Final Results

STYLES & WOOD GROUP PLC

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

RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015

Styles & Wood Group plc, the integrated property services and project delivery specialist, is pleased to announce its Results for the year ended 31 December 2015.

Financial Highlights

· Revenue up 18.6% to £115.0m (2014: £97.0m)

· Underlying1 profit before tax up 55% to £3.2m (2014: £2.1m)

· Profit before tax up 309% to £2.4m (2014: £0.6m)

· Underlying basic earnings per share up 47% to 37.2p (2014: 25.3p)

· Basic Earnings per share up 694% at 25.4p (2014: 3.2p)

· Net Cash and cash equivalents2 increased to £5.6m (2014: £1.2m)

· Net debt3 reduced to £1.43m (2014: £11.76m)

· Return on Capital Employed4 up 9.8% to 67.1% (2014: 61.1%)

· Weighted sightline5 week 11 up 13.1% to £113.1m (2014: Week 11 £100.0m)

1 Underlying profit before tax is before charging non-recurring items and preference share accounting

2 Cash balances less short term facilities

3 Net debt represents cash and cash equivalents less outstanding preference shares and loan notes

4 Return on capital employed is profit before interest and taxation. Capital employed is total equity adding back preference shares classified as debt plus loan note.

5 Weighted sightline represents order book plus tenders at 30% success rate

Operational Highlights

· Position secured as strategic delivery partner with TSB. Five year Framework with £15m projected annual revenue run rate.

· Completion to exacting standards of the comprehensive modernisation and fit-out of Lancaster University Library.

· Successful completion of City Gate office refurbishment and structural reconfiguration in central Manchester for Hermes Real Estate.

· Appointed to carry out the £17.7m refurbishment of Westminster House, Portland Street Manchester for Aviva Investors.

· Commissioned as the technologies lead for the integrated solution to rollout a comprehensive ATM replacement programme for one of the UK's leading high street banks.

· Over 70% of workload delivered from serial relationships with our preferred customers.

· Headcount increased by 20% through the successful attraction of high calibre recruits.

Corporate Highlights

· Successful refinancing strengthening the Group's balance sheet and providing a more appropriate capital structure.

· Introduction of two new blue chip institutional investors as major shareholders.

· Appointment to the Board of Matt Widdall as Non-Executive Director.

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

"The Group has built on a strong prior year performance and delivered double digit growth in both revenue and profit during 2015 as well as an improvement in gross margin. This is a further positive endorsement of a clearly defined strategy promoting diversification and a selective approach to new business opportunities.

The successful refinancing transaction carried out in June 2015, combined with improved trading performance, has significantly strengthened the Group's balance sheet. Our order book remains robust and provides the Board with confidence in the Group's ability to deliver double digit growth in the forthcoming year, in line with management expectations."

Enquiries:

CHAIRMAN'S STATEMENT

Performance

Full year results for 2015 showed impressive increases in revenue, 19% up at £115m (2014: £97m), and underlying profit before tax, 55% up at £3.2m (2014: £2.1m). This outcome was reinforced by repeat customer relationships which provided over 70% of overall Group revenue. Additionally, the associated cash position was particularly encouraging. Net cash of £5.6m (2014: £1.2m) and net debt of £1.4m (2014: £11.8m) both show a significant improvement over prior year following our successful balance sheet strengthening transaction and improved trading performance.

Balance Sheet Strengthening

The Company undertook a substantial refinancing transaction in 2015 which considerably strengthened the Group's balance sheet. The associated, significant reduction in net debt provides a robust platform from which to pursue future growth and take advantage of the opportunities presented in our preferred markets. Additionally, the provision of a working capital facility by our new relationship bank Barclays further reinforces this platform.

