Safestyle UK PLC Trading Update (8521H)
29 Noviembre 2022 - 1:00AM
UK Regulatory
TIDMSFE
RNS Number : 8521H
Safestyle UK PLC
29 November 2022
29 November 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 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.
Trading update
Order intake across the period from late September to the end of
October has been volatile. The Board attributes this to the
well-reported political and economic news and events that have had
a direct, adverse impact on consumer confidence. Consequently,
order intake (value) across this period was 7.6% behind
expectations and 2.7% lower than the prior year. In addition, the
Group experienced higher costs of acquisition than forecast which
the Board also attributes to the challenging market context.
Encouragingly, since early November, demand has improved which
has resulted in order intake (value) returning to expected levels
and growing by over 30% year on year across these last three weeks.
Lead generation costs have also returned to expected levels.
The lower order intake of September/October will result in lower
installation volume levels (c.5k frames) than expected this year.
The improved order intake in November has driven an increase in
cost in the month, but came too late to deliver the associated
revenue this year. Unfortunately, both aspects will significantly
impact FY22 profitability. The improved order intake later in the
year will, however, result in an order book that will close the
year significantly ahead of our original expectations which will
help mitigate any sales volatility in early FY23.
Operational update
The Group continues to execute the plan to transition to its new
supplier of PVCu profile which will conclude by the end of the
year. There is expected to be a small impact on manufacturing
volumes and thus installation volume levels (which is included in
the overall volume shortfall quantified above) to ensure there is
sufficient time for a smooth switchover.
The Group has also maintained the installation capacity levels
that it has built in the last few years. This has helped resource
the resolution of a backlog of customer service issues that arose
during the year following the cyber-attack and subsequent summer
factory disruption caused by record summer temperatures. The Board
looks forward to moving into calmer waters and making progress with
its initiatives and plans to further improve the customer
experience as described at its recent Capital Markets Day.
Borrowing facility update
The Board can confirm that it has reached agreement on heads of
terms for a replacement of its existing facility with a new GBP7.5m
RCF extending out to the end of 2026. The Board expects legal
completion by the end of the year. This new facility will also be
provided by Aurelius, the Group's existing facility provider. The
terms and pricing represent a reduced cost that is commensurate
with the much-improved health of the balance sheet since the
previous borrowing facility was secured in 2018.
Outlook
The Board continues to focus on delivery of its strategies and
medium-term financial targets which were shared at the recent
Capital Markets Day.
In the immediate term, as described above, the economic
uncertainty has had an adverse impact on demand levels in a trading
period that under-pinned installation volume expectations for the
last months of the financial year. Demand has significantly
improved in November and the Board is expecting the Group to
continue to achieve strong year on year order intake growth until
the end of the year. This performance will come too late to
positively influence FY22's outturn, but will materially increase
the closing order book versus previous expectations.
These reduced sales and thus lower installation volumes combined
with higher costs of order acquisition incurred until early
November, costs of maintaining capacity levels in the short-term
and investment in a larger closing order book will adversely impact
the Group's gross margin. As a result, the Board expects that the
Group's underlying profit before taxation for FY22 will be
materially below current market expectations. The Board also
forecasts that net cash, whilst still remaining healthy, will be
lower than expectations at c.GBP9m at the year-end.
Looking ahead into 2023, there remains limited visibility on the
strength of demand for next year, but the Board expects that the
market will continue to be sensitive to negative sentiment. The
Board reiterates that demand levels have improved recently and
points to the fact that the Group operates in what has historically
been a resilient and consistently-performing category despite
previous challenging macroeconomic conditions.
In addition, the Group has a strong track record of
out-performing the market in an environment such as this. The Board
intends to continue with its sales and marketing strategies to
ensure that consumers are aware of the Group's value proposition
whilst also emphasising the energy savings that our products can
deliver.
Despite the recent volatility in trading, the Board is focused
on advancing our strategic agenda and remains confident that this
will lead to progressive increases in the Group's share of the
market as well as driving improved margins over the coming
years.
Enquiries:
Safestyle UK plc via FTI Consulting
Mike Gallacher, Chief Executive Officer
Rob Neale, 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
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 or
www.safestyle-windows.co.uk .
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END
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