News Column

Styles & Wood Plans To Step Down To AIM As It Swings To Loss

April 30, 2014

Anthony Tshibangu

LONDON (Alliance News) - Integrated property services and project-delivery specialist Styles & Wood Group PLC Wednesday said it swung to a loss in the recent full year, as it announced a move from the London Stock Exchange's main market to AIM and proposed a capital reorganisation.

Styles & Wood Group said it is in the best interests of its shareholders to move to the "less regulated" AIM market, which will offer greater flexibility regarding corporate transactions, enabling it to agree and execute certain transactions more quickly and cost effectively than on the Official List.

The firm said it does not expect the move to affect its "attractiveness" to institutional investors, and instead hopes it will make it more attractive to retail investors.

The company requires shareholders approval for the move, and a general meeting will take place on May 28. If given the go-ahead, the firm expects to de-list from the Official List on June 26.

The firm also proposed a capital reorganisation to set the nominal value of its existing shares substantially below that of their market price in order to provide it with the ability to make future share issues. The issue of new shares by UK companies at a price below their nominal value is prohibited by UK law and accordingly the firm said its ability to "raise funds by way of the issue of further equity could be inhibited".

The mid-market price of Style & Wood's existing ordinary shares at the close Tuesday was 16 pence, compared to their nominal value of 25 pence per share. The stock was trading at 12.01 pence Wednesday morning, down 3.99 pence or 25% making it one of the biggest fallers on the London main market.

In addition, Styles & Wood said it is concerned about "share price volatility". It said the share price levels at which its shares have recently traded means that small absolute movements in the share price represent large percentage movements.

The company has decided to implement a share reorganisation so that every 10 existing ordinary shares will be consolidated into 1 new ordinary share and 1 new deferred share.

The company posted a pretax loss of GBP515,000 for 2013, compared with a profit of GBP806,000, which it blamed on contraction in the construction industry in the first half along with costs associated with its entry into new into new markets, including public sector and energy. In addition, the allocation of contracts was deferred by some of the company's customers who were "cautious about economic conditions".

Revenue dipped to GBP94.0 million from GBP97.9 million.

During the period, the group underwent a organisational change in order to "improve focus" and realise overhead efficiencies. As a consequence, it said, a new "enhanced executive leadership team is now in place which provides the business with a solid platform from which to address the opportunities presented by improving market conditions".

At the year-end the firm said it had net cash of GBP2.5 million, down from GBP3.6 million.

Looking ahead the firm said many of its customers are experiencing an improved level of confidence in the economy and a return to growth in UK construction output during the last quarter of 2013 which has continued into 2014.

"We believe that these factors will positively influence our business result for the second half of 2014 and provide better prospects for the business going forward," it said.

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Source: Alliance News