Audited Final Results 2013

RNS Number : 5515D

Safestyle UK PLC

31 March 2014

 



31 March 2014

Safestyle UK plc

Audited Final Results 2013

Safestyle UK plc (AIM: SFE), the window and door replacement company, today announces its preliminary results for the year ended 31 December 2013.

Financial Highlights

	Year ended 31 December 2013 £m	Year ended 31 December 2012 £m	% change
Revenue	124.8	110.2	13%
Gross profit	45.2	38.2	18%
Underlying* EBITDA**	15.8	10.4	52%
PBT	9.5	9.5	0%
Underlying PBT*	15.0	9.5	58%
Earnings per share
Basic	8.3p	9.1p	-9%
Underlying*	14.8p	9.1p	63%

* Excludes items relating to admission fees and historic tax settlement

** EBITDA reflects operating profit before depreciation and amortisation

·    Dividend of 5.5p per share proposed

Operational Highlights

·    Leads generated from media and internet marketing grown by 17% to 47,660 (2012: 40,858)

·    Volume of frames installed increased by 7.5% to 250,185 (2012: 232,687)

·    Average unit sales price up 5.5% to £496 (2012: £470)

·    Growth in market share to 7.85% at 31 December 2013 from 7.49% at prior year end - 9^th consecutive year of market share growth

·    Successful placing at IPO in December 2013

Commenting on the results, Steve Birmingham, CEO said: "Safestyle UK has continued its impressive run of turnover growth, market share gain and margin enhancement, all feeding through to a record level of profits.  We believe that we are the leading player in a highly fragmented yet competitive market and that our focus and dedication to quality and price, along with continued expansion into the South and South East, will enable us to grow further.

The Group is well positioned to build on this performance as the general economy and the home improvement market continue to recover.  Order intake in the first two months of the current financial year has been strong and in excess of that for the corresponding period in 2013.  With this in mind we are pleased to propose a dividend of 5.5p per share for the year ended 31 December 2013 and look forward to the future with confidence."

Enquiries:

Safestyle UK plc	Tel: [phone]
Steve Birmingham, Chief Executive Officer
Mike Robinson Chief Financial Officer
Zeus Capital (Nominated Adviser & Broker)	Tel: [phone]
Tim Metcalfe / Ross Andrews
Dominic King (Institutional Sales)
Newgate Threadneedle (Financial PR)	Tel: [phone]
Graham Herring	[e-mail]
Josh Royston / Madeleine Palmstierna

About Safestyle UK plc

The Group is the leading retailer and manufacturer of PVCu replacement windows and doors to the UK homeowner market.  For more information please visit the Safestyle UK website: www.safestyle-windows.co.uk.

Chairman's Statement

I am pleased to report Safestyle UK's first set of results as an AIM listed public company, following our successful IPO in December 2013.

Safestyle UK has continued its impressive run of turnover growth, market share gain and margin enhancement, all feeding through to a record level of profits. Revenue for the year ended 31^st December 2013 was up 13% at £124.8m, delivering Underlying EBITDA of £15.8m, up 52%, and profit before tax, listing costs and tax settlement of £15.0m for the year, an increase of 58%. Final reported figures are shown on page 6.

During the year the group made a number of changes related to the IPO. As a consequence there are costs relating to the  admission and historic tax settlement, of £5.0m, resulting in reported profit before tax of £10.0m. Earnings per share ("EPS") are 8.3p, although Underlying EPS at 14.8p is a truer reflection of our performance. As part of the IPO, the group was able to acquire the freehold of its two major locations - our head office in Bradford and our manufacturing facility in Wombwell, South Yorkshire. Our balance sheet is robust and the business has excellent cash generation. At the year-end we had cash of £5.2m.

The Directors have adopted a progressive dividend policy. Subject to approval at the AGM on 22^nd May 2014, the Board proposes to pay, on 14th July 2014, a dividend of 5.5 pence per share.  The record date will be 20 June 2014.

Turning to prospects, the recovering UK economy, with improving home-owner sentiment, coupled with the progress in our business, means that we are very well placed to enjoy a period of further success. Order intake in the first two months of the year has been strong and we have made an encouraging start to the year.

The business has been through many changes in 2013 and delivered record results. I would like to thank our many stakeholders - and our employees in particular - for their continued support and their contribution to our success.

Steve Halbert

Chairman

31 March 2014

CEO's Statement

Safestyle UK enjoyed a successful 2013 culminating in the admission to AIM  in December 2013.

