TIDMSFE
RNS Number : 3932R
Safestyle UK PLC
21 September 2017
21 September 2017
Safestyle UK plc
("Safestyle" or the "Group"))
Unaudited interim results for the six months ended 30 June
2017
Safestyle UK plc (AIM: SFE), the leading UK-focused retailer and
manufacturer of PVCu replacement windows and doors for the
homeowner market, today announces its interim results for the six
months ended 30 June 2017.
Financial and Operational highlights
Unaudited Unaudited % change
6 months ended Restated
30 June 2017 6 months ended
GBPm 30 June 2016
GBPm
-------------------- ---------------- ---------------- ----------
Revenue 82.5 81.4 +1.4%
-------------------- ---------------- ---------------- ----------
Gross profit 27.5 28.2 -2.5%
-------------------- ---------------- ---------------- ----------
Gross margin
% 33.3% 34.6% -130bps
-------------------- ---------------- ---------------- ----------
EBITDA 9.6 10.1 -5.0%
-------------------- ---------------- ---------------- ----------
Underlying EBITDA* 9.8 11.1 -11.7%
-------------------- ---------------- ---------------- ----------
PBT 8.8 9.5 -7.4%
-------------------- ---------------- ---------------- ----------
Underlying PBT** 9.0 10.6 -15.1%
-------------------- ---------------- ---------------- ----------
EPS - Basic 8.3p 9.4p -11.7%
-------------------- ---------------- ---------------- ----------
Interim Dividend 3.75p 3.75p
-------------------- ---------------- ---------------- ----------
* Underlying EBITDA is defined as earnings before interest, tax,
depreciation, amortisation and share based payments charges
** Underlying PBT is defined as earnings before taxation and
share based payments charges
-- Volume of frames installed decreased by 6.8% to 139,612 (H1 2016: 149,742)
-- Average unit sales price up 6.0% to GBP599 (FY 2016: GBP565)
-- Continued growth in market share to 11.2% at 30 June 2017 (End 2016: 10.2%)
-- Leads generated from media and on-line marketing grew by 9.1% to 42,680 (H1 2016: 39,118)
-- New installation depot opened in South Wales
-- Completed our new factory extension at Wombwell, South Yorkshire, on time and on budget
-- Pre-tax operating cash flow of GBP8.3 million (H1 2016: GBP9.8 million)
Commenting on the results, Steve Birmingham, CEO said:
"The first half of 2017 was an increasingly challenging market
however Safestyle increased revenue and market share albeit at a
higher cost than historically. As a result, we have experienced a
decline in profits in what was the severest contraction of our
market since 2008/09.
"So far in H2 we have maintained our order intake in line with
the previous year and have already commenced a number of
initiatives to reduce our cost base.
"The Group's cash conversion and balance sheet remain strong and
the Board is confident of outperforming the market and gaining
market share based on our differentiators of price competitiveness,
promotional finance offers, quality energy efficient products and
outstanding manufacturing capability."
Enquiries:
Safestyle UK plc Tel: 0207 653 9850
Steve Birmingham, Chief Executive
Officer
Mike Robinson, Chief Financial
Officer
Zeus Capital (Nominated Adviser Tel: 0203 829 5000
& Joint Broker)
Nick How / Dominic King
Liberum (Joint Broker) Tel: 0203 100 2100
Neil Patel / Jamie Richards
FTI Consulting (Financial Tel: 0203 727 1000
PR)
Oliver Winters / Alex Beagley safestyle@fticonsulting.com
/ James Styles
About Safestyle UK plc
The Group is the leading retailer and manufacturer of PVCu
replacement windows and doors to the UK homeowner market. For more
information please visit www.safestyleukplc.co.uk or
www.safestyle-windows.co.uk.
Chairman's Statement
Summary of Performance
The markets in which Safestyle operates have become more
challenging in recent months, and it is with this backdrop that the
Group reports its trading performance for the six months ended 30
June 2017.
