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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Safestyle Uk Plc | LSE:SFE | London | Ordinary Share | JE00BGP63272 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.32 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Manufacturing Industries,nec | 154.32M | -6.51M | -0.0469 | -0.07 | 444.37k |
From Apr 2019 to Apr 2024
TIDMSFE
RNS Number : 8831J
Safestyle UK PLC
15 September 2016
15 September 2016
This announcement contains inside information
Safestyle UK plc
Unaudited Interim Results for the six months ended 30 June 2016
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 2016.
Financial and Operational highlights
Hot Features
Premium
Unaudited Unaudited % change
6 months ended 6 months ended
30 June 2016 30 June 2015
GBPm GBPm
-------------------- ---------------- ---------------- ----------
Revenue 83.5 74.0 +12.8%
-------------------- ---------------- ---------------- ----------
Gross profit*** 28.2 25.2 +11.9%
-------------------- ---------------- ---------------- ----------
Gross margin %*** 33.7% 34.1% -40bps
-------------------- ---------------- ---------------- ----------
EBITDA 10.1 9.3 +8.6%
-------------------- ---------------- ---------------- ----------
Underlying EBITDA* 11.1 9.5 +16.8%
-------------------- ---------------- ---------------- ----------
PBT 9.5 8.7 +9.2%
-------------------- ---------------- ---------------- ----------
Underlying PBT** 10.6 9.0 +17.8%
-------------------- ---------------- ---------------- ----------
EPS - Basic 9.4p 9.1p +3.3%
-------------------- ---------------- ---------------- ----------
Interim Dividend 3.75p 3.40p +10.3%
-------------------- ---------------- ---------------- ----------
* 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
*** Cost of sales restated to reflect lead generation costs previously stated as other operating expenses
-- Volume of frames installed increased by 5.7% to 149,742 (H1 2015: 141,712) -- Continued growth in market share to 10.0% at 30 June 2016 (End 2015: 9.5%) -- Leads generated from media and on-line marketing grew by 26% to 39,118 (H1 2015: 31,095) -- Average unit sales price up 4.7% to GBP556 (FY 2015: GBP531) -- New sales offices opened in Guildford and Norwich -- Pre-tax operating cash flow of GBP9.8 million (2015: GBP8.7 million)
Commenting on the results, Steve Birmingham, CEO said:
"I am pleased to report that Safestyle UK has delivered another record performance in the first half of 2016 in which our revenue, market share and profit all increased. We have continued to build on the positive momentum generated last year and the Group's cash conversion and balance sheet remain strong. Furthermore, we continue to execute on our strategy of increasing market share and expanding geographically, with new sales branches opened in Guildford and Norwich.
So far in H2 we have seen no change in demand which might be attributed to June's Brexit vote. Order intake since the half year has increased on the previous year, albeit at a lower rate than in the first half due to more challenging comparatives.
We have entered the second half of 2016 in a strong position and the Board remains confident of making further progress and delivering a full year outturn in line with management expectations."
Enquiries:
Safestyle UK plc Tel: 0207 653 9850 Steve Birmingham, Chief Executive Officer Mike Robinson, Chief Financial Officer Zeus Capital (Nominated Adviser & Joint Tel: 0203 829 5000 Broker) Nick How / Dominic King / Andrew Jones Liberum (Joint Broker) Tel: 0203 100 2100 Neil Patel FTI Consulting (Financial PR) Tel: 0203 727 1000 Oliver Winters / Alex Beagley / James safestyle@fticonsulting.com 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 and www.safestyle-windows.co.uk.
Chairman's Statement
Summary of Performance
I am pleased to report that Safestyle UK has continued to perform well in the six months ended 30 June 2016.
Revenue was up 12.8% to GBP83.5 million (H1 2015: GBP74.0 million) as we continued to increase our market share in the period to 10.02% (9.46% as at 31 December 2015), according to FENSA installations data. Order intake was up 19.7% and we closed the period with a record half-year order book.
