Source - RNS
RNS Number : 1346K
Styles & Wood Group PLC
19 September 2016
 

 

Styles&Wood Group PLC

Interim Results for the Six Month Period Ended 30th June 2016

Styles & Wood Group plc, the integrated property services and project delivery specialist, announces its interim results for the six months ended 30 June 2016.

Financial Results

 

H1:2016

H1:2015

% Change

Revenue

£47.1m

£46.2m

2.0%

Gross Margin

9.9%

8.4%

17.9%

Underlying EBITDA1

£1.3m

£0.8m

63.4%

Underlying Profit Before Tax1

£0.5m

£0.2m

138.8%

Profit/(Loss) Before Tax

£0.4m

£(0.5)m

N/A

Underlying Earnings per Share1

3.9p

0.6p

550.0%

Earnings per Share

2.6p

(10.2)p

                                 N/A

Net cash and cash equivalents2

£3.70m

£1.38m

168.1%

Net debt3

£3.33m

£6.42m

N/A

Order Book Week 33

£69.9m

£66.1m

5.7%

Notes:

1                     Excludes non-recurring items 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 and loan notes

 

Operational Highlights:

§ Contract successfully negotiated for the Programme Management, Design and Delivery of Projects for a national, format enhancement initiative for a UK major grocery retailer, c£15m value.

§ Specialist design build fit out works commenced for Addleshaw Goddard's corporate offices in One St Peter's Square, Manchester.

§ Second major project commenced for Aviva in London following on from the ongoing works to Westminster House in Manchester.  Around 150 000 square feet of high quality space currently under refurbishment for this strategic client.

§ Appointment confirmed as automation partner for one of the UK's major high street banks providing a turnkey solution for ATM/Rebrand services.  Over 900 discrete projects and building interventions successfully programme managed and implemented with a similar volume planned for implementation during 2017.

§ Diversification strategy strengthened with Healthcare projects success, a fertility clinic for Care UK and a refurbishment scheme for BUPA, and the development of a new serial projects relationship with Easy Hotels.

 

Post Period Highlights

·      Appointed as one of four strategic partners by one of the world's largest banking and financial services organisations for the delivery of its UK capital plan over the next five years commencing in 2017.  Anticipated annual revenues in excess of £20m per annum.  Consolidated work streams including critical facilities, data centres, retail, office and initiatives.

 

Tony Lenehan, CEO of Styles&Wood Group plc, said:

'The Group has delivered a strong performance in the first half of the year with revenue, EBITDA and profit before tax all showing good growth supported by strong cash generation. This is a particularly pleasing set of interim results, which provides further positive endorsement of the Group's diversification strategy and, as demonstrated by improved margin performance, our selective approach to new business opportunities.  We have had significant success in securing longer term contracts with a number of blue chip clients, illustrating the relevance and strength of our service offering. The longer term nature of these contracted framework arrangements has also strengthened the projected carry through workload position for 2016/17 relative to prior year.'

Enquiries:

Styles & Wood Group plc                

Tony Lenehan, Chief Executive Officer

Philip Lanigan, Group Finance Director

 

Tel 0161 926 6000

Shore Capital                                   

Edward Mansfield/Mark Percy

 

Tel 0207 408 4090

FTI Consulting                          

Oliver Winters/James Styles

 

Tel 0203 727 1000

 

Chief Executive Officer's Statement

Group Results

Group revenue for the six months ending 30 June 2016 increased by 2% to £47.1m (H1 2015:  £46.2m).  The corresponding underlying operating profit increased by 88.2% to £1.1m (H1 2015:  £0.6m).  The increased profitability continues the trend evidenced over the last two years where investments made in people and processes are improving operational performance.  Repeat business from customers and through their professional advisers, now accounts for c75% of Group revenues which is characterised by an increase in gross margin to 9.9%.

Underlying finance costs were similar to 2015 at £0.2m, where reduced bank interest and charges have been offset by interest on the Loan Notes issued at the time of the refinancing in June 2015.

