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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Styles & Wood | LSE:STY | London | Ordinary Share | GB00BLG2TG58 | 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% | 463.50 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
From Apr 2019 to Apr 2024
TIDMSTY
RNS Number : 1370S
Styles & Wood Group PLC
29 September 2017
Styles&Wood Group PLC
Interim Results for the Six Month Period Ended 30(th) June 2017
Styles & Wood Group plc, the integrated property services and project delivery specialist, announces its interim results for the six months ended 30(th) June 2017.
Financial Results
Hot Features
Premium
H1:2017 H1:2016 % Change
Revenue GBP55.5m GBP47.1m 18.0%
Gross Margin 11.6% 9.9% 1.7%
Underlying EBITDA(1) GBP1.9m GBP1.5m 29.9%
Underlying Profit Before
Tax(1) GBP1.1m GBP0.5m 126.0%
Profit Before Tax GBP0.9m GBP0.4m 112.2%
Underlying Earnings
per Share(1) 10.8p 3.9p 176.9%
Earnings per Share 7.7p 2.6p 196.2%
Net cash and cash equivalents(2) GBP1.0m GBP3.7m
Net debt(3) GBP6.3m GBP3.3m
Full Year Order Book
week 36(4) GBP130.3m GBP97.6m 33.5%
Notes:
1 Excludes non-recurring items, amortisation of customer-related intangibles and notional interest on preference shares.
2 Cash balances, less short-term facilities.
3 Net debt represents cash and cash equivalents, less outstanding preference shares, loan notes and finance leases.
4 Order Book includes executed, secured and anticipated workload for the full year.
Corporate Activity Highlights:
Acquisition of The GDM Group Limited ("GDM"): The acquisition of GDM, completed in January 2017, considerably enhances the Group's skills and capabilities in mechanical, electrical and environmental consultancy services.
New Banking Facilities: In February, the Group entered into new banking facilities with Santander UK plc, comprising a GBP5.0m Revolving Credit Facility.
Post-period end
Investment in Joint Venture: On 27(th) July 2017, Spatial Initiative Limited, a new 50:50 joint venture between Styles & Wood Limited and Extraspace Solutions (UK) Limited, was incorporated. The joint venture will offer specialist services, including modular build and refurbishment to the education market.
Operational Highlights:
Aviva Properties: The successful completion of the 150,000 square feet refurbishment of Westminster House in central Manchester sees the second major project delivered for Aviva, following on from Irongate in London, which was handed over at the turn of the year.
India Buildings: Appointment for the pre-contract and early works phases for this major 250,000 square feet refurbishment project, to provide the new HMRC Regional Office Hub in Liverpool, ideally positions the Group for other opportunities within this major government office initiative.
New Framework Appointments: The Group has had significant success in framework conversions during 2017, including:
-- Manchester Airports Group: secured framework positions on a number of lots for projects and maintenance works for Manchester and Stansted Airports;
-- BUPA Care Home Re-Fresh Programme: first allocation of projects under a framework arrangement to re-fresh the entire care home estate; and
-- Wolseley: Estate Transformation Programme: fully integrated solution provided for this customer, including systems support, programme services, design and project development and delivery.
Post Period End
-- Barclays Office Rationalisation Programme: selected as one of three national service providers to support the remodelling of the Bank's UK Office Estate; and
-- Government Hubs Fit-Out Programme: one of nine strategic partners appointed to support the delivery of a major programme, designed to reshape the Government's Office Estate through the creation of 18 to 22 strategic office hubs across the UK.
Tony Lenehan, CEO of Styles&Wood Group plc, said:
'The Group has again delivered a strong performance in the first half of the year, following on from that reported for 2016. Revenue, EBITDA and profit before tax all show good growth. The Group is driving strong organic growth, reflected in the improved order book and new framework appointments. It is particularly pleasing to see healthy contributions from both recent acquisitions, Keysource and GDM, which have additionally realised early synergies and are also progressing well from an integration perspective.
The current order book position and trading forecasts remain in line with management expectations for the full year.'
Enquiries:
Styles & Wood Group plc Tel 0161 926 6000 Tony Lenehan, Chief Executive Officer Philip Lanigan, Group Finance Director Shore Capital Tel 0207 408 4090 Edward Mansfield/Mark Percy FTI Consulting Tel 0203 727 1000 Oliver Winters/James Styles
Chief Executive Officer's Statement
Group Results
Group revenue for the six months ending 30(th) June 2017 increased by 18.0% to GBP55.53m (H1 2016: GBP47.06m), assisted by contributions from the acquisition of Keysource and GDM. Underlying EBITDA(1) increased by 29.9% to GBP1.91m (H1 2016: GBP1.47m). Underlying finance costs were similar to 2016 at GBP0.24m (H1 2016: GBP0.23m) as the cash generated over the past twelve months has been invested in software product development and on the acquisitions of GDM and Keysource.
The Group recorded an underlying profit before tax of GBP1.13m (H1 2016: GBP0.50m) which, after charging amortisation of customer intangibles of GBP0.16m (H1 2016: GBPnil), professional fees on acquisitions of GBP0.02m (H1 2016: GBPnil) and notional interest on preference shares of GBP0.08m (H1 2016: GBP0.09m), results in a profit before tax of GBP0.87m (H1 2016: GBP0.41m), an increase of 112.2%.
