Styles & Wood Group Regulatory News (STY)

4 Sep 2007 07:01

Styles & Wood Group PLC04 September 2007 4 September 2007 STYLES & WOOD GROUP PLC ("STYLES & WOOD" OR "THE GROUP") INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 Styles & Wood Group plc, a leading provider of property services to premier UKretailers, announces its interim results for the six months ended 30 June 2007. Financial Highlights • Revenue up 39% to £149.8m (2006: £108.1m)• Operating profit up 29% to £6.1m (2006: £4.7m)• Profit before tax up 82% to £5.2m (2006: £2.9m)• Earnings per share up 87% to 5.6p (2006: 3.0p)• Over 90% of business generated from existing frameworks• 85% of 2007 planned revenue secured at 30 June 2007• Projected Order Book from client frameworks increased to £811m at 31 July (31 July 2006: £681m)• Maiden interim dividend of 1.25p per share Operational Highlights • New customers include Morrisons, The Co-operative and Nationwide• StoreFit secured record account values with Marks and Spencer, Tesco, John Lewis and Barclays• StorePlanning delivered improved performance in revenue and gross margin• StoreCare growth has continued to exceed expectations• Support Service divisions contributed 38% of Group operating profit Gerard Quiligotti, Chairman, Styles & Wood Group plc said: "We have delivered an excellent set of results for the first half. Our marketenvironment is strong and we are seeing an increase in the pace of change amongthe premier league retailers as they strive to improve their store portfolios. Trading since the end of June has seen us maintain good progress. In commonwith earlier years we expect a more balanced first and second half in 2007 whencompared with 2006 with the full year anticipated to be ahead of marketexpectations. Overall we remain confident in the Group's outlook and prospects and lookforward to achieving another record year in 2007." - Ends - Enquiries: Styles & Wood Group plc, Tel: 0161 926 6000 Gerard Quiligotti, Executive ChairmanNeil Davies, Chief ExecutiveGraham Clark, Director of Finance FD, Tel: 020 7831 3113 Billy Clegg / Susanne Walker Chairman and Chief Executive's Statement We are pleased to announce an excellent set of results reflecting very strongtrading in the first half of 2007. In the six months to 30 June profit beforetax increased by 82% to £5.2m (2006: £2.9m) on revenue up by 39% to £149.8m(2006: £108.1m). Earnings per share increased 87% to 5.6p (2006: 3.0p). TheBoard is declaring a maiden interim dividend of 1.25p per share to be paid on 12October 2007 to shareholders on the register at close of business on 14September 2007. Operating profit rose 29% to £6.1m (2006: £4.7m) and includes a non recurringprofit of £0.3m in 2006 and plc administrative expenses in 2007, which are now afeature of the business. Net interest reduced by 53% to £0.9m on the back of a significant reduction innet debt to £19.5m (2006: £42.8m). The effective rate of tax returned to a morestandard rate of 31% compared with 44% in the prior period, which had resultedfrom non deductible interest payable on the now repaid loan notes. Cash generated from operations was £5.9m (2006: £1.0m) representing a healthycash conversion rate of 96%. The Group's strong performance was achieved through our established strategy ofdeveloping leading positions within customer frameworks. During the period wemaintained all existing frameworks and in many cases have increased revenues bysecuring a larger share of our customers' development spend. Many customershave made it clear that they intend to engage with a reduced supplier base forlonger periods and we continue to benefit from this trend. StoreFit again underpinned this performance with our Support Services divisionsof StorePlanning, StoreData and StoreCare contributing 38% of operating profit,well ahead of our target. Review of Operations StoreFit StoreFit, our core business division continued to perform well and generatedrevenue of £133.4m (2006: £99.8m) with operating profit of £3.9m (2006: £3.3m).In the period we delivered over 150 projects to customers through new store fitout projects (30% of revenue) and store refurbishment schemes (70% of revenue). We continued our expansion into the Food Sector in the first half. Tesco was akey highlight with the completion of a number of innovative