Our results are testimony to the strength of our brand, the dedicated hard work of all our people and the concentrated focus on supplying the UK private homeowner replacement window and door market.

In 2013 Safestyle's market share increased for the ninth consecutive year to 7.85% which the directors understand to represent the leading share in a highly fragmented market. This increased penetration is a reflection of Safestyle UK's focus on its core products, its integrated sales and low cost manufacturing approach and its continued geographic expansion. In 2013 we carried out more than 55,000 home installations comprising over 250,000 glazed window and door frames.

.

Our core offering of high quality, 'A' rated products provides great energy efficiency at outstanding value, a proposition which is particularly attractive to homeowners in the current environment of increased energy bills, heightened household awareness of energy efficiency and the desire to make savings.

In addition the directors believe that after the prolonged economic downturn of last few years, the recent upturn in housing transactions and prices, falling unemployment and improving consumer confidence are creating conditions increasingly favourable to growth in market demand.

Consequently, we have continued to invest in the future development of the business. During 2013 we invested in our IT infrastructure and manufacturing systems and processes, to improve management control, product quality and customer service, and to increase capacity to support future growth. We completed the £0.8m first phase of a £1.55m two-stage investment in an upgrade to our PVCu equipment, with the second phase scheduled for implementation in 2014, accompanied by further investment in our IT infrastructure.

Furthermore, as the housing market and economy recover the Company has supplemented its  nationwide base of 29 sales offices and 10 installation depots with 2 further sales branches and 2 installation depots to ensure it is able to take full advantage of increasing demand in the South, South East and Greater London geographic area.

Since the year end I am also pleased to report that incoming order levels have remained strong, at levels in excess of those in the same period in 2013.

Steve Birmingham

CEO

31 March 2014

Finance Review

Revenue

Revenue for the year was £124.8 million, an increase of 13.2% over 2012.  The key factors underpinning this growth were:

·    Strong growth in leads generated from direct response, supplementing consistent good results from historic channels

·    7.5% growth in the volume of frames installed from 232,687 to 250,185

·    5.5% growth in average unit price from £470 to £496

·    4.2% growth in average order value from £2,710 to £2,823

Gross margin

Gross profit increased by 18% in the year to £45.2 million (2012: £38.2 million), with gross margin higher at 36.2% (2012: 34.7%).  This performance reflects principally an increase of 5.5% in the average unit sales price allied to the cost-effectiveness of rising levels of lead generation from direct response channels.

Other operating expenses

Other operating expenses for 2013 were £35.8 million (2012: £28.7 million), an increase of 24.7%.  Salary costs increased in line with revenues, with the majority of the increase arising from the advisory fees of £2.4 million incurred in the Group's admission to AIM in December 2013, and the settlement of a historic tax planning scheme with HMRC of £3.1 million.

Marketing costs in 2013 were 8% lower than in prior year, reflecting improved terms for TV advertising and online lead generation.  The cost per lead generated from direct response in 2013 fell by 21% compared with 2012.

EBITDA and PBT

Underlying EBITDA before the admission fees and tax settlement was £15.8 million for the year (2012: £10.4 million), an increase of £5.4 million.  PBT was unchanged at £9.5 million, but after adjusting for exceptional costs was 58% higher than last year at £15.0 million.

The earnings per share were 8.3p, down from 9.1p in 2012. However, 2013 underlying earnings per share, before charging exceptional items, increased by 63% to 14.8p. The basis for these calculations is detailed in note 3.

Cash

The cash balance at 31 December 2013 was £5.2 million, a reduction of £1.5 million in the year.

Operating cash flow was very strong at £15.1 million, reflecting operating profit of £9.3 million and a reduction in working capital of £4.5 million.  The working capital reduction included the repayment of loans made to certain directors amounting to £1.8 million.

The Group purchased the freehold of its head office and manufacturing properties in the year.  The cost of this investment was £4.0 million and accounted for the majority of the £5.1 million spent on fixed assets.

Dividend payments had a major impact on cash in the period - see below.

Dividends

Dividends of £9.1 million were paid during the year to shareholders in Style Group Holdings Limited prior to the IPO.

The Board is proposing a dividend of 5.5 pence per share subject to approval by shareholders at the AGM.  The dividend will be paid on 14 July 2014 to shareholders on the register at close of business on 20 June 2014.

