Safestyle UK PLC Half Year Trading Update (9483T)
24 July 2020 - 4:00PM
UK Regulatory
TIDMSFE
RNS Number : 9483T
Safestyle UK PLC
24 July 2020
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the Company to constitute inside information stipulated under the
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this announcement via the Regulatory Information Service, this
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domain.
24 July 2020
Safestyle UK plc
("Safestyle" or the "Group")
Half Year 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 a trading update for the six months
ended 30 June 2020, in advance of its half year results
announcement scheduled for 17 September 2020.
Highlights
-- Strong rebound in order intake post-lockdown with order
intake for the eight weeks from 25 May 23.2% ahead of the same
period last year
-- The Group was profitable for the months of January, February and June 2020
-- Net cash GBP6.0m at the end of June 2020
-- Order book carried into H2 is 45% higher than at the same point last year
-- Focus is on continuing to increase our survey, order processing and installation capacity
-- Board is encouraged by the restart performance whilst
cognisant that confidence and consumer demand remain uncertain
Trading and Operational Update
The Group restarted operations in mid-May with a phased return
to work which allowed the smooth implementation of COVID safe
policies, a balancing of work in progress and a good level of
collaboration with suppliers. Every function in the business was
impacted by our new COVID safe practices, with a particular focus
placed on ensuring safe in-home operations. The consumer response
was supportive and flexible with existing customers keen to have
their windows and doors fitted, reassured by the practices we had
adopted.
On restart it became clear that consumer demand was ahead of our
expectations. The strength of this demand combined with the speed
of our return to full operations delivered excellent initial order
intake, with growth of 23.2% versus 2019 for the eight week period
from 25 May.
In this context the Group has been focused on scaling up
capacity to meet the increased demand. As a result, initial
installation revenues were only marginally ahead for the same eight
week period of the prior year. Progress on capacity has been made
and hence the last three weeks delivered a 16.9% growth in
installation revenue.
All of the above has resulted in an order book carried into H2
that is now 45% higher than at the same point last year.
Our current focus is on continuing to ramp up our survey, order
processing and installation capacity to match our trading
performance. We aim to do this while ensuring we maintain
discipline on fixed overhead levels.
H1 Financial Headlines
H1 revenues were impacted by the cessation of all activities on
23 March with installation activities restarting on 25 May. As a
result of this, revenues for the period will be c.GBP42.1m, 34.7%
below H1 2019 despite the first two months of the year delivering
revenue growth year on year.
Net Cash at 30 June 2020 was c.GBP6.0m, with GBP3.0m of the
Group's committed banking facilities undrawn. The net cash position
has benefitted from the Placing of new shares raising GBP8.2m (net)
on 8 April 2020 and a delay in VAT payments agreed with HMRC of
GBP2.7m. With this exception, working capital is being controlled
normally and the Group is generating positive net cash inflows.
Outlook
The Board is encouraged by the performance of the business
following the restart of operations. However, it is not yet clear
whether the recent performance is sustainable in an environment
where confidence and consumer demand remain uncertain.
Faced with this uncertainty, the Board will continue to closely
monitor the Group's performance and market fundamentals in the
months ahead with the intention of providing guidance for the full
year as soon as it is credible to do so.
Mike Gallacher, CEO of Safestyle UK, commented:
"Prior to the lockdown on 23 March the business was ahead of our
internal budget and making good progress on its strategic
priorities. The lockdown was managed smoothly with a small skeleton
staff maintaining our order book, providing emergency customer
support and running a trial remote digital sales team. During April
we were pleased to receive strong support from our shareholders in
a GBP8.5m placing of new shares which significantly strengthened
our balance sheet and provided additional liquidity which proved
helpful as we restarted the business.
"The Board took an early decision to accelerate the Group's
return to full operations in response to the strong consumer demand
experienced in May and early June. Our cash position supported our
ability to trade proactively and we have undoubtedly benefited from
a slower competitor response since the lockdown lifted. Our view is
that the combination of deferred lockdown demand and a major shift
in consumer spend from travel and leisure to home improvement have
driven the increased demand we have experienced.
"Despite very good levels of current consumer demand the medium
term economic outlook remains uncertain. We will therefore maintain
a balanced approach, seeking to grow the business while keeping our
costs controlled and net cash position positive."
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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