
technology is expected to be realised.
Impairment review
During 2021, the Group recorded an impairment charge of £0.1 million (2020: £1.4 million) against
projects which were no longer considered to be commercially viable after a thorough review of
product lines.
As part of the impairment review, the Group compared the net book value of each intangible asset
with the discounted cash fl ows which are expected to be derived from the sale of products over the
next one to fi ve years that use the relevant intangible asset. The review was based on a discounted
cash fl ow model using a pre-tax discount rate of 12% and included associated overhead costs.
Sensitiviy analysis has been performed on pre-tax discount rates which shows that pre-tax discount
rates would need to exceed 22% to cause an impairment of more than 1% of the current net book
value of intangible assets. Similarly further sensitivity analysis was performed on sales revenue
which showed no material impairment at 80% of the forecast sales revenues.
The purpose of this review is to ensure that the value of the intangible asset is likely to be recovered
within the foreseeable future. In many cases, the expected gross profi t over the next two to three
years from the sale of products that use the intangible asset is materially greater than the net book
value of the individual intangible asset on the balance sheet. This provides signifi cant comfort that
the carrying value of the intangible is recoverable and, therefore, is not impaired.
Assessing the potential sales of products such as the Group’s connected homes technology is
inherently more diffi cult than products where the run rate of sales is already well known and the
pattern of sales is established. The Board expects that the take up of connected homes technology
products will increase over time as the technology becomes mainstream.
86
Notes to the fi nancial statements
18. Other intangible assets
Projects being amortised
d
e
t
c
e
n
n
o
C
s
e
m
o
h
2
e
f
a
s
-
i
W
d
e
r
e
w
o
p
-
s
n
a
M
i
o
n
a
N
g
n
i
s
n
e
s
-
e
k
o
m
S
s
t
c
u
d
o
r
p
g
n
i
r
u
t
c
a
f
u
n
a
M
s
t
s
o
c
p
u
t
e
s
r
e
h
t
O
l
a
t
o
T
Projects not currently
being amortised
j
s
t
c
e
o
r
p
e
r
u
t
u
F
d
e
t
c
e
n
n
o
C
s
e
m
o
h
l
a
t
o
T
l
a
t
o
T
d
n
a
r
G
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
£000
Cost
At 1 January 2021
6,447
1,923
1,599
1,280
1,976
2,410
1,240
16,875
4,267
1,527
5,794
22,669
Projects amortised in 2021
Technical costs capitalised
Employment costs capitalised
Total additions
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
44
44
-
-
-
-
-
-
(44)
208
602
810
-
207
448
655
(44)
415
1,050
1,465
-
415
1,050
1,465
At 31 December 2021
6,447
1,923
1,599
1,280
1,976
2,410
1,284
16,919
5,033
2,182
7,215
24,134
Amortisation
At 1 January 2021
Charge
Impairment
1,947
1,528
974
79
126
7
At 31 December 2021
3,000
1,661
453
153
-
606
461
134
-
1,805
1,622
1,069
45
-
287
-
43
-
8,885
1,762
86
595
1,850
1,909
1,112
10,733
43
-
-
43
-
-
-
-
43
-
-
8,928
1,762
86
43
10,776
Carrying amount
At 1 January 2021
At 31 December 21
4,500
3,447
395
262
1,146
993
819
685
171
126
788
501
171
172
7,990
6,186
*4,224
1,527
5,751
13,741
4,990
2,182
7,172
13,358
*Analysed in more detail on the following pages.
Projects being
amortised
The following is a high-level summary of the projects being amortised which are set out in the table
above.
Connected homes technology
This technology connects FireAngel’s alarms to the cloud via its interface gateway technologies.
Access to the cloud removes the need for social landlords to access properties for maintenance as
well as providing risk analysis on a property by property basis via the Group’s intuitive dashboards.
During 2021 the Group has continued to develop its B2B offering and successfully completed a
number of trials with social housing bodies around the UK. This technology is key to the Group’s
growth in sales in the year, particularly in UK Trade and UK Retail, and is the cornerstone of the
ongoing trials with a number of UK Housing Associations. During 2021 development of a 2nd
Generation gateway was undertaken, this incorporates cellular technology to connect to FireAngel’s
cloud services and is particularly tailored to the social landlord market. This product and the
associated software offerings are due to launched in 2022. This includes £2.1 million of purchased
core software modules from Intamac.
Wi-safe 2
Wi-safe 2 is the Group’s primary protocol that allows its interconnected alarms to communicate with
one another. This is a core element of the Groups wider Connected Homes strategy.