Mike Robinson

CFO

31 March 2014

 Consolidated statement of comprehensive income for the year ended 31 December 2013

			2013
		Note	Before Listing Costs and Historic Tax Settlement	Listing Costs and Historic Tax Settlement	After Listing Costs and Historic Tax Settlement	2012
			£000	£000	£000	£000
				(note 4)
Revenue			124,797	-	124,797	110,243
Cost of sales			(79,620)	-	(79,620)	(72,002)
Gross profit			45,177	-	45,177	38,241
Other operating expenses			(30,297)	(5,533)	(35,830)	(28,712)
Operating profit			14,880	(5,533)	9,347	9,529
Interest on bank deposits			164	-	164	87
Finance costs			(48)	-	(48)	(87)
Profit before taxation			14,996	(5,533)	9,463	9,529
Taxation		5	(3,512)	510	(3,002)	(2,433)
Profit after taxation			11,484	(5,023)	6,461	7,096
Other comprehensive income			-	-	-	-
Total comprehensive profit for the year attributable to shareholders			11,484	(5,023)	6,461	7,096
Earnings Per Share
Basic (pence per share)		3			8.3p	9.1p
Diluted (pence per share)		3			7.6p	9.1p

Consolidated statement of financial position as at 31 December 2013

			2013	2012
		Note	£000	£000
Assets
Intangible assets - Trademarks			504	504
Intangible assets - Goodwill			20,758	20,758
Intangible assets - Software			449	88
Property, plant and equipment			6,610	2,810
Deferred tax asset			120	144
Non-current assets			28,441	24,304
Inventories			1,350	1,080
Trade and other receivables			2,393	4,255
Cash and cash equivalents			5,237	6,750
Current assets			8,980	12,085
Total assets			37,421	36,389
Equity
Called up share capital		6	778	1
Share premium account		6	77,000	77,777
Profit and loss account			9,793	12,144
Common control transaction reserve		6	(66,527)	(66,527)
Total equity			21,044	23,395
Liabilities
Trade and other payables			11,352	8,518
Financial liabilities			279	453
Corporation tax liabilities			1,936	1,259
Provision for liabilities and charges			727	599
Current liabilities			14,294	10,829
Financial liabilities			275	483
Provision for liabilities and charges			1,808	1,682
Non-current liabilities			2,083	2,165
Total liabilities			16,377	12,994
Total equity and liabilities			37,421	36,389

Consolidated statement of changes in equity for the year ended 31 December 2013

			Share capital	Share premium	Profit and loss account	Common control transaction reserve	Total equity
			£000	£000	£000	£000	£000
Balance at 31 December 2011			1	77,777	5,048	(66,527)	16,299
Total comprehensive profit for the year			-	-	7,096	-	7,096
Balance at 31 December 2012			1	77,777	12,144	(66,527)	23,395
Total comprehensive profit for the year			-	-	6,461	-	6,461
Transactions with owners of the Company:
Issue of bonus Shares			777	(777)	-	-	-               -
Equity settled share based payment			-	-	23	-	23
Share warrants expense					250		250
Dividends			-	-	(9,085)	-	(9,085)
Balance at 31 December 2013			778	77,000	9,793	(66,527)	21,044

Consolidated statement of cash flows for the year ended 31 December 2013

		2013	2012
		£000	£000
Reconciliation of profit before tax to net cash inflow from operating activities
Profit before taxation		9,463	9,529
Interest on Bank Deposits		(164)	(87)
Finance Costs		48	87
Depreciation of plant, property and equipment		855	824
Amortisation of intangible fixed assets		68	42
Profit on sale of plant, property and equipment		(6)	(23)
Increase in inventories		(269)	(167)
Decrease/(increase) in trade and other receivables		2,307	(1,897)
Increase in trade and other payables		2,389	833
Increase in provisions		103	5
Equity settled share based payments		23	-
Share warrants expense		250	-
Net cash inflow from operating activities before taxation		15,067	9,146
Taxation		(2,150)	(1,964)
Returns on investments and servicing of finance
Hire purchase interest		(42)	(85)
Other interest		(6)	(2)
Interest received		164	87
Net cash inflow for returns on investments and servicing of finance		116	-
Net cash inflow from operating activities		13,033	7,182
Cash flows from investing activities
Acquisition of property, plant and equipment		(4,750)	(1,209)
Proceeds from sale of property, plant and equipment		100	45
Acquisition of intangible fixed assets		(429)	(42)
Net cash outflow from investing activities		(5,079)	(1,206)
Cash flows from financing activities
Payment of hire purchase and finance leases		(383)	(543)
Dividends paid		(9,085)
Net cash outflow from financing activities		(9,468)	(543)
Net (decrease)/Increase in cash and cash equivalents		(1,513)	5,433
Cash and cash equivalents at start of period		6,750	1,317
Cash and cash equivalents at end of period		5,237	6,750

1                      Statement of compliance

Whilst the financial information included in this Preliminary Announcement has been prepared on the basis of the requirements of International Financial Reporting Standards (IFRSs) in issue, as adopted by the European Union, this announcement does not itself contain sufficient information to comply with IFRS.

