TIDMSFE
RNS Number : 6100Z
Safestyle UK PLC
26 January 2022
26 January 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 and Operations Update, Upgraded FY21 Expectations &
Notice of Results
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 and operations update for
the year ended 2 January 2022 ("FY 21").
Key Highlights
-- Underlying profit before tax ahead of market expectations
-- Strong net cash position of c.GBP12.1m
-- Effective action to mitigate ongoing cost inflation and supply chain pressures
-- Continued progress against core strategic priorities
-- Trading during the first weeks of 2022 has remained healthy
with order book growing in line with usual Q1 trading pattern
Mike Gallacher, CEO of Safestyle, commented:
"I am delighted that despite the turbulent context in which we
have operated over the last 12 months we have been able to both
improve our financial delivery and make strong progress on our
strategic priorities. This has delivered our best financial
performance since 2017 whilst also building the foundations for
sustainable long-term growth.
As a result, the Board expects 2021's full year underlying
profit before tax to be ahead of current market expectations."
FY 21 Financial Headlines
The Group expects to report revenue growth of 26.6% for FY 21
compared to 2020 and 13.6% compared to 2019, delivering Group
revenues of c.GBP143.3m. 2019 provides a more meaningful
comparative as a result of the COVID lockdown in the first half of
2020 during which the business generated no revenue for almost two
full months.
Consistent with the Group's interim results in September 2021,
the progress reported on improved margins versus both comparative
periods has been sustained for the full year. However, as a result
of the historically low lead generation costs in H1 which
normalised to pre-pandemic levels in H2, the full year gross
margin, which is still expected to be over 30%, is expected to be
lower than the 32.3% reported for the first half of the year.
Notwithstanding the above, the Group expects to report
underlying profit before tax ahead of market expectations.
The Group's cash position has also significantly increased by
GBP4.5m against the prior year and is now a strong net cash balance
of c.GBP12.1m at 2 Jan 2022. This balance is after the repayment of
GBP2.4m of the VAT deferral from May 2020. GBP3.0m of the Group's
committed banking facilities remain undrawn.
Trading and Operational Update
Trading remained robust through H2 and the Group finished the
year with its second highest order book ever, only slightly behind
the record levels at the end of 2020. Trading during the first
weeks of 2022 has remained healthy with our order book growing in
line with our usual Q1 trading pattern.
Pricing pressure, supply chain uncertainty and labour shortages
continued to characterise the wider market in H2, combined with the
impact of COVID on scheduled work and productivity. However, the
business continued to take prompt action to navigate these
challenges including addressing cost pressures through pricing.
Since the interim results announcement, the Group has continued
to address the critical labour shortages which have impacted the
industry. During H2 this resource was focused both on new customers
and on recovering customer service levels that had deteriorated
during the pandemic. Throughout this period, maintaining our
operational schedules in the midst of widespread disruption proved
challenging and provided a constraint upon both revenue and
efficiency. Nonetheless, the Board is pleased with the progress
that was achieved by the end of the year and believes this will
underpin a more efficient operational performance in 2022.
Strategic Update
Despite the operational challenges outlined above, the Group has
made excellent progress across its core strategic priorities.
Specifically:
-- The modernisation of our brand will be reflected in a return
to TV advertising through a new national campaign during Q1 2022.
The updated brand positioning reflects our strength in the 'value
segment' supported by a new brand ambassador, former England
goalkeeper, David Seaman MBE.
-- We opened our new Safestyle Academy in Q4 2021, enabling our
vision of embedding Safestyle standards of expertise and customer
service in the industry, while also developing the next generation
of installers.
-- Our initiative to introduce Standard Operating Procedures and
training to level up performance across our sales branches and
depots has progressed. To support this, we have established new
roles for sales branch management and recruited c.100 PAYE
employees into these roles. This supports our ability to train,
manage and continually improve our national field sales
operations.
-- We have introduced Net Promoter Score ('NPS') metrics across
our installation network and supported this initiative with new
incentives that reward the delivery of customer satisfaction.
Concurrently, we have invested to improve our call centres,
ensuring better responsiveness and service levels.
-- C0(2) targets which we set for 2024 have been exceeded three
years in advance due to a strong set of initiatives implemented
ahead of plan during 2021. This positive progress will drive an
upgrade in our targets that we will communicate later in the
year.
Outlook
Looking ahead, the Board expects that the operating conditions,
which have generated continuing operational challenges through the
pandemic, will improve in 2022. The Board plans to leverage the
expected operational stability versus the last two years to
underpin strong investments in developing the business.
This investment will encompass the return to TV advertising,
continued investment in training staff in our new Academy as well
as further improving our customer experience. These long-term
investments are overdue and the Board believes that they will
enable sustained market share growth in the years to come.
A further trading update will be provided as part of our full
year results announcements for the year ended 2 January 2022, which
will be published on 24 March 2022.
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 / 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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