Half Year Trading Update and Notice of Results

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 Rob Neale, Chief Executive Officer Phil Joyner, Chief Financial Officer	via FTI Consulting
Zeus (Nominated Adviser & Joint Broker) Dan Bate / James Edis (Investment Banking) Dominic King (Corporate Broking)	Tel: [phone]
Liberum Capital Limited (Joint Broker) Jamie Richards / William King	Tel: [phone]
FTI Consulting (Financial PR) Alex Beagley / Sam Macpherson / Amy Goldup	Tel: [phone]

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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