The Group expects to publish full Consolidated Financial Statements in April 2014. The financial information set out in this Preliminary Announcement does not constitute the Group's Consolidated Financial Statements for the years ended 31 December 2013 or 2012, but is derived from those Financial Statements. Statutory Financial Statements for 2013 will be delivered to the registrar of companies with the Jersey Financial Services Commission (JFSC), following the Company's Annual General Meeting. The auditor, KPMG LLP, has reported on the 2013 Financial Statements. Their report was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain statements under Section 113B (3) or (6) of the Companies (Jersey) Law 1991.

Safestyle UK plc is a public listed company incorporated in Jersey. The company's shares are traded on AIM. The company is required under AIM rule 19 to provide shareholders with audited consolidated financial statements.  The registered office address of the Safestyle UK plc is 47 Esplanade, St Helier, Jersey JE1 0BD.

The company is not required to present parent company information.

Basis of preparation

The Group's financial statements for the year ended 31 December 2013 ("financial statements")  have been prepared on a going concern basis under the historical cost convention and is in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU and the International Financial Reporting Standards Interpretations Committee interpretations issued by the International Accounting Standards Board ("IASB") that are effective or issued and early adopted as at the time of preparing these financial statements.

Safestyle UK plc was incorporated on 8 November 2013. On 3 December 2013 Safestyle UK plc acquired Style Group Holdings through a share for share exchange. This has been accounted for as a common control transaction. The result of this is that the financial statements of Style Group Holdings have been included in the group consolidated financial statement of Safestyle UK plc at their book value at the IFRS transition date of 1 January 2010 with the assumption that the group was in existence for all the periods presented. The excess of the cost at the time of acquisition over its book value has been recorded as a common control transaction reserve as detailed in note 6.

New standards, amendments and interpretations issued but not yet effective

At the date of approval of these financial statements, the following standards, amendments and interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases have not yet been adopted by the EU):

·              IFRS 9: Financial Instruments and subsequent amendments

·              Amendments to IFRS 10, 12 and IAS 27: Investment entities

·              Amendments to IAS 32 and IFRS 7: Financial Instruments, on asset and liability offsetting

·              Amendments to IAS 36: Recoverable amount disclosures for non-financial assets

·              Amendments to IAS 39: Notation of derivatives and continuation of hedge accounting

·              Amendments resulting from Annual Improvements 2009-2011 Cycle

The Group is currently considering the implication of these standards, however it is anticipated the impact of these standards on the financial position and performance of the Group will be minimal and effects will principally relate to amendment and extension of current disclosures.

The Board is aware of the effective dates and will continue to review the potential impact on the financial statements.

Basis of consolidation

Subsidiaries are entities controlled by the Group.  Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities.  In assessing control, potential voting rights that are currently exercisable or convertible are taken into account.  The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date control ceases.

Intragroup transactions and balances are eliminated on consolidation.

Responsibility Statement

The Statement of Directors' Responsibilities is made in respect of the full Annual Report and Accounts not the extracts from the financial statements required to be set out in this Announcement.

The Directors confirm that to the best of our knowledge:

· The Group Consolidated Financial Statements, contained in the 2013 Annual Report and Financial Statements prepared in accordance with IFRS as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and loss of the Group; and

· The Director's Report contained in the 2013 Annual Report and Financial Statements includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

Cautionary Statement

This Report contains certain forward looking statements with respect to the financial condition, results, operations and business of Safestyle UK plc. These statements and forecasts involve risk and uncertainty because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by these forward looking statements and forecasts. Nothing in this Report should be construed as a profit forecast.