Strategic Development

We have continued with our highly selective approach to the development of business interest within our chosen sectors, specifically: commercial, retail & leisure, banking and public & community. These particular areas have a clearly defined requirement for the suite of capabilities which now characterise and differentiate the Group's full service line range. We are additionally promoting an integrated offer more usually leveraging and/or combining multiple services. Diversification to create resilience has gained momentum with a broadening of our skill sets in the support of technological applications and the provision of professional services.

People

An agile approach to organisational development, embracing both speed and stability, continues to create better outcomes for the business. Core in this respect is a fundamental commitment to the development of our people. Leadership programmes are now in place for apprentices, graduates and high achievers. The particularly strong endorsement of the Group by Investors in People, in renewing our accreditation, is testament to the success of this approach. I would like to take this opportunity to thank all colleagues for their considerable efforts through the course of the year and offer the Board's congratulations for a genuinely encouraging achievement.

Board Changes

I am pleased to welcome Matt Widdall to the Board. Matt brings additional expertise as an investor through his role with the Business Growth Fund, and also as a keen exponent of merger and acquisitions activity. Robert Hough continues with his role as Chair of the Remuneration Committee and has also been appointed as Chair of the Audit Committee, a role I have relinquished following my appointment as Chairman of the Group. Matt has been appointed to both Board committees.

Prospects

The Board remains confident that the Group is well positioned in its markets and that the range of accessible work winning opportunities is consistent with our planned growth. Property estate owners and operators continue to look to secure efficiency gains through smarter use of existing assets. This trend plays to our core capabilities in the expert provision of integrated solutions for the built environment and supports the Board's confidence in the Group for the future.

CHIEF EXECUTIVE OFFICER'S REVIEW

Enhanced Performance

Our business has significantly strengthened organically during the course of the year. Revenue increased by 19% to £115m (2014: £97m) whilst underlying profit before tax improved by 55% to £3.2m (2014: £2.1m). The Group's gross margin also improved to 9.3% (2014: 8.5%) reflecting the success of our strategy to continue to pursue a highly selective approach to new business opportunities. Net cash ended the year at £5.6m (2014: £1.2m) reinforced by improved trading and the successful completion of our balance sheet strengthening transaction.

In the period, we have consolidated our consultancy offer within Portfolio Services which now incorporates Design, Programme Services and Big Data Integration and Analytics.

This service line, together with Programme Management and Implementation, comprises our Professional Services segment which now reflects 60% of total Group revenues. Contracting services constitutes the balance of workload delivered during the year and is highly geared to specialist fit-out and refurbishment projects. Over 70% of overall sales during 2015 were secured through repeat customer relationships.

Responsible and Responsive Approach

We have continued to win recognition from external agencies, including the Royal Society for the Prevention of Accidents, for the high standards we hold and can evidence in safety management. Further progress has been made in raising training and competency standards during 2015 and excellent feedback has been received from the Construction Industry Training Board in this respect. The focus during 2016 will be to expand our approach to encompass third party participation including subcontractors, suppliers and strategic partners. Our absolute commitment to corporately responsible behaviours remains core to the Group's values and we have maintained an active involvement in Business in the Community's Marketplace Leadership Team.

Segmental Review

Professional Services

Portfolio Services

The consolidation and positive promotion of consultancy services has realised an increase in revenue to £5m (2014: £4m). The ability to offer professional services, informed and complemented by core risk management capabilities, for projects and programmes, differentiates our offer and strengthens margin performance.

Programme Management and Implementation

Our business interest in framework arrangements, with strategic holders of property portfolios, has expanded during the period with revenue of £65m (2014: £60m). We continue to hold a number of contractual relationships with key clients with exclusivity periods ranging from one to five years. Recently, we have secured an appointment for the remodelling of the majority of entrance areas for a major grocery retailer.

Contracting Services

Projects

We have successfully secured and delivered a diverse range of projects during the course of the year. The completion of a major refurbishment for the University of Lancaster's Learning Library and the first phase of a high volume, multiple project, bank ATM replacement rollout characterises the strength in depth and diversity of the Group's contracting services offer. Revenue has improved to £45m (2014: £33m) and our tender success ratio remains better than 1 in 3 by both number and value.

