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Safestyle UK PLC shares dropped on Tuesday, after it said it is working with shareholders and third party investors to secure a cash injection. Safestyle is a Bradford-based retailer and manufacturer of PVCu replacement windows and doors. Its shares were down 26% to 2.80 pence each in London on Tuesday morning. At the end of September, Safestyle reported that revenue in half-year ended July 2 fell 5.3% on-year to £74.1 million from £78.3 million. Its pretax loss widened to £6.7 million from £2.8 million. Safestyle decided against an interim dividend, after a 0.4 pence per share payout a year prior. ‘The trading context of the UK economy and consumer confidence remains extremely difficult. Encouragingly, inflation is beginning to show some signs of moderating, but that follows a period of sustained high inflation. The impact of significantly higher interest rates than expected is clearly impacting consumers’ disposable income,’ Safestyle said at the time. It also said that it has been engaging with its stakeholders to discuss ways to strengthen its balance sheet in order ‘to support its recovery and help facilitate future growth.’ As part of these discussions, Safestyle has engaged with ‘a number of third parties who have expressed interest in investing in the group.’ On Tuesday, Safestyle said the discussions have been ‘productive and remain ongoing.’ It added that in order to achieve a working capital injection an alternative financing structure is currently being sought. Safestyle expects its year-end net debt to be between £5.5 million and £6.5 million. At this point and into early January, the company said its full revolving credit facility with its bank will be required to support the working capital and liquidity requirements of the business. Currently, Safestyle noted said it remains compliant with the covenants of its £7.5 million borrowing facility. ‘However, if the losses forecast for the remainder of the year materialise, this would generate a material shortfall versus the existing covenants of the RCF in November. Therefore, under the current facility terms, access to the RCF at that time could be fully restricted,’ it warned. Despite this, Safestyle said it has had ‘good discussions’ with its bank, who ‘have remained supportive.’ Safestyle added that it remains confident that it will secure the ongoing support required to enable the company ‘to navigate the near-term challenges presented by what is a difficult market context.’ ‘Looking further ahead, the board maintains that growth recovery prospects are strong and data of an ageing housing stock in need of repair underpins this,’ it continued. Copyright 2023 Alliance News Ltd. All Rights Reserved.
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