REG - Safestyle UK PLC - Trading Update

Safestyle UKAnnouncement

19/09/2023 07:00

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RNS Number : 8381M  Safestyle UK PLC  19 September 2023

19 September 2023

 

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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 Update

 

Safestyle UK plc (AIM: SFE), the leading UK focused retailer and manufacturer
of PVCu replacement windows and doors for the homeowner market, today issues
the following trading update.

 

Performance update

 

As reported in our half year trading update on 27 July, our numerous
mitigation actions returned the business to profitability at the end of the
first half despite reduced volumes in this more challenging market.  I am
pleased to confirm that we achieved our profit expectations in July and
August.

 

Market and trading update

 

The Group is now in its most important trading period of the year.  This
period begins in mid-August and runs through to early December as customers
prepare their homes for the colder months which typically results in increased
demand for our products.

 

Whilst our order intake went according to plan in early August, since
mid-August we have fallen behind our internal forecasts and this has persisted
into early September.  Other independent indicators of market health, such as
online search activity, indicates that the current market is performing at
c.24% below the July and August levels of 2022.  Pleasingly, our order intake
has not fallen this far, it is currently down c.11% YoY which shows our
product offering is withstanding wider market pressures better than others.

 

It is management's belief that following a wet summer, the unseasonally warm
weather at the end of August into the hottest early September on record is
compounding the macroeconomic factors that influence current market demand
levels.

 

Despite these challenging headwinds, the latest data from FENSA demonstrates
that we are continuing to grow our market share, which is now estimated at
over 8%.  This growth in our market share, coupled with the proactive actions
management have taken to stimulate demand and protect the business are
expected to be a benefit as we move forward.

 

We are attempting to stimulate demand and purchase intent through online
activity, the deployment of our upgraded website, discount management and our
commitment to a leading consumer finance portfolio.  However, the impact of
an industry wide fall in volumes due to market conditions is combining with
higher lead generation costs and a lower average frame rate than expected.

 

As a result, management has continued to take further steps to mitigate these
weaker demand levels.  These include reduced shifts in our factory and
voluntary pay and fee waivers for the Board, alongside maintaining other
measures implemented earlier in the year that have reduced annualised
operating expenses by over £2m since the start of H2.

 

These measures alone are, however, not sufficient to fully mitigate the
adverse impact of current demand and thus, volume levels in the short-term.
Our best estimate is that, whilst we expect demand levels will pick up versus
current levels in line with seasonal trends, we believe it is likely to be
below previously expected levels.  Consequently, the Board now expects the
Group's revenue for 2023 will be between £140m - £142m and consequently,
underlying loss will be in the range of £(9.5)m - £(10.5)m.

 

On the above basis, year-end net debt is expected to be between £(5.5)m and
£(6.5)m.  The Group has debt facilities of £7.5m and was in a net cash
position of £1.5m as at the end of its August reporting period.  The trading
outlook and timing of working capital outflows for the year to go are the
primary cause of the expected year-end net debt position.  The Group intends
to engage with stakeholders to strengthen the balance sheet in order to
support its recovery and help facilitate future growth.

 

The Board maintains the growth recovery prospects are strong and clear data
highlighting the UK's ageing housing stock in need of repair underpins this.
As will be reported in the interim results statement, the Group has also made
progress on its strategic priorities and our market share growth is a further
sign that there remains a compelling opportunity for the business to
capitalise on a market recovery and achieve its medium-term targets.

 

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 / Anake Singh

 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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