Profit before tax increased by 8.9% to GBP9.5 million (H1 2015: GBP8.8 million), after including an unusually high charge related to LTIP share options granted at the time of the company's IPO in 2013, and exercised during the period, of GBP1.05 million (H1 2015: GBP0.22 million). Underlying EBITDA was up 16.5% at GBP11.1 million. EPS for the period is up marginally to 9.4p, reflecting both the option expense and the increased number of shares in issue as a result of the April 2016 exercise of share options and the October 2015 warrant exercise.
The business continues to convert profit into cash, with H1 2016 cash conversion (the ratio of net cashflow from operating activities before taxation to underlying EBITDA) for the period at 88%, compared with 91% for FY 2015. The Group's balance sheet is robust with cash of GBP23.6 million at 30 June 2016 (GBP16.5 million as at 31 December 2015). The special dividend of GBP5.6 million announced with the 2015 full year results was paid on 11 July 2016 alongside the final dividend of GBP5.6 million.
Interim Dividend
We will pay an interim dividend of 3.75 pence per share, an increase of 10.3%, on 31 October 2016. The record date will be 30 September 2016.
Business Review
The market in which the Group operates contracted by 2.2% by volume in H1 2016 (according to FENSA data), albeit with some recovery in Q2, which we expect will continue in Q3. Our own order intake has been very strong in the first half of the year. The second half has started on plan, with the three new frame colours introduced at the beginning of June being well received and current order intake shows growth in line with our expectations. We remain encouraged by the demand for our conservatory refurbishment program which remains on target.
We note the caution expressed by many commentators about the short-term market outlook for RMI related expenditure. We are pleased that we continue to trade well in an uncertain market place, and see some signs of returning consumer confidence. Taking into consideration the record low interest rates in the UK, we consider that the long-term prospects for enhanced RMI expenditure by the homeowner are robust.
Our continued market outperformance reflects our outstanding quality and value proposition, reinforced by our broad product range and ongoing development, geographic expansion, an effective digital strategy, and a market leading finance proposition.
Investment in our new factory extension at Wombwell, South Yorkshire, has commenced, and we are currently on time and on budget. The facility is scheduled to be operational in summer 2017.
Outlook
Our expectation is that the market will show some modest volume growth for the rest of 2016. We expect to continue to gain market share in H2, reflecting our strong order book at 30 June 2016 and our continued sales performance.
The business is well positioned and we expect to deliver a full year outturn in line with management expectations.
RS Halbert
Chairman
15 September 2016
Finance Review
Revenue
Revenue for the period was GBP83.5 million against GBP74.0 million for the same period last year, representing growth of 12.8%. The key factors underpinning this growth were:
-- 26.0% growth in leads generated from direct response from 31,095 to 39,118 -- 5.7% growth in the volume of frames installed from 141,712 to 149,742 -- 6.9% growth in average unit price from GBP520 to GBP556 ex VAT
The price list increase implemented at the start of the year to counterbalance the additional costs of the new consumer finance products has been secured. Unit prices have been further boosted by the sale and installation of 208 conservatory upgrades in the first 6 months of the year.
Gross margin
The basis of calculating gross margin has been changed from the beginning of this year and the prior period comparatives have been restated accordingly. Marketing costs that are directly linked to lead generation and previously included as 'Operating expenses' have been reclassified as 'Cost of sales', as explained in note 4.
On this basis gross profit increased by 11.9% in the period from GBP25.2 million in 2015 to GBP28.2 million in 2016. Gross margin suffered a small drop from 34.1% in the first half of 2015 to 33.7% for the same period in 2016.
The gross margin reduction is in line with expectations. The price list increase from 1 January 2016 almost offset the additional cost of the consumer finance products introduced on 1 June 2015. Average sales prices increased steadily through the first half as the pre-increase order book was installed, supporting expectations that gross margin will continue to improve in the second half of the year.
Other operating expenses
Other operating expenses for the period were GBP18.7 million (2015: GBP16.5 million), an increase of 13%. Employer National Insurance costs of GBP0.9 million were incurred in the period as a result of the exercise in April 2016 of LTIP options granted when the company floated in 2013.
