REG - Safestyle UK PLC - Trading and Operations Update & Notice of Results

Safestyle UKAnnouncement

26/01/2022 07:05

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RNS Number : 6100Z  Safestyle UK PLC  26 January 2022

26 January 2022

 

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")

Trading and Operations Update, Upgraded FY21 Expectations & Notice of
Results

 

Safestyle UK plc (AIM: SFE), the leading retailer and manufacturer of PVCu
replacement windows and doors to the UK homeowner market, today issues a
trading and operations update for the year ended 2 January 2022 ("FY 21").

 

Key Highlights

·      Underlying profit before tax ahead of market expectations

·      Strong net cash position of c.£12.1m

·      Effective action to mitigate ongoing cost inflation and supply
chain pressures

·      Continued progress against core strategic priorities

·      Trading during the first weeks of 2022 has remained healthy with
order book growing in line with usual Q1 trading pattern

 

Mike Gallacher, CEO of Safestyle, commented:

 

"I am delighted that despite the turbulent context in which we have operated
over the last 12 months we have been able to both improve our financial
delivery and make strong progress on our strategic priorities.  This has
delivered our best financial performance since 2017 whilst also building the
foundations for sustainable long-term growth.

As a result, the Board expects 2021's full year underlying profit before tax
to be ahead of current market expectations."

FY 21 Financial Headlines

 

The Group expects to report revenue growth of 26.6% for FY 21 compared to 2020
and 13.6% compared to 2019, delivering Group revenues of c.£143.3m.  2019
provides a more meaningful comparative as a result of the COVID lockdown in
the first half of 2020 during which the business generated no revenue for
almost two full months.

Consistent with the Group's interim results in September 2021, the progress
reported on improved margins versus both comparative periods has been
sustained for the full year.  However, as a result of the historically low
lead generation costs in H1 which normalised to pre-pandemic levels in H2, the
full year gross margin, which is still expected to be over 30%, is expected to
be lower than the 32.3% reported for the first half of the year.

Notwithstanding the above, the Group expects to report underlying profit
before tax ahead of market expectations.

The Group's cash position has also significantly increased by £4.5m against
the prior year and is now a strong net cash balance of c.£12.1m at 2 Jan
2022.  This balance is after the repayment of £2.4m of the VAT deferral from
May 2020.  £3.0m of the Group's committed banking facilities remain undrawn.

 

Trading and Operational Update

Trading remained robust through H2 and the Group finished the year with its
second highest order book ever, only slightly behind the record levels at the
end of 2020.  Trading during the first weeks of 2022 has remained healthy
with our order book growing in line with our usual Q1 trading pattern.

Pricing pressure, supply chain uncertainty and labour shortages continued to
characterise the wider market in H2, combined with the impact of COVID on
scheduled work and productivity.  However, the business continued to take
prompt action to navigate these challenges including addressing cost pressures
through pricing.

 

Since the interim results announcement, the Group has continued to address the
critical labour shortages which have impacted the industry.  During H2 this
resource was focused both on new customers and on recovering customer service
levels that had deteriorated during the pandemic.  Throughout this period,
maintaining our operational schedules in the midst of widespread disruption
proved challenging and provided a constraint upon both revenue and efficiency.
 Nonetheless, the Board is pleased with the progress that was achieved by the
end of the year and believes this will underpin a more efficient operational
performance in 2022.

 

Strategic Update

 

Despite the operational challenges outlined above, the Group has made
excellent progress across its core strategic priorities.  Specifically:

 

·      The modernisation of our brand will be reflected in a return to
TV advertising through a new national campaign during Q1 2022.  The updated
brand positioning reflects our strength in the 'value segment' supported by a
new brand ambassador, former England goalkeeper, David Seaman MBE.

 

·      We opened our new Safestyle Academy in Q4 2021, enabling our
vision of embedding Safestyle standards of expertise and customer service in
the industry, while also developing the next generation of installers.

 

·      Our initiative to introduce Standard Operating Procedures and
training to level up performance across our sales branches and depots has
progressed.  To support this, we have established new roles for sales branch
management and recruited c.100 PAYE employees into these roles.  This
supports our ability to train, manage and continually improve our national
field sales operations.

 

·      We have introduced Net Promoter Score ('NPS') metrics across our
installation network and supported this initiative with new incentives that
reward the delivery of customer satisfaction.  Concurrently, we have invested
to improve our call centres, ensuring better responsiveness and service
levels.

 

·      C0(2) targets which we set for 2024 have been exceeded three
years in advance due to a strong set of initiatives implemented ahead of plan
during 2021.  This positive progress will drive an upgrade in our targets
that we will communicate later in the year.

 

Outlook

 

Looking ahead, the Board expects that the operating conditions, which have
generated continuing operational challenges through the pandemic, will improve
in 2022.  The Board plans to leverage the expected operational stability
versus the last two years to underpin strong investments in developing the
business.

 

This investment will encompass the return to TV advertising, continued
investment in training staff in our new Academy as well as further improving
our customer experience.  These long-term investments are overdue and the
Board believes that they will enable sustained market share growth in the
years to come.

 

A further trading update will be provided as part of our full year results
announcements for the year ended 2 January 2022, which will be published on 24
March 2022.

 

 

 

Enquiries:

 Safestyle UK plc                                     via FTI Consulting

 Mike Gallacher, Chief Executive Officer

 Rob Neale, Chief Financial Officer

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

 Dan Bate / Daniel Harris / Dominic King

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

 Neil Patel / Jamie Richards

 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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