Styles & Wood Group Regulatory News (STY)

28 Feb 2008 07:00

Styles & Wood Group PLC28 February 2008 28 February 2008 STYLES & WOOD GROUP PLC ("STYLES&WOOD" OR "THE GROUP") PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007 Styles & Wood Group plc, a leading provider of retail property services topremier UK retailers, announces its Preliminary Results for the year ended 31December 2007. Financial highlights • Revenue up 17% to £315.5m (2006: £268.6m)• Operating profit up 24% to £13.5m (2006: £10.9m)• Profit before tax up 58% to £11.8m (2006: £7.5m)• Earnings per share up 56% to 12.6p (2006: 8.1p)• 14th year of revenue and profit growth• Cash conversion ratio of 106% (2006: 82%)• 30% operating profit contribution from Support Service Divisions• Record Opening Order Book of £137m• Projected Order Book from client frameworks of £841m• Maiden full year dividend of 3.75p proposed Operational highlights • Pathway strategy delivering long-term growth• 90% of business generated from existing customers• New customers secured including The Co-operative, Nationwide and Morrisons• Record account values achieved with Barclays, John Lewis, Marks & Spencer and Tesco• New frameworks secured with Sainsbury, Asda and Lloyds TSB• Food Retail Sector revenue growth of 14%• Retail Banking Sector revenue growth of 51% Gerard Quiligotti, Chairman, Styles & Wood Group plc said: "We are delighted to report another year of excellent progress for Styles &Wood.This is our fourteenth year of sustained growth, which reflects a clear focus onmaintaining strong long-term relationships with existing customers as well asstrengthening our blue chip customer base. We are pleased to have commenced operations in 2008 with a record opening orderbook. This is a firm foundation on which we expect to build a further year ofprogress." - Ends - Enquiries: Styles & Wood Group plc Tel: 0161 926 6000 Gerard Quiligotti, Executive Chairman Neil Davies, Chief Executive Graham Clark, Director of Finance FD Tel: 020 7831 3113 Billy Clegg / Georgina Bonham NOTES TO EDITORS Styles & Wood employs approximately 420 staff and operates from four officeslocated in Altrincham (its headquarters), London, Nottingham and Milton Keynes. Styles & Wood provides its store development services to premier UK retailersthrough four distinct divisions: StoreFit is the Group's core operation and the UK's leading fit-out business tothe retail sector in revenue terms. The division provides project management andimplementation services for new store fit-out, existing store refurbishment andextension programmes to its customers typically through long term frameworkarrangements. StorePlanning is Styles & Wood's retail design development division providing arange of services including surveying, space planning, design development andarchitectural services. StoreCare provides project management solutions that support retailers in theuse of their store portfolio once the new store or store refurbishment becomesoperational including planned maintenance, new merchandising layouts andpromotional activities. StoreData provides retailers with technology based property informationsolutions that can manage significant amounts of data about their propertyportfolios, including the provision of online information on design standards,cost and programme tracking. Styles & Wood floated on the Official List of the London Stock Exchange inNovember 2006. For further information please visit the company website,www.stylesandwood.co.uk CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT We are pleased to report another year of excellent progress for Styles&Wood.Once again we have grown revenue and profit, generated strong cash flows andstrengthened our forward order book position. The year has been a period of high achievement for the Group as we continue todeliver sustained growth - the fourteenth year in a row - through stronglong-term customer relationships and the securing of some important newcustomers. A 17% increase in revenue and a 24% increase in operating profit has drivenearnings per share growth of 56% for the period. In addition, the Group hasachieved 106% cash conversion and raised its projected order book