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Safestyle UK plc

Safestyle UK plc Management change

Safestyle UK plc (LON:SFE) has announced the resignation of its Chief Operating Officer, Giles Richell this morning. His role will not be replaced, and his reporting lines will revert to the existing senior leadership team, in line with the ongoing turnaround plan aimed at simplifying the Group’s organisation structure and streamlining its overhead position. Giles will resign from the Board with immediate effect but will remain in the business to manage the handover of his executive responsibilities. Safestyle remains focused on its three-phase turnaround plan aiming to stabilise the Group, return it to profitability and accelerate growth. The shares currently trade on an FY19 P/E of 11.0x which appears undemanding should management continue to execute its clearly defined turnaround plan.

Significant operational investment delivered: During his time in the Group, Giles has overseen the transformation of Safestyle’s Wombwell manufacturing site, which is now well invested with significant efficiency, flexibility and capacity for growth. He has also delivered an enhanced HR function and led the Group’s ongoing Digital Transformation programme, aiming to integrate lead generation, contracts and surveys onto a single common platform. The Digital Transformation programme is expected to result in material improvements in efficiency and quality of service going forwards.

Three-phase turnaround plan ongoing: Safestyle continues to focus on the delivery of it’s three-phase turnaround plan following a challenging 2018 that included significant disruption because of an aggressive new market entrant, SafeGlaze UK. Following a commercial agreement entered in October 2018, which included a five year non-compete, Safestyle has seen a significant increase in its contracted workforce across canvass, sales, surveying and installation. This increase in headcount, alongside initiatives being implemented as part of the turnaround plan, such as a new ladder solution that will reduce scaffolding costs, should drive improvement in profitability into FY19.

Valuation: We believe the positive momentum in the business following the resolution of the dispute with SafeGlaze, along with ongoing self-help measures being implemented as part of the turnaround creates substantial upside potential for the Group. Safestyle’s manufacturing facilities are well invested with headroom for ongoing growth whilst investment in technology is expected to generate efficiencies and incremental margin improvement going forward. Safestyle is currently trading on 11.0x FY19 earnings and carries low levels of debt. The Group will announce its final results for FY18 on 28th March 2019.

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