space expansionschemes, a total of five superstore refresh schemes and our appointment as solesupplier on their HomePlus development programme. For Waitrose we modernised atotal of six existing stores and converted two newly acquired stores to theWaitrose format. In Retail Banking we saw another strong performance from our Barclays frameworkagreement and we have secured orders already in excess of those received lastyear. For The Royal Bank of Scotland we delivered both retail and officedevelopments with allocations well ahead of expectations. Other frameworks inthis sector include HBOS, HSBC and LloydsTSB and we expect these to contributemore strongly in the second half. In Multiple Retail our framework with Boots was the strongest performer as weundertook a range of projects including both light and major refurbishments anda number of new store prototypes. These prototypes reflect the Alliance Bootsmerger and will become the new store formats used for a national roll outprogramme commencing in 2008. Elsewhere we completed a number of DepartmentStore developments including the major share of the Marks and Spencer 2007Remodel programme. In the period StoreFit also successfully delivered the NorthWell, a further important phase in the £60m three year development of the JohnLewis flagship store on Oxford Street. StorePlanning StorePlanning, our architectural and retail space planning business performedwell in the period generating revenues of £2.8m (2006: £2.5m) with operatingprofit of £0.5m (2006: £0.3m). We have set challenging targets for thisbusiness in 2007 following management changes made last year and good progresshas been achieved to date with revenue ahead of our expectations and a steadyimprovement in gross margins. We retained our position as one of two LeadDesigners with Barclays and have played a major role in supporting theirnational roll out of branch modernisation. We extended our engagement withBoots to include Health Centres and the expansion of their Midnight Pharmacy andBoots Opticians formats. Elsewhere we produced a new Brand Manual forSainsburys and grew account values with B&Q and The Co-operative to complete apleasing first half for StorePlanning. StoreData As expected StoreData, our property data management business had a slower firsthalf than last year, although in revenue terms was ahead of plan at £0.6m (2006:£0.9m) and operating profit of £0.1m (2006: £0.2m). We extended the Tesco MyProperty system increasing the number of licensed users as well as the areas ofdata we manage on behalf of Tesco including a new Design Standards Library andHealth and Safety Compliance Records. We are clear that StoreData must securenew clients in 2007 to achieve our full year expectations for this division andtowards the end of the period we secured B&Q, The Co-operative and Nationwideall of which should now contribute in the second half. StoreCare StoreCare, our retail support business which provides project management incapital replacement, in-store marketing, seasonal promotions and store refreshprogrammes has had a very strong first half. Revenue for the first half was£13.0m (2006: £4.9m) with operating profit of £1.8m (2006: £0.6m). We secured asignificant increase in volume from Asda under a three year measured termcontract and in addition secured a programme of store reconfigurations toimprove the flow of goods in over 60 Asda stores. We increased business throughour framework with Barclays which included planned maintenance to the branchnetwork, security replacement works and the installation of Barclays branding tothe Woolwich network. Other major frameworks which contributed to first halfperformance include Marks and Spencer and HBOS and we are excited about newgains made in the period including StoreCare's first opportunity with bothSainsburys and Tesco. Current Trading and Outlook The pace of change in our market, being the premier league of UK Retail, isincreasing and customer programmes remain strong as retailers improve theirstore portfolios. This emphasis on the store environment and the whole shoppingexperience is a positive market driver that we see continuing. Despite someindications of a slow down in consumer spending customers are acquiringadditional space to increase market share and this is evidenced by the