Revenue was up 1.4% to GBP82.5 million (H1 2016: GBP81.4
million, having been restated following a review of accounting
policies in the run up to the introduction of IFRS 15 Revenue
Recognition - see Finance Review and Note 4). FENSA statistics show
the rate of market decline in H1 2017 accelerated from a Q1
reduction of 2.4% to 17.2% in Q2, and we believe this significantly
steeper rate of decline has continued into the first two months of
Q3. Our response has been to protect revenues and gain market
share, which now stands at 11.2% at 30 June 2017, which has
increased the costs of lead generation and conversion into orders.
Order intake was up 1.8% for the first 6 months of the year.
Profit before tax declined to GBP8.8 million (H1 2016: GBP9.5
million), with underlying EBITDA down 11.7% at GBP9.8 million. EPS
for the period was down from 9.4p to 8.3p. The results reflect the
increased cost of delivering sales revenues, and our underlying
EBITDA margin declined from 13.6% to 11.8%.
The business continues to successfully convert profit into cash,
with H1 2017 cash conversion (the ratio of net cashflow from
operating activities before taxation to underlying EBITDA) for the
period at 85%, compared with 88% for H1 2016. The Group's balance
sheet is robust with cash of GBP17.7 million at 30 June 2017
(GBP13.5 million as at 31 December 2016).
Interim Dividend
We have declared an interim dividend of 3.75 pence per share
which will be paid on 6 November 2017 (2016: 3.75p). The record
date will be 29 September 2017.
Business Review
The sharp decline in our market has created a number of
challenges and opportunities, and we have chosen to protect revenue
despite the associated increased costs of lead generation and
providing customer finance. We have seen a steady increase in the
proportion of customers taking up our promotional finance offers
with no deterioration in acceptance rates. Longer term, we continue
to regard the potential for enhanced RMI expenditure by the
homeowner to be positive, notwithstanding the short term weakness
caused by the current uncertain economic outlook for consumers.
We have continued to evolve our business and in the period we
have further developed our brand messaging, invested in our
infrastructure, and continued to develop our conservatory
replacement offer and product range.
We have completed our new factory extension at Wombwell, South
Yorkshire, on time and on budget. This is a major step in ensuring
we have the UK's leading production facilities. The facility is now
fully operational and we expect to deliver manufacturing
productivity gains throughout the remainder of the year.
Share Buyback
Our balance sheet is strong and we continue to generate cash.
Whilst we take a cautious approach to long term planning, we have
previously stated that the Board is committed to returning excess
capital to shareholders where our cash resources are materially in
excess of investment requirements. With the Company's major
investment into its factory extension now complete, we will review
this further when we announce our 2017 Full Year results in March
2018 but are today making a separate announcement on a share
buy-back programme of up to GBP2.5m.
Outlook
Our expectation is that the market will continue to be weak for
at least the remainder of 2017. Consumer confidence has declined,
and our outlook is therefore cautious. We expect to continue to
gain market share in H2, although sales will continue to be
expensive to win and we expect operating margins to be challenging.
While market conditions remain at the current low level we will
continue to challenge our cost base for efficiencies, though the
impact of cost elimination will primarily benefit 2018 and
beyond.
We are determined that Safestyle will deliver out performance in
its market and gain market share, based on our geographic spread,
product range and commercial offerings.
RS Halbert
Chairman
21 September 2017
Finance Review
Revenue
Revenue for the period was GBP82.5 million against GBP81.4
million restated for the same period last year, representing growth
of 1.4%. The key factors underpinning this growth were:
-- 9.1% growth in leads generated from direct response from 39,118 to 42,680
-- 6.8% decline in the volume of frames installed from 149,742 to 139,612
-- 8.3% growth in average unit price from GBP553 to GBP599 ex VAT
The price list increase implemented at the start of the year to
counterbalance the additional raw material costs resulting from the
reduction in the value of Sterling has been secured. Unit prices
have been further boosted by growth in higher value items including
conservatory upgrades, composite doors and coloured frames.
A review of accounting policies in the run up to the adoption of
IFRS15 has led to the revenue from goods relating to financed
products to be shown net of the charges incurred in those sales.
Previously these were shown as a cost of sale and the results of 30
June 2016 and 31 December 2016 have been restated to reflect these.
