Interim results for six months ended 30 June 2014

RNS Number : 9348R

Safestyle UK PLC

18 September 2014

 



18 September 2014

Safestyle UK plc

Unaudited interim results for the six months ended 30 June 2014

Safestyle UK plc (AIM: SFE), the leading UK-focused retailer and manufacturer of PVCu replacement windows and doors for the homeowner replacement market, today announces its interim results for the six months ended 30 June 2014.

Financial highlights

	Unaudited 6 months ended 30 June 2014 £m	Audited 6 months ended 30 June 2013 £m	% change
Revenue	69.2	62.7	+10%
Gross profit	25.2	22.4	+13%
Gross margin %	36.4%	35.7%	+2%
Underlying EBITDA*	9.3	8.3	+12%
Underlying PBT**	8.8	7.8	+13%
EPS - Basic	8.5p	7.7p	+10%

* 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

·    Pre-tax operating cash inflow of £8.2 million

·    Interim dividend of 3.1p per share to be paid on 3 November 2014

Operational highlights

·    Leads generated from media and on-line marketing grown by 12% to 27,762 (H1 2013: 24,877)

·    Sales in South of England grown by 21%

·    Volume of frames installed increased by 8.0% to 136,518 (H1 2013: 126,451)

·    Average unit sales price up 1.5% to £503 (FY 2013: £495)

·    Growth in market share to 8.24% at 30 June 2014 from 7.85% at end of 2013

Commenting on the results, Steve Birmingham, CEO said: "Safestyle UK plc has enjoyed a successful first half of 2014 during which market share, turnover and profitability all increased. We continue to pursue our strategies of expansion in the South and South East and increasing market share. We started the second half of 2014 with a strong order book and order intake to date has been as expected, and we remain on course to meet full year expectations."

Enquiries:

Safestyle UK plc	Via Newgate Threadneedle
Steve Birmingham, Chief Executive Officer
Mike Robinson Chief Financial Officer
Zeus Capital (Nominated Adviser & Broker)	Tel: [phone]
Tim Metcalfe / Ross Andrews
Dominic King (Institutional Sales)
Newgate Threadneedle (Financial PR)	Tel: [phone]
Josh Royston / Madeleine Palmstierna	[e-mail]

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 the Safestyle UK website: www.safestyle-windows.co.uk.

Chairman's Statement

Summary of Performance

I am pleased to report that Safestyle UK has performed well in the six months ended 30^th June 2014.

Revenue was up 10.4% to £69.2m (H1 2013: £62.7m) and the Group continued to increase its market share in the period to 8.24% (7.85% as at 31 December 2013 for FY 2013) according to FENSA installations data.

Profit before tax increased by 10.3% to £8.6m (H1 2013: £7.8m), reflecting improved gross and net margins, with earnings per share up 10.4% to 8.5p. Underlying EBITDA was up 12.1% at £9.3m (H1 2013: £8.3m).

The business continues to convert profit into cash, with H1 2014 cash conversion (the ratio of net cash inflow from operating activities before taxation to underlying EBITDA) for the period at 88%, compared with 82%* for FY 2013. As a consequence, the Group's balance sheet is robust, with cash of £10.8m at 30 June 2014.

Interim Dividend

We will pay an interim dividend of  3.1 pence per share on 3rd November 2014.  The record date will be 3^rd October 2014.

Business Review

The market in which the Group operates grew by 4.3% by volume in H1 2014. Following a strong first quarter, as anticipated the rate of growth slowed in the second quarter. In the first half our installation volumes were up 8% to 136,518 (H1 2013: 126,451), with average unit sales price up 1.5% to £503. With our focus on continued expansion into the South East, where sales were up 21%, we grew ahead of the market and continued to gain market share, in part reflecting the effectiveness of our on-line strategy where lead generation was up 12%. Our focus on excellence in performance - from sales conversion, through manufacturing efficiency, to right first time installations - enables us to drive improving financial performance from market share gain.

During the period, we converted our increased revenue to higher profits, reflecting operational efficiencies in our business and our tight control of in-house operating costs. These efficiencies help mitigate the effects of inflationary cost pressures, currently being experienced in glass prices and the cost of TV advertising, as well as from a recent regulatory change requiring insurance-backed guarantees for all domestic glazing installations. Our ongoing programme of capital expenditure will help us deliver growth and drive further manufacturing gains.

Outlook

Our expectation for the market as a whole is of modest volume growth for the remainder of 2014 and into 2015. With our focus on increased geographic penetration and market share gains, the Board is confident that we can continue to deliver growth in sales, profit and cash flow, and accordingly we expect to report further progress for the full year.

