Safestyle plummets £5.7m into the red as pre-tax figures drop 164%

Bradford-headquartered Safestyle has reported a severe 164% drop in pre-tax reporting figures for the first half of the year, reporting pre-tax losses of £5.7m losses during the period – down from £8.8m in pre-tax profits in the same period last year. 

For the six months ending 30 June, the listed window retailer and manufacturer saw revenue fall to £60.5m, compared to the £82.5m achieved during the same period last year.

In the six month period, Safestyle experienced a 30.5% decline in the volume of orders from 31,258 to 21,724, and a further 28.7% decline in the volume of frames installed from 139,612 to 99,491.

Gross profit also reduced by 47.1% in the period to £14.6m (H1 2017: £27.5m). 

During the period, the firm paid non-recurring costs of £2.8m (H1 2017: £nil), which it said was  predominantly due to litigation costs and a Health and Safety Executive fine.

Earlier this month, the firm announced a settlement of its claims against NIAMAC Developments, trading as SafeGlaze UK. Safestyle had filed a legal claim against its competitor for alleged trade mark infringement, passing off, misuse of confidential information, malicious falsehood and various other matters.

As part of the settlement, SafeGlaze UK agreed to change trading name and re-brand fully within an agreed period of time.

The company, which issued a profit warning in July, made several new changes to the Board during the six month period. Mike Gallacher was appointed Group CEO and Rob Neale joined as the company’s new Group CFO.

Gallacher said: “The results announced today reflect an unprecedented set of circumstances faced in the first half of the year that created a number of significant challenges for the business.

“The litigation we initiated against an aggressive new market entrant has now concluded in an out of court settlement; as a result we expect some recovery in the trading position of the company in the second half.

“The Board and the Executive Team, including a number of new and high calibre appointees, believe in the fundamental strength of the core business model.

“We have developed a three phase turnaround plan which is designed to stabilise the Group before returning it to profitability and then accelerating growth. The focus of the whole Group is now on delivering this plan quickly and effectively.”

Of the current position and recent trading, Safetstyle added: “There has been steady improvement in our daily order intake which is almost 12% higher for September to date than it was at the start of July.  However, this improvement in order intake through July to September has not flowed into revenue in the quarter as the improvement came too late to affect installation volumes.  This has resulted in a weaker third quarter performance.

“Conversely, as we exit the third quarter, the opening order book will be higher than originally forecast and as that converts into revenue, the Board still expects that the Group will be generating modest operating profit in the fourth quarter of 2018.

 “As a result, the Group expects to report an Underlying Loss Before Tax for the full year in the region of £(6.5m).”

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