- Britain’s biggest doors and windows maker has seen a slowdown in demand
- Safestyle UK saw pre-tax losses more than double to £6.7m in the first half
- The firm’s shares have lost most of their value since the start of the year
Safestyle UK shares have been suspended from trading on the junior AIM market after it concluded investors would not benefit from a sale of the business.
Britain’s biggest doors and windows maker, based in Bradford, has been grappling with a slowdown in demand this year as interest rate hikes hit disposable incomes and raise the cost of consumer finance.
Having seen pre-tax losses more than double to £6.7million in the first half of the financial year, Safestyle warned earlier this month that it might be unable to pay its debts should anticipated losses be realised.
Troubles: Safestyle UK, Britain’s biggest doors and windows maker, has been grappling with a slowdown in demand this year as interest rate hikes hit disposable incomes
It soon confirmed it had hired professional services firm Interpath Advisory to explore strategic options, including a refinancing, capital injection or disposal of some or all of the business.
Following talks, Safestyle said on Thursday that it did not expect to receive a capital infusion or new financing, but was speaking to ‘a shortlist of interested parties’ about a sale.
However, bosses said today it was ‘increasingly unlikely’ that even if the company was acquired, it would ‘result in any return to shareholders.’
Due to this, as well as ‘ongoing financial uncertainty’ and low working capital, the group asked to have its shares suspended from trading.
Prior to Friday, Safestyle UK shares had plummeted by around 99 per cent since the start of the year amid weakness across the housing market.
Rising mortgage rates and inflationary pressures over the past 18 months have made it far more expensive to acquire or upgrade a property.
In September, Safestyle reported orders since mid-August, the beginning of its most crucial trading period, were down around 11 per cent year-on-year.
Aside from the difficult macroeconomic backdrop, the group attributed the lacklustre performance to the extremely warm weather spell from late August to early September.
It said that because sales are likely to stay below previously anticipated levels, it forecasts making annual turnover of between £140million and £142million, against £154.3million the previous year.
It also expects to post an underlying loss of £9.5million to £10.5million, compared to £4.4million in the prior 12 months and a £7.6million profit in the 2021 financial year.
Yet Safestyle said it managed to boost its share of the installation market and was confident of benefitting from the need to refurbish the UK’s old housing stock.
Analysts at investment bank Liberum recently estimated that Safestyle could attain £180million in annual turnover if it installed over 180,000 frames in a year.
But if installation rates rebound to peak levels, the company’s sales might reach £200million at a minimum and its pre-tax profits would possibly hit their medium-term target of £20million.
