Final Results
Aukett Fitzroy Robinson Group PLC
15 January 2008
Embargoed until 7am on Tuesday 15 January 2008
Aukett Fitzroy Robinson Group Plc
Preliminary announcement of results
for the year ended 30 September 2007
Aukett Fitzroy Robinson Group Plc, the international practice of architects and
interior design specialists, announces its preliminary results for the year
ended 30 September 2007.
Key highlights
• Group turnover up 21% to £19.7m with strong growth in the UK hotel and
retails sectors, and Russian operation.
• Profit before tax up £1.6m to £2.4m as a result of turnover and margin
growth.
• 136% growth in earnings to 1.06 pence per share.
• Strong cash flow with £1.8m of net cash inflow before financing
leading to the elimination of net debt.
• Shareholders' funds up 45% including net cash of £1.7m.
• Recommencement of dividend payments with 0.2 pence per share paid in
September 2007.
Nicholas Thompson, Chief Executive Officer of Aukett Fitzroy Robinson commented:
'Having now achieved two years of improving profitability, we are cautiously
optimistic as we embark upon a period where we need to maintain our current
financial performance and improve both the transparency and quality of our
income in the longer term.'
Enquiries
Aukett Fitzroy Robinson - 020 7636 8033
Nicholas Thompson, Chief Executive Officer
Duncan Harper, Group Finance Director
JM Finn - 020 7600 1658
Sam Smith
Clive Carver
Adventis Financial PR - 020 7034 4759
Chris Steele
Tarquin Edwards
Chairman's statement
I am delighted to report a further year of real financial progress.
At the half year we said that we expected to meet the then market expectation
for financial performance which we have done with profit before tax rising to
£2.37m (2006: £0.79m).
This improvement in our financial performance allowed us to reorganise our
capital structure thereby enabling a return to dividend payment with an initial
sum of 0.2p per share, which is reflected in these results.
The business now focuses upon those areas of the commercial property markets
both in the UK and throughout our international operation where we believe there
are proven long-term project opportunities to access better levels of fee income
and where the group has a clear competitive advantage.
Finally, after my return to the company in March 2004 and seeing it prosper, I
have decided to retire as Chairman at the next annual general meeting. It has
been a pleasure to be a part of the revival of Aukett Fitzroy Robinson in its
merged form and I am also delighted to have accepted the position of Honorary
President of the company for the next two years.
I leave an experienced and capable management team, whose commitment and loyalty
should maintain the group's return to growth and prosperity.
Gerry Deighton
Chairman
15 January 2008
Chief Executive Officer's report
Introduction
2007 has been another positive year for the group. Our actual financial
performance is underpinned by the significant efforts that were made to improve
both the quality of our income stream in previous periods and the size of
projects generated throughout our operations: the result of which is
self-evident in these financial statements.
Financial overview
The group achieved a profit before tax of £2.37m (2006: £0.79m) on turnover of
£19.75m (2006: £16.28m).
This result is all the more encouraging as it was achieved after paying staff
bonuses of some £0.91m (2006: £0.04m) which produces an underlying gross profit
of £3.28m (2006: £0.83m).
During the year group net borrowings were eliminated and the year ended with a
net cash surplus of £1.69m (2006: net debt £0.18m) which fully reflects the
impact of our consistent contract and invoicing regime which was implemented
following the merger in 2005.
Review of operations
Our operations in both the UK and countries where we have international offices
performed well during the year. Additionally, we have international projects in
other locations including the United Arab Emirates, France, Ukraine, Kazakhstan
and the Islands of Cape Verde.
As with many other professional consultants engaged in the construction based
industries, we have suffered from the lack of suitably qualified staff to
support both existing commissions and market opportunities to their full extent.
This phenomenon is not limited to the UK and has been noticeable in all our
office locations where we have sought to increase our workload, with the
exception of Germany. To an extent, the impact of this skill shortage has been
mitigated by the increasing number of larger projects that we have won, where
the gestation period up to the requirement for production information (the
project stage with the highest concentration of staff) is spread over a longer
period than has hitherto been the case on a historically smaller project
portfolio. In recent months we have seen a softening of the resource market
which should alleviate this situation.
For the second year running, our commercial office and hotel sector groups have
performed well. Our commercial office group is currently working on a number of
significant projects for its retained client base which includes: Goodman,
Development Securities, Jarrold, Land Securities and Great Portland Estates.