largeincrease in new retail space due to come on stream by the end of 2009. Ourcustomer base of premier retailers will occupy much of this space and in manycases be the anchor tenants of the new shopping centres. Against this backdrop the Group continues to concentrate on developing long termframeworks with customers through which we can build market leading positions.The success of this strategy is evidenced by the strength of our Projected OrderBook which at 31 July 2007 stands at a record £811m (2006: £681m). Trading sincethe end of June has seen us maintain good progress. In common with earlier yearswe expect a more balanced first and second half in 2007 when compared with 2006with the full year anticipated to be ahead of market expectations. Overall we remain confident in the Group's outlook and prospects and lookforward to achieving another record year in 2007. Gerard E QuiligottiChairman Neil A. DaviesChief Executive Consolidated Income StatementFor the six months ended 30 June 2007 Unaudited Audited Audited 6 months 6 months Year ended ended ended 30 June 30 June 31 December Notes 2007 2006 2006 £'000 £'000 £'000 Continuing operationsRevenue 2 149,828 108,070 268,594Cost of sales (136,437) (98,578) (245,075) Gross profit 13,391 9,492 23,519Administrative expenses (7,295) (4,759) (12,634) Operating profit 2 6,096 4,733 10,885Interest payable and similar charges (917) (1,914) (3,524)Interest receivable 41 48 119 Profit before tax 5,220 2,867 7,480Taxation 3 (1,630) (1,273) (3,085) Profit for the period attributable to equity 3,590 1,594 4,395shareholders Basic and diluted earnings per share, expressed 4 5.6p 3.0p 8.1pin pence per share Dividend proposed in respect of the period, 6 1.25p - -expressed in pence per share Consolidated Statement of Recognised Income and ExpenseFor the six months ended 30 June 2007 Unaudited Audited Audited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Profit for the period 3,590 1,594 4,395Gains not recognised in income statement - - - Total recognised income and expense for the 3,590 1,594 4,395period attributable to equity shareholders The notes below are an integral part of this financial information. Consolidated Balance SheetAs at 30 June 2007 Unaudited Audited Audited 30 June 30 June 31 December Notes 2007 2006 2006 £'000 £'000 £'000 Non current assetsIntangible assets - software 241 159 197Property, plant and equipment 949 453 924Deferred tax asset 108 86 121 1,298 698 1,242Current assetsTrade and other receivables 48,910 39,634 36,806Cash and cash equivalents 12,618 6,810 11,120 61,528 46,444 47,926Current liabilitiesTrade and other payables (61,274) (52,648) (49,650)Financial liabilities: borrowings 7 (2,851) (2,401) (2,833)Current tax liabilities (1,941) (1,272) (1,957) (66,066) (56,321) (54,440) Net current liabilities (4,538) (9,877) (6,514) Total assets less current liabilities (3,240) (9,179) (5,272) Non current liabilitiesFinancial liabilities: borrowings 7 (29,281) (47,197) (30,841) Net liabilities (32,521) (56,376) (36,113) Shareholders' equityOrdinary share capital 645 1 645Share premium 17,339 85 17,339Reverse acquisition reserve (66,665) (66,665) (66,665)Retained earnings 8 16,160 10,203 12,568 Total shareholders' deficit (32,521) (56,376) (36,113) The notes below are an integral part of this financial information. Consolidated Cash Flow StatementFor the six months ended 30 June 2007 Unaudited Audited Audited 6 months 6 months Year ended ended ended 30 June 30 June 31 December Notes 2007 2006 2006 £'000 £'000 £'000 Cash generated from operations 9 5,873 961 8,956Income taxes paid (1,633) (566) (1,727) Net cash generated from operating activities 4,240 395 7,229 Cash flows used in investing activitiesPurchase of property, plant and equipment (225) (77) (792)Purchase of intangible assets - software (71) (46) (128)Proceeds from sale of property, plant and - - 79equipmentNet cash impact of relocation of Group Head - 831 366Office Net cash (used in)/generated from investing (296) 708 (475)activities Cash flows used in financing activitiesInterest received 11 12 119Interest paid (827) (1,019) (3,579)Redemption of loan stocks - (13,879) (29,890)Redemption of preference shares - - (50)Repayment of borrowings (1,500) (1,250) (1,875)Net proceeds on issue of share capital - 85 17,950Bank loans drawn