ShareProphets

The one stop source for breaking news, expert analysis, and podcasts on fast-moving AIM and LSE listed shares


Join ShareProphets at less than 2p per article

> All the big AIM fraud exposés

> 300 articles and podcasts a month

> Hot share tips

> Original investigations by our experienced team

> No ads, no click-bait, no auto-play videos

Find out more

Safestyle UK – having been “pleased” with a legal outcome in May, how’s trading?

By Steve Moore | Wednesday 11 July 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.


In May Safestyle UK (SFE) was “pleased” with an interim legal outcome and the shares bounced above 60p. However, I concluded there remains a raft of uncertainty meaning I wouldn’t want to own the shares - and continue to avoid. Today a trading update

“Order intake has firmed up in recent weeks”. Oh, ok! ...“at a lower level than the previous management team had expected”. Ah! (CEO Mike Gallacher appointed on 1st May). “At an operational level, the organisation has now been stabilised and the rebuilding of the sales, survey and installation teams is well progressed”. Good, good …“the importance of maintaining the quality of recruitment to ensure high customer service levels means this process is likely to extend into 2019… Gross margins in the current year have been impacted through higher digital marketing costs and sales commissions”. Ah!

As a result, the company now expects “to report a small underlying loss before tax for the full year”. That compares to a £4 million profit broker to the company Liberum was still forecasting on the back of the May update – and I note even this latest is stated with “providing there is no further material deterioration in market conditions”.

With also “the company expects to report non-recurring exceptional cash costs of c.£6m in the current financial year… expects to report a break-even cash balance at the year-end”. That compares to an £11 million such position at the end of 2017!

It attempts to reassure that it “has put in place suitable borrowing facilities to ensure that it has access to appropriate funding, should it be needed” and that it “expects exit momentum from the current year to benefit from the programme of costs and margin improvement actions now in train which are expected to result in material annualised savings benefiting future financial years”. However, at least until there is evidence that trading is meaningfully turning, I continue to caution and avoid.


Filed under:


Never miss a story.




This area of the ShareProphets.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ShareProphets.com. ShareProphets.com does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ShareProphets.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ShareProphets.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.


More on SFE


Comments

Comments are turned off for this article.


Site by Everywhen