RS Halbert

Chairman

18^th September 2014

Note

* (after adjusting for the repayment of loans made to directors in the period before the Group's IPO which amounted to £1.8million).

Finance Review

Revenue

Revenue for the period was £69.2 million against £62.7 million for the same period last year, growth of 10.4%.  The key factors underpinning this growth were:

·    12% growth in leads generated from direct response from 24,877 to 27,762

·    8.0% growth in the volume of frames installed from 126,451 to 136,518

·    1.5% growth in average unit price from £495 to £503 ex VAT

Gross margin

Gross profit increased by 12% in the period from £22.4 million in 2013 to £25.2 million in 2014.  Gross margin in the period was 36.4% compared to 35.7% for the same period in 2013.  An increase in finance subsidies was more than offset by the benefits from higher prices and lower door canvas lead generation costs.  The proportion of leads being generated by door canvassing fell from 56% in 2013 to 53% in the reported period.

Other operating expenses

Other operating expenses for the period were £16.6 million (2013: £14.6 million), an increase of 14%.  Salary costs increased slightly ahead of revenues reflecting increased costs resulting from the annual pay award and auto-enrolment. 

Marketing costs were 18% higher than for the same period in 2013.  The additional investment contributed to a 12% increase in direct response leads generated but was impacted by a hardening of TV advertising rates.

EBITDA and PBT

Underlying EBITDA before share based payments was £9.3 million for the period (2013: £8.3 million), an increase of 12%. PBT increased by 10% from £7.8 million in 2013 to £8.6 million in the period.

Basic earnings per share for the period were 8.5p compared to 7.7p for the same period last year.  The basis for these calculations are detailed in note 6 to the accounts.

Cash

The cash balance at 30 June 2014 was £10.8 million, an increase of £5.6 million in the period.

Operating activities in the period generated £8.2 million (2013: £5.8 million).  After adjusting for accrued dividends, working capital movements resulted in an outflow of £1.4 million. This reflects seasonal fluctuations.

Dividends

The Board is paying an interim dividend of 3.1p per share.  The dividend will be paid on 3 November 2014 to shareholders on the register at close of business on 3 October 2014.

Condensed consolidated interim statement of comprehensive income

				Unaudited		Audited		Audited
			Note	6 months ended 30 June 2014		6 months ended 30 June 2013		12 months ended 31 December 2013
				£000		£000		£000
	Revenue			69,249		62,658		124,797
	Cost of sales			(44,028)		(40,222)		(79,620)
	Gross profit			25,221		22,436		45,177
	Other operating expenses			(16,645)		(14,640)		(35,830)
	Operating profit			8,576		7,796		9,347
	EBITDA before share based payments, listing costs and historic tax settlement			9,269		8,267		16,076
	Equity settled share based payments charges		9	(176)		-		(273)
	Depreciation and amortisation			(517)		(471)		(923)
	Operating profit before listing costs and historic tax settlement			8,576		7,796		14,880
	Listing costs and historic tax settlement			-		-		(5,533)
	Operating profit			8,576		7,796		9,347
	Finance income			56		90		164
	Finance expense			(28)		(44)		(48)
	Profit before taxation			8,604		7,842		9,463
	Taxation		7	(1,992)		(1,878)		(3,002)
	Profit after taxation for the period			6,612		5,964		6,461
	Other comprehensive income			-		-		-
	Total comprehensive profit for the period attributable to shareholders			6,612		5,964		6,461
	Earnings per share
	Basic (pence)		6	8.5		7.7		8.3
	Diluted (pence)		6	8.2		7.7		8.3

All operations were continuing throughout all periods.

Condensed consolidated interim statement of financial position

				Unaudited		Audited		Audited
			Note	6 months ended 30 June 2014		6 months ended 30 June 2013		12 months ended 31 December 2013
				£000		£000		£000
	Assets
	Intangible assets - Trademarks			504		504		504
	Intangible assets - Goodwill			20,758		20,758		20,758
	Intangible assets - Software			398		468		449
	Property, plant and equipment			6,707		2,580		6,610
	Deferred tax asset			312		153		120
	Non-current assets			28,679		24,463		28,441
	Inventories			1,419		1,167		1,350
	Trade and other receivables			4,264		8,939		2,393
	Cash and cash equivalents			10,803		10,599		5,237
	Current assets			16,486		20,705		8,980
	Total assets			45,165		45,168		37,421
	Equity
	Called up share capital		8	778		1		778
	Share premium account			77,000		77,777		77,000
	Profit and loss account			12,540		18,108		9,793
	Common control transaction reserve			(66,527)		(66,527)		(66,527)
				23,791		29,359		21,044
	Liabilities
	Trade and other payables			11,848		10,966		11,352
	Dividends accrued		5	4,278		-		-
	Financial liabilities			182		321		279
	Corporation tax liabilities			1,983		1,901		1,936
	Provision for liabilities and charges			814		662		727
	Current liabilities			19,105		13,850		14,294
	Financial liabilities			278		416		275
	Provision for liabilities and charges			1,991		1,543		1,808
	Non-current liabilities			2,269		1,959		2,083
	Total liabilities			21,374		15,809		16,377
	Total equity and liabilities			45,165		45,168		37,421

