Styles & Wood Group Regulatory News (STY)

13 April 2011

STYLES & WOOD GROUP PLC

("Styles & Wood" or the "Group")

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

Styles & Wood Group plc, a leading UK provider of property support to major retailers, banks and commercial organisations, announces its preliminary results for the year ended 31 December 2010.

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

"2010 saw the Group deliver a return to profit1 driven by strong performance in the second half of the year despite challenging market conditions demonstrating the robust nature of our business model. The more promising signs seen in the second half have continued into 2011 with current trading ahead of the same period 12 months ago. Whilst we expect markets in certain sectors to remain challenging, the Group will continue to focus on delivering improved margin performance and sustainable profitable growth."

"My review of the business is ongoing and progressing well and I look forward to communicating my strategic thoughts in the months ahead."

"In the short time I have been in the role, I have been greatly encouraged by both the quality of the Group's diverse range of services and calibre of our staff and I look forward to working with them to take the Group forward through its next stage of growth. "

ENQUIRIES:

CHAIRMAN'S STATEMENT

Challenging market and robust disciplines

Group results for the year represent an improvement in margins although revenues are down on the previous year. The trend of business activity however improved in the second half with revenues ahead by 47% against the first half of the year with some encouraging gains in the commercial and banking sectors. There is a continuing focus on improving margins and aligning costs with levels of revenues.

Changes to the Board

In December 2010 Ivan McKeever stepped down as chief executive officer to pursue personal business interests. On behalf of the Board I would like to thank him for his contribution and wish him well in his future career.

We would like to extend a warm welcome to Tony Lenehan who was appointed as chief executive officer on 1 January 2011.Tony has significant and relevant experience in the construction sector, most recently as Executive Director in the North of England for Bovis Lend Lease where he was responsible for their construction business interests. He was previously Managing Director for the building and integrated property services divisions of Carillion. Tony is very well placed to take the business forward through the next phase of its development.

Outlook

The outlook for this year in common with so many other businesses will be influenced by the planned cuts in public expenditure and the impact of this and other measures on consumer spending. Against this background however we believe there will be emerging opportunities from new and existing customers for our current wide range of services as well as others which are in the process of being developed. In addition to new sectors there is also a priority for the new management to regain market share with some of our long standing relationships. It is early days for the new team but in the first 100 days I believe they have made an encouraging start.

Strength in our people

On behalf of the Board I would like to thank all colleagues throughout the business for their hard work and dedication over the last year. 2011 will be just as demanding for us although I hope we will also share in the excitement of taking a major step in the recovery of this fine business.

Jim Martin, Chairman

FINANCIAL OVERVIEW

Return to profit

On revenue which was 29% lower at £99.1m (2009: £139.3m) the Group delivered an improvement in profitability. Profit before tax for 2010 (excluding preference share accounting) was £0.2m (2009: loss of £1.4m), the first time a profit has been delivered at this level since 2007. Profit after tax, excluding preference share accounting, was £0.1m (2009: loss of £1.2m). After charging notional interest on preference shares of £0.9m (2009: £0.4m), the Group delivered a loss after tax of £0.9m (2009: loss of £1.7m).

Revenue in the second half of the year of £59.0m (2009: £64.5m) was up substantially on the first half of the year, and it was the first time that the traditional weighting of revenue to the second half of the year had been experienced since 2007. In the second half of the year underlying operating profit (excluding non-recurring items and preference share accounting) exceeded £1.0m, the first time this threshold had been exceeded in a half year since the first half of 2008.

Diversification

The strategic drive to grow the business in the commercial and banking markets led to increased revenue of £50.4m (2009: £42.0m) from these sectors, of which 93% was delivered through frameworks. Our retail business experienced a challenging 2010 with high street retailers adopting a cautious approach to investment. Revenue from this sector fell by 54% to £48.7m (2009: £90.6m) with workloads in the second half broadly similar to the first half.

Divisional review

We support our customers with a broad range of complimentery services that integrate the design, build, fit out, refurbishment and maintenance of property to deliver smarter, smoother spaces.

Care

·; Minor Works

·; Refresh

·; Planned & Reactive Maintenance

·; Facilities Management

·; Restoration

·; Retail Trading Initiatives

·; Life Cycle Solutions

Care delivered over 500 projects during 2010, with typical values ranging from £5,000 to £100,000. These high volume lower value projects are extremely important to our customers who quite rightly demand the same level of care and attention to detail as their major projects receive.

Construct

·; Fit Out

·; Refurbishment

·; Construction

·; Design & Build

·; Supply Chain Management

We are renowned for delivering programmes and frameworks on behalf of national retailers, corporate occupiers, banks, leisure organisations and the major food retailers, but we are equally at home with one-off projects. As principal contractors we manage the construction processes associated with taking shell and core, Cat A, or existing space and delivering exceptional interiors.

