Safestyle UK plc (LON:SFE), the leading UK-focused retailer and manufacturer of PVCu replacement windows and doors for the homeowner market, today announced its final results for the 12 months ended 31 December 2019.
Financial and operational highlights
| Year ended 31 December 2018 £m | Year ended 31 December 2019 £m | % change | |
| Revenue | 126.2 | 116.4 | 8.4% |
| Underlying gross profit1 | 31.9 | 26.7 | 19.6% |
| Underlying gross margin %2 | 25.3% | 22.9% | 240bps |
| Gross profit | 31.9 | 25.9 | 23.3% |
| Gross margin % | 25.3% | 22.2% | 310bps |
| Underlying (loss) before taxation3 | (1.5) | (8.7) | 82.6% |
| Non-underlying items4 | (2.3) | (7.5) | 69.2% |
| (Loss) before taxation | (3.8) | (16.3) | 76.4% |
| EPS – Basic | (4.0p) | (16.1p) | 75.2% |
| Net cash5 | 0.4 | 0.3 | 70.6% |
1 Underlying gross profit is defined as reported gross profit before non-underlying items4 and is included as an alternative performance measure in order to aid users in understanding the ongoing performance of the Group.
2 Underlying gross margin % is defined as underlying gross profit divided by revenue and is included as an alternative performance measure in order to aid users in understanding the ongoing performance of the Group.
3 Underlying (loss) before taxation is defined as reported (loss) before taxation before non-underlying items and is included as an alternative performance measure in order to aid users in understanding the ongoing performance of the Group.
4 Non-underlying items consist of non-recurring costs, share-based payments and the Commercial Agreement amortisation. See Financial Review for more detail.
5 Net Cash is cash and cash equivalents less borrowings.
A reconciliation between the terms used in the above table and those in the financial statements can be found in the Financial Review.
· Group restored to profitability in the middle of the year with strong progress made on phase two of the Turnaround Plan (see CEO’s Statement), which is now complete and which has achieved improvements in revenues and gross margin alongside reduced overheads.
· The year end order book increased by 24% above 2018’s closing position through accelerated order intake in November and December driven by intentionally increased lead generation investment, which has held back the 2019 profit outcome.
· Volume of frames installed increased by 3.3% to 190,252 (2018: 184,184).
· Average unit sales price up 5.0% to £678 (2018: £646).
· Improvement in market share (as measured by FENSA) to 8.5% (2018: 7.8%).
· Business transformation has also accelerated, improving further in customer service, safety, compliance and internal management processes.
Outlook
· The Group has had a strong start to 2020, with both sales and profit ahead of the last year and the business well positioned for delivery of our forecast.
· However, the COVID-19 pandemic is creating significant uncertainty across the UK and international economy.
· The business has responded to the situation rapidly and is equipped to deal with the probable short-term adverse impact because of its improved net cash position, underpinned by a committed facility to October 2021 alongside a leaner cost base.
· To preserve cash, the previously announced c.£3m marketing investment has been now deferred.
· The Board is now focused on the wellbeing of staff, protecting the business and providing the best service possible in the current context.
· The overall effect of the current uncertainty on the Group is, at the current time, difficult to quantify. For this reason, the audit opinion will contain an emphasis of matter in respect of going concern as a result of COVID-19, although the audit opinion will remain unqualified. Notwithstanding these concerns, the Directors confirm that, after due consideration, they have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and have continued to adopt the going concern basis in preparing the financial statements.
Commenting on the results, Mike Gallacher, CEO said:
“The results for 2019 announced today show good progress in our turnaround plan. The business has started strongly in 2020 but is now facing into the challenges posed by the COVID-19 pandemic.
We are responding rapidly with the twin aims of protecting our people and customers, while providing the best service possible through the crisis. Our contingency planning was conducted early and our responses are being executed with huge support from our staff and agents.
Our results show that during 2019 the business restored profitability and closed the year with a healthy order book and having laid strong foundations for continued performance improvement and sustainable growth. Our intent remains to build the business for the long-term benefit of shareholders with our trusted value brand whilst consolidating our position as the UK’s No 1 choice for Windows and Doors.”
A conference call for analysts for the 2019 Final Results will be held today at 9.30 am. If you would like to join, please contact FTI Consulting at safestyle@fticonsulting.com or using the details below in order to access the registration details.