Condensed consolidated interim statement of changes in equity

				Share capital	Share premium	Profit and loss account	Common control transaction reserve	Total equity
				£000	£000	£000	£000	£000
	Balance at 31 December 2012			1	77,777	12,144	(66,527)	23,395
	Total comprehensive profit for the period			-	-	5,964	-	5,964
	Balance at 30 June 2013			1	77,777	18,108	(66,527)	29,359
	Total comprehensive profit for the period			-	-	497	-	497
	Transactions with owners of the Company:
	Issue of bonus shares			777	(777)	-	-	-
	Equity settled share based payment			-	-	23	-	23
	Share warrants expense			-	-	250	-	250
	Dividends			-	-	(9,085)	-	(9,085)
	Balance at 31 December 2013			778	77,000	9,793	(66,527)	21,044
	Total comprehensive profit for the period			-	-	6,612	-	6,612
	Transactions with owners of the Company:
	Equity settled share based payment			-	-	176	-	176
	Deferred tax on equity settled share based payments			-	-	237	-	237
	Dividends			-	-	(4,278)	-	(4,278)
	Balance at 30 June  2014			778	77,000	12,540	(66,527)	23,791

For an explanation of components of shareholders' equity see note 8.

Condensed consolidated interim statement of cash flows

				Unaudited		Audited		Audited
				6 months ended 30 June 2014		6 months ended 30 June 2013		12 months ended 31 December 2013
				£000		£000		£000
	Reconciliation of profit to net cash inflow from operating activities
	Profit for the period			6,612		5,964		6,461
	Interest on bank deposits			(56)		(90)		(164)
	Finance costs			28		44		48
	Depreciation of plant, property and equipment			451		439		855
	Amortisation of intangible fixed assets			66		32		68
	Profit on sale of plant, property and equipment			(2)		(36)		(6)
	Increase in inventories			(69)		(87)		(269)
	(Increase)/decrease in trade and other receivables			(1,786)		(4,684)		2,308
	Increase in trade and other payables			496		2,448		2,389
	Increase in provisions			270		(76)		103
	Equity settled share based payments			176		-		23
	Share warrants expense			-		-		250
	Tax expense			1,992		1,878		3,002
	Net cash inflow from operating activities before taxation			8,178		5,832		15,068
	Taxation			(1,900)		(1,244)		(2,150)
	Returns on investments and servicing of finance
	Hire purchase interest			(27)		(38)		(42)
	Other interest			(1)		(6)		(6)
	Interest received			56		90		164
	Net cash inflow for returns on investments and servicing of finance			28		46		116
	Net cash inflow from operating activities			6,306		4,634		13,034
	Cash flows from investing activities
	Acquisition of property, plant and equipment			(661)		(492)		(4,750)
	Proceeds from sale of property, plant and equipment			70		107		100
	Acquisition of intangible fixed assets			(56)		(80)		(429)
	Net cash outflow from investing activities			(647)		(465)		(5,079)
	Cash flows from financing activities
	Payment of hire purchase and finance leases			(93)		(320)		(383)
	Dividends paid			-		-		(9,085)
	Net cash outflow from financing activities			(93)		(320)		(9,468)
	Net increase/(decrease) in cash and cash equivalents			5,566		3,849		(1,513)
	Cash and cash equivalents at start of period			5,237		6,750		6,750
	Cash and cash equivalents at end of period			10,803		10,599		5,237

Notes to the interim financial information

1              General information

The condensed interim financial information set out herein are in respect of Safestyle UK plc and its subsidiaries (the Group) for the period ended 30 June 2014.

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 for the year ended 31 December 2013 is not the statutory accounts for the year but is instead extracted from the statutory accounts for that year and the financial information for the year ended 30 June 2013 is not the statutory accounts for that year but is instead extracted from the financial information included within the Admission Document to AIM issued on 6 December 2013.

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 2014 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 2013.