Nano
Developed in house by FireAngel’s wholly-owned subsidiary in Canada, Pace Sensors, the Nano
went into production into fi nished CO detectors in November 2016. This new generation of sensor
is incorporated within the Group’s new Gen5 CO detectors range which are due to be released in the
second quarter of 2022.
Mains-powered products
Mains-powered products include FireAngel Specifi cation and FireAngel Pro ranges which were
relaunched in 2019 and complete the Group’s product suite.
87
Notes to the financial statements
Projects not
currently being
amortised
Manufacturing setup costs
These are the costs incurred by the Group’s Technical and Project Management teams in preparing
its Polish manufacturing partner to produce FireAngel products and in preparing the Group’s Far East
based supplier to produce replacements to the BRK range. Such costs have been included within
intangible assets and are being amortised over fi ve years.
Other projects
This includes FireAngel’s 10-year life CO alarm as well as well as internally developed testing
equipment.
Product development costs and other intangible assets not yet available for use are regularly tested
for impairment. This assessment includes consideration of the likely costs of completing the project,
the time to market and an assessment of the potential sales and gross profi t opportunity using the
relevant technology.
Future projects
Gen 5 and Gen 6 are the next generation of the Group’s smoke, heat, CO and combined alarms. These
new technologies will be a common platform across all product types and will allow the Group to
develop new products using ‘bookshelf’ technologies developed as part of this project. As well
as standalone smoke, heat and CO alarms, combination alarms utilise all three of these sensing
methods in a single product that can use CO and heat to augment smoke measurements to improve
the rapid detection of fi res, while further reducing the incidence of false alarms. They also provides
enhanced data logging of events and the ability for wireless diagnostic downloads to a smartphone,
enabling service technicians to easily access diagnostic data on the alarm without the need to
remove it from the base. Gen 5 CO alarms are expected to be released in the second quarter of 2022.
Connected homes technology
The Group continues to invest in its FireAngel Connected B2B and B2C offerings which include new
gateway products, end mobile user apps and web interfaces.
19. Property, plant and equipment
Tooling
Offi ce equipment Motor vehicles
Fixtures & fi ttings Right-of-use assets
Cost
At 1 January 2020
Additions
Disposals
At 31 December 2020
Additions
Disposals
At 31 December 2021
Accumulated depreciation
At 1 January 2020
Depreciation charge for the year
Impairment
Disposals
Reclassifi cation
Effect of exchange rates
At 31 December 2020
Depreciation charge for the year
Impairment
Disposals
Effect of exchange rates
At 31 December 2021
Net book value
At 31 December 2020
At 31 December 2021
£000
4,379
155
(283)
4,251
296
(77)
4,470
945
874
188
(283)
-
-
1,724
846
44
(77)
-
2,537
2,527
1,933
£000
£000
£000
1,497
117
(235)
1,379
138
(19)
1,498
1,239
124
-
(235)
31
4
1,163
97
-
(19)
(2)
1,239
216
259
7
-
-
7
-
-
7
6
1
-
-
-
-
7
-
-
-
-
7
-
-
408
5
(66)
347
-
-
347
261
34
-
(66)
(31)
-
198
32
-
-
-
230
149
117
£000
1,790
283
(19)
2,054
7
(7)
2,054
307
396
-
(19)
-
(1)
683
445
-
(7)
-
1,121
1,371
933
Total
£000
8,081
560
(603)
8,038
441
(103)
8,376
2,758
1,429
188
(603)
-
3
3,775
1,420
44
(103)
(2)
5,134
4,263
3,242
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
i
F
Smoke-sensing products
The total depreciation expense of £1,420,000 (2020: £1,429,000) has been charged to operating expenses.
This consists of FireAngel’s own-brand heat and optical product ranges.
There are no material capital commitments at the balance sheet date.
89
Notes to the financial statements
88
Notes to the fi nancial statements
19. Property, plant
and equipment
Continued
The following table breaks down the net book value of right-of-use assets by category:
Carrying amount of right-of-use assets by category:
Land and buildings
Plant and machinery
Vehicles
Total carrying amount presented within property, plant and equipment
2021
2020
£000
£000
881
1,304
30
22
39
28
933
1,371
The following depreciation and interest have been charged to profi t and loss in the period:
21. Inventories
Depreciation charge for the year included in operating expenses
Land and buildings
Plant and machinery
Vehicles
Total depreciation charge on leased assets
Interest expense for the year recognised in fi nance costs
Land and buildings
Plant and machinery
Vehicles
Total interest expense on lease liabilities
2021
2020
£000
£000
422
375
9
14
6
15
445
396
2021
£000
38
1
1
40
The Group has entered in to a number of lease commitments which range in length between 1 and 6
years.
