Safestyle UK PLC Trading Update (8381M)
September 19 2023 - 2:00AM
UK Regulatory
TIDMSFE
RNS Number : 8381M
Safestyle UK PLC
19 September 2023
19 September 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")
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 GBP2m
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 GBP140m - GBP142m and
consequently, underlying loss will be in the range of GBP(9.5)m -
GBP(10.5)m.
On the above basis, year-end net debt is expected to be between
GBP(5.5)m and GBP(6.5)m. The Group has debt facilities of GBP7.5m
and was in a net cash position of GBP1.5m 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 or
www.safestyle-windows.co.uk .
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