The business continued to invest in building its brand profile, particularly in the south of England, and spent an additional GBP0.6 million in TV advertising.
Salary costs increased by GBP0.6 million as a result of the annual pay award and continued investment in organic growth.
EBITDA, PBT and EPS
Underlying EBITDA before share based payments was GBP11.1 million for the period (H1 2015: GBP9.5 million), an increase of 17%. PBT increased by 8% from GBP8.8 million in H1 2015 to GBP9.5 million but this was impacted by the one-off cost GBP0.9 million from the LTIP exercise.
Basic earnings per share for the period were 9.4p compared to 9.1p for the same period last year. The value for the first half of 2016 has been impacted by the one-off LTIP cost and by the dilution effect on the weighted average number of shares of both the LTIP exercise and the October 2015 warrant exercise. The basis for these calculations are detailed in note 6 to the accounts.
Cash
The cash balance at 30 June 2016 was GBP23.6 million, an increase of GBP7.1 million in the period.
Pre-tax operating activities generated GBP9.8 million (2015: GBP8.7 million). Capital expenditure in the period was GBP1.0 million. GBP0.7 million of this total related to the factory expansion project.
Dividends
The Board is declaring an interim dividend of 3.75p per share. The dividend will be paid on 31 October 2016 to shareholders on the register at close of business on 30 September 2016.
Condensed consolidated interim statement of comprehensive income
Unaudited Unaudited Audited
Restated Restated
Note 6 months 6 months 12 months
ended 30 June ended 30 June ended 31 December
2016 2015 2015
GBP000 GBP000 GBP000
Revenue 83,548 73,990 148,902
Cost of sales (55,361) (48,777) (99,212)
Gross profit 28,187 25,213 49,690
Other operating expenses (18,697) (16,485) (32,205)
Operating profit 9,490 8,728 17,485
EBITDA before share
based payments and charges
relating to exercised
LTIP options 11,103 9,528 19,060
Equity settled share
based payments charges 8 (104) (224) (443)
Charges relating to
exercised LTIP options 9 (947) - -
Depreciation and amortisation (562) (576) (1,132)
Operating profit 9,490 8,728 17,485
Finance income 55 45 96
Finance expense (7) (12) (18)
Profit before taxation 9,538 8,761 17,563
Taxation 7 (1,920) (1,701) (3,603)
Profit after taxation
for the period 7,618 7,060 13,960
Other comprehensive - - -
income
Total comprehensive
profit for the period
attributable to shareholders 7,618 7,060 13,960
================ ================ ===================
Earnings per share
Basic (pence) 6 9.4 9.1 17.8
Diluted (pence) 6 9.3 8.7 17.3
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 30 ended 30 ended 31
June 2016 June 2015 December
2015
GBP000 GBP000 GBP000
Assets
Intangible assets - Trademarks 504 504 504
Intangible assets - Goodwill 20,283 20,758 20,758
Intangible assets - Software 475 548 609
Property, plant and equipment 8,498 7,212 7,492
Deferred tax asset 30 746 1,241
Non-current assets 29,790 29,768 30,604
Inventories 1,711 1,556 1,500
Trade and other receivables 6,752 5,242 3,858
Cash and cash equivalents 23,552 14,864 16,485
Current assets 32,015 21,662 21,843
Total assets 61,805 51,430 52,447
============ ============ ==========
Equity
Called up share capital 828 778 803
Share premium account 81,979 77,000 79,440
Profit and loss account 18,375 19,311 24,278
Common control transaction
reserve (66,527) (66,527) (66,527)
34,655 30,562 37,994
Liabilities
Trade and other payables 12,812 11,673 10,159
Dividends accrued 5 11,263 4,822 -
Financial liabilities 70 94 108
Corporation tax liabilities 521 1,784 1,746
Provision for liabilities
and charges 701 719 668
Current liabilities 25,367 19,092 12,681
Financial liabilities 35 130 70
Provision for liabilities
and charges 1,748 1,646 1,702
Non-current liabilities 1,783 1,776 1,772
Total liabilities 27,150 20,868 14,453
------------ ------------ ----------
Total equity and liabilities 61,805 51,430 52,447
============ ============ ==========