This amounted to GBP1.7 million in H1 2017 and GBP2.2 million in
the same period for 2016. There was no impact to the profit and net
assets within these periods.
Gross margin
Gross profit reduced by 2.5% in the period to GBP27.5 million
(H1 2016: GBP28.2 million). Gross margin has reduced to 33.3% (H1
2016: 34.6%).
The price list increase from 1 January 2017 more than offset the
inflation in raw material costs resulting from Sterling weakness
but other direct costs have also seen increases which have led to a
dilution in gross margin. In particular, online marketing costs
have seen a significant increase with the cost of lead acquisition
increasing by 19% against the same period last year reflecting
increased competition for leads in a tough market.
In addition, manufacturing costs were higher as a result of the
planned disruption during the transfer of equipment into the new
factory. This was completed on time and the second half of the year
will benefit from the expected productivity and quality
benefits.
Other operating expenses
Other operating expenses were unchanged for the period at
GBP18.7 million (H1 2016: GBP18.7 million). Savings in charges
related to the exercise of options in the prior year were offset by
other costs as the business continued to invest in building its
brand profile, developing its IT infrastructure and strengthening
its management team.
EBITDA, PBT and EPS
Underlying EBITDA (as defined in the financial and operating
highlights) was GBP9.8 million for the period (H1 2016: GBP11.1
million), a decrease of 11.7%. PBT decreased by 7.4% from GBP9.5
million in H1 2016 to GBP8.8 million.
Basic earnings per share for the period were 8.3p compared to
9.4p for the same period last year. The basis for these
calculations is detailed in note 6 to the accounts.
Cash
The cash balance at 30 June 2017 was GBP17.7 million, an
increase of GBP4.2 million since the year end.
Pre-tax operating activities generated GBP8.3 million (2016:
GBP9.8 million). Capital expenditure in the period was GBP3.2
million of which GBP2.4 million related to the factory
expansion.
Dividends
The Board is declaring an interim dividend of 3.75p per share.
The dividend will be paid on 6 November 2017 to shareholders on the
register at close of business on 29 September 2017.
Condensed consolidated interim statement of comprehensive
income
Unaudited Unaudited Audited
Restated Restated
Note 6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
Revenue 82,484 81,360 159,435
Cost of sales (54,964) (53,173) (103,826)
Gross profit 27,520 28,187 55,609
Other operating
expenses (18,714) (18,697) (36,362)
Operating profit 8,806 9,490 19,247
EBITDA before share
based payments
and charges relating
to exercised LTIP
options 9,757 11,103 21,602
Equity settled
share based payments
charges 8 (160) (104) (240)
Charges relating
to exercised LTIP
options - (947) (947)
Depreciation and
amortisation (791) (562) (1,168)
Operating profit 8,806 9,490 19,247
Finance income 18 55 98
Finance expense (5) (7) (11)
Profit before taxation 8,819 9,538 19,334
Taxation 7 (1,957) (1,920) (3,778)
Profit after taxation
for the period 6,862 7,618 15,556
Other comprehensive - - -
income
Total comprehensive
profit for the
period attributable
to shareholders 6,862 7,618 15,556
========== ========== ============
Earnings per share
Basic (pence) 6 8.3 9.4 19.0
Diluted (pence) 6 8.2 9.3 18.9
All operations were continuing throughout all periods.
