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Styles&Wood Interim Statement 2013

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STYLES&WOOD PLC

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(“Styles&Wood”, “S&W” or the “Group”)

2 Interim Results For The Six Months Ended 30 June 2013 3 Styles&Wood Group Plc, a leading UK provider of property 4 commercial support services to major retailers, banks and organisations, announces its interim results for the six months 5 ended 30 June 2013. 12

Financial Highlights

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REVENUE: £40.6m (H1 2011: £40.3m) GROSS MARGIN: 8.8% (H1 2011: 7.9%) OPERATING PROFIT: £0.2m (H1 2011: Loss of £0.1m) UNDERLYING* PROFIT BEFORE TAX: £0.1m (H1 2011: Loss of £0.2m) LOSS BEFORE TAX: £0.5m (H1 2011: Loss of £0.9m) NET CASH**: £3.2m (H1 2011: £2.0m) UNDERLYING* EARNINGS PER SHARE: 0.1p (H1 2011: Underlying loss per share 0.2p)

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* Underlying profit excludes non-recurring items and notional interest on preference shares ** Net cash excludes preference share capital accounted for as debt

Operational Highlights  Order book continues to strengthen with 2012 weighted pipeline over 5% ahead of prior year Unexecuted secured workload for delivery in 2012/2013 is more than 10% ahead of prior year A balanced workload from projects, frameworks and professional services during first half of the year Continued leading position on banking frameworks with Barclays, Lloyds Banking Group and The Royal Bank of Scotland Successful diversification into public and commercial sectors evidenced through hospital and Free School refurbishment contracts, Local Authority strategic asset management projects and office rationalisation schemes Design & build solutions successfully implemented in high end retail projects New London office delivered a strong performance demonstrating the relevance of our service offer in the London market

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Styles&Wood Interim Statement 2013


Interim Statement 2013 > Introduction

Tony Lenehan, CEO commented: “While the wider current economic environment remains particularly challenging our ability to focus on aligning our interests with the business needs of our customers has been reflected in our encouraging first half performance. At the same time the Group has been able to diversify to provide a more resilient model and encouraging progress has been made in securing sustainable business interest in new sectors. This emphasises the transferrable nature of our core skills sets. Our improved results, with both increased profit and margin, demonstrate the efficiencies of our new organisational structure, hard work of our teams and a selective approach to market opportunities. With our growing order book and strong balance sheet, the Group is well positioned to build on its progress in the traditionally stronger second half of the year.� Enquiries: Styles & Wood Group PLC Tony Lenehan, CEO Philip Lanigan, FD

Tel: 0161 926 6000

FTI Consulting Oliver Winters/Georgina Bonham

Tel: 0207 831 3113

Shore Capital and Corporate Limited Pascal Keane/Edward Mansfield

Tel: 0207 408 4090

Styles&Wood Interim Statement 2013

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1 CHEIF EXECUTIVE’s OVERVIEW 2

OVERVIEW

3 results relative to the I am pleased to report that the Group has delivered improved same period last year. Whilst revenue is marginally ahead of 2011, following the slow start to the year that we previously reported, the Group has again delivered an increase 4 in profitability for the period. The improvements are a reflection of our strategic approach to new business opportunity and a more evenly balanced workload between projects, frameworks and professional services over the first5 six months. There has been further investment in our people and systems, including our new operating platform which, together with our increased presence in the London market, reinforces our commitment to deliver future growth. 12

GROUP RESULTS

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The Group’s revenue for the six months to 30 June 2012 was £40.6m compared with £40.2m in 2011 against a backdrop of price pressure within the market place. Gross margin of 8.8% for the period continues a positive trend (H1 2011: 7.4%). The mix of workload between projects and frameworks has delivered an improvement in net cash which was £3.2m at 30 June 2012 (30 June 2011: £2.0m). Improving cost structure, procurement strategies and delivery methods has brought improved value for our customers. A keen focus on cost control and overhead efficiencies has supported this performance with operating profit increased to £0.2m H1 2012 from £0.1m in H1 2011.

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Net finance costs (excluding notional interest on preference shares) were £0.2m (H1 2011: £0.3m) reflecting the improved cash position of the Group and realising the impact of the term loan repayment made in August 2011. Together with the contribution from our joint venture in Dubai, the Group reported an underlying profit before tax of £0.1m in the first half of 2012 (H1 2011: underlying loss of £0.2m).

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There were no non-recurring items in the first half of 2012 (H1 2011: £0.2m), and after charging £0.6m of notional interest on preference shares (H1 2011: £0.5m) the Group made a loss before tax of £0.5m (H1 2011: loss of £0.9m).

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RESULTS BY SECTOR

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We reviewed our reporting segments in early 2012 and have focussed in the period on increasing the proportion of our work from contracting projects, which has contributed to an improvement in the net cash position for the business. The balance of our workload comprises more predictable income streams from framework allocation and professional services. It is intended that these property support services segments will form the basis for future reporting.

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Styles&Wood Interim Statement 2013


Interim Statement 2013 > Chief Executive ‘s Review

SECTOR PERFORMANCE BANKING Banking frameworks represented 40% of the Group’s total revenue in the six months ending 30 June 2012 (H1 2011: 44%). This is demonstrative of the slower than anticipated allocation of workload for the first half of the year. As a consequence there will be a heavy programme weighting for the second half. Our design & build service offer for the refurbishment, reformat and refresh of facilities continues to differentiate the Group’s offer to blue chip customers such as LBG, Barclays and RBS where continued investment in customer facing operations and office rationalisation provides continuing business opportunities.

RETAIL The Group continues to provide a broad range of property based support services to the retail sector. Our strategic partnership with Tesco for the provision of iSite web based property related business systems has expanded further and we now provide support on an international basis. Our experience in space planning and optimisation, alongside project and programme delivery will allow us to target further opportunity with the major national food retailers as they continue to invest in format improvements. High end retail continues to deliver business opportunities and we are delighted to have successfully delivered BMW’s new flagship showrooms on Park Lane in central London prior to the start of the London 2012 Olympics.

Styles&Wood Interim Statement 2013

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1 COMMERCIAL

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Our skill sets, honed in retail, are transferrable to other sectors and where capital investment in new build is constrained, the requirement to make more from existing office space becomes acute. In the first half of 2012 we have successfully secured and developed office refurbishment projects for Deloitte, PwC and HSBC Pension Fund.

3 4 5 PUBLIC &12 COMMUNITY Substantial reductions in public sector expenditure plans create a necessity to rationalise existing property portfolios to support organisational change. In 2012 the Group has secured and completed refurbishment projects for healthcare trusts, educational bodies and local authorities which have additionally been supported by our property management systems and design capabilities. New framework wins include building refurbishment for the Intellectual Property Office and social housing through the Procure Plus community enterprise

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Styles&Wood Interim Statement 2013


Interim Statement 2013 > Finance Review

FINANCE REVIEW CASH FLOW At 30 June 2012 the Group had net cash of £3.2m (30 June 2011: £2.0m, 31 December 2011: £6.7m). During the first half of the year, the Group used £4.3m of cash in operations (2011: £5.2m) reflecting the reduced workload in the first half of 2012 compared to the second half of 2011 which is a continuing seasonal pattern for our business. The Group benefited from the return of £1.1m of cash collateral in relation to performance bonds which expired in the first half of the year and from positive cash flows on projects.

BANKING FACILITIES The Group’s £4.8m bank facilities comprise a multi option facility including overdraft, revolving credit facility and a bond and guarantee facility. At 30 June 2012 £0.8m of the facility had been used for the issue of performance bonds with the remainder of the facility undrawn.

TAXATION The effective tax rate for the first half of 2012, excluding the impact of non-deductible notional interest on preference shares, is 25% (year ended 31 December 2012: 26.1%).

DIVIDEND The Board is not declaring an interim dividend for the period (2012: nil) and will continue to review its dividend policy as the Group’s results improve.

Styles&Wood Interim Statement 2013

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STRATEGY

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The Styles&Wood property support services offer centres on an ability to successfully develop and deliver projects and programmes for the refurbishment, fit out and design & build of end user properties. This offer is characterised by an agile and innovative approach to working together with our customers to meet their changing needs and challenging requirements. These core skills are complemented by value adding service lines including architectural detail design, business process engineering and property management systems.