Growth Strategy

Diversification and Selectivity

The Group has a clearly defined plan to organically grow business interest in its strategic sectors and segments.

Investment has been made in the development of skills sets to establish a strong relevance for both existing and targeted new customers. By establishing account focused teams, aligned to the interests of our customers, we are able to create serial relationships and create efficiencies through continuous improvement.

The leveraging of capabilities across service lines provides an integrated solution which has the potential, through differentiation, to secure broader based business interest. We now routinely sell multiple service lines to individual customers; this establishes a mechanism to expertly determine scope of work, within challenging commercial parameters, and efficiently manage the risks associated with programme and project delivery.

Opportunities are subject to a rigorous selection process which objectively provides a means to define win themes and conversion strategies. A formal process is then applied to the associated cases for investment prior to proceeding. This approach is proactively managed and the success ratio, consistently over recent years of better than 1 in 3, is in line with the Group's growth aspirations.

The customer spread within the Group's preferred property sector and segments provides a degree of resilience in that particular areas of interest have been selected which have support service capacity constraints and are counter cyclical to one another. Good performance remains pivotal to business continuity and the level of repeat business in 2015, over 70% by revenue, provides a particularly strong testament in this respect.

Platform for Growth

Business Resilience

The Group's business model is scalable and provides a platform for the potential addition of new service lines and the enhancement of existing capabilities. Consideration is being given to the development of an acquisition plan with a focus on:

• expansion of Portfolio Services offer;

• property management facilities service; and

• technical support services.

The existing support service business infrastructure has been designed to support uplift in activity volumes of around a quarter without any material increase in administrative overhead.

Corporate Activity

Balance Sheet Strengthening

The successful refinancing transaction carried out in June 2015, combined with improved trading performance, has significantly strengthened the Group's balance sheet. Together with the working capital facility provided by Barclays, our new relationship bank, this places Styles&Wood in a strong position to pursue a growth agenda.

Integral to the refinancing, the Group has secured new investment interest from both Henderson Volantis (HV) and the Business Growth Fund (BGF). The appointment of Matt Widdall of BGF to the Board, with the involvement of Henderson Volantis in an observer capacity, has reinforced the Group's corporate credentials. We are already seeing additional opportunities develop through the BGF network, both client and supply side.

Our Senior Independent Non-Executive Director, Robert Hough, now chairs both the Audit and Remuneration Board Committees.

Markets and Outlook

Focus and Relevance

The Group has delivered strong organic growth with cash generative profits within its key markets. A discrete focus has been established in four principal sectors and an emphasis on segments with a positive outlook:

• Commercial: office fit-out and refurbishment

• Retail & Leisure: grocery superstores and high end niche brands

• Public & Community: healthcare and higher education

• Banking & Finance: property based technologies, projects and programmes

A shortage of new office space and a need for operational efficiency continues to drive refurbishment and fit-out opportunities in the UK. These drivers are further accentuated by a high concentration of lease events and lack of fitness for purpose in existing premises. A corresponding progressive increase in demand for high quality commercial space is forecast to prevail over the next five years.

Consolidation and format improvement within the superstore segment in retail is creating demand for programme solutions. Demand is also increasing in high volume niche brands, including new space acquisition and enhancement of the customer experience.

The Group is able to leverage strategic asset management, space planning and projects delivery services to provide customers with an efficient response to their requirements. This approach to the enhancement of existing facilities and the related adoption of a multi-channel offering will provide sustainable business interest over the next 5-7 years.

Whilst overall public sector spending reductions will continue on a year to year basis, the directly associated rationalisation and consolidation of existing estates creates a demand for the types of integrated property solutions offered by the Group.

