Window and door replacement company Safestyle UK (SFE:AIM) is in demand, the shares bid up 8.3% to 290.75p as better-than-expected annual numbers and a strong start to 2016 stoke earnings upgrades. Proving investors don't have to look to large cap leviathans for healthy levels of income, the veritable cash machine also pleases with news it will pay a 6.8p (£5.5 million) special dividend in June.

Founded in Bradford in 1992 with just £2,000 of start-up capital, Safestyle has grown into the leading UK focused retailer and manufacturer of PVCu replacement windows and doors for the homeowner market. Cheaper than national rivals, the AIM company is a prime beneficiary of RMI (repair, maintenance and improvement) activity.


Safestyle's finals for calendar 2015 show record sales and profits and growth across key performance indicators. Last year, the business carried out a record 60,134 installations, raised its average frame sales price 5.4% to £531 and grew its market share from 8.48% to 9.46%.

Impressively, this represented an eleventh consecutive year of market share growth despite muted overall RMI market conditions. 'During 2015 we continued our geographic expansion by opening three new sales branches, added conservatory upgrades to our product range and introduced an improved suite of promotional consumer finance options,' comments boss Steve Birmingham (pictured below).

CEO - Steve Birmingham

The CEO adds Safestyle is 'well positioned to continue to grow market share, expand our sales branch network and broaden our product range. In the current financial year, so far, order intake has been very strong giving us the confidence that we will maintain our successful progress in the year ahead.' Analysts upgrade earnings forecasts accordingly, with Safestyle reporting order intake in 2016 to date 'has been significantly ahead of the same period in 2015'.

Shares highlighted the copiously cash-generative nature of Safestyle's business model in our Griller interview with Birmingham here in October. Closing 2015 with £16.5 million of net cash, an £8 million increase in the year, Safestyle today proposes two dividends; a hike in the final dividend from 6.2p to 6.8p (taking the year's total to 10.2p), as well as a 6.8p special dividend.

Web chart - Safestyle - Mar 16

This £5.5 million return of surplus cash comes even as Safestyle confidently announces its intention to spend £7.25 million on doubling the capacity at its Barnsley fabication facility. Post these combined payouts, the balance sheet will remain conservative, with Safestyle still retaining some cash in the coffers 'as a buffer in the event of a sustained period of market regression'.

Issue Date: 17 Mar 2016