Condensed consolidated interim statement of financial
position
Unaudited Unaudited Audited
Note 6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
Assets
Intangible assets
- Trademarks 504 504 504
Intangible assets
- Goodwill 20,758 20,283 20,758
Intangible assets
- Software 499 475 415
Property, plant
and equipment 14,699 8,498 12,389
Deferred tax asset 119 30 119
Non-current assets 36,579 29,790 34,185
Inventories 2,006 1,711 2,176
Trade and other
receivables 6,438 6,752 4,560
Cash and cash equivalents 17,702 23,552 13,459
Current assets 26,146 32,015 20,195
Total assets 62,725 61,805 54,380
========== ========== ============
Equity
Called up share
capital 830 828 828
Share premium account 82,216 81,979 81,979
Profit and loss
account 22,850 18,375 22,052
Common control transaction
reserve (66,527) (66,527) (66,527)
39,369 34,655 38,332
Liabilities
Trade and other
payables 12,520 12,812 11,983
Dividends accrued 5 6,224 11,263 -
Financial liabilities 35 70 70
Corporation tax
liabilities 2,475 521 1,599
Provision for liabilities
and charges 657 701 701
Current liabilities 21,911 25,367 14,353
Financial liabilities - 35 -
Provision for liabilities
and charges 1,445 1,748 1,695
Non-current liabilities 1,445 1,783 1,695
Total liabilities 23,356 27,150 16,048
Total equity and
liabilities 62,725 61,805 54,380
========== ========== ============
Condensed consolidated interim statement of changes in
equity
Share Share Profit Common Total
capital premium and control equity
loss transaction
account reserve
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 30
June 2016 828 81,979 16,387 (66,527) 32,667
Total comprehensive
profit for the
period - - 9,872 - 9,872
Transactions with
owners of the
Company:
Issue of shares - - - - -
Equity settled
share based payment - - 136 - 136
Deferred tax on
equity settled
share based payments - - (1,239) - (1,239)
Dividends - - (3,104) - (3,104)
Balance at 31
December 2016 828 81,979 22,052 (66,527) 38,332
Total comprehensive
profit for the
period - - 6,862 - 6,862
Transactions with
owners of the
Company:
Issue of shares 2 237 - - 239
Equity settled - - - - -
share based payment
Deferred tax on
equity settled
share based payments - - 160 - 160
Dividends - - (6,224) - (6,224)
Balance at 30
June 2017 830 82,216 22,850 (66,527) 39,369
========= ========= ========= ============= ========
Condensed consolidated interim statement of cash flows
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP000 GBP000 GBP000
Cash flows from
operating activities
Profit for the year 6,862 7,618 15,556
Adjustments for:
Depreciation of
plant, property
and equipment 671 461 954
Amortisation of
intangible fixed
assets 120 101 214
Finance income (18) (55) (98)
Finance expense 5 7 11
Profit on sale of
plant, property
and equipment - 7 7
Equity settled share
based payments 160 104 240
Tax expense 1,957 1,920 3,778
---------- ---------- ------------
9,757 10,163 20,662
Decrease/(Increase)
in inventories 170 (211) (676)
Increase in trade
and other receivables (1,878) (2,894) (702)
Increase in trade
and other payables 536 2,654 1,824
Increase/(decrease)
in provisions (294) 79 26
---------- ---------- ------------
(1,466) (372) 472
Hire purchase interest
paid (5) (7) (11)
Other interest paid - - -
(5) (7) (11)
Taxation paid (1,080) (1,734) (3,893)
Net cash from operating
activities 7,206 8,050 17,230
---------- ---------- ------------
Cash flows from
investing activities
Acquisition of property,
plant and equipment (3,092) (1,007) (5,901)
Interest received 18 55 98
Proceeds from issue
of property, plant
and equipment - 42 42
Acquisition of intangible
fixed assets (93) - (20)
---------- ---------- ------------
Net cash outflow
from investing activities (3,167) (910) (5,781)
Cash flows from
financing activities
Proceeds from the 239 - -
issue of ordinary
shares
Payment of hire
purchase and finance
leases (35) (73) (108)
Dividends paid - - (14,367)
---------- ---------- ------------
Net cash outflow
from financing activities 204 (73) (14,475)
Net increase in
cash and cash equivalents 4,243 7,067 (3,026)
Cash and cash equivalents
at start of year 13,459 16,485 16,485
Cash and cash equivalents
at end of year 17,702 23,552 13,459
========== ========== ============
Notes to the interim financial information
1 General information
The condensed interim financial information set out herein is in
respect of Safestyle UK plc and its subsidiaries (the Group) for
the period ended 30 June 2017.
Safestyle UK plc is a public listed company incorporated in
Jersey. The registered office address of Safestyle UK plc is 47
Esplanade, St Helier, Jersey JE1 0BD.