The application of smart property systems and delivery of design and build projects and programmes, all core Group capabilities, has a specific relevance in this respect. We have focussed on Health and Higher Education where there are also sustainable, private sector lead investment programmes.

The influence of new technologies and a refocussing on retail and commercial customers is driving fundamental changes within the banking and finance sector. This creates a business need for the upgrade and modernisation of property estates which, due to the counter cyclical behaviours of the major banks, establishes a potential basis for sustainable sources of new income.

Order book timing defines revenue for the first half of the year similar to prior year and a full year position which is in line with management expectations. The weighted sightline at week 11 stands at £113.1m, representing a 13.1% increase on the like-for-like position in 2015.

What We Do

We have developed an integrated business model which provides a robust platform from which we can connect and adapt to the evolving needs of our customers. The association of grouped service lines in the professional and contracting fields reinforces our credentials as a support services provider.

This service line range aligns well with the specific needs and requirements for our strategic sectors. Banking & Finance, Commercial, Public & Community and Retail & Leisure have each been specifically targeted given a characteristic of progressively increasing demand for outsourced services to the built environment.

Integrated Property Solutions

Our approach to service provision is informed by an extensive suite of core capabilities. This ensures that where individual services are provided, they are enhanced by experience and expertise from the Group as a whole. This is a scalable approach which has the potential to expand to embrace the development of customer requirements. Clearly direct benefits are gained through the combination of services and the corresponding reduced reliance on interface management.

Operations

We have created sustainable business interest in each of our chosen sectors. The segmental weighting and diversification in sectors provides a measure of resilience. This platform is well placed to address new opportunities and enables adverse trends and shifts to be accommodated. Through the planned expansion of our service lines to new areas, such as change to technology led solutions, automation in the banking sector and the refurbishment of occupied end user premises in universities, we have been able to focus effort where there is evidence of accessible, predictable income streams. An agile organisational approach, with the ability to form customer and opportunity centric teams, continues to create better outcomes for the business.

Market Overview

The property support services market in interior fit-out and refurbishment was estimated to have a value of approximately £7bn in 2013. The dramatic decline of c25% from 2008 to 2010 was followed by a relatively flat period up to 2013. However, recovery to 2008 levels is now forecast by 2017 and the corresponding annual growth rates to 2018 are now anticipated to be in the region of 4-5%.1 Similar growth rates for 2016 to 2019 are now also expected within the UK shop fitting market.2

1 Interior Refurbishment and Fit-Out Market Report UK 2014-18: AMA Research May 2014

2 Shopfitting Market Report UK 2015-19. AMA Research January 2015

Banking & Finance

The main clearing banks are overtly pursuing a strategy to focus on retail and commercial banking on the domestic front with, in some cases, a dramatically diminishing interest in investment banking and international operations. This is characterised in real estate terms by an increasing workload promoting brand and new technology, estate rationalisation and new retail property models1 with the outsourcing of more non-core activities.

1 Deloitte Bricks and Click: Mapping the future of branches Jan 2014

Commercial

There are clear signs of returns to speculative office development led by London, where development in excess of 5 million square feet is currently underway. Notwithstanding, whilst availability continues to decline and now sits below the 10 year average, increased demand for the upgrading and refurbishment of space is also being driven by changes in working practices and a more responsible approach to environment and energy. Combined with an increasing level of lease events, as forecast over the next 24 months, significant opportunity is now anticipated in office refurbishment over the next 3-4 years1.

1: Central London Property Market Review: CBRE research, Q1 2014

Retail & Leisure

The UK's major supermarket retailers are all committed to investing in their existing estates to improve and enhance format rather than securing new space1. This is further compounded with a drive to expand into convenience, online and multi-channel formats creating an increasing demand for refresh, refit and refurbishment. The challenge posed by low cost retailers and their expansion and increased market share through large numbers of new small format conversions, creates a sustainable demand in this segment which is forecast to increase 5% year on year through to 2018. The resulting higher volume of smaller value projects has resulted in retailers reconfiguring their established frameworks and supply chains in construction services, increasing the Group's opportunity to engage.

