Styles & Wood Group Regulatory News (STY)

30 August 2012

STYLES & WOOD GROUP PLC

("Styles&Wood", "S&W" or the "Group")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012

Styles & Wood Group plc, a leading UK provider of property support services to major retailers, banks and commercial organisations, announces its interim results for the six months ended 30 June 2012.

Financial Highlights

·; 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)

* 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

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 Tel: 0161 926 6000

Tony Lenehan, CEO

Philip Lanigan, FD

FTI Consulting Tel: 0207 831 3113

Oliver Winters/Georgina Bonham

Shore Capital and Corporate Limited Tel: 0207 408 4090

Pascal Keane/Edward Mansfield

Chief Executive Officer's Review

Overview

I am pleased to report that the Group has delivered improved results relative to the 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 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 first 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.

Group results

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.

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).

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).

Results by segment

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.

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.

Commercial

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.

Public and 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.

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.

Strategy

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.

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:

§ Banking

§ Retail

§ Commercial

§ Public and Community

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.

Risks and 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:

Financial 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

Market Place

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.

KPIs

- order book, monthly performance measured relative to plan and prior year

- framework arrangements, order book resilience and predictable income streams

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 and 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.

Pipeline

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

Chief Executive Officer, Styles & Wood Group PLC

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 2011. There have been no changes to the Board since 31 December 2011.

By order of the Board

Tony Lenehan Philip Lanigan

30 August 2012 30 August 2012

Chief Executive Officer Group Finance Director

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).

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 Aspect House, Manchester Road, Altrincham, Cheshire, WA14 5PG.

This condensed consolidated financial information was approved for issue on 30 August 2012.

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 2012 and comparative results to 30 June 2011 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 2011 which 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 2012 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS34 "Interim financial reporting" as adopted by the European Union. The interim results should be read in conjunction with the annual report and financial statements for the year ended 31 December 2011 which are available from the group's website www.stylesandwood.co.uk.

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.

·; Segmental reporting disclosures have been amended to fall in line with the Group's new management reporting and are results are now disclosed for the following operating segments. Comparative disclosures have been restated accordingly.

Contracting Services

o Projects: Styles & Wood fulfils the role of Principal Contractor for projects with typical project values ranging from less than £100,000 to over £10m. Projects range from minor refresh to comprehensive refurbishment, shell fit-out, acquisition conversion, or complex structural re-configuration and renewable solutions.

Professional Services

o Frameworks: Formal framework agreements with contractors and suppliers create the ideal forum for sharing best practice in planning, procurement and delivery. Styles & Wood delivers major roll-out programmes for its framework customers and has been actively providing collaborative services to many of these customers through systems developed and refined in over a decade of Partnering and formal Framework Agreements.

o Design: Design provides outsourced design and development services including architectural services, space planning, retail initiative design and models & standards work.

o iSite: iSite provides clients with technology based property information solutions that store, manage and communicate critical data relating to their property portfolio and associated property activities. This data can include design models, supplier allocations as well as project specific data.

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 2011.

5. Financial risk management

The Group's operations and financial instruments expose it to a variety of financial risks. This interim financial information does not contain all financial risk management information and should be read in conjunction with the annual report and financial statements.

There have been no changes in the financial risk management policies or risks since the annual report for the year ended 31 December 2011 was published.

6. Revenue and profit from business segments

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 Company rather than the ongoing trade of the Group and includes administrative overheads, share option expenses, fees for professional advisers and senior management and directors' remuneration.

The Group's results include the following items:

(a) Costs in 2011 relate to the restructuring of the business to flatten the management structure and re-organisation of the Group's Service & Development team to integrate business development into the operational team. There are no such restructuring costs in 2012.

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

8. Finance costs

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.

A future reduction in the rate of Corporation Tax by a further 1% to 23% from 1 April 2013 has not yet been enacted and hence deferred tax is calculated based on the current statutory rate of 24%. The impact of future reductions will not have a material effect on the deferred tax asset.

10. Earnings per share

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

The Company has in issue 15,000,000 convertible preference shares which are convertible into 16,000,000 ordinary shares. These shares are not currently dilutive. Share options in issue within the Group are not considered to be dilutive.

11. Dividend

The Board does not consider it appropriate to pay an interim dividend (2011: nil).

12. Financial liabilities: bank borrowings