Cash flow in period, as determined by work mix and H1:H2 weighting, followed the conventional characteristic of an operational cash outflow in the first half of the year of GBP1.75m (H1 2016 GBP0.56m). The Group experienced an outflow on investing activities of GBP2.69m (H1 2016: GBP0.91m), with the acquisition of subsidiaries for GBP3.36m (H1 2016: GBPnil) partially offset by the cash acquired of GBP0.63m (H1 2016: GBPnil). The first six months saw the first substantial return of cash, GBP0.53m (H1 outflow of GBP0.15m), to the Group from the joint venture in Dubai as commercial settlement was reached on a major project.
Cash and cash equivalents at 30(th) June 2017 stood at GBP0.98m (H1 2016: GBP3.70m). In February 2017, the Group entered into a GBP5.0m Revolving Credit Facility with Santander, which is available until August 2019.
Overview and Strategy Update
The Group's selective approach to new business opportunities and an associated conversion ratio, which continues to perform at better than one in three, has established a basis for more predictable income streams. Adding building services consultancy and facilities management expertise (in particular in relation to business critical environments, through the acquisition of GDM and Keysource) has considerably strengthened the relevance of our customer service offering.
Our skills sets are now relevant in new sectors and subsets. In particular, we have been able to transfer learning and best practice from the private sector owner-occupier market to the public sector. The securing of strategic delivery partner status on the Government Hubs Fit-Out Framework clearly underscores this point. We have also seen the successes we have had in delivering complex clinical facilities for NHS Trusts lead to the development of serial relationships with private sector healthcare operators, HCA and BUPA. Similarly, expertise honed in grocery retail has enabled new relationships to be established with specialist end-users who operate critical facilities, such as Manchester Airports Group.
The Group's purpose, the creation of sustainable places for people, is focussed and differentiated through technologies-led solutions. Collaborative supply chain arrangements underpin our projects and programmes offer and, as we expand our business interests through strategic alliances and joint ventures, we will continue to actively investigate further acquisition opportunities.
Corporate Activity:
Acquisition of GDM: The acquisition of GDM, completed in early 2017, considerably enhances the Group's skills and capabilities in mechanical, electrical and environmental consultancy services. GDM was acquired for an initial consideration of GBP4.0m, satisfied in cash and shares, with further potential deferred and contingent cash consideration, up to GBP3.1m, linked to performance and commercial objectives over the next three years. These specialist capabilities, now integrated within the expanding Group, are increasingly relevant in a market with high dependency on building services technologies.
New Banking Facilities: In February, the Group entered into new banking facilities with Santander UK plc. The arrangement comprises a GBP5.0m Revolving Credit Facility to be used for working capital purposes, to support the growth of the Group following the acquisitions of Keysource in September 2016 and GDM in January 2017. The facility can also be utilised to support further acquisitions and is committed for a period of two and a half years.
Post-Period End
Investment in Joint Venture: On 27(th) July 2017, Spatial Initiative Limited, a new 50:50 joint venture between Styles&Wood Limited and Extraspace Solutions (UK) Limited, was incorporated. The joint venture is formed primarily to serve customers within the education sector, combining the skills of each partner to provide an expert capability to address under capacity in the schools' subset for fit-out, refurbishment and modular build solutions. The venture has secured a position on Batch B of the Education and Skills Funding Agency (ESFA) Priority School Building Programme, with an initial allocation of four primary schools to be delivered by the end of 2018.
Segmental Performance:
-- Professional Services: Revenue within the period of GBP30.2m (H1 2016: GBP19.0m) shows an increase of 58.9% relative to prior year. Operational performance remains strong, with Professional Services delivering a margin of 15.1% (H1 2016: 12.6%). Both Portfolio Services and Programme Management and Implementation experienced a growth in revenue in the first half of 2017. GDM revenues are included in the current year figures for Portfolio Services.
- Portfolio Services: New Governance, Risk and Compliance systems product launched in collaboration with Nationwide Building Society. Investment made in new enterprise platform for both internal and external customer deployment. Design and Programme Services Business Unit capabilities enhanced, and broader service line established.
- Programme Management and Implementation: Two to five year framework arrangements in place with four leading banking and financial institutions. Broad-based service line offer with multiple internal customer arrangements. Diversification into public sector office, healthcare, transport hub and industrial areas.
-- Contracting Services: Revenue at GBP18.6m (H1 2015: GBP27.5m) fell by 32.3% whilst profitability decreased by 58.4% to GBP0.7m (H1 2016: GBP1.7m). The lower revenue in H1 is primarily due to timing issues regarding two major projects' scope, prior to commencing on-site and delays in planning. The deferred start dates will give rise to a significant weighting of contracting revenue in the second half of the year.
- Project Development and Delivery: Serial and repeat customer relationships characterising business interest. Multiple projects in hotel conversion subset and major project success with India Buildings in Liverpool. Continuation of ATM projects' delivery for RBS.
-- Facilities Services: Revenue at GBP6.7m (H1 2016: GBP0.5m) with the increase primarily due to the acquisition of Keysource in September 2016, whilst profitability increased to GBP1.4m (H1 2016: loss of GBP0.1m). Further growth in this sector is expected in the second half of the year from the continued full-year impact of the Keysource acquisition, along with other life cycle services work due to start in H2.
- Critical Facilities: Consultancy-led solution incorporating projects and operations capabilities. Prioritised focus on blue light, universities and major corporates. Revenue includes the provision of services to The Mayor's Office for Policing And Crime ("MOPAC") data centre management and operations flagship contract.
- Life Cycle Services: Planned and reactive maintenance and small works programmes for banks and corporates. In July 2017, the Group was appointed to the Manchester Airports Group framework.
Market Review
-- Banking and Finance: With a growing emphasis on technology-led customer-centric services, there remains a requirement for investment in remaining branches, despite a reduction in the overall number. Branch reduction provides short-term opportunities linked to exit works, whilst the development of flagship branches, along with investment in branch technology and in-branch service offerings, provide further opportunities. Post-Brexit, the UK remains an attractive market with foreign banks opening new offices in the UK. Consolidation of office space, and a focus on regional office space outside of London, is also driving capital investment.
-- Commercial: An ongoing shortage of affordable, high specification office space is projected to drive demand in the short to medium-term for quality refurbishment and fit-out. Creative spaces are a focus for landlords in driving rental yields and end-users to attract talent. Major government office decentralisation programme and creation of super-hubs driving medium to long-term demand in Government and Public Sector office market.
-- Retail and Leisure: Leisure is a growing market, particularly the hotel segment, with high growth noted in both the budget and 4-star hotels sectors, with an increase in refurbishment activity. Post-Brexit exchange rates have driven increased UK tourism and 'staycations', reflected by occupancy rates increases across the UK. Technological change, multi-channel operations and a prerequisite for optimising format performance, are a defining focus for the large grocery multiples. Programmes to capture innovation and store interventions, with minimal customer impact, are being planned to better leverage existing assets and drive efficiency.
-- Education: Higher Education driving continued growth in the education sector. The application of formula capital funding for the UK's universities, aligned with a goal to provide a world-leading Higher Education system, establishes a sustainable basis for providing a high quality real estate infrastructure, with a focus on the upgrade of existing facilities, in favour of new-build projects. Schools' framework, launched by the Education Funding Agency with a view to creating more school places, deliver 500 new schools and refurbish or rebuild over 500 schools. Total Government investment in the schools estate of GBP23 billion to 2021 announced.
-- Healthcare: Health and social care devolution will create a demand for a more strategic approach to asset management for the corresponding estates rationalisation programme. Private healthcare provision is growing with continued investment in facility upgrades. Increased appetite for luxury care homes is driving demand for capital investment in estates within the private segment of this market.
-- Transport Hubs: Airports: Favourable post-Brexit exchange rates have led to increased international visitors to the UK, with a number of key UK airports running at, or close to, capacity. A focus on utilising space more efficiently to combat this is driving upgrade programmes, along with the announcement of significant capital spend at major hubs, such as Heathrow.
-- Critical Facilities: The importance of the data centre continues to be seen as mission critical. An ability to provide consultancy-led expert advice, supported by projects' capability and informed operational support, positions the business advantageously to address the continuing challenges within this space.
Outlook
Both recent acquisitions, Keysource and GDM, have performed well in the year to date, and significantly enhanced the Group's customer service offering and earnings potential. Further opportunities have been identified for growth and synergy realisation across the wider group in the current year and beyond.
The year-on-year order book position has strengthened within the core Styles & Wood business, in addition to the impact of the acquisitions. This current order book position and trading forecasts remain in line with management expectations for the full year, with new framework appointments and major project wins providing further growth into 2018.
Tony Lenehan Chief Executive Officer
Responsibility Statement
The Directors confirm that this condensed consolidated interim financial information has been prepared in accordance with IAS34, as adopted by the European Union, and that the interim management report contained herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
-- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last Annual Report.
The Directors of Styles & Wood Group plc are listed in the Annual Report for the year ended 31(st) December 2016.
By order of the Board
Tony Lenehan Philip Lanigan
28 September 2017 28 September 2017
Chief Executive Officer Chief Finance Officer
Consolidated Unaudited Unaudited Audited
Income Statement
For the six 6 months ended 6 months ended year ended
months ended 30
June 2017
30 June 2017 30 June 2016 31 December 2016
Underlying Non-recurring Total Underlying Non-recurring Total Underlying Non-recurring
items and items and items and
preference preference preference
share share share
accounting accounting accounting
Notes (note 7) (note 7) (note 7) Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Continuing
operations
Revenue 6 55,531 - 55,531 47,059 - 47,059 104,712 - 104,712
Cost of sales (49,095) - (49,095) (42,411) - (42,411) (91,843) - (91,843)
----------- -------------- --------- ----------- -------------- --------- ----------- -------------- ---------
Gross profit 6,436 - 6,436 4,648 - 4,648 12,869 - 12,869
Administrative
expenses (5,060) (187) (5,247) (3,545) - (3,545) (7,965) (404) (8,369)
Operating
profit/(loss) 6,7 1,376 (187) 1,189 1,103 - 1,103 4,904 (404) 4,500
Finance costs 8 (248) (82) (330) (232) (92) (324) (398) (187) (585)
Finance income 8 8 - 8 4 - 4 1 - 1
Share of results
of joint
venture 20 - - - (376) - (376) (376) - (376)
----------- -------------- --------- ----------- -------------- --------- ----------- -------------- ---------
Profit/(loss)
before taxation 1,136 (269) 867 499 (92) 407 4,131 (591) 3,540
Taxation 9 (197) - (197) (225) - (225) (1,003) 24 (979)
----------- -------------- ---------
Profit/(loss)
for the period
attributable to
equity
shareholders 939 (269) 670 274 (92) 182 3,128 (567) 2,561
----------- -------------- --------- ----------- -------------- --------- ----------- -------------- ---------
Basic earnings
per share,
expressed in
pence per share 10 10.8p (3.1)p 7.7p 3.9p (1.3)p 2.6p 41.8p (7.6)p 34.2p
----------- -------------- --------- ----------- -------------- --------- ----------- -------------- ---------
Diluted
(loss)/earnings
per share,
expressed in
pence per share 10 10.1p (2.9)p 7.2p 3.4p (1.1)p 2.3p 36.0p (6.5)p 29.5p
----------- -------------- --------- ----------- -------------- --------- ----------- -------------- ---------
There is no difference between the profit/(loss) for the period and the total comprehensive income for the period. Accordingly, no separate statement of comprehensive income has been presented.
Underlying results are shown before charging amortisation on customer-related intangibles, non-recurring expenses (note 7) and accounting for notional interest on preference shares (note 14).
The notes that follow are an integral part of the condensed Interim Financial Statements.
Unaudited
Notes Ordinary Hurdle Preference Equity Share Capital Reverse Translation Retained Total
share Shares share reserve premium redemption acquisition reserve earnings
capital capital reserve reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2016 25,659 - 993 182 16,300 4,773 (66,665) - 17,757 (1,001)
Profit for the
period - - - - - - - - 182 182
Total
comprehensive
income - - - - - - - - 182 182
Share option
scheme - 25 - - - - - - 120 145
Preference
share notional
interest 14 - - (92) - - - - - 92 -
Total
transactions
with owners - 25 (92) - - - - - 212 145
At 30 June 2016 25,659 25 901 182 16,300 4,773 (66,665) - 18,151 (674)
Comprehensive
income
Profit for the
period - - - - - - - - 2,379 2,379
Total
comprehensive
income - - - - - - - - 2,379 2,379
Transactions
with owners
Share option
scheme - - - - - - - - 173 173
Share issue net
of expenses 14 - - (182) 1,702 - - - - 1,534
Redemption of
preference
shares - - (95) - - - - - 95 -
Preference
share notional
interest 14 - - - - - 670 - - (670) -
Total
transactions
with owners 14 - (95) (182) 1,702 670 - - (402) 1,707
At 31 December
2016 25,673 25 806 - 18,002 5,443 (66,665) - 20,128 3,412
Comprehensive
income
Profit for the
period - - - - - - - - 670 670
Total
comprehensive
income - - - - - - - - 670 670
Share option
scheme - - - - - - - - 225 225
Share issue net
of expenses 2 - - - 984 - - - - 986
Preference
share notional
interest 14 - - (82) - - - - - 82 -
Currency
translation
differences - - - - - - - 7 - 7
Total
transactions
with owners 2 - (82) - 984 - - 7 307 1,218
At 30 June 2017 25,675 25 724 - 18,986 5,443 (66,665) 7 21,105 5,300
Consolidated Balance
Sheet
As at 30 June 2017 Unaudited Unaudited Audited
30 June 30 June 31 December
Notes 2017 2016 2016
GBP'000 GBP'000 GBP'000
Non-current assets
Intangible assets 14,916 239 8,399
Property, plant and equipment 1,232 1,110 1,161
Deferred tax asset 11 11 90
16,159 1,360 9,650
--------- --------- -----------
Current assets
Inventories 101 - 103
Trade and other receivables 43,296 36,124 37,437
Amounts owed by joint
venture 1,131 1,625 1,661
Cash and cash equivalents 12 2,282 3,697 6,085
Other financial assets:
cash collateral 13 590 1,049 590
47,400 42,495 45,876
--------- --------- -----------
Current liabilities
Trade and other payables (43,190) (38,168) (40,744)
Financial liabilities 14 (2,964) (670) (924)
Deferred and contingent
consideration 21 (2,734) - (1,000)
Current tax liabilities (665) (235) (676)
(49,553) (39,073) (43,344)
--------- --------- -----------
Net current (liabilities)/assets (2,153) 3,422 2,532
--------- --------- -----------
Total assets less current
liabilities 14,006 4,782 12,182
--------- --------- -----------
Non-current liabilities
Provisions 15 (172) - (210)
Financial liabilities 14 (4,935) (5,456) (4,760)
Deferred and contingent
consideration 21 (3,580) - (3,800)
Deferred tax liability (19) - -
--------- --------- -----------
(8,706) (5,456) (8,770)
Net assets/(liabilities) 5,300 (674) 3,412
--------- --------- -----------
Shareholders' equity
Ordinary share capital 25,675 25,659 25,673
Hurdle shares 16 25 25 25
Preference share capital 724 901 806
Share premium 18,986 16,300 18,002
Capital redemption reserve 5,443 4,773 5,443
Equity reserve - 182 -
Reverse acquisition reserve (66,665) (66,665) (66,665)
Translation reserve 7 - -
Retained earnings 21,105 18,151 20,128
Total shareholders' funds/(deficit) 5,300 (674) 3,412
--------- --------- -----------
The notes that follow are an integral part of the condensed Interim Financial Statements.
Consolidated Statement of
Cash Flows
For the six months ended
30 June 2017
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
Notes 2017 2016 2016
GBP'000 GBP'000 GBP'000
Cash (used in)/generated
from operations 17 (1,750) (559) 6,159
Income taxes paid (344) (319) (729)
Foreign exchange impact 7 - -
Net cash (used in)/generated
from operating activities (2,087) (878) 5,430
---------- ---------- ------------
Cash flows used in investing
activities
Purchase of property, plant
and equipment (151) (757) (900)
Purchase of intangible assets
- software (362) (7) (939)
Proceeds from disposal of
property, plant and equipment 32 - -
Acquisition of subsidiaries (3,363) - (3,522)
Cash acquired 628 - 636
Amounts returned from/(advanced
to) joint ventures 530 (149) (185)
Net cash used in investing
activities (2,686) (913) (4,910)
---------- ---------- ------------
Cash flows used in financing
activities
Interest received 8 4 1
Interest paid/Finance costs (43) (36) (215)
Repayment of loans (156) - -
Redemption of preference
share capital - - (670)
Preference share coupon paid (65) (76) (151)
Prepaid debt issue costs (52) - -
Proceeds of ordinary share
capital (net of fees) - - 555
Repayments on hire purchase
agreements (27) - (10)
Cash collateral deposits - - 459
Net cash used in financing
activities (335) (108) (31)
---------- ---------- ------------
Net decrease in cash and
cash equivalents (5,108) (1,899) 489
Cash and cash equivalents
at beginning of period 6,085 5,596 5,596
Net cash and cash equivalents
at end of period 12 977 3,697 6,085
---------- ---------- ------------
The notes that follow are an integral part of the condensed Interim Financial Statements.
Notes to the interim financial information
1. General information
Styles & Wood Group plc ("the Company") is a public limited company, incorporated and domiciled in the United Kingdom and listed on the AIM market of the London Stock Exchange. Styles & Wood Group plc and its subsidiaries (together "the Group") provide property services to banking, retail, leisure, commercial and public organisations within the UK. The Group has a joint venture in Dubai providing property services to the local market. The address of Styles & Wood Group plc's Registered Office is Cavendish House, Cross Street, Sale, Cheshire. M33 7BU.
This condensed consolidated financial information was approved for issue on 28(th) September 2017.
This condensed consolidated interim financial information does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The interim results to 30(th) June 2017 and comparative results to 30(th) June 2016 are neither audited nor reviewed by the auditors. The financial information for the full preceding year is based on the statutory accounts for the year ended 31(st) December 2016 which were approved by the Board of Directors on 26(th) April 2016 and have been delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph nor any statement under section 498 of the Companies Act 2006.
2. Basis of preparation
This condensed consolidated interim financial information for the six months ended 30(th) June 2017 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority (formerly the Financial Services Authority) and with IAS34 "Interim financial reporting" as adopted by the European Union. The condensed interim results should be read in conjunction with the Annual Report and Financial Statements for the year ended 31(st) December 2016, which are available from the Group's website www.stylesandwood-group.co.uk.
Going concern basis
The Group meets its day-to-day working capital requirements through its bank facilities. The Group's current forecasts and projections, which take account of reasonably possible changes in trading conditions, show that the Group should be able to operate within the level of its current facilities, details of which can be found in note 12. Therefore, the Group continues to adopt the going concern basis in preparing the consolidated interim financial information.
3. Accounting policies
The accounting policies, methods of computation and presentation followed are consistent with those applied in the Annual Report and Financial Statements which are prepared in accordance with IFRS as adopted by the European Union, except as described below:
-- Taxes on income in the interim periods are accrued using the tax rate that would be applicable to total expected annual earnings.
There are no new IFRSs or IFRICs that are effective for the first time for this interim period that would be expected to have a material impact on the Group.
4. Estimates
The preparation of interim financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.
In preparing this condensed consolidated interim financial information, the significant judgements 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 for the year ended 31(st) December 2016.
5. Principal Risks
The Group's operations and financial instruments expose it to a variety of financial and other risks. This interim financial information does not contain all risk management information and should be read in conjunction with the Annual Report and Financial Statements.
There have been no changes in the risk management policies or risks since the Annual Report for the year ended 31(st) December 2016 was published.
6. Revenue and profit from business segments
All revenues arise from external customers for the provision of property-related services in the UK. Operating segments are reported in a manner consistent with the internal reporting to the Board of Directors (the chief operating decision maker), which is used to assess performance and make strategic decisions.
Segmental reporting disclosures have been amended in line with the Group's new management reporting. Comparative disclosures for the six months ending 30(th) June 2016 have been restated accordingly in the tables below.
Unallocated segment result reflects expenses relating to the overall Group, rather than a particular segment, and includes people costs, professional fees and share option expenses. Transactions between segments are eliminated on consolidation.
Six months ending 30 June 2017
CONTRACTING PROFESSIONAL FACILITIES UNALLOCATED GROUP
SERVICES SERVICES SERVICES
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 18,616 30,185 6,730 - 55,531
------------ ------------- ----------- ------------ --------
Underlying segment
result 626 4,563 1,363 (5,176) 1,376
Non-recurring items
and customer intangible
amortisation (note
7) - - - (187) (187)
------------ ------------- ----------- ------------ --------
Segment result 626 4,563 1,363 (5,363) 1,189
Finance costs (330)
Finance income 8
Share of results
of joint venture -
--------
Profit before taxation 867
Taxation (note 9) (197)
Profit for the period 670
--------
Six months ending 30 June 2016
(restated)
CONTRACTING PROFESSIONAL FACILITIES UNALLOCATED GROUP
SERVICES SERVICES SERVICES
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 27,497 19,024 538 - 47,059
------------ ------------- ----------- ------------ --------
Underlying segment
result 1,740 2,399 (125) (2,911) 1,103
Non-recurring items
(note 7) - - - - -
------------ ------------- ----------- ------------ --------
Segment result 1,740 2,399 (125) (2,911) 1,103
Finance costs (324)
Finance income 4
Share of results
of joint venture (376)
--------
Profit before taxation 407
Taxation (note 9) (225)
Profit for the period 182
--------
Year ending 31 December 2016
CONTRACTING PROFESSIONAL FACILITIES UNALLOCATED GROUP
SERVICES SERVICES SERVICES
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 52,521 48,228 3,963 - 104,712
------------ ------------- ----------- ------------ --------
Underlying segment
result 3,997 8,302 890 (8,285) 4,904
Non-recurring items
(note 7) - - - (404) (404)
------------ ------------- ----------- ------------ --------
Segment result 3,997 8,302 890 (8,689) 4,500
Finance costs (585)
Finance income 1
Share of results
of joint venture (376)
--------
Profit before taxation 3,540
Taxation (note 9) (979)
Profit for the period 2,561
--------
7. Non-recurring items and preference share accounting
The Group's results include the following items:
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
Notes GBP'000 GBP'000 GBP'000
Charged to administrative
items:
Restructuring, redundancy
and related fees (a) - - (109)
Acquisition fees (b) (23) - (266)
Amortisation of customer-related
intangibles (c) (164) - (29)
(187) - (404)
Charges to finance expense:
Notional interest on preference
shares (82) (92) (187)
Total non-recurring items
before tax (269) (92) (591)
---------- ---------- ------------
Tax on non-recurring items - - 24
Total non-recurring items
after tax (269) (92) (567)
---------- ---------- ------------
(a) In 2016, restructuring costs relate to costs associated with the restructure and integration of Keysource Limited following its acquisition.
(b) Professional fees incurred on the acquisition of Keysource Limited and The GDM Group Limited. The acquisitions of Keysource Limited and The GDM Group created GBP1,050,000 and GBP1,022,000 respectively of share premium in the Group, against which fees incurred on the transactions of GBP75,000 and GBP38,000 respectively have been allocated and offset.
(c) This relates to the amortisation charge on the customer-related intangibles recognised in the Group on acquisition of Keysource Limited and The GDM Group.
8. Finance costs
Unaudited Unaudited Audited
6 months ended 6 months year
ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Interest expense:
Interest on bank borrowings 43 - 2
Fees on bank facilities - 36 2
Amortisation of debt issue
costs 32 20 39
Loan note 100 100 200
Interest on other loans 8 - 4
Notional interest on preference
shares (note 14) 82 92 187
Cash coupon on preference
shares (notes 14) 65 76 151
Total interest payable and
similar charges 330 324 585
--------------- ---------- ------------
Interest income:
Interest receivable (8) (4) (1)
Total interest receivable (8) (4) (1)
--------------- ---------- ------------
9. Taxation
Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate for the full financial year. The estimated average effective annual tax rate used for the year to 31(st) December 2017 is 22.7% (the estimated average effective annual tax rate for the six months ended 30(th) June 2016 was 22.1%).
Unaudited Unaudited Audited
6 months 6 months
ended ended year ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Taxation comprises:
Current tax 197 225 982
Prior year tax - - -
Deferred tax - - (3)
197 225 979
---------- ---------- ------------
10. Earnings per share
Underlying Non-recurring Total
items and
preference
Six months ended 30 June 2017 share accounting
Profit/(loss) attributable
to equity holders of the Group
(GBP '000) 939 (269) 670
Weighted average number of
shares in issue 8,679,244 8,679,244 8,679,244
Basic earnings/(loss) per share
(pence per share) 10.8p (3.1)p 7.7p
----------- ------------------ ----------
Diluted earnings/(loss) per
share (pence per share) 10.1p (2.9)p 7.2p
----------- ------------------ ----------
Underlying Non-recurring Total
items and preference
Six months ended 30 June 2016 share accounting
Profit/(loss) attributable
to equity holders of the Group
(GBP'000) 274 (92) 182
Weighted average number of
shares in issue 7,077,585 7,077,585 7,077,585
Basic earnings/(loss) per share
(pence per share) 3.9p (1.3)p 2.6p
----------- ---------------------- ----------
Diluted earnings/(loss) per
share (pence per share) 3.4p (1.1)p 2.3p
----------- ---------------------- ----------
Underlying Non-recurring Total
items and
preference
Year ended 31 December 2016 share accounting
Profit/(loss) attributable
to equity holders of the Group
(GBP'000) 3,128 (567) 2,561
Weighted average number of
shares in issue 7,477,580 7,477,580 7,477,580
Basic earnings/(loss) per share
(pence per share) 41.8p (7.6)p 34.2p
----------- ---------------------- ------------
Diluted earnings/(loss) per
share (pence per share) 36.0p (6.5)p 29.5p
----------- ---------------------- ------------
The Company has in issue 4,356,780 convertible preference shares which are convertible into 464,723 ordinary shares. These shares are not currently dilutive.
On 19(th) June 2015, the Group issued 364,600 nil cost warrants for a consideration of GBP182,300 and a five year warrant over 740,000 new ordinary shares exercisable at a price of 75p per share. These warrants were redeemed on 20(th) September 2016, resulting in the issuance of 1,104,600 ordinary shares. The warrants were dilutive up to the point of redemption, which has been accounted for in the diluted earnings per share calculations.
The Hurdle Shares, and options awarded under the Performance Share Plan, are dilutive. The impact of the dilution of earnings per share has been calculated, based on average share price in 2016 from the date of award.
11. Dividend
The Board does not consider it appropriate to pay an interim dividend on ordinary shares (2016: nil). A dividend on the preference shares accrues at a rate of 3%. The charge for the six months ended 30 June 2017 was GBP65,000 (six months ended 30(th) June 2016: GBP76,000, year ended 31(st) December 2016: GBP151,000).
12. Cash and cash equivalents
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Cash at bank and in hand 2,282 3,697 6,085
Bank overdraft and credit (1,305) - -
facility
---------- ---------- ------------
Net cash and cash equivalents 977 3,697 6,085
The Group's current banking facility comprises a GBP5.0m working capital facility which was entered into in February 2017. This facility is available until 31(st) July 2019. As at 30(th) June 2017, the net balance of the banking facility was a drawdown of GBP1,305,000, after off-setting positive cash balances held with the same bank, where legal off-set is permitted. This balance is presented within current financial liabilities on the face of the balance sheet.
Issue costs in respect of the facilities have been prepaid and are being amortised over the life of the facility.
13. Other financial assets: Cash collateral
At 30(th) June 2016, the Group had deposited cash of GBP590,000 (30(th) June 2016 GBP1,049,000, 31(st) December 2016 GBP590,000) as collateral for the issue of performance bonds. The cash was held by the surety, providing the bonds and deposited in a client account with the surety's bank.
14. Financial liabilities
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Financial liabilities
Commitments under hire purchase
agreements (note 15) 106 - 133
Preference shares (see below) 3,633 4,126 3,551
Loan notes 2,855 2,000 2,000
Bank overdraft and credit 1,305 -
facility -
---------- ---------- ------------
Total financial liabilities 7,899 6,126 5,684
Less: non-current portion (4,935) (5,456) (4,760)
---------- ---------- ------------
Total current financial liabilities 2,964 670 924
---------- ---------- ------------
The loan notes comprise three individual loans (30(th) June 2016: one, 31(st) December 2016: one). The GBP2,000,000 loan is repayable on 31(st) December 2018 and carries interest of 10%, with interest payments made on an annual basis.
As part of the acquisition of GDM, a further GBP675,000 of loan notes were issued, which are repayable in January 2018 and carry interest of 2.75%.
A further loan of GBP180,000 is held by GDM Partnership Building Services Consultants Limited ("GDM Partnership") which is interest-free and repayable in semi-annual instalments of GBP30,000.
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP GBP GBP
Preference share capital
4,356,780 convertible preference
shares of GBP1 each (30
June 2016 5,026,860) 4,356,780 5,026,860 4,356,780
Less: amounts classified
as liabilities (3,632,798) (4,125,922) (3,551,187)
------------ ------------ ------------
Total preference share capital 723,982 900,938 805,593
------------ ------------ ------------
The 4,356,780 convertible, redeemable preference shares are held by Business Growth Fund and Lombard Odier Asset Management (Europe) Limited. The conversion rights allow the holder to convert the 4,356,780 preference shares into 464,723 ordinary shares at a price of GBP9.375 per share, in tranches from 31(st) December 2017 to 31(st) December 2019. The shares carry a cash coupon of 3% and, unless converted by the holder, are redeemable in tranches from 31(st) December 2016 as follows:
GBP
31 December 2017 871,356
31 December 2018 697,085
31 December 2019 2,788,339
Due to the conversion rights attached to the preference shares, International Accounting Standards require them to be accounted for by separating the liability and equity components based on their respective fair value on issue. Subsequent to issue, the liability component is measured at amortised cost and a notional interest charge, which is greater than the cash coupon payable on the shares, is made to the income statement. The difference between the imputed notional interest charge and the actual cash coupon is then credited to the profit and loss reserve, reducing the equity component.
A cash coupon of GBP65,000 is payable in respect of the six months ended 30(th) June 2017 (six months ended 30(th) June 2016: GBP76,000, year ended 31(st) December 2016: GBP151,000) has been charged within underlying profit. Notional interest of GBP82,000 has been credited back to reserves (six months ended 30(th) June 2016: GBP92,000, year ended 31(st) December 2016: GBP187,000).
15 Non-current liabilities
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Provisions
At 1 January 210 - -
On acquisition - - 221
Utilised in period (38) - (11)
---------- ---------- ------------
Carrying amount 172 - 210
---------- ---------- ------------
The above provisions are related to property occupied by the Group.
The Group's financial instruments comprise cash, obligations under hire purchase agreements, loan notes, preference shares and various items, such as receivables and payables, which arise from its operations. All financial instruments in 2017 and 2016 were denominated in Sterling. There is no material foreign exchange risk in respect of these instruments.
The carrying amounts of all of the Group's financial instruments are measured at amortised cost in the Financial Statements. IFRS 13 (amended) 'Financial Instruments: Disclosures' requires disclosure of financial instruments measured at fair value, grouped into Levels 1 to 3 below, based on the degree to which fair value is observable:
- Level 1 fair value measurements are those derived from unadjusted quoted prices in active markets for identical assets or liabilities;
- Level 2 fair value measurements are those derived from inputs, other than quoted prices included within Level 1 above, that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).
All of the Group's derivative financial instruments, as described in the note above, were classified as Level 2 in the current and prior year. There were no transfers between levels in either the current or prior year.
Future commitments under hire purchase agreements are as follows:
Unaudited Audited
30 June 2017 Unaudited 30 June 2016 31 December 2016
GBP'000 GBP'000 GBP'000
Amounts payable within 1 year 65 - 65
Amounts payable between 1 and 2 years 65 - 65
Amounts payable between 3 and 5 years - - 33
-------------- ----------------------- ------------------
130 - 163
Less interest and finance charges relating to future
periods (24) - (30)
-------------- ----------------------- ------------------
106 - 133
-------------- ----------------------- ------------------
Current obligations 53 - 53
Non-current obligations 53 - 80
-------------- ----------------------- ------------------
106 - 133
-------------- ----------------------- ------------------
16. Hurdle Shares
Unaudited Unaudited Audited
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Issued Hurdle Shares
of GBP2.50 each 25 25 25
On 26(th) January 2016, the Company issued 10,000 GBP2.50 Hurdle Shares to six senior managers. The Hurdle Shares are "employee shareholder" shares, and have extremely limited transferability. The Hurdle Shares have conversion rights into Ordinary Shares dependent on the share price on 31(st) December 2018 and certain other defined events. These are set out in the Articles of Association.
17. Notes to the cash flow statement
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Profit before tax for the
period 867 407 3,540
Adjustments for:
Finance costs 330 324 585
Finance income (8) (4) (1)
Depreciation and amortisation 525 217 653
Share option scheme 225 145 318
Share of loss of joint venture - 376 376
(Profits)/Losses on disposal
of fixed assets (32) - 60
---------- ---------- ------------
Operating cash flows before
movement in working capital 1,907 1,465 5,531
Changes in working capital:
Increase in inventories 2 - (70)
Decrease in trade and other
receivables (4,664) (9,921) (6,231)
Decrease in trade and other
payables 1,043 7,897 6,929
Decrease in provisions (38) - -
---------- ----------
Cash (used in) generated
from operations (1,750) (559) 6,159
---------- ---------- ------------
18. Contingencies
The Group takes out performance bonds in the ordinary course of business. The aggregate amount of such bonds outstanding at 30(th) June 2017 was GBP3,058,000 (30(th) June 2016: GBP3,055,000, 31(st) December 2016: GBP2,957,000). The aggregate amount of bonds outstanding at 30(th) June 2017 on projects where practical completion has been achieved was GBP1,772,000 (30(th) June 2015: GBP866,000, 31(st) December 2016: GBP432,000).
It is not anticipated that any material liabilities will arise from the contingencies. The Group has no capital commitments.
19. Related party transactions
The Executive and Non-Executive Directors are considered to be the key management personnel of the Group. Their aggregate remuneration for the period was as follows:
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Salaries, fees and short term
benefits 279 264 538
Pension contributions 24 36 73
303 300 611
---------- ---------- ------------
In the six months ended 30(th) June 2017, the company paid fees of GBP17,500 (six months ended 30(th) June 2016: GBP17,500, year ended 31(st) December 2016: GBP35,000) to the Business Growth Fund and accrued interest payable of GBP50,000 (six months ended 30(th) June 2016: GBP50,000, year ended 31(st) December 2016: GBP100,000) on loan notes issued to the Business Growth Fund.
The following transactions have taken place between the Group and entities over which Paul Bell, who has a 25% shareholding in the Group, and is therefore considered to be a related party. All transactions were undertaken in the ordinary course of business.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Purchases from related parties 44 32 110
Balances owed to related parties
at the balance sheet date 15 - 7
---------- ---------- ------------
20. Joint ventures
The Group has a 49% investment in Dutco Styles & Wood LLC, a company registered in Dubai. The investment is held by Styles & Wood Limited and the terms of the joint venture agreement entitle Styles & Wood Limited to jointly control the entity and to a 50% share of the profits of the joint venture.
Unaudited Unaudited Audited
6 months 6 months year
ended ended ended
30 June 30 June 31 December
2017 2016 2016
GBP'000 GBP'000 GBP'000
Net book amount
At 1 January 1,661 1,852 1,852
Share of loss in the period - (376) (376)
Working capital loan (repaid)/advanced (530) 149 185
---------- ---------- ------------
At 30 June/31 December 1,131 1,625 1,661
---------- ---------- ------------
21. Acquisitions
On 8(th) January 2017, the Company acquired the whole of the issued share capital of The GDM Group, incorporating The GDM Group Limited and its wholly-owned subsidiaries GDM Partnership Building Services Consultant Limited and GDM Design & Management Limited (together "GDM Group"), for an initial consideration of GBP4,024,000, satisfied by;
-- Cash payment of GBP2,235,000. -- Issue of GBP675,000 in loan notes, repayable January 2018.
-- Issue of 250,778 ordinary shares of 1p each with a fair value at acquisition date of GBP1,024,000.
Potential further deferred and contingent consideration of up to GBP3.1m is payable in cash, subject to the following:
DEFERRED CONSIDERATION
Deferred consideration of up to GBP2.1 million may be payable subject to the achievement of certain financial performance criteria for the two year period ending 31(st) December 2018, details of which are set out below.
The level of deferred consideration due is dependent on future profitability of GDM:
-- FY 2017 - On the achievement of a minimum PBT of GBP0.7 million, the Group will pay GBP0.35 million plus 75% of any PBT generated above the minimum threshold (capped at GBP1.075 million); and
-- FY 2018 - On the achievement of a minimum PBT of GBP1.0 million, the Group will pay GBP0.35 million plus 70% of any PBT generated above the minimum threshold (capped at GBP1.025 million).
CONTINGENT CONSIDERATION
A further cash consideration of up to GBP1 million is contingent on the achievement of certain commercial objectives over the periods ending 31(st) December 2019.
The fair value of the deferred consideration arrangement of GBP3,100,000 was estimated by applying the income approach.
Net assets acquired Fair value adjustments Fair value of
assets acquired
GBP'000 GBP'000 GBP'000
Intangible assets
- Goodwill - - 5,473
Intangible assets
- Customer contracts - - 1,022
Property, plant and
equipment 116 (11) 105
Trade and other receivables 2,438 (277) 2,161
Cash 628 - 628
Trade and other payables (1,512) (183) (1,695)
Corporation tax liability (205) (10) (215)
Loans (336) - (336)
Deferred income tax
liability (18) (1) (19)
------------------- ---------------------- ----------------
1,111 (482) 7,124
------------------- ---------------------- ----------------
The revenue included in the consolidated statement of comprehensive income since 8(th) January 2017 contributed by GDM Group was GBP3,635,000. GDM Group also contributed profit before tax of GBP484,000 over the same period.
Had GDM Group been consolidated from 1(st) January 2017, there would be no material change in the consolidated statement of income or total profit before tax, given minimal trading between 1(st) January 2017 and 8(th) January 2017 within GDM Group.
(1) Operating Profit before taxation adding back depreciation, amortisation and share-based payments
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFVVADITFID
(END) Dow Jones Newswires
September 29, 2017 02:00 ET (06:00 GMT)
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