The hotel team has five major projects that are underway both in the UK and
internationally. These cover both Grade I & II listed conversions for high net
worth private clients and new build opportunities within the branded hotel
market - an area we see for future expansion.
Our specialist interiors team support the main architectural sectors and have a
number of commissions with Radisson Edwardian, Radisson SAS and Hilton.
Both our transport team and Veretec, our executive architecture arm, performed
at a similar level to the prior year with work on the upgrading of Farringdon
Station in London and for major contractors including Taylor Woodrow, Wates and
Kier.
The retail group had one of its best years for some time, having concentrated on
the 'green' agenda and captured ten new commissions from one of the UK's premier
retailers under this heading, whilst at the same time maintaining exposure in
the bespoke retail market with a commission for Dunhill in London's West End.
Outside of London, our two regional offices in Bristol and Southampton continued
to win significant projects in their local markets. The Bristol office currently
has six projects at the planning application stage of which three were won
during the current year. Due to its recent success, the Bristol office is
planning to relocate to larger premises within the city during the new financial
year.
The newly opened Southampton office had a variable year with a number of the
initial opportunities not proceeding. However, the office achieved a planning
consent for the new headquarters of Linden Homes and has currently secured a new
commission for a 200 unit residential apartment block and is negotiating on a
£60m mixed-use scheme both of which will enable the team to expand over the
forthcoming period.
Internationally, Russia continues to perform well with a further four contracts
being signed during the current year which have a combined contract value of
$240m. In addition, the Moscow office is now converting residential
opportunities in Sochi, a Black Sea resort, in the Krasnodar region and in the
Ukraine for Conrad Hilton.
Our offices in Prague and Bratislava further improved on last year's excellent
results, and continue to enjoy a range of new enquiries from a broad spectrum of
commercial clients.
Poland, as reported at the interim stage has yet to achieve a better balance in
its business model and continued to be loss-making in the second half. However,
local management is working with group executives on a number of alternative
income generating options in order to maintain our position in this strategic
market.
Both of our German joint ventures were profitable during the year, arising out
of a resurgence in the economic activity in this country. Berlin, particularly,
has seen an increase in the number and size of project opportunities.
In both Romania, where we have a joint venture, and in the adjacent market of
Bulgaria, commissions are based upon individual project opportunities.
People
As part of our succession programme, we have appointed six new operational
directors within the UK business. The group provides a formal career path for
talented individuals which is underpinned by further training and coaching to
improve their skills and maintain both the design quality and management
requirements of the business. Internationally, we have appointed six staff to
the position of associate director in the UK, Moscow, Prague and Warsaw.
Duncan Harper joined us as Group Finance Director in August. Duncan is a
chartered accountant and comes with senior finance experience at Avesco and at
Connect Mortgages where he was Finance Director. Duncan trained with Coopers &
Lybrand.
I would also like to pay a special tribute to our Chairman, Gerry Deighton, who
has presided over the merger process and the restoration of Aukett Fitzroy
Robinson's market reputation to the point where we have a robust and sustainable
business model in terms of both architectural skill and financial management.
His good counsel has been much appreciated by his board colleagues.
Corporate strategy
Our corporate strategy established in 2005 remains to double turnover to £25m by
2010, whilst improving margins. These results show that we are on-track to
achieve that objective. Much of our attention has now been focused on ensuring
that our design and delivery systems, and the skills that are necessary to
underpin our work, are both maintained and improved as we strive to achieve our
financial objectives.
There has been much speculation and commentary on the prospects of a downturn in
the UK commercial property market - which we consider well founded - but we
believe our diversified business model allows us to realign our resource focus
into those areas of the market which provide greater opportunities based upon
our wide skill base and track record. We have identified international branded
hotels, green retail in the UK, and Russian orientated projects, to provide the
most promising opportunities to maintain our business model. Management focus
has therefore shifted into these areas to compensate for any potential
reductions in revenue from traditional income flows.
During the current year we entered talks with a competitor which, if
consummated, would have created Europe's largest architectural practice. Whilst
this merger process did not proceed, we continue to seek opportunities that will
improve our market position based on strengthening our core sector skills or
entering markets where there are premium income opportunities. Management will
focus on those opportunities which improve the business model whilst at the same
time enhancing earnings.
Summary
Having now achieved two years of improving profitability, we are cautiously
optimistic as we embark upon a period where we need to maintain our current
financial performance and improve both the transparency and quality of our
income in the longer term.
