Safestyle readies for coronavirus impact after turnaround year
Window and door manufacturer Safestyle reported an 8.4% improvement in revenue in its final results on Thursday, to £126.2m.
The AIM-traded firm said its underlying gross profit was 19.6% firmer for the year ended 31 December at £31.9m, as its underlying gross margin improved by 240 basis points to 25.3%.
It said its underlying loss before tax narrowed by 82.6% to £1.5m, with its basic losses per share shrinking by 75.2% to 4p.
At year-end, the company had net cash of £0.4m, which was up 70.6% on the prior year.
The board noted that the company was restored to profitability in the middle of the year, with “strong progress” made on the second phase of its turnaround plan.
That plan was now complete, and had achieved improvements in revenues and gross margin, alongside reduced overheads, Safestyle said.
It said its year-end order book was 24% higher than 2018's closing position through accelerated order intake in November and December, which was driven by an intentional increase in lead generation investment, which held back the 2019 profit outcome.
The volume of frames installed rose 3.3% to 190,252, while the average unit sales price was ahead 5.0% at £678.
Safestyle said it saw an improvement in its market share, as measured by FENSA, to 8.5% from 7.8% year-on-year.
Its business transformation also accelerated, the directors explained, saying the company improved further in customer service, safety, compliance and internal management processes.
The group said it had a “strong start” to 2020, with both sales and profit ahead of last year and the business being “well positioned” to deliver its forecast.
However, the board noted that the Covid-19 coronavirus pandemic was creating “significant uncertainty” across the UK and international economy.
The firm had responded to the situation “rapidly”, it said, adding it was 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 £3m marketing investment had now been deferred.
The board said it was now focused on the wellbeing of staff, protecting the business and providing the best service possible in the current context.
Safestyle said the overall effect of the current uncertainty was, at the current time, difficult to quantify, and so the audit opinion would contain an emphasis of matter in respect of going concern as a result of Covid-19, although the opinion would remain unqualified.
Notwithstanding those concerns, the directors confirmed that, after due consideration, they had a “reasonable expectation” that the group had adequate resources to continue in operational existence for the foreseeable future, and had continued to adopt the going concern basis in preparing the financial statements.
“The results for 2019 announced today show good progress in our turnaround plan,” said chief executive officer Mike Gallacher.
“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.”
Gallacher said the company's contingency planning was conducted early, adding that its responses were being executed with “huge support” from 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 number one choice for windows and doors.”
At 1334 GMT, shares in Safestyle were down 0.57% at 10.44p.