Following a strategic review of our interests in Dubai and in conjunction with our partner in region, the venture is being repositioned to reflect a focus on select major fit out opportunities rather than a broad based portfolio approach.  A loss of £(0.4)m (H1 2015: £(0.2)m) has been incurred for the period in this respect

The Group recorded an underlying profit before tax of £0.5m (H1 2015: £0.2m) which, after non-recurring costs of £nil (H1 2015:  £0.3m) and notional interest on preference shares of £0.1m (H1 2015:  £0.4m), results in a profit/(loss) before tax of £0.4m (H1 2015: £(0.5)m).

Cash flow in period, as determined by work mix and H1:H2 weighting, has assumed a more conventional characteristic with an operational cash outflow in the first half of 2016.  The Group had cash balances of £3.7m at 30th June 2016 (H1 2015: £1.4m), and a £3.0m bank facility from Barclays unused throughout the period.  Net debt stands at £3.3m (H1 2015: £6.4m) reflecting the strong cash conversion from trading performance.

Overview

The Group now has a proven diversification strategy and consistent, selective approach to new business opportunities.  In excess of 65% of 2016 revenue is expected to be secured through serial customer relationships and formal frameworks.  Our appointments as preferred service supplier, to strategic customers now typically have committed durations of between two and five years.  Coupled with a tender conversion ratio better than one in three, by both number and value, the Group is now establishing more predictable income streams to further enhance profitable growth.

The restructuring of the balance sheet in June 2015 provided greater freedom to harness the developing skills and capabilities of the Group

In order to reinforce our platform for growth, we relocated our principal operational centre to Cavendish House in Sale, Great Manchester.  The building provides the Group with a useable floor space of 26 000 square feet over four floor, an increase in excess of 20%.  We have designed and fitted out our new office space to reflect smart integrated team working with a concentration of collaborative work areas with flexible layouts.  This inspiring new working environment complements the exciting spaces we have created for our other operations centres in Nottingham and London.

 

 

Segmental Performance:

§ Professional Services:  Revenue within the period of £19.6m (H1 2015:  £17.2m) shows an increase of 13.4% relative to prior year.  Operational performance remains strong with Portfolio Services delivering a margin of 17.1% (H1 2015: 19.5%) and Programme Management & implementation 10.1% (H1 2015: 10.4%), with both segments experiencing a growth in revenue.

-     Portfolio Services: New customer consultancy concessions have been successfully converted for the Data Analytics Business Unit.  Existing customer relationships with major retailers and banks have also provided sources of new opportunity in Data Analytics and extended scope for both Programme Services and Design Business Units.

-     Programme Management & Implementation:  Our most significant customer in the year to date has been a major UK grocery multiple for whom we are delivering several hundred discrete projects to improve store entrances.  The programme was negotiated and represents an opportunity for the Group to leverage its complete range of skills through the provision of a fully integrated solution.  The additional conversion, post period end, of a five year framework with one of the world's leading banking and financial services institutions reinforces our credentials as a market leader in this sector.  Our diversification strategy also continues to gather momentum with the successful conversion of a number of projects in the healthcare and leisure sectors.  Serial project conversions for BUPA and Easy Hotels build on our specialist credentials established in hospital critical environments and office conversions.

§ Contracting Services:  Revenue at £27.5m (H1 2015:  £28.9m) fell by 4.9% whilst profitability increased by 73% to £1.7m (H1 2015:  £1.0m).  The lower revenue in H1 is primarily due to timing issues and will give rise to a compensating enhancement of the weighting of the second half of the year.

-     Project Development & Delivery:  The Group's diversification strategy is now showing real traction and our specialist and strong technical skills are creating a clear point of difference.  Successful contract wins in period include:  Irongate House office refurbishment for Aviva Property in central London, a fertility treatment clinic for CARE and the high end fit out of One St Peter's Square, Manchester for Adddleshaw Goddard; the second major project for the Group in this flagship building.  Additionally, the ATM projects' delivery for RBS continues to grow in strength of delivery performance and is fast approaching best in class in terms of quality outcomes and volumes.

Market Review[1]:

§ Banking and Finance:  With a growing emphasis on customer centric services, multi-channel operations and a necessity to transform legacy systems, there remains a requirement for revision and improvement in real estate infrastructure for UK Banks.  Office consolidation and regional focus are similarly driving rationalisation and modernisation.  Longer term capital plans are now under development to support and sustain the associated change programmes.