The financial information presented for the year ended 31
December 2016 is not the statutory accounts for that financial
year. These accounts have been reported on by the company's
auditor. The report of the auditor was unqualified and did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report.
The company is not required to present parent company
information.
2 Basis of preparation
The condensed consolidated interim financial information for the
period ended 30 June 2017 has been prepared in accordance with IAS
34, 'Interim financial reporting' as adopted by the European
Union.
Selected explanatory notes are included to explain events and
transactions that are significant to an understanding of the
changes in financial position and performance of the Group since
the last annual consolidated financial statements as at and for the
year ended 31 December 2016.
The condensed consolidated interim financial information should
be read in conjunction with the annual financial statements for the
period ended 31 December 2016 which have been prepared in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the European Union.
The accounting policies adopted in the condensed interim
financial information are consistent with those set out in
financial statements for the period ended 31 December 2016.
3 Going concern
The Group has considerable financial resources and has prepared
forecasts that show the Group is expected to continue to trade
solidly. As a consequence, the Directors believe that the Group is
well placed to manage its business risks successfully.
The assessment of the Group's ability to execute its strategy by
funding future working capital requirements involves judgement. The
Directors monitor future cash requirements to assess the Group's
ability to meet these funding requirements.
The Directors have a reasonable expectation that the Group has
adequate resources to continue in operational existence for the
foreseeable future. Thus they continue to adopt the going concern
basis of accounting in preparing the annual financial
statements.
4 Significant accounting policies
Accounting estimates
In preparing this condensed consolidated interim financial
report, significant judgments made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those that applied to the consolidated
financial statements as at and for the year ended 31 December
2016.
Revenue recognition
A review of accounting policies in the run up to the adoption of
IFRS15 has led to the revenue from goods relating to financed
products to be shown net of the charges incurred in those sales.
Previously these were shown as a cost of sale and the results of 30
June 2016 and 31 December 2016 have been restated to reflect these.
The effect on revenue in the period was GBP1,735k (GBP2,188k 30
June 2016, GBP3,681k 31 December 2016).
There is no effect on the overall gross margin or operating
profit for the Group within these periods.
5 Dividends
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
The aggregate amount
of dividends comprises: GBP'000 GBP'000 GBP'000
Dividends paid in
respect of the period - - 14,367
Dividends declared 6,224 11,263 -
6,224 11,263 14,367
---------- ---------- ------------
A final dividend for the year end 31 December 2016 of 7.5 pence
per ordinary share totaling GBP6,224,219 was paid on 10 July
2017.
A proposed interim dividend for the half year end 30 June 2017
of 3.75 pence per ordinary share will be paid on 6 November
2017.
6 Earnings per share
a) Basic earnings per share
The calculation of basic earnings per share has
been based on the following profit attributable
to ordinary shareholders and weighted-average
number of shares outstanding.
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Profit attributable
to ordinary shareholders 6,862 7,618 15,556
============= ============= =============
Weighted-average
number of ordinary
shares (basic)
No of shares No of shares No of shares
'000 '000 '000
Issued ordinary
shares at period
end 82,868 81,184 82,006
============= ============= =============
b) Diluted earnings per share
The calculation of diluted earnings per share
has been based on the following profit attributable
to ordinary shareholders and weighted-average
number of ordinary shares outstanding after adjustment
for the effects of all dilutive potential ordinary
shares.
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Profit attributable
to ordinary shareholders 6,862 7,618 15,556
============= ============= =============
No of shares No of shares No of shares
'000 '000 '000
Weighted-average
number of ordinary
shares (basic) 82,868 81,184 82,006
Effect of dilutive
share options and
warrants 319 385 341
Weighted-average
number of ordinary
shares (basic) at
period end 83,187 81,569 82,347
============= ============= =============
The average market value of the Company's shares
for the purpose of calculating the dilutive effect
of share options was based on quoted market prices
for the period during which the options were outstanding.
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Earnings per share
(pence) 8.3 9.4 19.0
Diluted earnings
per share (pence) 8.2 9.3 18.9
7 Taxation
The condensed interim financial information includes a tax
charge based on management's best estimate of the full year
effective tax rate. The effective tax rate applied in the period
was 22.19% (period ended 30 June 2016: 20.13%) which compares to
the standard corporation tax rate of 20.00%.