down - 12,000 12,625Cost of debt - - (339)Cost of equity - - (353) Net cash used in financing activities (2,316) (4,051) (5,392) Net increase/(decrease) in cash and cash 1,628 (2,948) 1,362equivalentsCash and cash equivalents at beginning of period 9 8,972 7,610 7,610 Cash and cash equivalents at end of period 9 10,600 4,662 8,972 For the purposes of the cash flow statement, cash and cash equivalents excludesrestricted cash of £2,018,000 (30 June 2006: £2,148,000, 31 December 2006:£2,148,000). The notes below are an integral part of this financial information. Notes to the Interim Financial Information 1. Basis of preparation Styles & Wood Group plc ("the Company") is a company incorporated and domiciledin the United Kingdom. Styles & Wood Group plc and its subsidiaries (together "the Group") provide retail property services within the UK. The address ofStyles & Wood Group plc's registered office is Aspect House, Manchester Road,Altrincham, Cheshire WA14 5PG. This condensed consolidated interim financial information for the six monthsended 30 June 2007 has been prepared in accordance with IAS34 "Interim financialreporting" as adopted by the European Union. The interim results should be readin conjunction with the annual report and financial statements for the yearended 31 December 2006 which are available from the group's websitewww.stylesandwood.co.uk. The accounting policies, methods of computation andpresentation followed are consistent with those applied in the annual report andfinancial statements which are prepared in accordance with IFRS as adopted bythe European Union. During the period the Company applied IFRS2 "Share-basedpayment" for the first time as explained in note 5. The interim results do not constitute statutory results within the meaning ofsection 240 of the Companies Act 1985. The interim results to 30 June 2007 areneither audited nor reviewed by the auditors. The interim results for thecomparative period to 30 June 2006 are based on the audited financialinformation that was included in the prospectus issued for the group's listingon the London Stock Exchange. The financial information for the full precedingyear is based on the statutory accounts for the year ended 31 December 2006,upon which the auditors issued an unqualified opinion and which have been filedwith the Registrar of Companies. The interim financial results were approved for issue on 4 September 2007. 2. Revenue and profit from business segments 6 months ended 30 June 2007Unaudited Store StoreFit StoreCare StoreData Unallocated Group Planning £'000 £'000 £'000 £'000 £'000 £'000 Revenue 2,806 133,419 12,985 618 - 149,828Segment result 463 3,891 1,802 74 (134) 6,096Interest expense (917)Interest income 41Profit before tax 5,220Taxation (1,630)Profit for the period from 3,590continuing operationsNet profit attributable to 3,590equity shareholders 6 months ended 30 June 2006Audited Store StoreFit StoreCare StoreData Unallocated Group Planning £'000 £'000 £'000 £'000 £'000 £'000 Revenue 2,461 99,784 4,945 880 - 108,070Segment result 303 3,347 632 175 276 4,733Interest expense (1,914)Interest income 48Profit before tax 2,867Taxation (1,273)Profit for the period from 1,594continuing operationsNet profit attributable to 1,594equity shareholders Year ended 31 December 2006Audited Store StoreFit StoreCare StoreData Unallocated Group Planning £'000 £'000 £'000 £'000 £'000 £'000 Revenue 5,994 248,386 12,620 1,594 - 268,594Segment result 810 8,403 1,584 425 (337) 10,885Interest expense (3,524)Interest income 119Profit before tax 7,480Taxation (3,085)Profit for the year from 4,395continuing operationsNet profit attributable to 4,395equity shareholders 3. Taxation Unaudited Audited Audited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000Taxation comprises:Current tax 1,617 1,273 3,120Deferred tax 13 - (35) 1,630 1,273 3,085 4. Earnings per share Details of the earnings and the number of shares used in the calculation are setout below: Unaudited Audited Audited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Earnings attributable to equity holders 3,590 1,594 4,395of the Group (£'000) Weighted average number of shares in 64,493,641 52,618,196 54,408,234issueBasic earnings per share (pence per 5.6 3.0 8.1share) Weighted average number of shares 64,495,195 52,618,196 54,408,234allowing for dilutive effect of shareoptionsDiluted earnings per share (pence per 5.6 3.0 8.1share) 5. Share options On 1 June 2007, a grant of 148,786 options with an exercise price of £2.02 pershare was made under the Styles & Wood Group plc HMRC Approved SAYE share optionscheme. The options vest at the conclusion of a three year savings contract. A charge of £2,293 has been made in these interim results in respect of thescheme. The charge was calculated in accordance with IFRS 2 "Share-based payment" using the Black-Scholes model. 