§ Commercial:  A continuing high concentration of lease events and an ongoing shortage of affordable, high specification space are projected to drive demand in the short to medium term for quality refurbishment and fit out.

§ Retail and Leisure:  Technological change, multi-channel operations and a prerequisite for optimising format performance are 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.

§ Public 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 new and refurbished high quality real estate infrastructure.  A new £6bn schools' framework is being launched by the Education Funding Agency with an increased scope and ambition to significantly increase the number of preferred suppliers.  Health and social care devolution will create a demand for a more strategic approach to asset management for the corresponding estates rationalisation programmes.

Note:  1 AMA Research:     Interior Refurbishment and Fit-Out Market Report UK 2016-2020 analysis

                        

 

Outlook

The Board continues to actively investigate acquisition and collaborative opportunities for the Group with the goal of strengthening service line provision and/or capability enhancement. The Board is focused on potential targets that fulfil one or more of the following criteria:

•     expansion of Portfolio Services offer;

•     broadening of property management service provision; and

•     enhancement of specialist technical services capabilities.

 

The trading for the full year remains in line with market forecasts with deferral of work from live frameworks and larger longer term projects strengthening the projected carry through position for 2017.   

 

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 December 2015.

 

By order of the Board

 

 

Tony Lenehan                                                                       Philip Lanigan

19 September 2016                                                           19 September 2016

Chief Executive Officer                                                       Chief Finance Officer

 

Consolidated Income Statement

 

 

 

 

 

 

For the six months ended 30 June 2016

 

Unaudited
6 months ended

 

Unaudited
6 months ended

 

Audited
Year ended

 

 

30 June 2016

 

 

30 June 2015

 

31 December 2015

 

Notes

Underlying

Non-recurring items and preference share accounting

(note 7)

Total

 

Underlying

Non-recurring items and preference share accounting

(note 7)

Total

 

Underlying

Non-recurring items and preference share accounting

(note 7)

Total

 

 

 

 

 

£'000

£'000

£'000

 

£'000

£'000

£'000

 

£'000

£'000

£'000

Continuing operations

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

6

47,059

-

47,059

 

46,157

-

46,157

 

114,986

-

114,986

Cost of sales

 

(42,411)

-

(42,411)

 

(42,272)

-

(42,272)

 

(104,248)

-

(104,248)

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

4,648

-

4,648

 

3,885

-

3,885

 

10,738

-

10,738

Administrative expenses

 

(3,545)

-

(3,545)

 

(3,299)

(285)

(3,584)

 

(6,854)

(372)

(7,226)

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating profit/(loss)

6,7

1,103

-

1,103

 

586

(285)

301

 

3,884

(372)

3,512

 

 

 

 

 

 

 

 

 

 

 

 

 

Finance costs

8

(232)

(92)

(324)

 

(223)

(387)

(610)

 

(518)

(495)

(1,013)

Finance income

8

4

-

4

 

-

-

-

 

6

-

6

Share of results of joint venture

19

(376)

-

(376)

 

(154)

-

(154)

 

(136)

-

(136)

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) before taxation

 

499

(92)

407

 

209

(672)

(463)

 

3,236

(867)

2,369

Taxation

9

(225)

-

(225)

 

(174)

-

(174)

 

(758)

81

(677)

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) for the period attributable to equity shareholders

 

274

(92)

182

 

35

(672)

(637)

 

2,478

(786)

1,692

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share,

expressed in pence per share

10

3.9p

(1.3)p

2.6p

 

0.6p

(10.8)p

(10.2)p

 

37.2p

(11.8)p

25.4p

 

Diluted (loss)/earnings per share,

expressed in pence per share

10

3.4p

(1.1)p

2.3p

 

0.6p

(10.8)p

(10.2)p

 

35.0p

(11.1)p

23.9p

 

 

 

 

 

 

 

 

 

 

 

 

 

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 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

 

 

 

 

 

 

For the six months ended 30 June 2016

 

 

 

 

 

 

 

 

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes

Ordinary share capital

 

Hurdle Shares

Preference share capital

 

Equity reserve

Share premium

Capital redemption reserve

Reverse acquisition reserve

 

Retained earnings

Total

 

 

£'000

 