A reduction in the UK corporation tax rate from 21% to 20%
(effective from 1 April 2015) was substantively enacted on 2 July
2013. Further reductions to 19% (effective from 1 April 2017) and
to 18% (effective 1 April 2020) were substantively enacted on 26
October 2015, and an additional reduction to 17% (effective 1 April
2020) was substantively enacted on 6 September 2017. This will
reduce the Group's future current tax charge accordingly. The
deferred tax asset at 30 June 2017 has been calculated based on
these rates.
8 Share based payments
At 30 June 2017 the Group had the following share based payment
arrangements:
LTIP
The Group operates an equity-settled LTIP remuneration scheme
for Directors and certain management ("LTIP 2015", "LTIP 2016"
& "LTIP 2017").
On 10 April 2017, a further 348,210 options were granted ("LTIP
2017"). All schemes require a combination of specific performance
based criteria and remaining an employee for a minimum period.
The numbers of share options in existence during the year were
as follows:
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 2017 30 June 2016 31 December
2016
Number Weighted Number Weighted Number Weighted
of share average of share average of share average
options exercise options exercise options exercise
price price price
------------------- ---------- ---------- ---------- ---------- ------------ ----------
Outstanding
at start of
period 1,030,134 GBP2.18 452,460 GBP1.37 4,581,976 GBP1.00
Granted during
the year 348,210 - 87,485 GBP2.25 448,533 GBP1.79
Issued in the
year - - - - (2,564,427) GBP1.00
Cancelled in
the year - - - - (1,421,683) GBP1.00
Lapsed in the
year (118,318) GBP2.09 (59,093) GBP1.49 (14,265) GBP1.79
Outstanding
at end of period 1,260,026 GBP1.58 480,852 GBP1.51 1,030,134 GBP2.18
Exercisable
at end of period - - - - - -
-------------------- ---------- ---------- ---------- ---------- ------------ ----------
Options are valued using the Black-Scholes option pricing model.
The following information is relevant in the determination of the
fair value of the options granted during the period.
Unaudited
6 months
ended
30 June 2017
LTIP LTIP LTIP
2017 2016 2015
Grant date 10/04/2017 29/04/2016 01/04/2015
Vesting date 10/04/2020 29/04/2019 01/04/2018
Lapsing date 10/04/2027 01/04/2026 01/04/2025
Risk free interest
rate 0.15% 1.22% 1.28%
Expected volatility 33.56% 36.93% 43.13%
Expected option
life (in years) 6.50 6.50 6.50
Weighted average share GBP3.04 GBP2.67 GBP1.80
price after adjusting for
PV of dividends
Weighted average GBP0.00 GBP2.68 GBP1.79
exercise price
Weighted average fair
value of options granted 255.90p 65.79p 44.78p
Dividend Yield 5.71% 3.60% 5.20%
Remaining contractual
life 9.78 8.76 7.76
At the grant date there was limited share price history for the
company on which to calculate volatility. Volatility was therefore
estimated using both Safestyle and companies classified in the
'Home Improvement Retailers' subsector on the London Stock
Exchange.
SAYE
On 1 April 2017 the company launched a new share save (SAYE)
scheme ("SAYE 2017") in addition to the existing schemes ("SAYE
2013", "SAYE 2014" and "SAYE 2015") for employees. All schemes
allow employees to acquire a certain number of shares at a discount
of 20% of the share price prior to the invitation to join the
scheme, using amounts saved under a 'Save As You Earn' savings
contract.
The "SAYE 2013" matured within the period and as of the 30 June
2017, 183,016 options were issued at a price of 130.8 pence per
share from 198,714 options granted.