1: Planet Retail 26th February 2014/IGD Retail Analysis

Public & Community

Despite continuing constraints on public sector spending, investment in Health and Education still remains both a priority and a challenge for government. This imperative will provide substantive business opportunity given a core requirement to consolidate and rationalise the associated property infrastructure. Not-for-profit healthcare groups are continuing to invest in new capacity and have a business imperative to reinvest surplus and enhance service quality. Higher Education has relatively recently evolved, following changes to funding structures and substantive increases in student fee income, into a significant source of sustainable business opportunity1. The continuing emphasis on maximising the potential of existing real estate through refurbishment and remodelling reinforces our confidence in our ability to drive growth in this sector.

1: Financial health of the higher education sector: 2014-15 to 2017-18 forecasts: Higher Education Funding Council for England November 2015

Tony Lenehan Chief Executive Officer

CHIEF FINANCE OFFICER'S REVIEW

Balance Sheet Strengthening

On 19 June 2015 the Group completed a transaction which resulted in a material improvement in the Group's balance sheet. The transaction involved the sale by RBS of the £13.0m convertible preference shares it owned in the capital of the Company to institutional investors. Following the sale:

· £5.2m nominal value of the preference shares were converted into 554,666 new ordinary shares at the fixed conversion price of £9.375 and 20,777,812 non-voting deferred ordinary shares of 25p each, reducing future cash outflow on redemptions by £5.2m

· £2m of Preference Shares were redeemed

· £2m 10% loan notes repayable on 31 December 2018 were issued by the Company

· 309,100 new ordinary shares of 1p were issued to the new investors at 50p per share, the premium on the issue of new shares of £151,000 was credited to Share Premium, against which fees incurred on the transaction of £151,000 were offset

· 364,600 nil cost warrants were issued to the investors for a consideration of £182,300, which has been credited to an Equity Reserve

· The Company issued a five year warrant over 740,000 new ordinary shares exercisable at a price of 75p per share

Following the transaction the overall debt of the Group decreased by £5.2m. The strengthened balance sheet enabled the Group to negotiate a new £3m working capital facility with Barclays Bank in 2015, and this facility expires in October 2017. The strengthened balance sheet has also enabled the Group to negotiate a £2m bonding facility to support growth, and this will reduce the requirement for cash collateral or use of banking facility to support performance bonds.

Financial Performance

Revenue for the year ended 31 December 2015 increased by 18.6% to £115.0m (2014: £97.0m). The improvement in revenues experienced in the second half of 2014 continued into 2015, with revenues in 2015 experiencing a more traditional 40:60 seasonal split between half one and half two.

The improved revenues are a consequence of the investment and diversification undertaken by the Group over the past few years, with a growing presence in the regional commercial fit-out market, and an increase in activity and confidence in our major markets.

The work on improving operational efficiency in prior years, maintenance of strict control over the operational cost base and increased volume of work has helped gross margin improve to 9.3% (2014: 8.5%).

Underlying administrative expenses increased to £6.8m (2014: £5.7m), with additional expenditure on overhead infrastructure (personnel, premises, systems) to support the growth of the business.

The improved trading performance is reflected in a 55% increase in underlying Group operating profit to £3.9m (2014: £2.5m).

Underlying profit before tax increased by £1.1m to £3.2m (2014: £2.1m). Non-recurring expenditure on expenses incurred on the transaction £0.4m (2014: £0.3m), restructuring of £nil (2014: £0.3m), fees associated with transfer to AiM £nil (2014: £0.1m) and accounting for notional interest on preference shares of £0.5m (2014: £0.8m) reduced the result to a profit before taxation of £2.4m (2014 £0.6m).

Financing Costs

Net financing costs have reduced from the prior year due to the lower debt levels following the balance sheet strengthening in June 2015, and the improved trading performance of the business.