£'000

£'000

 

£'000

£'000

£'000

£'000

 

£'000

£'000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

At 1 January 2015

 

20,456

 

-

2,975

 

-

16,300

2,000

(66,665)

 

18,325

(6,609)

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss for the period

 

-

 

-

-

 

-

-

-

-

 

(637)

(637)

Total comprehensive income

 

-

 

 

-

-

 

-

-

-

-

 

(637)

(637)

Transactions with owners

 

 

 

 

 

 

 

 

 

 

 

 

 

Share option scheme

 

-

 

-

-

 

-

-

-

-

 

12

12

Issue of new equity

 

5,204

 

-

-

 

182

22

-

-

 

-

5,408

Redemption of Preference Shares

 

-

 

 

-

 

 

 

2,000

-

 

(2,000)

-

Preference Share allocation to debt

 

-

 

 

-

(1,488)

 

-

-

-

-

 

-

(1,488)

Preference share notional interest

14

-

 

 

(387)

 

-

-

-

-

 

387

-

Total transactions with owners

 

5,204

 

 

(1,875)

 

182

22

2,000

-

 

(1,601)

3,932

At 30 June 2015

 

25,660

 

-

1,100

 

182

16,322

4,000

(66,665)

 

16,087

(3,314)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

 

-

 

-

-

 

-

-

-

-

 

2,329

2,329

Total comprehensive income

 

-

 

 

-

-

 

-

-

-

-

 

2,329

2,329

Transactions with owners

 

 

 

 

 

 

 

 

 

 

 

 

 

Share option scheme

 

-

 

-

-

 

-

-

-

-

 

6

6

Issue of new equity

 

(1)

 

 

-

 

-

(22)

-

-

 

-

(23)

Redemption of Preference Shares

 

-

 

 

-

 

 

 

-

773

-

 

(773)

-

Preference Share allocation to debt

 

-

 

 

-

1

 

-

-

-

-

 

-

1

Preference share notional interest

14

-

 

 

-

(108)

 

-

-

-

-

 

108

-

Total transactions with owners

 

(1)

 

 

-

(107)

 

-

(22)

773

-

 

(659)

(16)

At 31 December 2015

 

25,659

 

-

993

 

182

16,300

4,773

(66,665)

 

17,757

(1,001)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The notes that follow are an integral part of the condensed interim financial statements.

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited    

 

 

30 June

 

30 June

 

31 December

 

Notes

2016

 

2015

 

2015

 

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Intangible assets - software

 

239

 

375

 

347

Property, plant and equipment

 

1,110

 

448

 

455

Deferred tax asset

 

11

 

58

 

11

 

 

1,360

 

881

 

813

 

 

 

 

 

 

Trade and other receivables

 

36,124

 

33,680

 

26,223

Amounts owed by joint venture

19

1,625

 

1,672

 

1,852

Cash and cash equivalents

12

3,697

 

1,381

 

5,596

Other financial assets: cash collateral

13

1,049

 

519

 

1,049

 

 

42,495

 

37,252

 

34,720

 

 

 

 

 

 

Trade and other payables

 

(38,168)

 

(34,575)

 

(30,171)

Financial liabilities: preference shares

14

(670)

 

(773)

 

(670)

Current tax liabilities

 

(235)

 

(172)

 

(329)

 

 

(39,073)

 

(35,520)

 

(31,170)

 

 

 

 

 

 

 

 

3,422

 

1,732

 

3,550

 

4,782

 

2,613

 

4,363

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial liabilities: preference shares

14

(3,456)

 

(3,927)

 

(3,364)

Financial liabilities: loan notes

 

(2,000)

 

(2,000)

 

(2,000)

 

 

(5,456)

 

(5,927)

 

(5,364)

 

(674)

 

(3,314)

 

(1,001)

 

 

 

 

 

 

 

 

 

 

 

 

 

Ordinary share capital

 

25,659

 

25,660

 

25,659

Hurdle Shares

15

25

 

-

 

-

Preference share capital

14

901

 

1,100

 

993

Share premium

 

16,300

 

16,322

 

16,300

Capital redemption reserve

 

4,773

 

4,000

 

4,773

Equity reserve

 

182

 

182

 