22. Financial assets
20. Shares in
subsidiaries
Company
Cost
At 31 December
Accumulated impairment
At 31 December
Net book value
2021
2020
£000
£000
675
392
-
675
-
392
The share-based payments in 2021 totalling £282,648 were issued from the parent company. These
related to the 2015 Long-Term Incentive Plan nominal cost options awarded on 2 August 2019 , 30
November 2020 and 8 July 2021, and option awards under the Company’s share matching scheme
since May 2020.
The Group has two non-trading subsidiary companies, AngelEye Corporation and AngelEye
Incorporated, both registered in North America. The Company’s subsidiaries as at 31 December
2021 were as follows:
Registered
offi ce (see
footnote)
Place of incorporation
(or registration) and
operation
Proportion
of ownership
interest
%
Proportion
of voting
power held
%
1
2
3
4
UK
Canada
Canada
USA
100
100
100
100
100
100
100
100
Principal activity
Distribution of smoke
and CO alarms
Manufacture of CO
sensors
Non-trading
Non-trading
Name of subsidiary
FireAngel Safety
Technology Limited
Pace Sensors Limited
AngelEye Corporation
AngelEye Incorporated
1. Vanguard Centre, Sir William Lyons Road, Coventry, CV4 7EZ, UK
2. 3-3165 Unity Dr., Mississauga, ON, L5L 4L4, Canada
3. 82 Bilbermar Drive, Richmond Hill, ON, L4S 1C1, Canada
4. The Corporation Trust Company, 1209 Orange Street, Wilmington, DE, 19801, USA
The results of all subsidiary undertakings are included in the consolidated accounts.
FireAngel Safety Technology Group plc has direct holdings in FireAngel Safety Technology Limited,
AngelEye Corporation and AngelEye Incorporated. It has an indirect holding in Pace Sensors Limited,
via AngelEye Corporation.
Company impairment test
As part of the Group impairment test detailed in note 17, the Directors considered the need to impair
the carrying value of the Company’s shares in its subsidiaries. In common with the conclusion
reached in the Group impairment test, no impairment was considered necessary in the period (2020:
no impairment).
Raw materials
Work-in-progress
Finished goods
Total gross inventories
Inventory provisions
Total net inventories
Group
2021
£000
161
98
4,026
4,285
(548)
3,737
Group
2020
£000
133
267
6,790
7,190
(632)
6,558
Company
2021
Company
2020
£000
£000
-
-
-
-
-
-
-
-
-
-
-
-
Pace Sensors Limited, the Group’s wholly owned subsidiary in Canada, manufactures CO sensors
for use in the Group’s CO alarms. The CO sensors are shipped to Pace Technologies, an independent
third-party supplier based in China, for assembly into fi nished CO alarms, which are then purchased
by the Group in the UK. The Group does not maintain a provision for unrealised profi t in CO sensors
within fi nished CO alarm stock, as CO sensors are sold to an independent third party, Pace
Technologies, before being acquired as fi nished CO alarm products and put into stock by the Group.
Stock impairment costs of £0.1 million were provided in the year (2020: £1.7 million).
Trade receivables and other debtors
Cash and cash equivalents
Derivative fi nancial assets
Group
2021
£000
9,011
3,294
291
Group
2020
£000
9,430
1,466
-
Company
2021
Company
2020
£000
£000
34,969
29,857
2
-
2
-
Maximum exposure to credit risk
12,596
10,896
34,971
29,859
The Directors are of the opinion that whilst there are signifi cant concentrations of credit risk,
customer payments are closely scrutinised to ensure debts are paid on time and credit limits are
reasonably adhered to.
The fair value of the fi nancial assets is not considered to be materially different from their carrying
value.
Trade and other receivables for the Company represents balances owed to it by fellow Group
undertakings.
Trade and other receivables comprise:
Trade receivables
Amounts due from fellow group companies
Other debtors
Prepayments
Group
2021
£000
7,929
-
826
675
Group
2020
£000
9,309
Company
2021
Company
2020
£000
£000
-
-
-
34,969
29,857
380
382
-
-
-
-
Trade and other receivables
9,430
10,071
34,969
29,857
The primary credit risk relates to customers which potentially may be unable to settle their debts
with the Group. The average credit period taken on sale of goods is 59 days (2020: 62 days). As at 31
December 2021 a credit loss provision of £56,000 (2020: £66,000) was held against the exposure of
potential bad debts.