Net financing costs for the year reduced by £0.5m to £1.0m (2014: £1.5m) and included £0.5m (2014: £0.8m) of notional interest on preference shares. Net interest and fees on bank borrowings were £0.2m (2014: £0.2m). Interest of £0.1m (2014: £nil) was payable on the Loan Notes issued during the year. Finance costs include the payment of interest on the preference shares, which reduced

to £0.17m (2014: £0.43m) following the conversion and redemption of Preference Shares in June, and represents the 3% cash coupon on outstanding preference shares.

Accounting for Preference Share Capital

The convertible redeemable preference shares of £1 each carry a cash coupon of 3% and are redeemable in tranches from December 2013 through to December 2019 or convertible into ordinary shares at a price of £9.375 at any time between August 2012 and July 2019 following the 1 for 10 share consolidation in 2014.

As the preference shares have a conversion option, the Group has to account for them in accordance with IAS 39 with the result that a proportion of the preference share capital is classed as debt with the remainder treated as equity. At 31 December 2015, £670,000 (2014: £2,000,000) of the preference share capital was classified as a current liability, being repayable on 31 December 2016 and £3,364,000 (2014: £8,025,000) of the preference share capital was classified as non-current liabilities with the balance of £993,000 (2014: £2,975,000) shown as shareholders' equity.

In addition, IAS 32 requires that notional interest payable on the debt component is calculated based on a notional interest rate, which is significantly higher than the actual coupon rate, on the preference shares. The notional interest is charged through the Income Statement. The notional interest charge on the preference shares in 2015 was £495,000 (2014: £828,000) of which the charge in the second half of 2015 was £108,000 (2014: £426,000) following the £7.2m reduction in outstanding preference shares on 19 June. The cash dividend paid on the preference shares was £174,000 (2014: £427,000).

An amount corresponding to the notional interest charge, to the extent it exceeds the cash coupon, is credited to reserves, ensuring that the distributable reserves and net assets of the Group are unaffected by the accounting treatment.

Taxation

The tax charge for the year amounted to £0.7m (2014: £0.4m). This results in an effective tax charge on the profit before tax of 28.6% (2014: 65.8%). The largest factor affecting the effective tax rate compared to the UK corporation tax rate of 20.25% (2014: 21.5%) is the preference share interest charge of £0.7m (2014: £1.5m) which being part notional charge and part preference share coupon does not qualify for tax relief. Other factors impacting the effective rate are non-deductible expenses and the tax treatment of losses incurred by the joint venture.

Dividend

No dividends on ordinary shares are proposed in respect of the year ended 31 December 2015 (2014: £nil) and it is not currently envisaged that a dividend will be proposed on ordinary shares in the new financial year.

Earnings Per Share

Earnings per share1 were 25.4p (2014: 3.2p). Underlying earnings per share were 37.2p (2014: 25.3p).

1 Earnings per share excludes non-recurring and notional interest on preference shares.

Net Cash and Cash Flow

The Group closed the year with net cash (cash balances less short term facilities) at 31 December 2015 of £5.6m (2014: £1.2m), a net inflow of £4.4m.

The net cash inflow from operations was £7.5m (2014: £1.5m) with an inflow before working capital movements of £4.0m (2014: £2.2m) reflecting the improvement in underlying profitability. Capital expenditure was lower than prior year at £0.3m (2015: £0.5m) which was essentially maintenance capital spend. 2014 capital expenditure included investment in larger premises in Nottingham. The net outflow from financing activities was £2.1m (2014: £1.7m), and this includes £1.0m of cash collateral deposits to support the issue of performance bonds. The financing costs include redemption of Preference Shares of £2.8m and the issue of a £2.0m Loan Note.

International

The Group's joint venture operation in the UAE was established in May 2009. The business has now established credentials providing interior fit-out services to a range of markets including commercial premises, leisure and hospitality and education. The share of losses included within the consolidated results are £0.14m (2014: profit £0.25m).