182

Reverse acquisition reserve

 

(66,665)

 

(66,665)

 

(66,665)

Retained earnings

 

18,151

 

16,087

 

17,757

 

(674)

 

(3,314)

 

(1,001)

 

The notes that follow are an integral part of the condensed interim financial statements.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unaudited

 

Unaudited

 

Audited

 

 

6 months ended

 

6 months ended

 

Year

ended

 

 

30 June

 

30 June

 

31 December

 

Notes

2016

 

2015

 

2015

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

Cash (used in)/generated from operations

16

(559)

 

977

 

7,502

Income taxes paid

 

(319)

 

(282)

 

(581)

 

 

 

 

 

 

 

Net cash (used in)/generated  from operating activities

 

(878)

 

695

 

6,921

 

 

 

 

 

 

 

Cash flows used in investing activities

 

 

 

 

 

 

Purchase of property, plant and equipment

 

(757)

 

(53)

 

(162)

Purchase of intangible assets - software

 

(7)

 

(55)

 

(183)

Amounts (advanced to)/returned from joint ventures

 

(149)

 

-

 

(162)

 

 

 

 

 

 

 

 

(913)

 

(108)

 

(507)

 

 

 

 

 

 

 

Cash flows used in financing activities

 

 

 

 

 

 

Interest received

 

4

 

-

 

6

Interest paid/Finance Costs

 

(36)

 

(78)

 

(173)

Redemption of preference share capital

 

-

 

(2,000)

 

(2,773)

Preference share coupon paid

 

(76)

 

-

 

(174)

Loan note issued

 

-

 

2,000

 

2,000

Prepaid debt issue costs

 

-

 

(55)

 

(78)

Proceeds of ordinary share capital (net of fees)

 

-

 

26

 

3

Issue of warrants

 

-

 

182

 

182

Cash collateral deposits

 

-

 

(519)

 

(1,049)

 

 

 

 

 

 

 

Net cash generated from/(used in) financing activities

 

(108)

 

(444)

 

(2,056)

 

 

 

 

 

 

 

Net decrease in cash and cash equivalents

 

(1,899)

 

143

 

4,358

Cash and cash equivalents at beginning of period

 

5,596

 

1,238

 

1,238

 

 

 

 

 

 

 

Cash and cash equivalents at end of period

12

3,697

 

1,381

 

5,596

 

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 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 15th September 2016.

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 June 2016 and comparative results to 30 June 2015 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 December 2015 which were approved by the Board of Directors on 5 April 2015 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 June 2016 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 December 2015 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 this 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 December 2015.

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 December 2015 was published.

6.             Revenue and profit from business segments

 

Six months ending 30 June 2016

 

 

 

 

 

 

CONTRACTING SERVICES

PROFESSIONAL SERVICES

 

 

 

Projects

Frameworks

Portfolio Services

Unallocated

Group

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Revenue

27,497

15,396

4,166

-

47,059

 

Segment result

1,740

1,562

712

(2,911)

1,103

 

Finance costs

 

 

 

 

(324)

 

Finance income

 

 

 

 

4

 

Share of results of joint venture

 

 

 

 

(376)

 

Profit before taxation

 

 

 

 

407

 

Taxation

 

 

 

 

(225)

 

Profit for the year from continuing operations

 

 

 

 

182

 

Net profit attributable to equity shareholders

 

 

 

 

182

 

 

 

 

 

 

 

 

 

 

Six months ending 30 June 2015

 

 

 

 

 

 

 

CONTRACTING SERVICES

PROFESSIONAL SERVICES

 

 

 

Projects

Frameworks

Portfolio Services

Unallocated

Group

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Revenue

28,914

14,210

3,033

-

46,157

 

Underlying segment result

1,006

1,484

591

(2,495)

586

 

Non-recurring items (note 7)

-

-

-

(285)

(285)

 

Segment result

1,006

1,484

591

(2,780)

301

 

Finance costs

 

 

 

 

(610)

 

Share of results of joint venture

 

 

 

 

(154)

 

Profit before taxation

 

 

 

 

(463)

 

Taxation

 

 

 

 

(174)

 

Loss for the year from continuing operations

 

 

 

 

(637)

 

Net loss attributable to equity shareholders

 

