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Safestyle UK – “pleased” with interim legal outcome… but clear challenges remain

By Steve Moore | Tuesday 29 May 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.

Shares in Safestyle UK (SFE) have currently bounced above 60p on the back of an “Update: Filing of Legal Claim & Directorate Change”

This is that a hearing has seen interim court orders “preventing Safeglaze UK and certain named individuals from undertaking various actions, and an order requiring them to provide specified documents to Safestyle”. This is with Safestyle seeking injunctive relief and damages “from what the group considers to be passing off, the misuse of confidential information, unlawful means conspiracy and malicious falsehood”.

This hearing is only really the start of the matter though and “a further hearing concerning outstanding matters raised in Safestyle UK PLC's application for interim injunctive relief will be heard during the week commencing 9 July 2018”. It all thus on an interim basis at this point and, further reflecting the current situation, the company “also announces the resignation of Chairman Peter Richardson with immediate effect… it has become clear that the specific challenges currently facing the business and the time commitment required are beyond what he envisaged”.

This all follows ANOTHER profit warning last month – which noted “intensified” new competitor (i.e. Safeglaze) activities, with also market and operational challenges. That meant “now expects group revenues and underlying profit before tax for the year ending 31 December 2018 to be significantly below current market expectations” - and even that with, despite “as an immediate priority, the board is undertaking a detailed strategic review of its operations” (suggesting current uncertainty on measures to take), “profits for the year expected to be heavily weighted to the second half”.

The company emphasises “pleased with the outcome of the hearing”, but there remains a raft of uncertainty meaning I wouldn’t want to own the shares here currently - and continue to avoid.

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