Refinancing of Convertible Preference Shares

19 June 2015

Styles & Wood Group plc

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

Refinancing of Convertible Preference Shares, issue of Loan Note, Placing and issue of Warrants

Further to the release earlier today of the Group's preliminary results for the period to 31 December 2014, Styles & Wood, the integrated property services and project delivery specialist, is pleased to announce a refinancing of the outstanding Convertible Preference Shares held by SIG 1 Holdings (a subsidiary of RBS) (the "Refinancing"). The Refinancing includes the:

· Acquisition by Henderson and the Business Growth Fund (together, the "Investors") of the £13.0 million of outstanding Convertible Preference Shares in issue, for £5.8 million;

· Conversion of £5.2 million of the outstanding Convertible Preference Shares by the Investors into 554,666 new Ordinary Shares at a conversion price of £9.375, representing a 1,476 per cent. premium to the closing share price as at 18 June 2015;

· Issue of a £2.0 million Loan Note to the Investors by the Company which has been applied to redeem a further £2.0 million of the outstanding Convertible Preference Shares leaving £5.8 million of outstanding Convertible Preference Shares in issue;

· Conditional issue of 740,000 warrants with an exercise price of £0.75 per Ordinary Share to the Investors and conditional purchase of 364,600 nil cost warrants by the Investors for £182,300 (representing £0.50 per Ordinary Share);

· Placing of 309,100 Placing Shares in conjunction with the sale to the Investors of the 1,064,493 SIG 1 Holdings Shares at £0.50 per share giving the Investors an aggregate holding of approximately 1,928,259 Ordinary Shares representing 27.4 per cent. of the enlarged issued share capital of the Group; and

· Business Growth Fund having the right to nominate a director for appointment to the Board and Henderson having the right to appoint an observer to the Board.

The Board believes the Refinancing will help the business accelerate its growth objectives by delivering the following benefits for the Group:

· Strengthening the Group's balance sheet and providing a more appropriate capital structure;

· Increasing net assets by approximately £3.6 million through the conversion of Convertible Preference Shares into the Conversion Shares;

· Reducing future cash outflows by £5.2 million as a result of Convertible Preference Share redemptions and payment of interest under the Articles after accounting for the payments due under the Loan Note (with £4.7 million of the £5.2 million saving to occur in the next three financial years ending 31 December 2017);

· Allowing the Group to continue its diversification programme and take advantage of growth opportunities available to it including, possibly, acquisitions of other businesses; and

· Bringing two high quality institutional investors onto the Group's share register.

Further details of the Refinancing are set out further below. Capitalised terms are set out in the definitions below.

Tony Lenehan, CEO of Styles & Wood, said:

"The refinancing announced today positions Styles & Wood for growth at a pivotal stage in the Group's development. Over the last 12-18 months we have successfully implemented our diversification strategy to ensure that we are ideally placed to take advantage of the positive trends we are seeing in our core markets.

Following the refinancing the Group will have a substantially strengthened balance sheet with significant reduction in net debt supported by two new blue chip institutional investors providing a strong endorsement of the Group's strategy. As announced in our final results earlier today the positive trading seen in the second half of 2014 has continued into 2015 and the Group has generated significant momentum across all of its key sectors. With the order book 20 per cent. ahead of that for the equivalent period for 2014, there is a positive outlook across all business units, I believe Styles & Wood is well placed to deliver growth on a number of fronts."

For further information please contact:

Background to the Refinancing

The Convertible Preference Shares and SIG 1 Holdings Shares were issued to RBS as part of a refinancing undertaken by the Group in 2009. The Board is of the view that the ongoing and growing redemption profile of the Convertible Preference Shares combined with the 3 per cent. preference dividend payable was, and would continue to be, a constraint on the growth and development of the Group.

In its efforts to preserve cash to facilitate future growth and to achieve a stronger balance sheet to create a more appropriate capital structure, the Board entered into discussions with the Investors regarding refinancing the Group by way of an acquisition and conversion of a portion of the £13.0 million of outstanding Convertible Preference Shares.

Terms of the Refinancing

Convertible Preference Shares

The Investors have today acquired £13.0 million of Convertible Preference Shares from SIG 1 Holdings in consideration for £5.78 million. Convertible Preference Shares totaling £5.2 million in par value have been converted into 554,666 new Ordinary Shares ("Conversion Shares") at a conversion price of £9.375 (which represents a premium of approximately 1,476 per cent. to the closing share price as at 18 June 2015).

Loan Note

The Group has today constituted a £2.0 million Loan Note. Each Investor has subscribed for £1.0 million of the Loan Note. The Loan Note is unsecured and subordinate to the Group's Bank Facilities and will carry a coupon of 10 per cent. per annum. The Loan Note cannot be converted into new Ordinary Shares. The Loan Note proceeds have been applied by the Group to redeem a further £2.0 million of the outstanding Convertible Preference Shares. The balance of £5.8 million of outstanding Convertible Preference Shares will continue to accrue a 3 per cent. preference dividend payable annually and remain redeemable in accordance with the Articles.

The terms of the Loan Note are as follows:

· The Loan Notes are repayable by 31 December 2018;

· A coupon of 10% per annum is payable annually in arrears commencing on 1 July 2016 subject to RBS confirming there is no indebtedness due to it from the Group (should this confirmation not be made, the coupon will accrue until such time as payment can be made); and

· Noteholders holding more than 50% of the principal amount of the Loan Notes may agree in writing to extend the repayment date to 31 December 2020.