The Directors believe that the carrying value of trade and other receivables represents their fair
value. In determining the recoverability of trade receivables the Group considers any change in the
credit quality of the receivable from the date credit was granted up to the reporting date. Factors
considered include a review of past payment history and the current fi nancial status of customers
and the ongoing relationship with the Group. Credit limits are kept under review to ensure customers
are not exceeding agreed terms.
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
i
F
90
Notes to the fi nancial statements
22. Financial assets
Continued
Domestic trade debtors are pledged as security to the Group’s bankers as part of the Group’s banking
facilities. The domestic trade debtor balance at 31 December 2021 was £4.7 million (2020: £7.3
million).
At 31 December 2021 £4.8 million (2020: £7.3 million) of trade receivables were denominated in
sterling, £1.6 million (2020: £1.0 million) in US dollars and £1.5 million (2020: £1.0 million) in euros.
At 31 December 2021, cash of £1.3 million (2020 cash of nil) was denominated in sterling, cash of
£1.7 million (2020: cash of £1.4 million) in US dollars, cash of £0.3 million (2020: cash of £0.1 million)
in Canadian dollars and cash of £nil million (2020: overdrawn balance of £0.1 million) in euros.
At the year end, all other fi nancial assets held were denominated in sterling.
Amounts owed by fellow group companies represent interest-free loans made to the Company’s
main subsidiary undertaking. The gross loan advanced by the Company is £42.3 million.
In accordance with IFRS 9 ‘Financial Instruments’, as the subsidiary undertaking cannot repay the
loan at the reporting date, the Company has made an assessment of expected credit losses. Having
considered multiple scenarios on the manner, timing, quantum and probability of recovery on the
receivables, a lifetime expected credit loss of £7.3 million has been provided. Further details are
given in note 3.
The carrying value of amounts owed by subsidiary undertakings at 31 December 2021, net of
provisions, was £35.0 million (2020: £29.9 million).
23. Derivative
fi nancial
instruments
Assets
Foreign currency forward contracts
Liabilities
Foreign currency forward contracts
2021
£000
2020
£000
291
-
-
693
Derivative fi nancial instruments are classifi ed between current and non-current based on the date of
their maturity. They are measured at their fair value. The maturity of all forward contracts at each year
end was less than twelve months, and therefore all contracts are classifi ed as current.
The notional principal amounts of the outstanding foreign currency forward contracts at 31
December 2021 were US $18.5 million (2020: US $15.5 million), sterling of £nil million (2020: £nil
million) and euro of €nil million (2020: €nil million).
Gains and losses on foreign currency forward contracts are recognised within cost of sales each
month, as the forward contracts are utilised to mitigate foreign currency risk associated with product
sales and purchases in currencies other than the Group’s sterling functional currency.
24. Loans and
borrowings
Bank term loan
Invoice discounting facilities
Group
2021
Group
2020
Company
2021
Company
2021
£000
£000
£000
£000
3,223
2,623
-
2,539
-
-
-
-
During the year the Group refi nanced its existing Coronavirus Large Business Interruption Loan
Scheme (“CLBILS”) with HSBC UK. The new loan of, in aggregate, £3.7 million comprises a
Coronavirus Business Interruption Loan Scheme (“CBILS”) loan of £3.2 million and an additional
Receivables Finance CBILS of £0.5 million which has yet to be drawn down. The CBILS loan, which
will be used to pay off the balance of the CLBILS, has a term of 6 years with the fi rst year being free
of interest and capital repayments and an interest rate thereafter of 3.99 per cent. over the Bank of
England’s base rate. The Group maintains its existing Invoice Discounting Facility of £7.5 million,
which at 31 December had not been drawn on.
At 31 December 2021, the Group had the following lease liabilities totalling £0.9 million:
Maturity analysis of lease liabilities:
Land and buildings
Plant and machinery
Vehicles
Total lease liabilities
Within 6
months
6 months
to 1 year
£000
£000
1 to 5
years
£000
Over 5
years
Total at 31
December 2021
£000
£000
217
218
468
1
7
225
8
5
231
17
7
492
-
-
-
-
903
26
19
948
91
25. Changes in
liabilities arising
from fi nancing
activities
26. Fair value
disclosures
Notes to the financial statements
Balance at 1 January 2020
Net cash generated/ (used in) fi nancing activities
Acquisition of leases
Balance at 31 December 2020
Net cash generated/ (used in) fi nancing activities
Acquisition of leases
Balance at 31 December 2021
£000
-
2,623
-
2,623
600
-
3,223
Bank
Loans
Invoice discounting
facility
Lease
liabilities
£000
6,985
£000
1,479
Total
£000
8,464
(4,446)
(381)
(2,204)
2,539
(2,539)
-
-
283
1,381
(441)
8
948
283
6,543
(2,380)
8
4,171
The total net gain on forward contracts recognised in the income statement for the year ended 31
December 2021 was £1.0 million (2020: loss of £0.3 million) and is included within cost of sales.