Relocation of Head Office

In March 2016, the Group relocated Head Office operations, from Aspect House in Altrincham to Cavendish House, Cross Street, Sale, M33 7BU. After 10 years at Aspect House, the business had outgrown the current space and with aspirations for future growth, the decision was made to relocate. Designed by ID:SR, Cavendish House meets the specific requirements in terms of an inspirational working environment that delivers a reduction in both operational overhead and energy consumption. 

There is no difference between the profit for the year and the total comprehensive income for the year. Accordingly no separate statement of comprehensive income has been presented.

All activities are derived from continuing operations. The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent company income statement or statement of comprehensive income.

The profit of the parent company for the year ended 31 December 2015 was £1,473,000 including a dividend received of £3,000,000 and after charging a notional charge for effective interest on preference shares of £495,000 (2014: profit of £2,317,000 including a dividend received of £1,945,000 and notional charge on preference shares of £828,000).

Notes to the preliminary results

1. Basis of Preparation

The financial information does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006 but is derived from the accounts for the years ended 31 December 2015 and 31 December 2014. The financial information is prepared on the same basis as will be set out in the statutory accounts for the year ended 31 December 2015.

The financial information was approved for issue by the Board of Directors on 5 April 2015.

The statutory accounts for the year ended 31 December 2015 will be delivered to the Registrar of Companies following the Company's Annual General Meeting. Statutory Accounts for the year ended 31 December 2014 have been filed with the Registrar of Companies. The auditor's report on those 2014 accounts was unqualified and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

Going Concern

The Group has a strong cash position at the year-end of £5.6m. In addition, the Group has a £3.0m working capital facility from Barclays Bank. The directors have reviewed the Group's forecasts and projections, including assumptions concerning capital expenditure and the impact on cash flows, and have a reasonable expectation that the Group has sufficient financial resources to continue its operations for the foreseeable future. For this reason they have continued to adopt the going concern basis in preparing the financial statements.

Segmental reporting

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

Contracting Services:

Projects: fulfilling the role of Principal Contractor for projects with values ranging from £100,000 to £20million.

Professional Services:

Portfolio Services:

- Programme Services: creating major roll-out programmes for framework customers.

- Design: providing design and development services; and

- iSite: providing technology based property information solutions.

Programme Management & Implementation: working with clients to develop, scope and fully implement programmes.

The Group's trade is generated primarily in the United Kingdom and as such the Group has only one geographical segment. The Group has a joint venture in Dubai and its results are currently immaterial to those of the Group. Its business segments are therefore its reportable segments.

Segment revenues, results, assets and liabilities include amounts directly attributable to a segment and amounts that can be reasonably allocated to a segment. Amounts that cannot be allocated to segments are included as unallocated.

2. Segmental reporting

2. Segmental reporting (continued)

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 overall operation of the Group rather than a particular segment and includes central people costs, professional fees, share option expenses. Transactions between segments are eliminated on consolidation.

In 2015, revenue of £69,898,000 was generated from two external customers, each of which contributed more than 10% of Group revenue. The most significant contributed revenue of £52,893,000. In 2014 three external customers each contributed more than 10% of Group revenue; the total revenue from these three customers was £44,332,000.

3. Non-recurring items and preference share accounting

The Group's results include the following items:

(a) In 2014, restructuring costs relate to an exercise to restructure the operating divisions within the Group's trading subsidiary, Styles & Wood Limited.

(b) Transfer of listing from Premium Market to the AIM market ("AiM").

(c) Corporate Finance fees are for work on transactions in 2015 and 2014.

(d) Tax on non-recurring items reflects the non-deductibility of the notional interest on preference shares.