to £841m at 31December 2007. Results In 2007 pre-tax profits at £11.8m (2006: £7.5m) were 58% up on last year fromrevenues of £315.5m (2006: £268.6m) representing an increase of 17% on theprevious twelve months. Basic and diluted earnings per share stood at 12.6p(2006: 8.1p), an increase of 56% on 2006. The board recommends a final dividend of 2.5p per share making a total dividendfor the year of 3.75p (2006: nil) to be paid on 9 May 2008 to shareholders onthe register at close of business on 11 April 2008. Strategy In 2007 we made good progress in pursuing the business objectives set out inPathway, our strategic plan. We achieved record levels of repeat business,retained all of our existing framework arrangements and more customers engagedmore of our services. We saw growth across all our retail sectors, in particular we have strengthenedour position in both our main target market sectors of Food Retail and RetailBanking. In Food Retail we added The Co-operative and Morrisons to an alreadyimpressive customer list which means in 2008 we will serve all the majorsupermarket operators. We also secured new framework arrangements with existingcustomers Asda and Sainsbury's and expect this sector to be a particularlystrong performer in the year ahead. In Retail Banking we added new frameworkarrangements with Lloyds TSB and Nationwide and saw revenues from this sectorgrow by 51%. Another key part of our strategy is to grow our Support Service divisions andthrough the StorePlanning and StoreCare divisions in particular we have madegood progress in the year. As a result Support Services revenue grew to £31.5mand operating profit to £4.2m reaching our target of 30% of Group operatingprofit a full year ahead of our expectations. We remain confident that our growth ambitions can be met by delivery of theideas and objectives set out in Pathway. Market The Group's focus on leading UK retailers provides it with a target market ofconsiderable scale. Furthermore, we believe that certain key trends willcontinue to drive property development and expenditure across our chosen market.Major retailers continue to outsource non-retail elements of their businessesand this continues to fuel the growth in our Support Services divisions. Therefurbishment cycle followed by major retailers continues to accelerate ascustomer loyalty and relationships are influenced by the shopping experiencewithin the store. Multi-format retailing is a growing trend with the emergenceof a mixture of large store, small store, edge of town and non-food formats. Additionally, we are benefiting from a strong UK shopping centre developmentprogramme consisting of approximately 20m ft2 of new retail space coming onstream. We believe the Styles&Wood business model of targeting premier league retailershelps to insulate us from the cyclical nature of consumer spending. The keydriver for our services is our customers need for change and as a result wecontinue to see good prospects ahead. People A relentless pursuit of excellence by all Styles&Wood colleagues performing atthe highest levels has been the cornerstone of this year's success. Numbersacross the organisation have grown by over 20% in the year and we continue toattract the very best candidates in the industry to sustain our growth andmaintain best in class status. We plan to continue investment in our colleaguesand systems through training and development of their skills so that theycontinue to be the most respected operators in our sector. During the year theStyles&Wood Academy, which offers a wide and relevant selection of personaldevelopment courses closely aligned with client needs, again supported thisobjective. The board would like to thank all colleagues for their commitment andcontribution to another record breaking result. We never underestimate the valueof the people at Styles&Wood, still by far our most important and valued asset. Outlook Clearly there is a challenging outlook for the retail sector; however, the focusfor major retailers remains on improving the store environment to enhance thecustomer experience and their competitive position amongst peers. We haveentered 2008 with a secured Opening Order Book of £137m. This is a firmfoundation on which we expect to build a further year of progress. Gerard E Quiligotti Neil A DaviesChairman Chief Executive28 February 2008 28 February 2008 FINANCE DIRECTOR'S REPORT Introduction The Group's revenue, profitability and operating margins all showed healthygrowth during the year and cash management continued to be very positive. Profit before tax of £11.8m (2006: £7.5m) was up 58% on last year reflecting thecontinuing focus on top line growth generating improved gross profits togetherwith close management of administrative expenses and finance charges. Thecompound annual growth rate at revenue level for the past five years is acreditable 24%. Cash conversion was also healthy with a cash generated fromoperations to operating profit ratio of 106% (2006: 82%). Financial performance In the year ended 31 December 2007, revenue increased by 17% to a record £315.5m(2006: £268.6m). StorePlanning, StoreFit and StoreCare divisions all increasedtheir revenue over 2006 through organic growth, particularly in StoreCare, whichincreased its revenue over 2006 by 90%. StoreData's revenue of £1.5m was downby 6% in the year. Gross profit increased by 22% to £28.8m (2006: £23.5m) with gross marginincreasing to 9.1% (2006: 8.8%). Increases in gross profit and gross margin wererecorded by StoreFit, StorePlanning and StoreCare divisions, with StoreDatarecording a fall in both measures. Operating profit increased by 24% to £13.5m (2006: £10.9m) with operating profitmargin increasing to 4.3% (2006: 4.1%). The Support Service divisions ofStorePlanning, StoreCare and StoreData contributed 30% of operating profit inthe year (2006: 25%), achieving our target for this indicator a full twelvemonths early. In our first full year as a listed company, associated costs, including the costof employee share schemes, were £0.5m (2006: nil). Future listed company costswill rise as new share scheme awards are made in 2008 and 2009. Net finance costs reduced by 50% to £1.7m (2006: £3.4m) following the reductionin borrowings in 2006 and a 1% reduction in interest rate margin negotiated withthe Group's bankers on flotation. Further reductions are forecast for futureyears as scheduled bank loan repayments are made together with an additionalreduction in margin from 1.25% to 0.6% in February 2008. Profit before tax increased by 58% to £11.8m (2006: £7.5m). Divisional performance Store Fit Store Planning Store Care Store Data Group*2007 £m £m £m £m £m Revenue 283.9 6.1 24.0 1.5 315.5Operating Profit 9.8 1.0 3.0 0.2 13.5Margin 3.5% 16.5% 12.6% 12.9% 4.3% Store Fit Store Planning Store Care Store Data Group*2006 £m £m £m £m £m Revenue 248.4 6.0 12.6 1.6 268.6Operating Profit 8.4 0.8 1.6 0.4 10.9Margin 3.4% 13.5% 12.6% 26.7% 4.1% * Group operating profit includes £0.5m (2006: £0.3m) of plc expenses notallocated to a division. Taxation The tax charge in the year amounted to £3.7m (2006: £3.1m). This represents aneffective tax charge on profit before tax of 31.2% (2006: 41.2%). The 2006effective rate was affected by non deductible expenses, primarily costs relatingto the flotation in November 2006 and to non deductible interest payable on loanstock, which was repaid prior to 1 January 2007. In future years the effective tax rate is expected to be consistent with the2007 rate, subject to the upcoming reduction in the statutory corporation taxrate in April 2008. Tax paid in the year increased to £3.4m (2006: £1.7m). Earnings per share Basic and diluted earnings per share increased by 56% to 12.6p (2006: 8.1p). Dividend On 12 October 2007, a maiden interim dividend of 1.25p per share was paid toshareholders on the register at close of business on 14 September 2007. Thedirectors recommend a final dividend of 2.5p per share for the year ended 31December 2007 to be paid on 9 May 2008 to shareholders on the register at 11April 2008. Cash flow Bank balances in 2007 were, on average, 54% greater than those recorded in 2006.Cash and cash equivalents, before restricted cash balances, rose 54% to £13.8m(2006: £9.0m). Cash generated from operations was £14.3m (2006: £9.0m). This equates to a cashconversion ratio of 106% (2006: 82%). Capital expenditure in the year