The Loan Note may be redeemed earlier provided that the Convertible Preference Shares have been redeemed in full in accordance with the Articles and subject to RBS confirming there is no indebtedness due to it from the Group. In the event that the Convertible Preference Shares have not been redeemed in full on or prior to 31 December 2018, there is a redemption premium payable on the Loan Notes of an amount equivalent to 7% of the outstanding balance of Convertible Preference Shares at the relevant time.

Pursuant to a side letter to the instrument constituting the Loan Notes ("Loan Note Side Letter"), the Company has undertaken to the Investors that it will not, without the Investors' prior written consent:

· vary any rights attached to any class of shares in the capital of the Company;

· issue any shares in excess of 10% of the nominal value of the ordinary shares in issue at the relevant time;

· put in place any share incentive arrangements;

· pay any dividends or make any other distribution to shareholders, other than the distribution already agreed to be paid to the holders of Convertible Preference Shares;

· dispose of or acquire any material asset or operation or incur capital expenditure in excess of certain budgeted parameters;

· make any material alteration to the nature or scope of its business as presently proposed to be carried on;

· other than in the ordinary course of a contracting business, give any guarantee, indemnity, surety or like assurance of third party obligations;

· save for trade credit in the ordinary course of trading and the existing employee loans, give any credit or make any loan to any third party or alter/vary the terms of existing credit or loan;

· commence or settle any litigation, arbitration or other proceedings which are material in the context of the business of the relevant Group company, other than in the ordinary course of business;

· take any steps to wind up any member of the Group; or

· sell, transfer or otherwise dispose of or purchase, enter into an option to purchase or otherwise acquire any interest in any share capital of any company.

The Loan Note Side Letter also provides that Business Growth Fund have the right to nominate a director for appointment to the Board and Henderson having the right to appoint an observer to the Board. It is Business Growth Fund's intention to appoint Matthew Widdall to the Board. A further announcement regarding his appointment will be made in due course.

Warrants

The Company has agreed to issue to the Investors 740,000 warrants in the Company with an exercise price of £0.75 per Ordinary Share and the Investors have additionally purchased a further 364,600 nil cost warrants for £182,300 (representing a price of £0.50 per nil cost warrant) (together the "Warrants"). The issue of the Warrants is conditional on the passing of certain shareholder resolutions at the Group's forthcoming AGM (or, if not passed at the AGM, at a later general meeting). In the event that the relevant resolution is not approved by Shareholders by the time the Loan Notes are repaid (and so the Warrants cannot be issued) then the principal amount outstanding under the Loan Note will increase by an amount per Warrant that reflects excess of the average closing mid-price of an Ordinary Share for the 30 day period immediately prior to 31 December 2018 over the exercise price. A minimum increase of £0.50 per Warrant is in place in respect of the 364,600 nil cost warrants. The Warrants have a 5 year exercise period from the date of the AGM (or if the relevant resolutions are passed later, then the date on which they are passed).

Placing

The Company has additionally undertaken a Placing with the Investors, raising £154,500 (before expenses) through the issue of 309,100 Placing Shares, representing 5 per cent. of the Group's current issued share capital, at a price of £0.50 per new Ordinary Share. The Issue Price represents a 16 per cent. discount to the closing price on the London Stock Exchange of £0.595 per Ordinary Share on 18 June 2015.

As part of the Placing, Shore Capital has also arranged the sale by SIG 1 Holdings of the SIG 1 Holdings Shares at the Issue Price to the Investors.

RBS Deferred Ordinary Shares and Deferred Shares held by SIG 1 Holdings

Pursuant to agreements entered into today, SIG 1 Holdings has agreed to transfer all of its RBS Deferred Ordinary Shares and Deferred Shares to the Company's EBT for the aggregate sum of £2.00. The transfer of the RBS Deferred Ordinary Shares occurred earlier today. The transfer of the Deferred Shares remains conditional, inter alia, upon approval of the relevant resolution at the Company's forthcoming AGM. Assuming that this condition is satisfied, it is anticipated that the Deferred Shares held by SIG 1 Holdings will be transferred to the Company's EBT on 13 July 2015.

Related Party Transaction

As a result of inter-conditional nature of the Refinancing (given that the issue of the Placing Shares and the Warrants by the Company to the Investors is inter-conditional with the sale of the SIG 1 Holdings Shares and Convertible Preference Shares), the Refinancing constitutes a related party transaction under Rule 13 of the AIM Rules. The Directors consider that, having consulted with the Company's nominated adviser, SCC, the terms of the Refinancing are fair and reasonable insofar as Shareholders are concerned.

Dealing and share capital

The New Ordinary Shares will, on Admission, rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions thereafter declared, made or paid in respect of the Ordinary Share capital of the Company.

Application has been made for the new Placing Shares and the Conversion Shares to be admitted to trading on AIM. It is expected that such Admission will become effective and that dealings will commence at 8:00 a.m. on 25 June 2015.

In accordance with the provisions of the Disclosure and Transparency Rules of the Financial Conduct Authority, the Company confirms that, following the issue and allotment of the New Ordinary Shares, its issued share capital will comprise 7,046,149 Ordinary Shares. All of the Ordinary Shares have equal voting rights. The total number of voting rights in the Company is therefore 7,046,149.

Definitions

The following definitions apply throughout this announcement: