Results at commercial office fit out specialist Styles & Wood (STY:AIM) confirm it still has a lot to do to deliver on its fledgling turnaround plans.
Styles & Wood is one of the best performing London-listed shares of 2015 after a fund raising and debt reorganisation announced in June saw its shares surge.
The stock is up 169% year-to-date as investors have become more confident about the business’s financial position.
Cleaning up the balance sheet was the first stage of a multi-year plan to return the business to a sustainable operational and financial position.
Management is banking on cost cutting along with a number of market-based tailwinds to outgrow its high fixed cost base and still sizeable debt pile.
Constrained new build activity should drive demand for interior office refurbishment, chief executive Tony Lenehan says, delivering market-wide growth of 4-5% in the next few years.
Retail is another potential growth avenue, Lenehan says. As the supermarket space race slows, big grocers are shifting capital expenditure budgets from new stores to upgrades of their existing estates.
Results for the six months to 30 June 2015 show revenue at Styles surged 37.5% to £46.2 million and underlying gross profit margin increased from 8.2% to 8.4% helped by an ATM upgrade project for a high street bank.
Underlying profit-before-tax was positive, at £200,000 but this is before redundancy and restructuring costs of £346,000 and notional interest of £400,000 on convertible preference shares.
Cash collection improved significantly on the prior year.
Statutory earnings per share were minus 10.2p a share and shares trade 11.7% lower today at 239p.