The table below analyses fi nancial instruments carried at fair value, by valuation method. The
different levels have been defi ned as follows:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)
•
•
Inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2)
Inputs for the asset or liability that are not based on observable market data (that is, unobservable
inputs) (level 3)
The following table presents the Group’s fi nancial assets and liabilities that are measured at fair
value at the last two year ends. All assets and liabilities measured are valued at level 2.
Level 2
Assets
Foreign currency forward contracts
Liabilities
Foreign currency forward contracts
2021
£000
2020
£000
291
-
-
693
s
t
n
e
m
e
t
a
t
s
l
a
i
c
n
a
n
i
F
27. Provisions
FireAngel warranty
provisions
BRK Brands warranty
provisions
At 1 January 2020
Charge in year
Utilisation in year
At 1 January 2020
Charge in year
Utilisation in year
At 31 December 2021
£000
3,465
1,167
(1,887)
2,745
-
(1,192)
1,553
Total
£000
3,493
1,167
£000
28
-
(28)
(1,915)
-
-
-
-
2,745
-
(1,192)
1,553
The total warranty provision is classifi ed between less than one year and greater than one year as
follows:
Current provision
Non-current provision
Total warranty provisions
2021
£000
1,012
541
1,553
2020
£000
1,491
1,254
2,745
Review of warranty
provision
In assessing the adequacy of the warranty provision, it is necessary to form a view on matters
which are inherently uncertain, such as the returns profi le over time, the fi nal return rate, whether the
product return rates of each year of production will be similar, whether the return rates from different
sales channels will vary and the average cost of redress.
There is a greater degree of uncertainty in assessing these factors when an issue is fi rst identifi ed
although with the known battery warranty issue (which represents the majority of the provision) the
Board has considerably more experience of the returns rates having monitored product returns by
year of manufacture by market for several years. Consequently, the continued appropriateness of
the underlying assumptions is reviewed on an ongoing basis against actual experience and other
relevant evidence and adjustment made to the provision over time as required.
92
Notes to the fi nancial statements
28. Trade and other
payables
Trade payables
Accruals and deferred income
Other tax and social security
93
31. Called up
share capital
Group
2021
Group
2020
Company
2021
Company
2021
£000
£000
£000
£000
3,465
7,033
4,265
3,654
405
2,147
8,135 12,834
-
-
-
-
-
-
-
-
At 31 December 2021, £0.7 million (2020: £0.6 million) of payables were denominated in sterling,
£nil million (2020: £0.2 million) in euros and £2.7million (2020: £6.2 million) in US dollars. Trade and
other payables principally comprise amounts outstanding for trade purchases and ongoing costs.
The average credit period taken for trade purchases was 21 days (2020: 72 days). The reduction was
due to the increased pressure to support our manufacturing partners with extended working capital
exposure from longer component lead times resulting in increased credit exposure in addition to
purchasing components on the open market with minimal credit terms.
The Directors consider that the carrying amount of trade and other payables approximates to their
fair value.
29. Deferred tax
Deferred tax liabilities
Deferred tax assets
Net position at 31 December
The movement in the year in the Group’s net deferred tax position was as follows:
At 1 January
Credit to income for the year
At 31 December
2021
2020
£000
£000
(3,069) (2,415)
3,069
2,415
-
-
2021
2020
£000
£000
-
-
-
-
-
-
The following are the major deferred tax liabilities and assets recognised by the Group and the
movements thereon during the period:
Deferred tax liabilities
At 1 January 2021
Credit/ (charge) to income for the year
At 31 December 2021
Deferred tax liabilities
At 1 January 2021
Credit/ (charge) to income for the year
At 31 December 2021
Derivative fi nancial
instruments
Non-current
asset timing
£000
22
(3)
19
£000
2,393
657
3,050
Deferred
tax losses
Derivative fi nancial
instruments
Share-based
payments
£000
2,371
618
2,989
£000
£000
1
(1)
-
43
37
80
Total
£000
2,415
654
3,069
Total
£000
2,415
654
3,069
As at 31 December 2021, there is an unrecognised net deferred tax asset of £1,500,811 . This has
not been recognised due to uncertainty as to when the asset will be utilised by the Group. Whilst the
Group expects a return to profi tability in the future, the generous deduction available for research and
development expenditure means that it is likely to be several years before these losses will need to
be accessed.