Condensed consolidated interim statement of changes in equity
Share Share Profit Common Total
capital premium and loss control equity
account transaction
reserve
GBP000 GBP000 GBP000 GBP000 GBP000
Balance at 30 June
2015 778 77,000 19,311 (66,527) 30,562
Total comprehensive
profit for the period - - 6,900 - 6,900
Transactions with owners
of the Company:
Issue of shares 25 2,440 - - 2,465
Equity settled share
based payment - - 219 - 219
Deferred tax on equity
settled share based
payments - - 496 - 496
Dividends - - (2,648) - (2,648)
Balance at 31 December
2015 803 79,440 24,278 (66,527) 37,994
Total comprehensive
profit for the period - - 7,618 - 7,618
Transactions with owners
of the Company:
Issue of shares 25 2,539 (2,564) - -
Equity settled share
based payment - - 104 - 104
Deferred tax on equity
settled share based
payments - - 203 - 203
Dividends - - (11,263) - (11,263)
Balance at 30 June
2016 828 81,979 18,375 (66,527) 34,655
========= ========= ========== ============= =========
Condensed consolidated interim statement of cash flows
Unaudited Unaudited Audited
6 months 6 months 12 months
ended 30 ended 30 ended 31
June 2016 June 2015 December
2015
GBP000 GBP000 GBP000
Cash flows from operating
activities
Profit for the year 7,435 7,060 13,960
Adjustments for:
Depreciation of plant,
property and equipment 461 493 957
Amortisation of intangible
fixed assets 101 83 175
Finance income (54) (45) (96)
Finance expense 7 12 18
Profit on sale of plant, 7 - -
property and equipment
Equity settled share based
payments 104 224 443
Tax expense 2,103 1,701 3,603
------------ ------------ ----------
10,164 9,528 19,060
Increase in inventories (211) (93) (36)
Increase in trade and
other receivables (2,894) (1,928) (544)
Decrease in trade and
other payables 2,654 1,356 (160)
Decrease in provisions 79 (147) (142)
------------ ------------ ----------
(372) (812) (882)
Hire purchase interest
paid (7) (11) (17)
Other interest paid - (1) (1)
(7) (12) (18)
Taxation paid (1,734) (1,600) (3,540)
Net cash from operating
activities 8,051 7,104 14,620
------------ ------------ ----------
Cash flows from investing
activities
Acquisition of property,
plant and equipment (1,007) (663) (1,343)
Interest received 54 45 96
Proceeds from issue of 42 - -
property, plant and equipment
Acquisition of intangible
fixed assets - (28) (243)
------------ ------------ ----------
Net cash outflow from
investing activities (911) (646) (1,490)
Cash flows from financing
activities
Proceeds from the issue
of ordinary shares - - 2,465
Payment of hire purchase
and finance leases (73) (51) (97)
Dividends paid - - (7,470)
------------ ------------ ----------
Net cash outflow from
financing activities (73) (51) (5,102)
Net increase in cash and
cash equivalents 7,067 6,407 8,028
Cash and cash equivalents
at start of year 16,485 8,457 8,457
Cash and cash equivalents
at end of year 23,552 14,864 16,485
============ ============ ==========
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 2016.
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 2015 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 2016 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 2015.
The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the period ended 31 December 2015 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 2015.
3 Going concern
The Group has considerable financial resources and has prepared forecasts that show the Group is expected to continue to trade strongly. 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 2015.
Reclassification of costs
In the current year costs of GBP3.0m (H1 2015: GBP2.3m, FY 2015: GBP4.8m) relating to the cost of generating of customer leads were reclassified as a 'cost of sale', previously these were classed as 'other operating expenses'. The board of Directors decided this reflected the 'true nature' of the cost. There is no resulting change to operating profit in the period and there are no prior year adjustments to profit. The previous year's figures have been restated to allow comparison with the current year.