 

 

 

(637)

 

 

 

 

 

 

 

 

 

 

Year ending 31 December 2015

 

 

 

 

 

 

 

CONTRACTING SERVICES

PROFESSIONAL SERVICES

 

 

 

Projects

Frameworks

Portfolio Services

Unallocated

Group

 

 

£'000

£'000

£'000

£'000

£'000

 

 

 

 

 

 

 

 

Revenue

45,480

64,597

4,909

-

114,986

 

Underlying segment result

2,560

6,645

779

(6,100)

3,884

 

Non-recurring items (note 7)

-

-

-

(372)

(372)

 

Segment result

2,560

6,645

779

(6,472)

3,512

 

Finance costs

 

 

 

 

(1,013)

 

Finance income

 

 

 

 

6

 

Share of results of joint venture

 

 

 

 

(136)

 

Profit before taxation

 

 

 

 

2,369

 

Taxation

 

 

 

 

(677)

 

Profit for the year from continuing operations

 

 

 

 

1,692

 

Net profit attributable to equity shareholders

 

 

 

 

1,692

 

 

 

 

 

 

 

 

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.

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.

 

 

7.             Non-recurring items and preference share accounting

The Group's results include the following items:

 

 

Unaudited

 

Unaudited

 

Audited

 

 

6 months    ended

 

6 months ended 

 

Year

Ended

 

 

30 June

 

30 June

 

31 December

 

Note

2016

 

2015

 

2015

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

Corporate finance fees

(a)

-

 

(285)

 

(372)

 

 

-

 

(285)

 

(372)

 

 

 

 

 

 

Notional interest on preference shares

Note 14

(92)

 

(387)

 

(495)

 

 

 

 

 

 

 

 

(92)

 

(672)

 

(867)

 

 

 

 

 

 

 

(b)

-

 

-

 

81

 

 

 

 

 

 

 

 

(92)

 

(672)

 

(786)

 

(a)           Corporate finance fees are for work on transactions in 2015

(b)           Tax on non-recurring items reflects the non-deductibility of the notional preference share interest (note    14).

 

 

8.             Finance costs

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

6 months ended

 

6 months ended

 

Year

Ended

 

 

30 June

 

30 June

 

31 December

 

 

2016

 

2015

 

2015

 

 

£'000

 

£'000

 

£'000

Interest expense:

 

 

 

 

 

 

Interest on bank borrowings

 

-

 

47

 

117

Fees on bank facilities

 

36

 

32

 

56

Amortisation of debt issue costs

 

20

 

57

 

64

Loan note

 

100

 

-

 

107

Notional interest on preference shares (note 14)

 

92

 

387

 

495

Cash coupon on preference shares (notes 11 & 14)

 

76

 

87

 

174

 

 

 

 

 

 

 

 

324

 

610

 

1,013

 

 

 

 

 

 

 

Interest income:

 

-

 

-

 

-

Interest receivable

 

(4)

 

-

 

(6)

 

 

 

 

 

 

 

 

(4)

 

-

 

(6)

 

 

 

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 December 2016 is 23.2% (the estimated average effective annual tax rate for the six months ended 30 June 2015 was 22.1%).

 

 

Unaudited

 

Unaudited

 

Audited

 

 

 

6 months ended

 

6 months ended

 

Year

Ended

 

 

30 June

 

30 June

 

31 December

 

 

2016

 

2015

 

2015

 

 

£'000

 

£'000

 

£'000

Taxation comprises:

 

 

 

 

 

 

Current tax

 

225

 

174

 

708

Prior year tax

 

-

 

-

 

16

Deferred tax

 

-

 

-

 

(47)

 

 

225

 

174

 

677

 

10.          Earnings/(loss) per share

On 19th June 2015, 309,100 Ordinary Shares of 1p each were issued. In addition, £5.2m preference shares were converted into 554,666 Ordinary Shares of 1p each. These transactions have been taken into account in calculating the weighted average number of shares in issue for the period ended 30 June 2015.