was £0.7m (2006: £0.9m). In future years capitalexpenditure is expected to be at a similar level to 2007. Net debt Net debt reduced by 34% to £14.9m at 31 December 2007 (2006: £22.6m). Scheduled loan repayments were made during the year to the Group's bankers,reducing gross debt by £3.0m. Outlook We have reported another strong set of results for 2007 and have deliveredimprovement in all of our financial key performance indicators. We will continue to focus on strong cash management and in particular on costcontrol, both of which are essential to the Group's financial strategy. This,together with organic growth in StoreFit and an increasing contribution fromStorePlanning, StoreCare and StoreData, will further strengthen our financialposition. Graham A ClarkDirector of Finance28 February 2008 Consolidated income statementFor the year ended 31 December 2007 Notes 2007 2006 £'000 £'000 Continuing operationsRevenue 2 315,489 268,594Cost of sales (286,725) (245,075) Gross profit 28,764 23,519Administrative expenses (15,236) (12,634) Operating profit 2 13,528 10,885Interest payable and similar charges (1,859) (3,524)Interest receivable 157 119 Profit before taxation 11,826 7,480Taxation 3 (3,687) (3,085) Profit for the year attributable to equity 8,139 4,395shareholders Basic and diluted earnings per share 4 12.6p 8.1p expressed in pence per share Dividends in respect of the year 5 expressed in pence per share - Interim dividend paid 1.25p - - Final dividend proposed 2.50p - Consolidated balance sheetAs at 31 December 2007 Notes 2007 2006 £'000 £'000 Non current assetsIntangible assets - software 387 197Property, plant and equipment 902 924Deferred tax asset 122 121 1,411 1,242Current assetsTrade and other receivables 36,907 36,806Cash and cash equivalents 6 15,853 11,120 52,760 47,926Current liabilitiesTrade and other payables (49,935) (49,650)Financial liabilities: borrowings (4,887) (4,981)Current tax liabilities (2,236) (1,957) (57,058) (56,588) Net current liabilities (4,298) (8,662) Total assets less current liabilities (2,887) (7,420) Non current liabilitiesFinancial liabilities: borrowings (25,824) (28,693) Net liabilities (28,711) (36,113) Shareholders' equityOrdinary share capital 645 645Share premium 17,339 17,339Reverse acquisition reserve (66,665) (66,665)Retained earnings 19,970 12,568 Total shareholders' deficit (28,711) (36,113) Consolidated cash flow statementFor the year ended 31 December 2007 Notes 2007 2006 £'000 £'000 Cash generated from operations 6 14,323 8,956Income taxes paid (3,409) (1,727) Net cash generated from operating activities 10,914 7,229 Cash flows from investing activitiesPurchase of property, plant and equipment (358) (792)Purchase of intangible assets - software (302) (128)Proceeds from sale of property, plant and equipment - 79Net cash impact of relocation of Group Head Office - 366 Net cash used in investing activities (660) (475) Cash flows from financing activitiesInterest received 145 119Interest paid (1,730) (3,579)Proceeds from issue of preference shares - 50Redemption of loan notes - (29,890)Redemption of preference shares - (50)Repayment of borrowings (3,000) (1,875)Net proceeds on issue of share capital - 17,900Bank loans drawn down - 12,625Cost of debt - (339)Cost of equity - (353)Dividends paid to equity shareholders (806) - Net cash used in financing activities (5,391) (5,392) Net increase in cash and cash equivalents 4,863 1,362Cash and cash equivalents at beginning of year 8,972 7,610 Cash and cash equivalents at end year 13,835 8,972 Notes to the preliminary results 1. Basis of preparation The preliminary results of Styles&Wood Group plc ("the Group") have beenprepared on the basis of the IFRS accounting policies set out in the Group'sAnnual Report and Financial Statements for the year ended 31 December 2006. The financial information set out in this announcement does not constitute theGroup's statutory financial information for the year ended 31 December 2007, butis extracted from those financial statements. The auditors have reported onthose financial statements and have given an unqualified report which does notcontain a statement under section 237 (2) or 237 (3) of the Companies Act 1985. 