The numbers of share options in existence during the year were
as follows:
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 2017 30 June 2016 31 December
2016
Number Weighted Number Weighted Number Weighted
of share average of share average of share average
options exercise options exercise options exercise
price price price
---------------- ----------------- ---------- -------------------- ---------- -------------------- ----------
Outstanding
at start of
period 423,382 GBP1.49 452,460 GBP1.37 452,460 GBP1.37
Granted during
the year 119,955 GBP2.51 87,485 GBP2.25 87,485 GBP2.25
Issued in the
year (183,016) GBP1.31
Lapsed during
the period (5,750) GBP1.78 (59,093) GBP1.49 (116,563) GBP1.57
Outstanding
at end of
period 354,571 GBP1.93 480,852 GBP1.51 423,382 GBP1.49
Exercisable
at end of
period 15,686 GBP1.31 - - - -
----------------- ----------------- ---------- -------------------- ---------- -------------------- ----------
Options are valued using the Black-Scholes option pricing model.
The following information is relevant in the determination of the
fair value of the options granted during the year.
Unaudited
6 months
ended
30 June 2017
SAYE SAYE SAYE SAYE
2017 2016 2015 2014
Grant date 25/04/2017 01/04/2016 01/04/2015 27/03/2014
Vesting date 01/06/2020 01/05/2019 01/05/2018 01/05/2017
Lapsing date 01/12/2020 01/11/2019 01/11/2018 01/11/2017
Risk free interest
rate 0.21% 0.56% 0.76% 1.31%
Expected volatility 34.17% 32.88% 23.80% 52.80%
Expected option
life (in years) 3.35 3.35 3.35 3.35
Weighted average share GBP3.14 GBP2.81 GBP1.80 GBP1.57
price after adjusting for
PV of dividends
Weighted average GBP2.51 GBP2.25 GBP1.43 GBP1.31
exercise price
Weighted average fair
value of options granted 68.60p 71.93p 41.52p 58.40p
Dividend Yield 5.53% 3.40% 5.20% 8.00%
Remaining contractual
life 3.35 2.34 1.34 0.34
At the grant date there was limited share price history for the
company on which to calculate volatility. Volatility was therefore
estimated using both Safestyle and companies classified in the
'Home Improvement Retailers' subsector on the London Stock
Exchange.
The total share-based expense comprises:
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 2017 30 June 2016 31 December
2016
GBP000 GBP000 GBP000
Equity settled
- LTIP 121 60 369
Equity settled
- SAYE 39 44 74
Employers national
insurance on issue
of LTIP with associated
charges - - 947
160 104 1,390
------------- ------------- ------------
9 Seasonality
Order intake is subject to small seasonal fluctuations with
higher demand in the first and fourth quarters as a result of
seasonal weather factors. The business can, within limits, smooth
this demand by flexing its order book and aims to level load its
operations to minimize costs. As a result revenues and profits
would normally be similar for both halves of the year.
INDEPENDENT REVIEW REPORT TO SAFESTYLE UK PLC
Conclusion
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly report for the six
months ended 30 June 2017 which comprises the Condensed
Consolidated Interim Statement of Comprehensive Income, the
Condensed Consolidated Interim Statement of Changes in Equity, the
Condensed Consolidated interim Statement of Financial Position, the
Condensed Consolidated Interim Statement of Cash Flows and the
related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly report for the six months ended 30 Junsafe 2017
is not prepared, in all material respects, in accordance with IAS
34 Interim Financial Reporting as adopted by the EU and the AIM
Rules.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
half-yearly report and consider whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly report is the responsibility of, and has been
approved by, the directors. The directors are responsible for
preparing the half-yearly report in accordance with the AIM
Rules.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with International Financial
Reporting Standards as adopted by the EU. The directors are
responsible for preparing the condensed set of financial statements
included in the half-yearly financial report in accordance with IAS
34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on
the condensed set of financial statements in the half-yearly report
based on our review
The purpose of our review work and to whom we owe our
responsibilities
This report is made solely to the company in accordance with the
terms of our engagement. Our review has been undertaken so that we
might state to the company those matters we are required to state
to it in this report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company for our review work, for this
report, or for the conclusions we have reached.
Ian Beaumont
for and on behalf of KPMG LLP
Chartered Accountants
1 Sovereign Square,
Sovereign St,
Leeds
LS1 4DA
21 September 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UAVVRBKAKURR
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