We do this for the most demanding clients; as a result we have highly developed skills and resources and the drive, enthusiasm and commitment to add value, drive out waste and consistently hit challenging deadlines.

During 2010, our Construct division worked on more than 400 properties being engaged by a wide range of customers across a diverse range of projects.

In a challenging retail environment the business continued to enjoy good relationships with many of the UK's leading retailers including Argos, Homebase, Primark and the Co-operative Group delivering 14 new stores and refurbishing over 70 existing stores for these key customers during 2010. We enhanced our credentials in department stores, working for the first time at probably the UK's most famous retail store, Harrods in Knightsbridge, and for Selfridges at their Manchester store.

The office and retail banking sector experienced a significant upturn in workload in 2010, particularly after quarter one. In total S&W fitted out, refurbished or refreshed nearly 300 retail bank branches during 2010 working with Barclays, Lloyds Banking, RBS and Nationwide.

Design

·; Architectural Services

·; Space Planning

·; Retail Initiatives

·; Design Management

·; Models & Standards

Bringing ideas to life, our concept and design development team have the ideas and experience to deliver creative environments. With a large team of architectural, design and support staff S&W Design has the capability to take large project volumes from concept through to completion which, through efficiencies in process, and appropriate challenges to any given concept, give real value to our customers.

However, the ability to offer a turnkey Design & Build service is becoming a more important factor in our market. In 2010 our Design business worked in tandem with our Construct businessto jointly deliver projects for a number of customers including Lloyds Banking Group, Home Retail Group and Makro. In addition, they were engaged directly by a number of other retailers and retail banks including Barclays, B&Q, Nationwide and Sainsbury's to deliver design services.

The level of planning applications and hence construction design activity remains down on previous years, a condition that is likely to prevail in the medium-term. However, as market activity picks up, our customers will begin to look into increasing planning applications and design activity, which we believe will benefit our outsource model.

iSite

·; Property Management Solutions

·; Project Collaboration

·; Management Dashboards

·; Business Systems Analysis

·; Process Engineering

Information is everything when it comes to efficiently and cost-effectively managing property portfolios. Knowing what is happening where and when, in real time, is the basis of good strategic decision making at the highest level. Led by our Property Solutions division, iSite, we are able to provide property portal solutions and services to help capture, store, integrate and track property information and process into one single view; making it possible for our clients to manipulate property information, see the impact of their decisions and make strategic choices all based around real knowledge of real information about their real estate.

We pride ourselves on delivering solutions that are easy to use and flexible - our focus on 'Building Intelligence' means our applications are geared towards helping our customers improve the way they work and enable business change. We have a strong pedigree of working with some of the largest property owners in the UK, including Tesco, Nationwide and B&Q adapting our solutions to meet a variety of business models from Total Property Management to business out-sourcing and supply chain empowerment.

Structured approach to risk management

The review of the Group's business processes and risk management approach which commenced in 2009 has started to impact positively on financial performance and as a result overall gross margin is up by 137bps compared to the prior year. The realignment of the cost base continued with underlying administrative expenses down 11% on prior year at £6.3m and running at 72% of the cost two years ago.

Philip Lanigan, Group Finance Director

CHIEF EXECUTIVE OFFICER'S STATEMENT

Sustainable profitable growth

Our broad geographic spread, diversity in project scale and service line reach characterise the resilience in our business model. Developing strategic and tactical relationships with our supply chain partners will ensure competitive advantage and value for money. A heritage geared to clear alignment with our customers' interests and drivers, together with positive trends in our focus sectors and markets provides good opportunity for sustainable profitable growth.

Focus for the future

Existing customer relationships and frameworks afford predictable business opportunities for the future. In addition, as property related capital investment programmes in our markets begin to show positive signs of recovery, we continue to target new prospects. We will remain selective in this approach with emphasis placed on return on investment and quality of earnings rather than volume.

Property specific applications of alternative sustainable technologies and public sector property services' frameworks, including outsourcing, present major business opportunities closely aligned to our core skills and capabilities.

Drive to add value

Investment in our people and systems will be a key feature in business planning in order to present best practice and enhance value adding skills and capabilities.

This strategy will ensure that we are effectively positioned to capitalise on the opportunities presented by improvements in our markets and reinforce the drive for sustainable profitable growth.

Tony Lenehan, Chief Executive Officer

Consolidated income statement

For the year ended 31 December 2010

Consolidated balance sheet

As at 31 December 2010

Consolidated cash flow statement

For the year ended 31 December 2010

Cash and cash equivalents exclude restricted cash of £97,000 (2009: £218,000).