The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the period ended 31 December 2013 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 2013.

3              Going concern

The Group has considerable financial resources and has prepared forecasts that show the Group is expected to continue to trade strongly and as a consequence, the directors believe that the Group is well placed to manage its business risks successfully.

The assessment of Group's ability to execute its strategy by funding future working capital requirements involves judgement. The Directors monitor future cash requirements to assess 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 2013.

5              Dividends

				Unaudited		Audited		Audited
				6 months ended		6 months ended		12 months ended
				30 June 2014		30 June 2013		31 December 2013
	The aggregate amount of dividends comprises:			£'000		£'000		£'000
	Dividends paid in respect of the period			-		-		9,085
	Dividends declared			4,278		-		-

A final dividend for the year end 31 December 2013 of 5.5 pence per ordinary share totaling £4,277,778 was paid on the 14 July 2014.

A proposed interim dividend for the half year end 30 June 2014 of 3.1 pence per ordinary share will be paid on 3 November 2014.

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		Audited		Audited
				6 months ended		6 months ended		12 months ended
				30 June 2014		30 June 2013		31 December 2013
				£'000		£'000		£'000
	Profit attributable to ordinary shareholders			6,612		5,964		6,461
	Weighted-average number of ordinary shares (basic)
				No of shares '000		No of shares '000		No of shares '000
	Issued ordinary shares at period end			77,778		77,778		77,778

On 4 December 2013 the share capital was increased by the creation of 44,860,100 new ordinary shares, 44,950 new A ordinary shares, 44,950 new B ordinary shares and 32,727,777 new C ordinary shares each as bonus shares out of share premium to the existing shareholders in proportion to their existing holdings.  At the same time the existing 2,000 shares with a nominal value of £0.50 were subdivided into shares of £0.01 and all shares were reclassified as ordinary shares. This resulted in their being 77,777,777 ordinary shares in issue. As these transactions have changed the number of ordinary shares outstanding without a corresponding change in resources the weighted average number of ordinary shares outstanding during the year and for the comparative year for both basic and diluted EPS have been adjusted.

6              Earnings per share (continued)

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		Audited		Audited
				6 months ended		6 months ended		12 months ended
				30 June 2014		30 June 2013		31 December 2013
				£'000		£'000		£'000
	Profit attributable to ordinary shareholders			6,612		5,964		6,461
				No of shares '000		No of shares '000		No of shares '000
	Weighted-average number of ordinary shares (basic)			77,778		77,778		77,778
	Effect of dilutive share options and warrants			2,858		-		131
	Weighted-average number of ordinary shares (basic) at period end			80,636		77,778		77,909
	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		Audited		Audited
				6 months ended		6 months ended		12 months ended
				30 June 2014		30 June 2013		31 December 2013
	Earnings per share (pence)			8.5		7.7		8.3
	Diluted earnings per share (pence)			8.2		7.7		8.3

c) Earnings per share adjusted for the effect of admission costs and historical tax settlement.

				Unaudited		Audited		Audited
				6 months ended		6 months ended		12 months ended
				30 June 2014		30 June 2013		31 December 2013
				£'000		£'000		£'000
	Profit attributable to ordinary shareholders			6,612		5,964		6,461
	Admission costs and historic tax settlement			-		-		5,023
	Adjusted profit attributable to ordinary shareholders (basic and diluted)			6,612		5,964		11,484
	Adjusted basic earnings per share (pence)			8.5		7.7		14.8
	Adjusted diluted earnings per share (pence)			8.2		7.7		14.7

Admission costs and historic tax settlement are shown net of corporation tax refund of £510k on the historic tax settlement.

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 2014. The effective tax rate applied in the period was 23.2% (period ended 30 June 2013: 23.9%) which compares to the standard corporation tax rate of 21.5%. The main reason for the effective tax rate being higher than the standard rate is due to the effect of expenses not deductible for tax purposes.

Reductions in the UK corporation tax rate from 23% to 21% (effective from 1 April 2014) and from 21% to 20% (effective from 1 April 2015) were substantively enacted on 2 July 2013. These will reduce the Group's future tax charge accordingly and have been taken into account when performing the relevant tax calculations in this financial information.

8              Share capital

				Unaudited		Audited		Audited
				6 months ended		6 months ended		12 months ended
				30 June 2014		30 June 2013		31 December 2013
				£'000		£'000		£'000
	Authorised
	77,777,777 Ordinary Shares @ 1p each			778		1		778
				778		1		778
	Allotted, issued and fully paid
	77,777,777 Ordinary Shares @ 1p each			778		1		778
				778		1		778

On 3 December 2013 Safestyle UK issued 2,000 shares at £38,888.89 each (total value of £77,777,777) to acquire a 100% ownership of Style Group Holdings Limited.  The 2,000 shares, which each had a nominal value of 50p, comprised 998 ordinary shares, 1 A ordinary share, 1 B ordinary share and 1,000 C ordinary shares.

