REG - Safestyle UK PLC - Half Year Trading Update and Notice of Results

Safestyle UKAnnouncement

27/07/2023 07:15

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RNS Number : 3956H  Safestyle UK PLC  27 July 2023

27 July 2023

 

The information contained within this announcement is deemed by the Company to
constitute inside information stipulated under the Market Abuse Regulation
(EU) No. 596/2014 as it forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018.  Upon the publication of this
announcement via the Regulatory Information Service, this inside information
is now considered to be in the public domain.

 

Safestyle UK plc

("Safestyle" or the "Group")

 

Half Year Trading Update and Notice of Results

 

Safestyle UK plc (AIM: SFE), the leading UK focused retailer and manufacturer
of PVCu replacement windows and doors for the homeowner market, today issues a
trading and operations update for the six months ended 2 July 2023 ("H1").

 

Trading and operations update

 

The Group expects to report H1 revenue of £74.0m, a decline of 5.4% on H1
2022, which is in line with our forecasts and reflects the challenging trading
conditions of the first half of the year.

 

The combination of inflation, which has continued to remain higher than
economist forecasters expected, and consequential higher interest rates, have
put even greater pressure on our customers' disposable incomes, weakened
consumer confidence and increased the cost of providing our market leading
finance products.  That being said, following the £1.4m investment in the
Group's Q1 TV Campaign, brand awareness has continued to grow and our market
share has increased by 30bps to 8.0% (3.9% growth) in H1.

 

H1 industry data from Fensa shows that the market for installations is c.8%
lower year on year, with Q2 representing a declining trend at c.12% lower.
Alongside the reduction in installations in the market, the average number of
frames per installation has also declined.

 

H1 order intake (value) was 6.4% lower than the prior year and our H1 order
book closed 22% lower than an unusually strong H1 22 comparator.

 

In response to the challenging market conditions, the Board initiated the
largest efficiency and cost reduction programme for many years which,
regrettably, included a small number of redundancies at all levels across the
business.  These actions equate to a c.£2m annualised saving from levels at
the start of 2023.

 

Although these actions have not been enough to fully counter the volume and
margin impact of the trading environment, the Board remains focused on
delivering monthly run rate profitability in a challenging market which was
achieved at the end of H1.  In line with our forecasts, the Group expects to
report an underlying loss before taxation for H1 2023 of c.£(6.0)m.

 

The impact of the H1 financial performance, alongside a one-off change in
timing of payments to our new profile supplier, has resulted in net cash at 2
July 2023 of c.£0.9m.

 

Outlook

 

The challenging market conditions have worsened over the last 5 weeks into
July and have adversely impacted order intake volumes which the Board
forecasts will be an ongoing trend to the extent the Group's full year
performance is now expected to be materially below current market
expectations.  The Board continues to forecast an underlying profit before
taxation for H2, now expected to be c.£0.5m.  This performance level
represents ongoing delivery of monthly profitability established at the end of
H1 into H2.  The Board also remains confident that the Group will continue to
deliver market share growth for the remainder of the year.

 

The net cash position at the end of the year is still expected to be
positive.  The Group also remains fully compliant with its borrowing facility
arrangements and the full £7.5m facility continues to be accessible.

 

More detail on the Group's financial performance, the delivery of its
efficiency and cost reduction programme and the progress made against its
strategic priorities will be provided in its interim results for the six
months ended 2 July 2022 on 27 September 2023.

 

Enquiries:

 

 Safestyle UK plc                             via FTI Consulting

 Rob Neale, Chief Executive Officer

 Phil Joyner, Chief Financial Officer

 Zeus (Nominated Adviser & Joint Broker)      Tel: 0203 829 5000

 Dan Bate / James Edis (Investment Banking)

 Dominic King (Corporate Broking)

 Liberum Capital Limited (Joint Broker)       Tel: 0203 100 2100

 Jamie Richards / William King

 FTI Consulting (Financial PR)                Tel: 0203 727 1000

 Alex Beagley / Sam Macpherson / Amy Goldup

About Safestyle UK plc

The Group is the leading retailer and manufacturer of PVCu replacement windows
and doors to the UK homeowner market.  For more information please visit
www.safestyleukplc.co.uk (http://www.safestyleukplc.co.uk) or
www.safestyle-windows.co.uk (http://www.safestyle-windows.co.uk) .

 

 

 

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