30. Retirement
benefi ts - defi ned
contribution plan
The Group operates a defi ned contribution retirement benefi t plan. The assets of the scheme are
held separately from those of the Group in an independently administered fund. The pension cost
charge of £0.2 million (2020: £0.2 million) represents contributions payable by the Group to the fund
for the year. Contributions amounting to £44k (2020: £40k) were payable at the year end.
Notes to the financial statements
Company
2021
Company
2021
Number
‘000
Number
‘000
126,558
54,445
64
75,935
50,623
-
181,067
126,558
£000
2,531
1,089
1
3,621
£000
1,519
1,012
-
2,531
Ordinary shares in issue:
As at 1 January
Issue of shares in respect of capital raise
Issue of shares in respect of share options exercised
As at 31 December
Issued and fully paid ordinary shares of 2p each:
As at 1 January
Issue of shares in respect of capital raise
Issue of shares in respect of share options exercised
As at 31 December
The Company has one class of ordinary share which carries no right to fi xed income.
On 8 May 2021, the Company raised £9.8 million (gross) through the issue of 54,444,444 new
ordinary shares of 2p nominal value each at an issue price of 18p per share. The premium on issue
was 16p per share amounting to £8.7 million. This was credited to the share premium account. Share
issue expenses amounted to £0.8 million. These were debited to the share premium account.
32. Reserves
Share premium account
The share premium account represents the excess of consideration received for shares issued
above their nominal value net of transaction costs.
Currency translation reserve
The currency translation reserve represents the exchange gains and losses that have arisen on the
retranslation of overseas operations.
Retained earnings
Retained earnings represents the cumulative profi t and loss net of distributions to owners.
The loss for the fi nancial year dealt with in the Company was £3,882,562 (2020: loss of £1,591,000).
As permitted under Section 408 of the Companies Act 2006, a separate profi t and loss account has
not been presented for the Company.
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33. Share-based
payments
The share-based payments charge of £282,648 (2020: £243,232), included in the consolidated
income statement within operating expenses, relates to the 2015 Long-Term Incentive Plan nominal
cost options awarded on 2 August 2019, 30 November 2020 and 8 July 2021, and option awards
under the Company’s share matching scheme since May 2020.
2021
2020
Options
‘000
Weighted average
exercise price
Options
‘000
Weighted average
exercise price
Outstanding at 1 January
Exercised during the year
Granted during the year
Expired or lapsed during the year
Outstanding at 31 December
9,288
(63)
7,650
(2,097)
14,778
14p
2p
2p
16p
8p
3,968
-
6,190
(870)
9,288
30p
-
2p
3p
14p
94
Notes to the fi nancial statements
33. Share-based payments
Continued
Details of the share options outstanding at the end of the year are as follows:
Grant date
Options under LTIPs
Directors’ share options
25/04/2014
02/08/2019
30/11/2020
08/07/2021
Employee share options
25/04/2014
02/08/2019
08/07/2021
Options under LTIPs
Options under share matching
scheme
Directors’ share options
01/06/2020
03/07/2020
18/12/2020
Employee share options
01/06/2020
19/06/2020
03/07/2020
06/01/2021
14/01/2021
Outstanding at
start of the year
Exercised during
the year
125,000
1,500,000
5,000,000
-
437,112
1,035,000
-
8,097,112
281,514
25,000
49,660
239,838
544,904
49,473
-
-
-
-
-
-
-
-
-
-
-
-
-
(63,348)
-
-
-
-
Options under share matching
scheme
1,190,389
(63,348)
Lapsed/
surrendered
during
the year
-
(1,500,000)
-
-
(145,833)
(450,000)
Granted during
the year
Outstanding at
end of the year
Expiry date
Exercise price
125,000
28/04/2024
200p
-
-
-
-
02/08/2029
5,000,000
30/11/2030
3,132,588
3,132,588
08/07/2031
-
-
291,279
585,000
28/04/2024
02/08/2029
4,338,302
4,338,302
08/07/2031
(2,095,833)
7,470,890
13,472,169
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
103,000
76,144
281,514
01/06/2030
25,000
49,660
03/07/2030
18/12/2030
176,490
544,904
01/06/2030
19/06/2030
49,473
03/07/2030
103,000
06/01/2031
76,144
03/07/2031
179,144
1,306,185
2p
2p
2p
200p
2p
2p
2p
2p
2p
2p
2p
2p
2p
2p
Total options
9,287,501
(63,348)
(2,095,833)
7,650,034
14,778,354
2014 EMI share
options award
2019 share
options award
As at 31 December 2021, a total of 14,778,354 options were outstanding which had an average
exercise price of 8p, and a weighted average remaining contractual life of 9.0 years.