On 4 December 2013 the share capital was increased to £777,777.77 by the creation of 44,860,100 new ordinary shares of £0.01 each, 44,950 new A ordinary shares of £0.01 each, 44,950 new B ordinary shares of £0.01 each and 32,727,777 new C ordinary shares of £0.01 each as bonus shares out of share premium to the existing shareholders in proportion to their existing holdings.  At the same time the existing shares with a nominal value of £0.50 were subdivided into shares of £0.01 and all shares were reclassified as ordinary shares resulting in the Company having 77,777,777 ordinary shares of £0.01 in issue.

A Common Control Transaction Reserve has been created through Safestyle UK plc's acquisition of the group headed by Style Group Holdings Limited.  The reserve of £66.5 million represents the difference in the fair value of the consideration paid for Style Group Holdings of £77.8 million and the share capital and share premium held by Style Group Holdings Limited at the time of the acquisition of £11.3 million.

9              Share Based Payment

The Group operates an equity-settled LTIP remuneration scheme for directors and certain management.  The only vesting conditions attached to the options are that the individual must remain an employee of the Group for a minimum period.

The number of share options in existence during the year were as follows:

			Unaudited		Audited		Audited
			6 months ended		6 months ended		12 months ended
			30 June 2014		30 June 2013		31 December 2013
			Number of share options	Weighted average exercise price	Number of share options	Weighted average exercise price	Number of share options	Weighted average exercise price
	Outstanding at start of period		4,083,333	£1.00	-	-	-	-
	Granted during the year		-	-	-	-	4,083,333	£1.00
	Outstanding at end of period		4,083,333	£1.00	-	-	4,083,333	£1.00
	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		Audited		Audited
			6 months ended		6 months ended		12 months ended
			30 June 2014		30 June 2013		31 December 2013
	Risk free interest rate			1.19%		-		1.19%
	Expected volatility			38.90%		-		38.90%
	Expected option life (in years)			3.5		-		3.5
	Weighted average share price after adjusting for PV of dividends			£0.77		-		£0.77
	Weighted average exercise price			£1.00		-		£1.00
	Weighted average fair value of options granted			15.93p		-		15.93p

9              Share Based Payment (continued)

In the period the company launched a sharesave (SAYE) scheme for employees. This allowed 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. It commenced on the 27 March 2014 and matures on 1 May 2017.

			Unaudited		Audited		Audited
			6 months ended		6 months ended		12 months ended
			30 June 2014		30 June 2013		31 December 2013
			Number of share options	Weighted average exercise price	Number of share options	Weighted average exercise price	Number of share options	Weighted average exercise price
	Outstanding at start of period		-	-	-	-	-	-
	Granted during the year		262,598	£1.31	-	-	-	-
	Outstanding at end of period		262,598	£1.31	-	-	-	-
	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		Audited		Audited
			6 months ended		6 months ended		12 months ended
			30 June 2014		30 June 2013		31 December 2013
	Risk free interest rate			1.31%		-		-
	Expected volatility			40.04%		-		-
	Expected option life (in years)			3.35		-		-
	Weighted average share price after adjusting for PV of dividends			£1.57		-		-
	Weighted average exercise price			£1.31		-		-
	Weighted average fair value of options granted			58.4p		-		-

In December 2013 the Group also issued warrants to Zeus Capital in lieu of payment for services related to the IPO.  The warrant is for 3% of the fully diluted share capital of the company following the exercise of the subscription rights.  The warrant is exercisable at any time between the 1st and 10th anniversary of admission to AIM.  The fair value of the warrant has been determined by the estimated value of services provided and was charged as an IPO expense in the year ended December 2013.

The total share-based expense comprises:

			Unaudited		Audited		Audited
			6 months ended		6 months ended		12 months ended
			30 June 2014		30 June 2013		31 December 2013
				£000		£000		£000
	Equity settled - LTIP			163		-		23
	Equity settled - SAYE			13		-		-
	Warrants			-		-		250
				176		-		273

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 2014 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 2014 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the AIM Rules.

David Morritt

for and on behalf of KPMG LLP 

Chartered Accountants

1 The Embankment

Neville Street

Leeds

LS1 4DW

18 September 2014

 

END

 

 

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