# Safestyle UK 9% increase year on year revenue for Q3

- Link: https://www.directorstalkinterviews.com/safestyle-uk-9-increase-year-on-year-revenue-for-q3/412948522
- Published: 2020-12-17T07:33:01+00:00
- Author: Giles

**Safestyle UK plc** (LON:SFE), the leading retailer and manufacturer of PVCu replacement
windows and doors to the UK homeowner market, has issued an update on current trading
for the year ending 31 December 2020.

Following the Government’s implementation of a second national lockdown in November,
the Group was able to continue largely normal operations with its strict COVID-safe
policies that were developed during and after the first lockdown and embedded throughout
the business.

**Trading Update**

Since the Group’s interim results announcement on 17 September 2020, the Board is
pleased to report that in response to the strong order intake growth described in
its previous announcement, the business has continued to increase its operational
capacity, recruiting staff across processing, survey, manufacturing and installations.
This response delivered 9% year on year revenue growth in Q3 and is expected to 
deliver c.20% revenue growth for Q4. 

This revenue growth was achieved despite major supply chain issues attributable 
to the overall increase in industry demand, reduced third party supply chain inventories
and specific global and European supply constraints.  Despite these significant 
operational disruptions, the increase in capacity has enabled the Group to deliver
its fastest acceleration in revenue growth since flotation in 2013.

Throughout the second half of this year, management have worked to balance trading
and installation activities to optimise order intake growth and deliver margin improvement
whilst controlling customer lead times and service levels.  This is illustrated 
by the Group taking the opportunity to grow the order book to a position that is
more than double what it was at the end of Q3 last year and a forecast year-end 
level that is 75% higher than 2019’s closing position.

The Group will therefore enter 2021 with its strongest ever installation pipeline
at this stage of the year, providing a solid platform to maintain its current trading
momentum whilst at the same time providing some insulation against the potential
impact of disruption to future sales activities from further lockdowns.

**Strategic Activities**

Despite the challenges associated with operating safely and effectively through 
H2, progress has also been made on our longer-term strategic priorities.  Our new
commercial management team have started to standardise our sales branch structure
and processes and the same activities are underway within our depot network.  Significant
investments have been made in improving our customer service and this focus will
be sustained in 2021.  In addition, a range of margin enhancing activities have 
been completed that are now starting to positively impact our financial performance.

**Outlook**

The level of installations activity in Q4 is expected to help deliver our strongest
financial result for any quarter since 2017.  The Group has built capacity to deliver
double digit revenue growth and has also invested in strengthening the year-end 
order book.  At the same time, management have navigated a range of issues including
supply chain disruption, additional COVID-related costs, temporary restrictions 
on canvass operations and investments to deal with lockdown warranty work.  Together,
these factors have impacted profitability levels.  

As a result, H2 revenue is expected to be approximately £71m with an underlying 
profit before taxation of around £0.5m, materially lowered by the investments made
into building our order book and the issues highlighted above.  

Full year revenue is therefore expected to be over £113m with an underlying loss
before taxation of approximately £(4.5)m, the loss being fully attributable to the
cessation of operations during the first national lockdown in H1.  Liquidity remains
strong with year-end net cash forecast to be approximately £7m, with £3m of the 
Group’s banking facilities remaining undrawn and a significant level of covenant
headroom available.  The year-end net cash position benefits from an agreed deferral
of a £2.5m VAT liability originally payable during the first lockdown in May which
will be paid in March 2021. 

The Group has made good progress in its margin initiatives as a result of actions
taken through the year, most importantly through addressing the costs of our consumer
finance proposition.  The benefits of these items are only recently translating 
into installation revenue, with the majority of the improvement currently reflected
in the order book. 

Notwithstanding the obvious uncertainty of the consumer context, the Board is confident
that the Group’s revenue and profitability momentum in Q4 will carry through into
2021, a performance level that is underpinned by the strength of the order book.

Consequently, the Board expects 2021 financial performance to be significantly ahead
of current market expectations.

> **Mike Gallacher, CEO of Safestyle UK, commented:**
> “Despite the unprecedented challenges faced by the Group during the year, I am
> pleased with the recent tangible progress we have made in stepping up our operational
> capacity and delivering strong revenue growth, whilst further strengthening our
> order book.  Moreover, we have also made good progress on our longer-term strategic
> priorities.  Notwithstanding the uncertainty associated with the current economic
> backdrop, the Group is well positioned to build on this positive momentum going
> into 2021.  I would again like to thank our staff and all of our stakeholders 
> for their efforts and support over the course of the year.”

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