2                      Dividends

The aggregate amount of dividends comprises:		2013	2012
		£000	£000
Interim dividends paid in respect of the period of £9,085 (2012: £nil) per Ordinary, Ordinary 'A', Ordinary 'B' and Ordinary 'C' share		9,085	-

These dividends relate to payments made to shareholders of Style Group Holdings Ltd prior to the acquisition by Safestyle UK plc.

A final dividend of 5.5p per ordinary share is proposed by the Board subject to approval at the AGM.

3                      Earnings per share

a) Basic earnings per share
The calculation of basic earnings per share has been based on the following profit attributable to ordinary shareholders and weighted-average number of shares outstanding.
	i) Profit attributable to ordinary shareholders (basic)
						2013		2012
						£000		£000
	Profit attributable to ordinary shareholders					6,461		7,096
	ii) Weighted-average number of ordinary shares (basic)
						2013		2012
						No of shares '000		No of shares '000
	Issued ordinary shares at 1 January					77,778		77,778

On 4 December 2013 the share capital was increased by the creation of 44,860,100 new ordinary shares, 44,950 new A ordinary shares, 44,950 new B ordinary shares and 32,727,777 new C ordinary shares each as bonus shares out of share premium to the existing shareholders in proportion to their existing holdings.  At the same time the existing 2,000 shares with a nominal value of £0.50 were subdivided into shares of £0.01 and all shares were reclassified as ordinary shares. This resulted in their being 77,777,777 ordinary shares in issue. As these transactions have changed the number of ordinary shares outstanding without a corresponding change in resources the weighted average number of ordinary shares outstanding during the year and for the comparative year for both basic and diluted EPS have been adjusted.

 

b) Diluted earnings per share
The calculation of diluted earnings per share has been based on the following profit attributable to ordinary shareholders and weighted-average number of ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares.
	i) Profit attributable to ordinary shareholders (diluted)
								2013			2012
								£000			£000
	Profit attributable to ordinary shareholders							6,461			7,096
	ii) Weighted-average number of ordinary shares (diluted)
								2013			2012
								No of shares '000			No of shares '000
	Weighted-average number of ordinary shares (basic)							77,778			77,778
	Effect of conversion of share options and warrants							131			-
	Weighted-average number of ordinary shares (basic) at 31 December							77,909			77,778
	The average market value of the Company's shares for the purpose of calculating the dilutive effect of share options was based on quoted market prices for the period during which the options were outstanding.

c) Earnings per share adjusted for the effect of admission costs and historical tax settlement.
	i) Profit attributable to ordinary shareholders (basic and diluted)
						2013		2012
						£000		£000
	Profit attributable to ordinary shareholders (basic and diluted)					6,461		7,096
	Admission costs and historic tax settlement					5,023		-
	Adjusted profit attributable to ordinary shareholders (basic and diluted)					11,484		7,096
	Earnings per share adjusted for the effect of admission costs and historical tax settlement.
						2013		2012
	Basic earnings per share (pence)					14.8		9.1
	Diluted earnings per share (pence)					14.8		9.1

4                      Admission costs and historic tax settlement

		2013	2012
		£000	£000
PAYE/NIC settlement		3,148	-
Vesting of Share Warrants		250	-
AIM Admission Costs		2,135	-
Profit before Taxation		5,533	-
Corporation tax adjustment on tax settlement		(510)	-
Profit after Taxation		5,023	-

The admission costs relate to legal and professional costs associated with the AIM listing on 3 December 2013.

The Group also issued warrants to Zeus Capital in lieu of payment for services related to the IPO.  The warrant is for 3% of the fully diluted share capital of the company following the exercise of the subscription rights.  The warrant is exercisable at any time between the 1st and 10th anniversary of admission to AIM.  The fair value of the warrant has been determined by the estimated value of services provided and has been charged as an IPO expense in the period.

On 25 November 2013, the Group agreed to pay £3,148,000 to Her Majesty's Revenue and Customs ("HMRC") to settle a previously unprovided payroll liability following an investigation by HMRC.  The liability related to 2004/2005 and was unprovided at 31 December 2012 and earlier period ends because the Directors, following advice from external advisors, were confident that they were not liable.  However, in October 2013, in preparing to float the Group, the directors received external advice that they should approach HMRC in order to resolve the matter and to avoid a lengthy and drawn out investigation, which could ultimately lead to financial settlement post floatation.  A corporation tax adjustment of £510,000 has been netted off these costs.