6. Dividend An interim dividend of 1.25p per share (2006: nil) will be paid on 12 October2007 to shareholders on the register at the close of business on 14 September2007. These interim financial results do not reflect this dividend payable, which willbe recognised in shareholders' funds as an appropriation of retained earnings inthe year ending 31 December 2007. 7. Financial liabilities: borrowings Unaudited Audited Audited 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Current 2,851 2,401 2,833Non current 29,281 47,197 30,841 32,132 49,598 33,674 The movement in borrowings can be analysed as follows: Unaudited Audited Audited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Opening amount at 1 January 33,674 52,965 52,965Movement in unamortised issue costs 88 (109) (22)Issue of preference shares - - 50Redemption of loan stocks (130) (14,008) (30,019)Redemption of preference shares - - (50)Draw down of bank loans - 12,000 12,625Repayment of bank loans (1,500) (1,250) (1,875)Closing amount at 30 June/31 32,132 49,598 33,674December The loan stocks redeemed in the period were redeemed out of the restricted cashbalance (note 9). 8. Retained earnings Unaudited Audited Audited 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Opening amount at 1 January 12,568 8,609 8,609Profit for the period 3,590 1,594 4,395Bonus issue of shares - - (436)Share option credit 2 - -Closing amount at 30 June/31 16,160 10,203 12,568December 9. Notes to the cash flow statement Unaudited Audited Audited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Profit for the period 3,590 1,594 4,395Adjustments for:Interest payable and similar charges 917 1,914 3,524Taxation 1,630 1,273 3,085Interest receivable (41) (48) (119)Depreciation and amortisation 227 285 406Net profit on relocation of Group - (366) (366)Head Office(Profit)/loss on disposal of - (463) 88property, plant and equipmentShare option charge 2 - -Operating cash flows before movement 6,325 4,189 11,013in working capitalChanges in working capital:Increase in trade and other (12,104) (20,446) (17,617)receivablesIncrease in trade and other payables 11,652 17,218 15,560 Cash generated from operations 5,873 961 8,956 For the purposes of the cash flow statement, cash and cash equivalents excludesrestricted cash of £2,018,000 (30 June 2006: £2,148,000, 31 December 2006:£2,148,000). 10. Contingencies The Group takes out performance bonds in the ordinary course of business. The aggregate amount of such bonds outstanding at 30 June 2007 was £291,770 (30June 2006: £96,770, 31 December 2006: £96,770). The aggregate amount of bondsoutstanding at 30 June 2007 on projects where practical completion has beenachieved was £291,770 (30 June 2006: £96,770, 31 December 2006: £96,770). It is not anticipated that any material liabilities will arise from thecontingencies. 11. Related party transactions The directors are considered to be the key management personnel of the Group.Their aggregate remuneration for the period was as follows: Unaudited Audited Audited 6 months 6 months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £'000 £'000 £'000 Salaries, fees and short term 646 510 990benefitsPension contributions 70 34 86 716 544 1,076 In the six months ended 30 June 2007 the Group paid fees of £17,500 to RickittMitchell & Partners Limited, corporate finance advisers to the Group, in respectof Paul Mitchell's services as a non-executive director. No other fees were paidin the period. In previous periods, the Group undertook transactions with Sawprop Limited, arelated party, in respect of its previous headquarters. No transactions havetaken place during the six months ended 30 June 2007. This information is provided by RNS The company news service from the London Stock Exchange