5 Dividends
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 2016 30 June 2015 31 December
2015
The aggregate amount
of dividends comprises: GBP'000 GBP'000 GBP'000
Dividends paid in respect
of the period - - 4,822
Dividends declared 11,263 4,822 2,648
11,263 4,822 7,470
------------- ------------- ------------
A final dividend for the year end 31 December 2015 of 6.8 pence per ordinary share totalling GBP5,630,847 was paid on 11 July 2016.
A special dividend for the year end 31 December 2015 of 6.8 pence per ordinary share totalling GBP5,630,847 was also paid on 11 July 2016.
A proposed interim dividend for the half year end 30 June 2016 of 3.75 pence per ordinary share will be paid on 31 October 2016.
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 2016 30 June 2015 31 December
2015
GBP'000 GBP'000 GBP'000
Profit attributable to
ordinary shareholders 7,618 7,060 13,960
============= ============= =============
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 81,184 77,778 78,283
============= ============= =============
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 2016 30 June 2015 31 December
2015
GBP'000 GBP'000 GBP'000
Profit attributable to
ordinary shareholders 7,618 7,060 13,960
============= ============= =============
No of shares No of shares No of shares
'000 '000 '000
Weighted-average number
of ordinary shares (basic) 81,184 77,778 78,283
Effect of dilutive share
options and warrants 385 3,040 2,435
Weighted-average number
of ordinary shares (basic)
at period end 81,569 80,818 80,718
============= ============= =============
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 2016 30 June 2015 31 December
2015
Earnings per share (pence) 9.4 9.1 17.8
Diluted earnings per
share (pence) 9.3 8.7 17.3
7 Taxation
The condensed interim financial information includes a tax charge based on the management's best estimate of the full year effective tax rate based on expected full year profits to 31 December 2016. The effective tax rate applied in the period was 20.13% (period ended 30 June 2015: 19.4%) which compares to the standard corporation tax rate of 20.00%. The main reason for the effective tax rate being higher than the standard rate is due to movements in deferred tax relating to capital allowances and share based payments.
Reductions in the UK corporation tax rate from 23% to 21% (effective 1 April 2014) and 20% (effective from 1 April 2015) were substantively enacted on 2 July 2013. Further reductions to 19% (effective 1 April 2017) and to 18% (effective 1 April 2020) were substantively enacted on 26 October 2015. This will reduce the Group's future current tax charge accordingly. The deferred tax asset at 30 June 2016 has been calculated based on these rates.
8 Share Based Payments
At 30 June 2016 the Group had the following share based payment arrangements:
LTIPS
The Group operates an equity-settled LTIP remuneration scheme for Directors and certain management ("LTIP 2013", "LTIP 2015" & "LTIP 2016").
The only vesting condition attached to the LTIP 2013 scheme was that the individual must remain an employee of the Group for a minimum period. The LTIP 2013 options vested on 5 December 2015. On 22 April 2016 all the members vested their options resulting in the issue of 2,564,427 new shares out of 3,986,110 originally granted. The remaining shares are not exercisable under the criteria used in the issue of the shares and the LTIP 2013 has now closed.