 

Six months ended 30 June 2016

 

Underlying

 

Non-recurring items and preference share accounting

Total

 

 

 

 

 

 

 

 

Profit/(loss) attributable to equity holders of the Group (£ '000)

 

274

 

(92)

182

 

 

 

 

 

 

Weighted average number of shares in issue

 

7,077,585

 

7,077,585

7,077,585

Basic earnings per share (pence per share)

 

3.9p

 

(1.3)p

2.6p

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share (pence per share)

 

3.4

 

(1.1)

2.3

 

 

 

 

 

 

 

 

 

Six months ended 30 June 2015

 

Underlying

 

Non-recurring items and preference share accounting

 

Total

 

 

 

 

 

 

 

 

 

Profit/(loss) attributable to equity holders of the Group (£'000)

 

35

 

(672)

 

(637)

 

 

 

 

 

 

 

Weighted average number of shares in issue

 

6,239,649

 

6,239,649

 

6,239,649

Basic and diluted earnings/(loss) per share (pence per share)

 

 

0.6p

 

 

(10.8)p

 

 

(10.2)p

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year ended 31 December 2015

 

 

Underlying

 

 

 

 

 

Non-recurring items and preference share accounting

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

Profit/(loss) attributable to equity holders of the Group (£'000)

 

 

2,478

 

 

(786)

 

 

1,692

 

 

 

 

 

 

 

Weighted average number of shares in issue

 

6,653,562

 

6,653,562

 

6,653,562

Basic and diluted earnings/(loss) per share (pence per share)

 

 

37.2

 

 

(11.8)

 

25.4

 

 

 

 

 

 

 

Diluted earnings/(loss) per share (pence per share)

 

35.0

 

(11.1)

 

23.9

 

The Company has in issue 5,800,000 convertible preference shares which are convertible into 618,667 ordinary shares. These shares are not currently dilutive.

On 19th June 2015, the Company issued 740,000 warrants with an exercise price of £0.75 and 364,600 nil cost for a consideration of £182,300. The warrants and the outstanding share options in issue within the Group are considered to be dilutive, and the impact on earnings per share is show above.

11.          Dividend

The Board does not consider it appropriate to pay an interim dividend on ordinary shares (2015: nil). A dividend on the preference shares accrues at a rate of 3%. The charge for the six months ended 30 June 2016 was £76,000 (six months ended 30 June 2015 £87,000, year ended 31 December 2015; £174,000).

 

 

12.          Cash and cash equivalents

 

 

Unaudited

 

Unaudited

 

Audited

 

 

30 June

 

30 June

 

31 December

 

 

2016

 

2015

 

2015

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

Cash and cash equivalents

 

3,697

 

1,381

 

5,596

 

 

 

 

 

 

 

 

The Group's current banking facility comprises a £3.0m working capital facility. This facility is available until 31st October 2017.

Issue costs in respect of the facilities have been prepaid and are being amortised over the life of the facilities.

 

13.          Other financial assets: Cash collateral

At 30 June 2016 the Group had deposited cash of £1,049,000 (30 June 2015 £519,000, 31 December 2015 £1,049,000) 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.          Preference share capital

 

 

Unaudited

 

Unaudited

 

Audited

 

 

30 June

 

30 June

 

 

31 December

 

 

2016

 

2015

 

2015

 

 

£

 

£

 

£

 

 

 

 

 

 

5,026,860 convertible preference shares of £1 each (30 June 2015 5,800,000)

 

5,026,860

 

 

 

5,800,000

 

5,026,860

Less: amounts classified as liabilities

 

(4,125,922)

 

(4,700,000)

 

(4,033,860)

 

 

900,938

 

 

1,100,000

 

993,000

 

The 5,026,860 convertible, redeemable preference shares are held by British Growth Fund plc and Henderson Global Investors. The conversion rights allow the holder to convert the 5,026,860 preference shares into 536,198 ordinary shares at a price of £9.375 per share, in tranches from 31 December 2015 to 31 December 2019. The shares carry a cash coupon of 3% and, unless converted by the holder, are redeemable in tranches from 31 December 2016 as follows:

 

£

31 December 2016

670,080

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 £76,000 is payable in respect of the six months ended 30 June 2016 (six months ended 30 June 2015: £87,000, year ended 31 December 2015: £174,000) has been charged within underlying profit. Notional interest of £92,000 has been credited back to reserves (six months ended 30 June 2015:  £387,000, year ended 31 December 2014: £495,000).

