Styles & Wood profits thanks to strong demand for fit-outs and refurbs

Final results from property refurbishment and office fit-out services group Styles & Wood show it lifted underlying profits 55% last year and now has a bulging order book as it enjoys various beneficial trends in 2016.

S&W said shortage of new office space and the drive for operational efficiency continues to create demand for refurbishment and fit-out work, while a corresponding acceleration in demand for high quality commercial space is forecast to prevail over the next five years.

Shifts in the supermarket sector for store design, as well as high-volume niche brands are also creating demand, while opportunities are also perceived in public sector work, especially in health and higher education.

In 2015, major contracts included the City Gate office refurbishment and structural reconfiguration for Hermes Real Estate and refurbishment of Aviva's Westminster House, both in Manchester, plus S&W was signed up by TSB in a £15m five-year deal and also was commissioned by another bank as part of its comprehensive ATM replacement programme.

Over 70% of the year's workload came from serial relationships with repeat customers.

All in all, revenue of £115m was up 19% on the previous year, with underlying profit before tax up 55% to £3.2m and profit before tax up 309% to £2.4m.

Underlying basic earnings per share up 47% to 37.2p.

Net debt ended the year down to £1.4m from £11.8m 12 months before thanks to strong cash generation and the £13m convertible preference shares sold last June.

Chief executive Tony Lenehan said the double-digit growth in revenue and profit was down to the strategy of "promoting diversification and a selective approach to new business opportunities".

He added: "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."

With the order book currently standing at £113.1m, house broker Shore Capital forecasts revenues of £127.3m for 2016, with EBIT of £4.5m, adjusted PBT of £4.1m and adjusted diluted EPS forecast increased to 38.3p.

"Cash flow is expected to remain robust and, indeed, is set to strengthen with growth and we expect the balance sheet and order book to continue to improve in coming quarters. We note a free cash flow yield of 17.1% for FY2016, whilst funding growth, on our current estimates and delivering a small net cash position by the end of the year."

Shares up 16% to 235p by mid afternoon on Wednesday.