2. Segmental reporting Year ending 31 December 2007 StoreFit Store StoreCare Store Data Unallocated Group Planning £'000 £'000 £'000 £'000 £'000 £'000 Revenue 283,949 6,057 23,977 1,506 - 315,489Segment result 9,796 1,001 3,012 194 (475) 13,528Interest expense (1,859)Interest income 157Profit before taxation 11,826Taxation (3,687)Profit for the year from 8,139continuing operationsNet profit attributable 8,139to equity shareholdersSegment assets 26,133 2,043 6,666 596 - 35,438Unallocated assets - - - - 18,733 18,733Total assets 26,133 2,043 6,666 596 18,733 54,171 Segment liabilities (39,769) (99) (5,270) (614) - (45,752)Unallocated liabilities - - - - (37,130) (37,130)Total liabilities (39,769) (99) (5,270) (614) (37,130) (82,882) Year ending 31 December 2006 StoreFit Store StoreCare Store Data Unallocated Group Planning £'000 £'000 £'000 £'000 £'000 £'000 Revenue 248,386 5,994 12,620 1,594 - 268,594Segment result 8,403 810 1,584 425 (337) 10,885Interest expense (3,524)Interest income 119Profit before taxation 7,480Taxation (3,085)Profit for the year from 4,395continuing operationsNet profit attributable to 4,395equity shareholdersSegment assets 27,376 1,367 6,896 308 - 35,947Unallocated assets - - - - 13,221 13,221Total assets 27,376 1,367 6,896 308 13,221 49,168 Segment liabilities (41,381) (709) (4,037) (234) - (46,361)Unallocated liabilities - - - - (38,920) (38,920)Total liabilities (41,381) (709) (4,037) (234) (38,920) (85,281) Unallocated assets and liabilities include property, plant and equipment,software, cash and cash equivalents, interest payable, current and deferred taxliabilities and borrowings. Unallocated segment result reflects expenses relating to the Company rather thanthe ongoing trade of the Group and includes share scheme expenses, fees forprofessional advisers and non-executive director remuneration. 3. Taxation The effective tax rates tax for the years ended 31 December 2007 (31.2%) and 31December 2006 (41.2%) are different from the standard rate of corporation tax inthe UK of 30%. The differences are explained below. 2007 2006 £'000 £'000 Profit on ordinary activities before tax 11,826 7,480Profit on ordinary activities multiplied by rate of 3,548 2,244corporation tax in the UK (30%)Effects of:Expenses not deductible for tax purposes 163 468Disallowable interest payable on non bank borrowings - 373Adjustments in respect of prior periods (24) - Total taxation 3,687 3,085 In 2006 the effective rate of tax was significantly impacted by thenon-deductible expenses of admission and disallowable interest payable. Thereare no similar items in 2007. 4. Earnings per share Reconciliations of the earnings and the number of shares used in the calculationare set out below: 2007 2006 Earnings attributable to equity holders of the Group (£'000) 8,139 4,395 Weighted average number of shares in issue 64,493,641 54,408,234Basic and diluted earnings per share (pence per 12.6 8.1share) There is no difference between basic and diluted earnings per share as theoptions in issue within the group are not considered to be dilutive. 5. Dividends An interim dividend of 1.25p per share was paid during the year (2006: nil). Afinal dividend of 2.5p per share will be proposed at the annual general meetingon 23 April 2008. 6. Note to the cash flow statement Group 2007 2006 £'000 £'000 Profit for the year 8,139 4,395Adjustments for:Interest payable and similar charges 1,859 3,524Taxation 3,687 3,085Interest receivable (157) (119)Depreciation and amortisation 492 406Net profit on relocation of Group Head Office - (366)Profit on disposal of property, plant and equipment - 88Share option charge 69 - Operating cash flows before movement in working capital 14,089 11,013Changes in working capital:Increase in trade and other receivables (101) (17,617)Increase in trade and other payables 335 15,560 Cash generated from operations 14,323 8,956 For the purposes of the cash flow statement, cash and cash equivalents excludesrestricted cash balance of £2,018,000 (2006: £2,148,000). Loan notes redeemed inthe period were redeemed out of this restricted cash. This information is provided by RNS The company news service from the London Stock Exchange