TIDMSFE
RNS Number : 9213I
Safestyle UK PLC
17 December 2020
[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. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.]
17 December 2020
Safestyle UK plc
("Safestyle" or the "Group")
Trading Update
Safestyle UK plc (AIM: SFE), the leading retailer and
manufacturer of PVCu replacement windows and doors to the UK
homeowner market, today issues an update on current trading for the
year ending 31 December 2020.
Following the Government's implementation of a second national
lockdown in November, the Group was able to continue largely normal
operations with its strict COVID-safe policies that were developed
during and after the first lockdown and embedded throughout the
business.
Trading Update
Since the Group's interim results announcement on 17 September
2020, the Board is pleased to report that in response to the strong
order intake growth described in its previous announcement, the
business has continued to increase its operational capacity,
recruiting staff across processing, survey, manufacturing and
installations. This response delivered 9% year on year revenue
growth in Q3 and is expected to deliver c.20% revenue growth for
Q4.
This revenue growth was achieved despite major supply chain
issues attributable to the overall increase in industry demand,
reduced third party supply chain inventories and specific global
and European supply constraints. Despite these significant
operational disruptions, the increase in capacity has enabled the
Group to deliver its fastest acceleration in revenue growth since
flotation in 2013.
Throughout the second half of this year, management have worked
to balance trading and installation activities to optimise order
intake growth and deliver margin improvement whilst controlling
customer lead times and service levels. This is illustrated by the
Group taking the opportunity to grow the order book to a position
that is more than double what it was at the end of Q3 last year and
a forecast year-end level that is 75% higher than 2019's closing
position.
The Group will therefore enter 2021 with its strongest ever
installation pipeline at this stage of the year, providing a solid
platform to maintain its current trading momentum whilst at the
same time providing some insulation against the potential impact of
disruption to future sales activities from further lockdowns.
Strategic Activities
Despite the challenges associated with operating safely and
effectively through H2, progress has also been made on our
longer-term strategic priorities. Our new commercial management
team have started to standardise our sales branch structure and
processes and the same activities are underway within our depot
network. Significant investments have been made in improving our
customer service and this focus will be sustained in 2021. In
addition, a range of margin enhancing activities have been
completed that are now starting to positively impact our financial
performance.
Outlook
The level of installations activity in Q4 is expected to help
deliver our strongest financial result for any quarter since 2017.
The Group has built capacity to deliver double digit revenue growth
and has also invested in strengthening the year-end order book. At
the same time, management have navigated a range of issues
including supply chain disruption, additional COVID-related costs,
temporary restrictions on canvass operations and investments to
deal with lockdown warranty work. Together, these factors have
impacted profitability levels.
As a result, H2 revenue is expected to be approximately GBP71m
with an underlying profit before taxation of around GBP0.5m,
materially lowered by the investments made into building our order
book and the issues highlighted above.
Full year revenue is therefore expected to be over GBP113m with
an underlying loss before taxation of approximately GBP(4.5)m, the
loss being fully attributable to the cessation of operations during
the first national lockdown in H1. Liquidity remains strong with
year-end net cash forecast to be approximately GBP7m, with GBP3m of
the Group's banking facilities remaining undrawn and a significant
level of covenant headroom available. The year-end net cash
position benefits from an agreed deferral of a GBP2.5m VAT
liability originally payable during the first lockdown in May which
will be paid in March 2021.
The Group has made good progress in its margin initiatives as a
result of actions taken through the year, most importantly through
addressing the costs of our consumer finance proposition. The
benefits of these items are only recently translating into
installation revenue, with the majority of the improvement
currently reflected in the order book.
Notwithstanding the obvious uncertainty of the consumer context,
the Board is confident that the Group's revenue and profitability
momentum in Q4 will carry through into 2021, a performance level
that is underpinned by the strength of the order book.
Consequently, the Board expects 2021 financial performance to be
significantly ahead of current market expectations.
Mike Gallacher, CEO of Safestyle UK, commented:
"Despite the unprecedented challenges faced by the Group during
the year, I am pleased with the recent tangible progress we have
made in stepping up our operational capacity and delivering strong
revenue growth, whilst further strengthening our order book.
Moreover, we have also made good progress on our longer-term
strategic priorities. Notwithstanding the uncertainty associated
with the current economic backdrop, the Group is well positioned to
build on this positive momentum going into 2021. I would again like
to thank our staff and all of our stakeholders for their efforts
and support over the course of the year."
Enquiries:
Safestyle UK plc via FTI Consulting
Mike Gallacher, Chief Executive Officer
Rob Neale, Chief Financial Officer
Zeus Capital (Nominated Adviser & Joint Tel: 0203 829 5000
Broker)
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 / James Styles / Sam Macpherson
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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