Safestyle celebrates successful market debut as shares rocket

Shares in the Bradford-based firm rose 38p to 138p after the float was heavily oversubscribed and over 10 million shares were traded.

Chief executive Steve Birmingham said: “We have been delighted with the response in our over-subscribed placing and are very pleased to welcome our new investors. The company has experienced strong growth in a difficult market, driven by the outstanding quality of our product, the focus on executing our strategy and the dedication of our staff.

“As economic conditions continue to improve and as we increase our geographical presence into the South of England we feel confident in a bright and successful future as a PLC.”

The company floated with a market capitalisation of £78m, making it one of the largest AIM floats this year.

Analysts at Killik & Co said: “Whilst the recession has had a very negative impact on the industry as a whole – installation volumes have fallen by 35 per cent over the last five years – Safestyle has actually grown volumes by over 11 per cent over this period, increasing its market share from 4.4 per cent in December 2007 to 7.5 per cent in December 2012.

“We attribute this market outperformance to the group’s strong value proposition. Unlike larger national peers Everest and Anglian, Safestyle is focused only on the manufacture and sale of replacement windows and doors, whereas peers have diversified into solar panels, driveways and conservatories amongst other things.

Safestyle said a flotation was the next logical step for the company.

“It will increase our credibility, ” said Mr Birmingham.

“It was a lengthy process, a lot of due diligence, a lot of hurdles to leap. It’s an endorsement of the business.

“We will be the only quoted double glazing company. It will give us credibility.”

Safestyle is one of three big double glazing players in the market. Alongside Everest and Anglian, the three firms account for a 20 per cent share of the market. The remaining 80 per cent is shared between 20 and 30 regional companies and hundreds of local traders.

“We’ve got a value proposition,” said Mr Birmingham.

“We call it the Aldi effect. People are pleasantly surprised that they can buy a good quality product for less than our rivals.

“We exceed people’s expectations. We have a very high quality product for a very good price.”

He said that Safestyle’s offer is comparable with Everest and Anglian in terms of quality, but it can undercut its rivals by 20 per cent because it has a lower cost base due to its sole focus on windows and doors.

“It’s a simple business model that keeps costs low. We’re highly centralised whereas our rivals have a regional management structure,” he added.

“While we’re 20 per cent cheaper than our big rivals, we’re probably a little more expensive than the smaller guys.

“However, we will be around for the next 10 years to service the double glazing. A lot of the smaller players are finding it very difficult to remain in the market.”

The company has grown from its founding in 1992 to become the largest company in the UK household window and door replacement market, manufacturing 232,000 frames in 2012 and carrying out over 50,000 installations. It has 10 installation depots and 29 sales offices throughout the country.

The group said its focus on windows and doors has allowed it to increase its UK market share from 4.4 per cent in 2007 to 7.5 per cent in 2012, in a market that has declined 35 per cent from its 2007 high point.

Its big rivals offer a wider range of home improvement products, such as conservatories.

Group aims to extend reach

SAFESTYLE believes it can capture a significant market share by extending its geographic reach.

At the moment, 50 per cent of its sales are in the north and the Midlands and 50 per cent in the south and south east. Its key targets are Greater London and other parts of the south and south east of England.

The group said that as housing transactions, mortgage approvals and consumer spending improve, it is well positioned to take advantage of the improving economic situation.

“The feelgood factor is starting to come back,” said chief executive Steve Birmingham.

“This is the first time in five years we’ve had six months of consecutive growth.”