On 29 April 2016, a further 448,523 options were granted ("LTIP 2016"). The LTIP 2015 and 2016 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 ended 6 months ended 12 months ended
30 June 2016 30 June 2015 31 December 2015
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 4,581,976 GBP1.10 4,083,333 GBP1.00 4,083,333 GBP1.00
Granted during
the year 448,533 GBP2.68 595,866 GBP1.79 595,866 GBP1.79
Issued in the
year (2,564,427) GBP0.00 - - (97,223) GBP1.00
Cancelled in the
year (1,421,683) GBP1.00 - - - GBP1.00
Lapsed in the
year (14,265) GBP1.79 - - - GBP1.00
Outstanding at
end of period 1,030,134 GBP2.18 4,679,199 GBP1.10 4,581,976 GBP1.10
Exercisable at
end of period - - - - 3,986,110 GBP1.00
------------------- ------------ ---------- ---------- ---------- ---------- ----------
8 Share Based Payments (continued)
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 2016
LTIP 2016 LTIP 2015 LTIP 2013
Grant date 29/04/2016 01/04/2015 05/12/2013
Vesting date 29/04/2019 01/04/2018 05/12/2015
Lapsing date 01/04/2026 01/04/2025 05/12/2018
Risk free interest
rate 1.22% 1.28% 1.19%
Expected volatility 36.93% 43.13% 38.90%
Expected option
life (in years) 6.50 6.50 3.50
Weighted average share price after GBP2.67 GBP1.80 GBP0.77
adjusting for PV of dividends
Weighted average GBP2.68 GBP1.79 GBP1.00
exercise price
Weighted average fair value
of options granted 65.79p 44.78p 15.93p
Dividend Yield 3.60% 5.20% 8.00%
Remaining contractual
life 9.76 8.76 2.43
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.
8 Share Based Payments (continued)
SAYE
On 1 April 2016 the company launched a new share save (SAYE) scheme ("SAYE 2016") in addition to the existing schemes ("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 numbers of share options in existence during the year were as follows:
Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended
30 June 2016 30 June 2015 31 December 2015
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 452,460 GBP1.37 262,598 GBP1.31 262,598 GBP1.31
Granted
during
the year 87,485 GBP2.25 211,657 GBP1.43 211,657 GBP1.43
Lapsed during
the period (59,093) GBP1.49 (21,795) GBP1.31 (21,795) GBP1.31
Outstanding
at
end of
period 480,852 GBP1.51 474,255 GBP1.43 452,460 GBP1.37
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 year.
Unaudited
6 months ended
30 June 2016
SAYE 2016 SAYE 2015 SAYE 2014
Grant date 01/04/2016 01/04/2015 27/03/2014
Vesting date 01/05/2019 01/05/2018 01/05/2017
Lapsing date 01/11/2019 01/11/2018 01/11/2017
Risk free interest
rate 0.56% 0.76% 1.31%
Expected volatility 32.88% 23.80% 52.80%
Expected option
life (in years) 3.35 3.35 3.35
Weighted average share price after GBP2.81 GBP1.80 GBP1.57
adjusting for PV of dividends
Weighted average GBP2.25 GBP1.43 GBP1.31
exercise price
Weighted average fair value
of options granted 71.93p 41.52p 58.40p
Dividend Yield 3.40% 5.20% 8.00%
Remaining contractual
life 3.34 2.34 1.34
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.
8 Share Based Payment (continued)
The total share-based expense comprises:
Unaudited Unaudited Audited
6 months ended 6 months ended 12 months ended
30 June 2016 30 June 2015 31 December 2015
GBP000 GBP000 GBP000
Equity settled
- LTIP 60 186 369
Equity settled
- SAYE 44 38 74
104 224 443
---------------- ---------------- -----------------
9 Charges relating to exercised LTIP options
On 22 April 2016 the LTIP 2013 options were exercised resulting in an employer's national insurance contribution charge of GBP920k and GBP27k of associated charges. These have been shown within 'operating profit' but excluded from 'EBITDA before share based payments and charges relating to exercised LTIP options' on the face of the statement of comprehensive income.
10 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
Introduction
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 2016 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. We have read the other information contained in the half-yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
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.
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 IFRSs as adopted by the EU. The condensed set of financial statements included in this half-yearly report has been prepared in accordance with IAS 34 Interim Financial Reporting 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.
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. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) 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.
Conclusion
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 June 2016 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the AIM Rules.
Ian Beaumont
for and on behalf of KPMG LLP
Chartered Accountants
1 Sovereign Square,
Sovereign St,
Leeds
LS1 4DA
15 September 2016
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR USSRRNAAKAUR
(END) Dow Jones Newswires
September 15, 2016 02:01 ET (06:01 GMT)
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