4. Finance costs and income

5. Taxation

The standard rate of Corporation Tax in the UK changed from 21% to 20% with effect from 1st April 2015. Accordingly the standard rate of tax applied for the year ended 31 December 2015 is 20.25% (2014: 21.5%). The effective tax rates for the years ended 31 December 2015 (28.6%) and 31 December 2014 (65.8%) are different from the standard rate of corporation tax. The differences are explained in the table below.

A change to the UK corporation tax rate was announced in the Chancellor's Budget on 16 March 2016. The change announced is to reduce the main rate to 17% from 1 April 2020. Changes to reduce the UK corporation tax rate to 19% from 1 April 2017 and to 18% from 1 April 2020 had already been substantively enacted on 26 October 2015. 

As the change to 17% had not been substantively enacted at the balance sheet date its effects are not included in these financial statements. The overall effect of that change, if it had applied to the deferred tax balance at the balance sheet date, would be to reduce the deferred tax asset by an additional £1,500.

6. Earnings per share

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

During 2014 the Ordinary shares were consolidated in a 1 for 10 share exchange. Accordingly the number of shares in issue was reduced tenfold. The comparative earnings per share figures have been adjusted accordingly.

On 1 January 2014, the Company had outstanding 14,000,000 convertible preference shares which were convertible into 1,493,333 ordinary shares. On the 31 December 2014, 1,000,000 of the shares were redeemed leaving 13,000,000 shares in issue which were convertible into 1,386,667 ordinary shares. On 19 June 2015, 2,000,000 convertible preference shares which were redeemed and 5,200,000 convertible preference shares which were converted into 554,666 ordinary shares, and on 31 December 2015 773,140 of the shares were redeemed leaving 5,026,860 shares in issue which are convertible into 536,198 ordinary shares. These shares are not currently dilutive.

On 19 June 2015, the Group issued 364,600 nil cost warrants for a consideration of £182,300 and a five year warrant over 740,000 new ordinary shares exercisable at a price of 75p per share. These warrants are dilutive and have been accounted for in the diluted earnings per share calculations.

7. Dividends

No interim dividend on ordinary shares was paid during the year (2014: nil) and no final ordinary dividend is proposed (2014: nil). A dividend on the preference shares accrued from 1 September 2012 at a rate of 3%. The charge for the year ended 31 December 2015 was £174,000 (2014: £427,000).

8. Cash flow from operating activities

9. Net cash

Net cash represents cash at bank and in hand and excludes preference shares classified as debt.

10. Related party transactions

In the year ended 31 December 2015 the Company paid fees of £85,000 (2014: £50,000) to Rickitt Mitchell & Partners Limited in respect of Paul Mitchell's services as a non executive director.

In the year ended 31 December 2015 the Company paid fees of £18,555 (2014:£nil) to the Business Growth Fund and accrued interest payable of £53,699 (2014:£nil) 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 31% (2014:35%) shareholding in the Company and who was a director of the Group's trading subsidiary Styles & Wood Limited until his resignation on 14 August 2015, has significant influence and are therefore considered to be related parties. All transactions were undertaken in the ordinary course of business with normal commercial terms and with no security given.

The Company received a dividend from its subsidiary company Styles & Wood Investments Limited during the year of £3.0m (2014: £1.9m).

There were no sales and purchases between Group companies during the year (2014: nil). Movements in intercompany balances occur in relation to the loan of cash, the transfer of group relief for taxation purposes (£150,000 in total) and where certain expenses of the Company are paid for by a subsidiary company (£759,177 expenses for Styles&Wood Group plc and £82,004 for Maraq Limited paid for by Styles&Wood Limited).

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 2015 annual report and financial statements that is available on the website www.stylesandwood-group.co.uk.

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 2015. 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:

Preliminary announcement

The preliminary announcement, which has been agreed with the auditors, was approved by the Board of Directors on 5 April 2016. It is not the Group's statutory accounts. Copies of the Group's audited statutory accounts are available on the company's website and a printed version will be dispatched to shareholders in due course.