5                      Taxation

		2013	2012
		£000	£000
Current tax
Current tax on income for the period		2,986	2,459
Adjustments in respect of prior periods		(8)	-
Total current tax		2,978	2,459
Deferred tax
Origination and reversal of timing differences		4	(36)
Effect of change in tax rate		15	9
Adjustments in respect of prior periods		5	-
Total deferred tax (see note 13)		24	(27)
The current year tax charge is split into the following:
Underlying tax charge		3,512	2,432
Tax reclaimed on admission costs and historic tax settlement		(510)
Total tax expense		3,002	2,432

Reconciliation of effective tax rate
		2013	2012
Current tax reconciliation		£000	£000
Profit before taxation		9,463	9,529
Admission costs and historic tax settlement		5,533	-
Profit before taxation,  admission costs and historic tax settlement		14,996	9,529
Expected tax charge based on the standard rate of corporation tax in the UK of 23.25% (2012: 23.5%)
		3,487	2,239
Effects of:
Expenses not deductible for tax purposes		13	184
Adjustments to tax charge in respect of prior periods		(3)	-
Effect of change in tax rate		15	9
Total on ordinary activities		3,512	2,432
Tax reclaimed on admission costs and historic tax settlement		(510)	-
Total tax expense		3,002	2,432

Reductions in the UK corporation tax rate from 26% to 24% (effective from 1 April 2012) and to 23% (effective 1 April 2013) were substantively enacted on 26 March 2012 and 3 July 2012 respectively. Further reductions to 21% (effective from 1 April 2014) and 20% (effective from 1 April 2015) were substantively enacted on 2 July 2013. This will reduce the company's future current tax charge accordingly.

6                      Share capital

		2013	2012
		£000	£000
Authorised
77,777,777 Ordinary Shares @ 1p each		778	1
		778	1
Allotted, issued and fully paid
77,777,777 Ordinary Shares @ 1p each		778	1
		778	1

On 3 December 2013 Safestyle UK issued 2,000 shares at £38,888.89 each (total value of £77,777,777) to acquire a 100% ownership of Style Group Holdings Limited.  The 2,000 shares, which each had a nominal value of 50p, comprised 998 ordinary shares, 1 A ordinary share, 1 B ordinary share and 1,000 C ordinary shares.

On 4 December 2013 the share capital was increased to £777,777.77 by the creation of 44,860,100 new ordinary shares of £0.01 each, 44,950 new A ordinary shares of £0.01 each, 44,950 new B ordinary shares of £0.01 each and 32,727,777 new C ordinary shares of £0.01 each as bonus shares out of share premium to the existing shareholders in proportion to their existing holdings.  At the same time the existing shares with a nominal value of £0.50 were subdivided into shares of £0.01 and all shares were reclassified as ordinary shares resulting in the Company having 77,777,777 ordinary shares of £0.01 in issue.

A Common Control Transaction Reserve has been created through Safestyle UK plc's acquisition of the group headed by Style Group Holdings Limited.  The reserve of £66.5 million represents the difference in the fair value of the consideration paid for Style Group Holdings of £77.8 million and the share capital and share premium held by Style Group Holdings Limited at the time of the acquisition of £11.3 million.

7                      Share Based Payment

The Group operates an equity-settled LTIP remuneration scheme for directors and certain management.  The only vesting conditions attached to the options are that the individual must remain an employee of the Group for a minimum period.
The number of share options in existence during the year were as follows:
	2013			2012
	Number of share options	Weighted average exercise price		Number of share options	Weighted average exercise price
Granted during the year	4,083,333	£1.00		-	-
Outstanding at 31 December	4,083,333	£1.00		-	-
Exercisable at 31 December	-	-		-	-
Options are valued using the Black-Scholes option pricing model.  The following information is relevant in the determination of the fair value of the options granted during the year.
	2013
Risk free interest rate	1.19%
Expected volatility	38.90%
Expected option life (in years)	3.5
Weighted average share price after adjusting for PV of dividends	£0.77
Weighted average exercise price	£1.00
Weighted average fair value of options granted	15.93p
The Group also issued warrants to Zeus Capital in lieu of payment for services related to the IPO.  The warrant is for 3% of the fully diluted share capital of the company following the exercise of the subscription rights.  The warrant is exercisable at any time between the 1st and 10th anniversary of admission to AIM.  The fair value of the warrant has been determined by the estimated value of services provided and has been charged as an IPO expense in the period.
The total share-based expense for 2013 comprises:
Equity settled - LTIP	£23,167
Warrants	£250,000
	£273,167

 

END

 

 

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