Share options totalling 63,348 shares were excised in the year at an average weighted share price of
20.36p.
The Company has an approved EMI scheme for qualifying UK-based employees which provided for
an award of share options based on seniority. Share options vest over three years. If options remain
unexercised after a period of ten years from the date of grant, the options usually expire except in
exceptional circumstances at the discretion of the Board.
On 30 April 2014, the Company granted awards over 1.46 million shares under the EMI scheme
at an exercise price of £2.00 per share. The share options vested evenly over three years and are
exercisable for ten years from the date of grant.
On 2 August 2019, the Company granted awards over a total of 3.4 million shares under its 2015
Long-Term Incentive Plan (‘LTIP’). Under the LTIP, selected employees are entitled to exercise an
option to receive a certain number of shares at any time after a three-year vesting period, at a cost
to the employee of the nominal value of the shares. The number of shares awarded at the end of the
three-year period is dependent on the achievement of certain performance criteria.
Vesting of the LTIP awards is dependent on achievement of total shareholder return (‘TSR’). If TSR on
Shares is 200% or more at the end of three years following the award, all of the shares awarded will
vest. If TSR is 100%, then 25% of the awarded shares will vest. Between these points the number of
shares that vest will be pro-rata. If TSR is less than 100% then no shares will vest.
2020 share
options award
On 30 November 2020, the Company granted an annual award over 5 million shares under its 2015
Long-Term Incentive Plan (‘LTIP’) to the Executive Chairman, John Conoley. Under the LTIP, he is
entitled to exercise an option to receive shares at any time after a three-year vesting period, at a cost
to the employee of the nominal value of the shares. The number of shares awarded at the end of the
three-year period is dependent on the achievement of certain performance criteria.
95
Notes to the financial statements
Vesting of the LTIP awards is dependent on achievement of total shareholder return (‘TSR’). If TSR on
Shares is 300% or more at the end of three years following the award, all of the shares awarded will
vest. If TSR is 100%, then 25% of the awarded shares will vest. Between these points the number of
shares that vest will be pro-rata. If TSR is less than 100% then no shares will vest.
The fair value of these options was determined using a monte-carlo model and principal input
assumptions into that model include the exercise price 2p, expected volatility of 60.0%, option life 3.5
years. Volatility was determined with reference to the movement in the Company share price over 5
years starting from November 2015.
Employee share
matching scheme
In May 2020, the Board implemented an employee share-matching incentive scheme. The scheme
awards options to acquire shares at nominal value on a one-for-one basis with any shares acquired
in the market by the employee, their spouse or civil partner, subject to the discretion of the Board’s
Remuneration Committee. There is no vesting period or performance criteria for the options under
the scheme, therefore the option to acquire shares vests immediately and becomes fully exercisable.
The share matching scheme was closed following the release of the Company’s audited fi nal results
for the year ended 31 December 2020.
2021 share
options award
34. Related party
transactions
On 8 July 2021, the company granted awards of 7.5 million shares under its 2015 Long-Term
Incentive Plan (‘LTIP’). Under the LTIP, selected employees are entitled to exercise an option to receive
a certain number of shares at any time after a three-year vesting period, at a cost to the employee of
the nominal value of the shares. The number of shares awarded at the end of the three-year period is
dependent on the achievement of certain performance criteria.
Vesting of the LTIP awards is dependent on achievement of two metrics, total shareholder return
(‘TSR’) and earnings per share (‘EPS’). The maximum number of options that vest and become
exercisable into shares at the end of the vesting period is calculated as follows for each performance
condition:
Total Shareholder
Return (TSR)
Less than 100%
growth
100% growth
Between 100%
growth and 200%
growth
% of Options that vest
under the TSR performance
condition (50% of total award)
Earnings Per Share
(EPS)
% of Options that vest under
the EPS performance condition
(50% of total award)
Nil
25%
Between 25% and 100% on a
straight-line basis
Less than 2.2
pence
Nil
Between 2.2 pence
and 3.2 pence
Between 0% and 25% on a
straight-line basis
Between 3.2 pence
and 4.2 pence
Between 25% and 100% on a
straight-line basis
200% growth or more 100%
4.2 pence or more
100%
The fair value of these options was determined using a monte-carlo model and principal input
assumptions into that model include the exercise price 2p, expected volatility of 60.0%, option life
3.25 years. Volatility was determined with reference to the movement in the Company share price
over 5 years starting from July 2016.
