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Safestyle UK – following trading challenges, now Health & Safety ones

By Steve Moore | Tuesday 10 April 2018

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Previously writing on Safestyle UK (SFE), “the leading UK-focused retailer and manufacturer of PVCu replacement windows and doors for the homeowner market”, last month it was lower profit on lower revenue, but a maintained dividend. Now an HSE Court Case Update

This is that a court case has seen the company fined £850,000 for an incident in which a contractor suffered a knee injury. It is stated that “the HSE had previously indicated, as reported, that the range of the fine could be £550,000 to £2.9m for this incident. The fine has been reduced in light of the guilty plea entered and the company's full co-operation with the HSE. The company will pay the fine in the next two weeks from existing cash resources”.

There was also another incident which led to reportable injury - which the Health & Safety Executive continues to investigate.

The 2017 results showed net cash of £11 million – though that £2.4 million lower after a trading performance particularly noted to have been impacted by “increases in door canvass and digital lead generation costs, increased finance subsidy costs and raw material price increases as a result of sterling weakness and commodity price inflation”. Additionally, it was stated “the group's order intake in 2018 to date has been weak and our market share is under pressure… market conditions remain challenging, given the current economic uncertainties and the increased competitive environment”.

That saw me conclude that the worry the prospective dividend yield suggested on outlook looked valid. As such, particularly in this context, such health & safety issues are particularly untimely. With they adding to clear challenges the company already faces, my view on the shares currently remains avoid.

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