Notes to the preliminary results

1. Basis of preparation

The financial information set out in this announcement does not constitute the Group's statutory accounts for the year ended 31 December 2010 or 2009. The preliminary results of Styles & Wood Group plc ("the Group") for the year ended 31 December 2010 have been extracted from audited consolidated financial statements which have not yet been delivered to the Registrar of Companies. The auditors have reported on the Group's statutory accounts for the year ended 31 December 2010. The report does not contain a statement under either section 498(2) or section 498(3) of the Companies Act 2006. The financial information for the year ended 31 December 2009 is derived from the statutory accounts for that year. The consolidated financial statements for the year ended 31 December 2010 have been prepared on the basis of the IFRS accounting policies set out in the Group's Annual Report and Financial Statements for the year ended 31 December 2009. 2. Segmental reporting

Year ended 31 December 2010

Year ended 31 December 2009

All revenues arises from external customers for the provision of property related services in the UK. All assets are domiciled 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 assets and liabilities include property, plant and equipment, software, cash and cash equivalents, interest payable, current and deferred tax liabilities and borrowings.

Unallocated segment result reflects expenses relating to the Company rather than the ongoing trade of the Group and includes share option expenses, fees for professional advisers and non-executive director remuneration.

No one customer represents a significant proportion of the Group's revenue. Transactions between segments are eliminated on consolidation.

3. Non-recurring items and preference share accounting

The Group's results include the following items:

(a) Restructuring costs in 2010 relate to the departure of the Chief Executive Officer, Ivan McKeever and to the appointment of his replacement, Anthony Lenehan. Costs include severance payment, legal expenses and consultant's fees. In 2009 the costs related to programmes of redundancy and included redundancy and notice payments made to employees together with related legal fees. 

(b) Professional fees incurred in the year ended 31 December 2009 in advance of the refinancing included fees paid to advisers as the Company explored a number of options to strengthen its balance sheet. Fees incurred as part of the refinancing reflect fees and expenses relating to the refinancing that could not be directly attributed to the cost of debt or equity.

(c) Upon the refinancing in June 2009 the Group wrote off £379,000 in respect of capitalised debt issue costs relating to the previous bank facility. Other bank charges of £75,000 were paid to the Group's bankers in respect of a covenant reset prior to the arrangement of the new facility.

(d) Tax on non-recurring items reflects the non-deductibility of the notional interest on preference shares and certain non-recurring costs relating to the refinancing in 2009.

4. Taxation

The effective tax rates tax for the years ended 31 December 2010 (-22.5%) and 31 December 2009 (8.2%) are different from the standard rate of corporation tax in the UK of 28% (2009: 28%). The differences are explained below.

5. Earnings per share

Reconciliations of the earnings and the number of shares used in the calculation are set out below:

The weighted average number of shares in issue for the periods presented reflects the share consolidation that took place on the 29 June 2009 together with the impact of the open offer made to existing shareholders as part of that refinancing.

On 29 June 2009 the Company issued 15,000,000 convertible preference shares which are convertible into 16,000,000 ordinary shares. These shares are not currently dilutive and neither are share options that are currently in issue in the Group. Hence there is no difference between basic and diluted earnings per share (2009: no difference).

6. Dividends

No interim dividend was paid during the year (2009: nil) and no final dividend is proposed (2009: nil).

7. Cash flow from operating activities

8. Net cash

Net debt excludes preference share capital of £8.3m (2009: £7.4m) that is accounted for as debt and included in non current liabilities due to the conversion rights attached to those shares.

9. Related party transactions

In the year ended 31 December 2010 the Company paid fees of £37,500 (2009: £37,500) to Rickitt Mitchell & Partners Limited in respect of Paul Mitchell's services as a non executive director. The Company paid £nil to Rickitt Mitchell in respect of corporate finance advice (2009: £10,000).

Details of the directors' interests in the share capital of Styles & Wood Group plc may be found in the remuneration report within the annual report and financial statements for the year ended 31 December 2010 which will be published on the website www.stylesandwood.co.uk today.

Additional disclosures

Risks and uncertainties

As with any business, risk assessment and the implementation of mitigating actions and controls are vital to the achievement of the Group's strategy. Information on the key risks and mitigating factors can be found in the 2010 annual report and financial statements that has been published on the website www.stylesandwood.co.uk today.

Statement of Directors' responsibilities

The Directors confirm that to the best of their knowledge the information set out in this announcement has been prepared in accordance with the Disclosure and Transparency Rules of the UK Financial Services Authority, International Financial Reporting Standards (IFRS) and the International Financial Reporting Interpretation Committee (IFRIC) Interpretations, as endorsed by the European Union (EU). Except as described in the basis of preparation, the accounting policies applied are consistent with those set out in the annual report and financial statements for the year ended 31 December 2009. In preparing this announcement the Directors have also made reasonable and prudent judgements and estimates. The financial information, Chairman's statement, Chief Executive's statement and the Financial Review contained herein give a true and fair view of the assets, liabilities, financial position and profit and loss of the Group.

The Directors of Styles & Wood Group plc at the date of this announcement are as set out below:

Jim Martin Non-Executive Chairman

Tony Lenehan Chief Executive Officer

Philip Lanigan Group Finance Director

Robert Hough Non-Executive Director

Paul Mitchell Non-Executive Director