Balances and transactions between the Company and its subsidiaries were as follows:
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Drawdown of loans and borrowings (principal amount)
Repayment of loans and borrowings (principal amount)
Impairment of intercompany loan (IFRS 9)
Cash transfer
Total transactions between Company and subsidiaries
2021
2020
£000
£000
-
-
-
-
(3,883) (1,586)
8,995
5,496
5,112
3,910
96
Notes to the financial statements
34. Related party
transactions
Continued
Remuneration of key management personnel
The remuneration of the key management personnel of the Group, together with the Non-Executive
Directors, is set out below.
Details of individual Directors’ remuneration are given in the remuneration section of the
Remuneration Committee report.
97
OTHER INFORMATION:
Corporate directory
Remuneration of key management personnel
Aggregate emoluments
Company pension contributions
Sums paid for Non-Executive Directors’ services
Share-based payments
Total remuneration
The remuneration in respect of the highest paid Director was:
Emoluments
Defined pension contributions
Share-based payments
2021
2020
£000
£000
927
1,009
54
313
60
69
205
157
1,354
1,440
2021
2020
£000
£000
254
14
268
239
14
253
During 2021, the Company granted awards over 3.1 million shares in total to two Executive Directors
under its 2015 LTIP. These options have an exercise price of the nominal cost of the shares of
2 pence per share and have an expected life of ten years. The share options vest following a
performance period of three years and are subject to the achievement of total shareholder return and
earnings per share targets (note 33). The element of the share-based payment charge relating to the
two Executive Directors is £22,231. For movements in directors share-based payments please refer
to the directors renumeration section on page 47.
35. Post balance
sheet events
As announced on 28 March 2022 the Group successfully completed the fully funded Development
Phase 1 (DP1) of its partnership with Techem and has now formally concluded the agreement
with Techem for Development Phase 2 (DP2), with a detailed specification. It is expected that the
development period will last until the end of 2024 and the new generation smoke alarm will be
available for sale in H2 2024. Techem has also selected the FireAngel CO sensor, manufactured by
FireAngel’s CO sensor factory in Canada, to be incorporated exclusively into the new alarm, which is
expected to significantly increase the medium-term financial opportunity for the Group.
Other information
NOMINATED ADVISOR AND BROKERS
Shore Capital & Corporate Limited/ Shore Capital
Stockbrokers Limited
Cassini House
57-59 St James’s Street
London
SW1A 1LD
Singer Capital Markets
1 Bartholomew Lane
London EC2N 2AX
REGISTRAR
Neville Registrars Limited
Neville House
Steelpark Road
Halesowen
B62 8HD
BANKER
HSBC UK Bank plc
3 Rivergate
Temple Quay
Bristol
BS1 6ER
REGISTERED NUMBER
3991353
COMPANY SECRETARY
Miss D.E.A Williams
REGISTERED OFFICE
Vanguard Centre
Sir William Lyons Road
Coventry
CV4 7EZ
AUDITOR
RSM UK AUDIT LLP
Chartered Accountants
St Philips Point
Temple Row
Birmingham
B2 5AF
SOLICITORS
Pinsent Masons
30 Crown Place
London
EC2A 4ES
Shareholder
information
SHAREHOLDER ENQUIRIES
Any shareholder with enquiries should, in the first instance, contact the Company’s registrar,
Neville Registrar, using the address provided in the Corporate directory.
SHARE PRICE INFORMATION
London Stock Exchange AIM symbol: FA.
Information on the Company’s major shareholders is available in the Share Details section of the
Investors area of the FireAngel Safety Technology Group plc website at www.fireangeltech.com.
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INVESTOR RELATIONS
Vanguard Centre
Sir William Lyons Road
Coventry
CV4 7EZ
Telephone: 024 7771 7700
Email: info@fireangeltech.com
Website: www.fireangeltech.com
Financial year end - 31 December 2021
Full Year Announced - 29 March 2022
Annual General meeting - 22 June 2022
Now fully recyclable
FireAngel Safety Technology Group plc
Registered in England and Wales with Registered No. 3641019.
Registered Offi ce: Vanguard Centre, Sir William Lyons Road, Coventry, CV4 7EZ
VAT No. GB 765 3419 14