Nicholas Thompson
Chief Executive Officer
15 January 2008
Consolidated profit and loss account
For the year ended 30 September 2007
2007 2006
£'000 £'000
Turnover (including share of joint ventures) 20,302 16,677
Less share of joint ventures turnover (554) (393)
Group turnover 19,748 16,284
Group operating profit 2,349 840
Share of operating profit of joint ventures 62 105
Share of operating profit / (loss) of associate 11 (22)
Total operating profit 2,422 923
Loss on disposal of subsidiary - (15)
Profit on ordinary activities before interest & taxation 2,422 908
Interest receivable and similar income 55 44
Interest payable and similar charges (109) (166)
Profit on ordinary activities before taxation 2,368 786
Tax on profit on ordinary activities (831) (137)
Profit for the financial year 1,537 649
Basic earnings per share 1.06p 0.45p
Diluted earnings per share 1.06p 0.45p
Dividends per share 0.20p -
All turnover and operating profit arises from continuing operations.
Consolidated balance sheet
At 30 September 2007
2007 2006
£'000 £'000
Fixed assets
Intangible assets 1,545 1,596
Tangible assets 275 322
Interests in joint ventures 46 19
Investment in associate 14 6
Fixed assets 1,880 1,943
Current assets
Debtors 8,226 6,432
Cash at bank and in hand 2,819 1,341
Current assets 11,045 7,773
Creditors: Amounts falling due within one year (7,664) (5,588)
Net current assets 3,381 2,185
Total assets less current liabilities 5,261 4,128
Creditors: Amounts falling due after more than one year (975) (1,162)
Net assets 4,286 2,966
Capital and reserves
Called up share capital 1,456 1,448
Share premium account - 1,385
Merger reserve - 1,542
Profit and loss account 2,830 (1,409)
Shareholders' funds 4,286 2,966
Consolidated statement of total recognised gains and losses
For the year ended 30 September 2007
2007 2006
£'000 £'000
Profit for the financial year 1,537 649
Currency translation differences 40 (13)
Total gains and losses recognised in year 1,577 636
Reconciliation of movements in consolidated shareholders' funds
For the year ended 30 September 2007
2007 2006
£'000 £'000
Profit for the financial year 1,537 649
Dividends paid (291) -
Retained profit 1,246 649
Currency translation differences 40 (13)
Issue of new shares 34 -
Net addition to shareholders' funds 1,320 636
Opening shareholders' funds 2,966 2,330
Closing shareholders' funds 4,286 2,966
Consolidated cash flow statement
For the year ended 30 September 2007
2007 2006
£'000 £'000
Net cash inflow from operations 2,637 1,716
Returns on investments and servicing of finance
Interest received 26 44
Interest paid (112) (166)
Net cash outflow from returns on investments and servicing
of finance (86) (122)
Taxation paid (192) (65)
Capital expenditure
Purchase of tangible fixed assets (228) (326)
Net cash outflow from capital expenditure (228) (326)
Equity dividends paid (291) -
Net cash inflow before financing 1,840 1,203
Financing
Issue of new shares 34 -
Repayment of bank loans (187) (38)
Repayment of loan notes (200) -
Capital element of finance leases (9) (38)
Net cash outflow from financing (362) (76)
Increase in cash 1,478 1,127
Notes to the preliminary announcement
1 Basis of preparation
The preliminary results for the year ended 30 September 2007 have been prepared
in accordance with the accounting policies set out in the annual report and
accounts for the year ended 30 September 2006.
2 Segmental analysis
The directors consider that the group's activities fall within a single business
segment and therefore only geographical segmental analysis is shown below.