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The Group has adopted a selective approach to new business opportunities which objectively considers the case for investment, differentiation of service line, win themes and conversion planning. Our marketplace focus is geared to four specific sectors where we are able to define opportunity for sustainable profitable growth:

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• Banking • Retail • Commercial • Public and Community

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The skillsets the Group has developed are transferable and relevant for all four sectors. A new organisational structure is now in place which provides ownership and clarity for relationship management and a scalable platform for growth. Functional support to operational activity is provided through a matrix structure which additionally promotes overhead efficiency, best practice and economies of scale. The diversification associated with the sectors identified introduces a significant degree of resilience to our business model which is a key driver given the challenges associated with the current macroeconomic environment. The Group continues to develop its offer in international markets through its joint venture in Dubai which provided a positive contribution in the first half of 2012 on increased revenues.

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Styles&Wood Interim Statement 2013


Interim Statement 2013 > Finance Review

RISK & PERFORMANCE MANAGEMENT The key risk areas, associated uncertainties and related performance indicators remain unchanged from those set out in the Annual report and Financial Statements for the year ended 31 December 2011 and are as follows:

FINANCE PERFORMANCE Maintaining profitability is fundamental to ensuring the stability of the business. Controls in place to address this challenge include planned management intervention through progress review meetings for individual material projects and specific accounts. KPIs • monthly revenue, benchmarked against current budget and prior year • gross profit margin, measured for individual projects and programmes • net cash balances, controlled through adherence to working capital targets

OPERATIONAL EXCELLENCE The Group’s corporate responsibility commitments embrace demanding health and safety and environmental improvement targets. Delivering our services safely and environmentally responsible on time consistently to a high standard will preserve our reputation and promote stability. KPIs • accident frequency rate, year on year improvement • waste to landfill, year on year improvement • H&S audit scores, framework for continuous improvement

PEOPLE ENGAGEMENT People remain our principal asset. The recruitment, retention and development of the right people, who are committed to the Group’s strategy is fundamental to the success of the business. KPIs • personal development plans, measured completion ratio against targets • flexible benefits, annual take-up improvement targets • employee survey, progressive improvement for specified feedback areas

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1 MARKET PLACE

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A strategic focus on specific sectors enables the development of an in-depth understanding of the associated discrete risk profiles. Diversification into adjacent markets, for which our skillsets are transferable, can then be achieved in a controlled structured manner.

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KPIs • order book, monthly performance measured relative to plan and prior year • framework arrangements, order book resilience and predictable income streams

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Styles&Wood Interim Statement 2013


Interim Statement 2013 > Outlook

OUTLOOK MARKET Declining economic output for the third quarter in succession presents a significant challenge and reinforces the considerable levels of uncertainty in the markets in which the Group operates. Current economic forecasts for 2013 and 2014 show marginal growth in construction of 0.1% and 1.4% respectively. This underscores the necessity to pursue diversification into sectors with sustainable business opportunities. The transferrable nature of the Styles&Wood core service line skills sets provides a measure of resilience in this respect.

BANKING The major UK high street banking institutions remain focussed on improving customer relationships and their associated retail offer including branch refurbishment, refit and remodelling programmes. The committed capital investment plans have a three to five year horizon which through framework arrangements provides sustainable sources of income.

RETAIL High end and major food retail segments continue to be characterised by significant investment programmes in property. A selective approach to specific opportunities for particular customers affords the best potential for growth in this area. The Group’s ability to differentiate its service offering by integrating service lines creates positive win themes.

PUBLIC & COMMUNITY The comprehensive nature of the major reductions in both central and local government capital spending programmes have entailed a significant positive shift in requirement for a more strategic approach to asset management. This becomes manifest in a requirement for the refresh, refurbishment and remodelling of existing buildings to support collocation and organisational rationalisation which plays to the Group’s skill set.

PUBLIC & COMMUNITY An improved work mix for the first half of 2012 has created a stronger balance sheet and better positioned the Group for a significant increase in workload in the second half of the year. Our frameworks provide predictable, sustainable income streams and well organised and managed projects deliver positive cash. New work opportunity for 2013 is being discretely targeted to more evenly balance future years’ weighting in order to realise further cost efficiencies and cash flow improvements. Our weighted sightline for 2012 is currently tracking over 5% ahead of 2011 and the unexecuted order book for work to be delivered in 2012/13 is similarly showing an improvement of more than 10% over prior year. TONY LENEHAN CHEIF EXECUTIVE OFFICER STYLES& WOOD PLC Styles&Wood Interim Statement 2013

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Interim Statement 2013 > Chapter Head

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Styles&Wood Interim Statement 2013

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