15.          Hurdles Shares

 

 

Unaudited

 

Unaudited

 

Audited

 

 

30 June

 

30 June

 

31 December

 

 

2016

 

2015

 

2015

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

Issued Hurdle Shares of £2.50 each

 

25

 

-

 

-

 

 

 

 

 

 

 

On 26th January 2016, the Company issued 10,000 £2.50 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 31st December and certain other defined events. These are set out in the Articles of Association.

 

 

 

16.          Notes to the cash flow statement

 

 

Unaudited

 

Unaudited

 

Audited

 

 

6 months ended

 

6 months ended

 

   Year    ended

 

 

30 June

 

30 June

 

31 December

 

 

2016

 

2015

 

2015

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

 

407

 

(463)

 

2,369

Adjustments for:

 

 

 

 

 

 

Finance costs

 

324

 

610

 

1,013

Finance income

 

(4)

 

-

 

(6)

Depreciation and amortisation

 

217

 

222

 

480

Share option scheme

 

145

 

12

 

18

Share of loss of joint venture

 

376

 

154

 

136

 

1,465

 

535

 

4,010

Changes in working capital:

 

 

 

 

 

 

Decrease in trade and other receivables

 

(9,921)

 

1,363

 

8,837

Decrease in trade and other payables

 

7,897

 

(921)

 

(5,345)

 

 

 

 

 

 

 

 

(559)

 

977

 

7,502

 

 

 

 

 

 

 

 

17.      Contingencies

The Group takes out performance bonds in the ordinary course of business. The aggregate amount of such bonds outstanding at 30 June 2016 was £3,055,000 (30 June 2015: £865,000 31 December 2015: £2,637,000). The aggregate amount of bonds outstanding at 30 June 2016 on projects where practical completion has been achieved was £866,000 (30 June 2015: nil, 31 December 2015: £nil).

It is not anticipated that any material liabilities will arise from the contingencies. The Group has no capital commitments.

 

 

18.          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 ended

 

6 months ended

 

Year

ended

 

 

30 June

 

30 June

 

31 December

 

 

2016

 

2015

 

2015

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

Salaries, fees and short term benefits

 

264

 

257

 

597

Pension contributions

 

36

 

35

 

68

 

 

300

 

292

 

665

 

 

 

 

 

 

 

 

In the six months ended 30 June 2016 the Group paid no fees to Rickitt Mitchell & Partners Limited, in respect of Paul Mitchell's services as a non-executive director (six months ended 30 June 2015: £32,500, year ended 31 December 2015: £85,000). From 1 January 2016, Paul Mitchell was directly remunerated for his services through the payroll.

In the six months ended 30 June 2016 the company paid fees of £17,500 (six months ended 30 June 2015: £1,055, year ended 31 December: £18,555) to the Business Growth Fund and accrued interest payable of £50,000 (six months ended 30 June 2015: £3,699, year ended 31 December 2015: £53,699) 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 31% shareholding in the Company and who was a director of the Group's trading subsidiary Styles & Wood Limited until 14 August 2015, has significant influence and are therefore considered to be related parties. All transactions were undertaken in the ordinary course of business.

 

 

Unaudited

 

Unaudited

 

Audited

 

 

6 months ended

 

6 months ended

 

Year

ended

 

 

30 June

 

30 June

 

31 December

 

 

2016

 

2015

 

2015

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

 

Sales made  to related parties

 

-

 

-

 

-

Purchases from related parties

 

32

 

204

 

527

Balances owed by related parties at the balance sheet date

 

-

 

-

 

-

Balances owed to related parties at the balance sheet date

 

-

 

65

 

17

 

 

 

 

 

 

 

 

 

19. 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 ended

 

6 months ended

 

Year

Ended

 

 

30 June

 

30 June

 

31 December

 

 

2016

 

2015

 

2015

 

 

£'000

 

£'000

 

£'000

 

 

 

 

 

 

At 1 January

 

1,852

 

1,826

 

1,826

Share of loss  in the period

 

(376)

 

(154)

 

(136)

Working capital loan advanced/(repaid)

 

149

 

-

 

162

 

1,625

 

1,672

 

1,852

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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