Turnover by origin
2007 2006
United Rest of United Rest of
Kingdom World Total Kingdom World Total
£'000 £'000 £'000 £'000 £'000 £'000
Turnover (including share of
joint ventures) 15,975 4,327 20,302 13,035 3,642 16,677
Less share of joint ventures
turnover - (554) (554) - (393) (393)
Group turnover 15,975 3,773 19,748 13,035 3,249 16,284
Turnover by destination
2007 2006
United Rest of United Rest of
Kingdom World Total Kingdom World Total
£'000 £'000 £'000 £'000 £'000 £'000
Turnover (including share of
joint ventures) 14,321 5,981 20,302 11,766 4,911 16,677
Less share of joint ventures
turnover - (554) (554) - (393) (393)
Group turnover 14,321 5,427 19,748 11,766 4,518 16,284
Profit before taxation
2007 2006
United Rest of United Rest of
Kingdom World Total Kingdom World Total
£'000 £'000 £'000 £'000 £'000 £'000
Group 1,713 582 2,295 428 275 703
Share of joint ventures - 62 62 - 105 105
Share of associate - 11 11 - (22) (22)
Profit before taxation 1,713 655 2,368 428 358 786
Net assets
2007 2006
United Rest of United Rest of
Kingdom World Total Kingdom World Total
£'000 £'000 £'000 £'000 £'000 £'000
Group 3,410 820 4,230 2,541 418 2,959
Share of joint ventures - 42 42 - 1 1
Share of associate - 14 14 - 6 6
Net assets 3,410 876 4,286 2,541 425 2,966
3 Tax on profit on ordinary activities
2007 2006
£'000 £'000
Gross UK corporation tax 634 -
Less double tax relief (58) -
Net UK corporation tax 576 -
Overseas tax 170 126
Adjustment in respect of previous years 61 36
Share of associate and joint ventures 24 1
Total current tax charge 831 163
Group deferred tax - (26)
Total tax charge 831 137
The differences from the standard rate of corporation tax in the UK are
explained below:
2007 2006
£'000 £'000
Profit on ordinary activities before tax 2,368 786
Profit on ordinary activities multiplied by the standard
rate of corporation tax in the UK of 30% (2006: 30%)
710 236
Effects of:
Non tax deductible expenses 109 109
Depreciation in excess of capital allowances 8 23
Other timing differences 6 -
Tax losses utilised (9) (239)
Differences in overseas tax rates (28) (2)
Tax relief on exercise of share options (26) -
Adjustment in respect of previous years 61 36
Total 831 163
4 Earnings per share
The calculations of basic and diluted earnings per share are based on the
following data:
Earnings 2007 2006
£'000 £'000
Profit for the financial year 1,537 649
Number of shares 2007 2006
Number Number
Weighted average of ordinary shares in issue 145,363,844 144,813,825
Effect of dilutive options 179,239 68,665
Diluted weighted average of ordinary shares in issue 145,543,083 144,882,490
5 Dividends
2007 2006
£'000 £'000
Interim dividend paid of 0.2p per share 291 -
Total 291 -
6 Reconciliation of group operating profit to net cash flow from
operating activities
2007 2006
£'000 £'000
Group operating profit 2,349 840
Depreciation of tangible fixed assets 275 286
Amortisation of intangible fixed assets 51 51
Loss on disposal of fixed assets - 61
Increase in debtors (1,781) (634)
Increase in creditors 1,743 1,112
Net cash flow from operating activities 2,637 1,716
7 Analysis of net funds / (debt)
At 1 At 30
October Cash September
2006 flow 2007
£'000 £'000 £'000
Cash 1,341 1,478 2,819
Bank loans (1,312) 187 (1,125)
Loan notes (200) 200 -
Finance lease obligations (9) 9 -
Net (debt) / funds (180) 1,874 1,694
8 Reconciliation of net cash flow to movement in net funds / (debt)
2007 2006
£'000 £'000
Increase in cash 1,478 1,127
Cash outflow from repayment of bank loans 187 38
Cash outflow from repayment of loan notes 200 -
Cash outflow from finance lease obligations 9 38
Change in net (debt) / funds 1,874 1,203
Opening net debt (180) (1,383)
Closing net funds / (debt) 1,694 (180)
9 Status of preliminary announcement
This preliminary announcement was approved by the board of directors on 15
January 2008.
The preliminary results for the year ended 30 September 2007 have been extracted
from the group's audited statutory accounts for the year ended 30 September 2007
which will be delivered to the Registrar of Companies following the company's
annual general meeting. The auditor's report on these accounts was unqualified
and did not contain a statement under either Section 237 (2) or (3) of the
Companies Act 1985.
Statutory accounts for the year ended 30 September 2006 have been delivered to
the registrar of companies and the auditors' report on these accounts was
unqualified and did not contain a statement under either Section 237(2) or (3)
of the Companies Act 1985.
The financial information set out in this preliminary announcement does not
constitute the group's or the company's statutory accounts for the year ended 30
September 2007.
10 Annual general meeting
The annual general meeting of the Company will be held at 14 Devonshire Street,
London, W1G 7AE on 10:30am at Thursday 3 April 2008.
11 Annual report and accounts
Copies of the annual report and accounts will be dispatched to shareholders in
due course. Copies will also be available on the company's website
(www.aukettfitzroyrobinson.com) and from the registered office of the company
(14 Devonshire Street, London, W1G 7AE).
This information is provided by RNS
The company news service from the London Stock Exchange
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