26th Sep 2014 07:00
LONDON (Alliance News) - Property services and project-delivery specialist Styles & Wood Group PLC Friday said its pretax loss narrowed in the first half, but revenue dropped as it continued to be beset by contract delays, a situation that is expected to improve in the second half.
The company posted a pretax loss of GBP1.2 million for the six months to June 30, compared with a GBP2.0 million loss a year earlier, even though revenue fell to GBP33.6 million, from GBP40.4 million. Its gross margin improved to 8.25%, from 5.63%, as it did more profitable work and as management focused its attention on margin improvement. It said its operating cost base improved by 13% on the year as it cut headcount and improved its resource planning.
Styles & Wood said revenue is currently forecast to recover to beyond prior year levels during the fourth quarter. The business is currently heavily weighted to the second half in terms of workload, primarily due to the deferral of programmes scheduled for this calendar year by two of its strategic customers in the banking and finance sector.
It said "the recent seasonal pattern for the business to absorb cash in the first half of the year was exacerbated by the start on site of a large number of framework projects being deferred to the second half of the year."
At an operating level, Styles & Wood said revenue for its contracting services division fell to GBP11.2 million from GBP17 million a year earlier. However, a number of successful project conversions during the reporting period are planned to be delivered in the second half including several new stores for Lidl and the refurbishment of Lancaster University Library.
Meanwhile, revenue for the professional services division was in line with the prior year at GBP22.1 million. Programmes included retail and banking frameworks with full service line provision for supermarkets including Waitrose and three of the four largest high street banks.
At the period-end, the group had net debt of GBP3.5 million compared with just GBP200,000 a year earlier. However, Styles & Wood said the increase in activity in the second half has seen the group's cash position recovering towards 2013 levels.
"There are increasing levels of activity and confidence in the sectors in which we operate which have begun to translate into a number of significant contract wins, as well as a growing order book as we move into the second half," Chief Executive Tony Lenehan said in a statement.
"We have identified a number of growth opportunities across key sectors and believe the Group is now right sized and well positioned to take advantage of the growing confidence in our core markets," he added.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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