Final Results
Announcement of final audited results for the year ended 30 September 2010
Aukett Fitzroy Robinson Group Plc, the international practice of architects and interior design specialists, announces its final audited results for the year ended 30 September 2010.
Key points
· Pre tax losses down 58% to £789,000
· Net cash inflow before financing of £1,544,000 eliminating net debt
· Revenue from UK based projects 95% of prior year level
· Pre tax losses of UK operations down 93% to £209,000
· Core service delivery teams retained throughout the group
· Order book of major developments lifted to £85m of future fee income
Tim Hodgson, Chairman of Aukett Fitzroy Robinson commented:
“Although we see encouraging signs of recovery in some areas of our markets we remain of the view that it will be 2012 at the earliest before any material improvement is evident on a wider basis and management will consequently maintain its cautious outlook with careful control of costs. However, with a sound financial base, a quality brand, a substantial order book and a first rate workforce, the group is in good health and the key components for the short term sustainability and the medium term expansion and development of the business are firmly in place.”
Enquiries
Aukett Fitzroy Robinson – 020 7636 8033
Nicholas Thompson, Chief Executive Officer
Duncan Harper, Group Finance Director
FinnCap – 020 7600 1658
Clive Carver or Rose Herbert – Corporate Finance
Stephen Norcross or Simon Starr – Corporate Broking
Hermes Financial PR
Chris Steele – 07979 604687
Trevor Phillips – 07889 153628
Chairman’s statement
As we anticipated, 2009/10 proved to be a further year of uncertainty, principally due to the significant falls in construction activity and demand for related professional services in the real economies in which the group operates. In spite of this extremely hostile trading environment your company has further demonstrated its durability, sustainability and resilience.
The primary focus of the board and the management team has remained: the maintenance of our financial stability and the delivery capability of our businesses in the United Kingdom, Continental Europe, Russia and the Middle East; to navigate through the current difficulties; and position the group to take full advantage as conditions improve. There are encouraging signs that despite the adverse market, the group’s competitive position has improved in a number of key areas such as Central London and international ranking amongst UK peers.
Although the group reports a pre tax loss of £789,000 this represents a considerable improvement in the position over 2008/09 (loss of £1,876,000) and includes further restructuring costs as the business has adjusted its capacity to the reduced demand for its services. Within the same period the group generated £1,544,000 of net cash inflows before financing to return it to a net funds position of £139,000 (2009: net debt of £1,393,000). I said in my statement last year that success in the current market is measured in relative terms and while no business can be satisfied at making a loss, the impact of earlier cost reduction measures and the positive cash position will provide a sound trading platform for the future.
It is often the case in times of uncertainty that there is a flight to quality and this has been evident in the case of a number of significant recent appointments that we have secured, particularly, but not exclusively, in Central London. The quantity of opportunities remains at a low level but the quality of projects and the frequency of our success in securing new projects is testament to the strength of the Aukett Fitzroy Robinson brand. As a consequence we have seen the total construction value of our forward order book of schemes in excess of £10m improve to £2.3bn.
The success of any professional services business is largely determined by the quality of its personnel. We remain indebted to our management and professional teams who, despite the difficulties in the market, continue to demonstrate exemplary dedication and commitment, and whose skills and creative qualities lie at the heart of our brand.
Although we see encouraging signs of recovery in some areas of our markets we remain of the view that it will be 2012 at the earliest before any material improvement is evident on a wider basis and management will consequently maintain its cautious outlook with careful control of costs. However, with a sound financial base, a quality brand, a substantial order book and a first rate workforce, the group is in good health and the key components for the short term sustainability and the medium term expansion and development of the business are firmly in place.
Tim Hodgson
Chairman
1 February 2011
Chief Executive Officer’s report
Construction industry reports confirm that 2010 was another year of declining activity in the sectors and geographies in which we operate. The UK, in particular, felt the effects of this contraction in activity levels with further decline in construction output of 4% on top of the 23% fall in 2009. Against this background the group continues to see its revenues fall.
At the same time, however, we have considerably improved both the quality and value of our order book and have eliminated our net debt position. These are not inconsiderable achievements given the economic circumstances.
Our pre tax losses for the year reduced by a creditable 58% to £789,000 (2009: loss of £1,876,000). This improved performance was led by cost reductions and recoveries being achieved more quickly than the decline in revenues. Revenues fell by just under fifty percent and reflect a significant slow-down in both the Russian and Middle Eastern markets and our revenue from those operations. The UK and Continental Europe revenues were more stable.
On a positive note our order book of schemes over £10m has increased by seven to twenty seven schemes with a total construction value of £2.3bn. Of these, nine schemes with a construction value of £261m are now proceeding. Four (£96m) are at the feasibility stage, three (£90m) are instructed to planning submission and two (£75m) will start on site in 2011. If instructed to completion the balance of fees attaching to these twenty seven projects total £85m (2009: £80m).
We continue to be instructed by Land Securities, HSBC, Macquarie Bank, PRUPIM, Grosvenor Estates, Imperial College, GE, Tishman Speyer, London & Regional and many other well-known organisations.
Overall we believe that our performance has been creditable given the negative environment in which we have been operating over the past twelve months.
Summary of results
Group revenues for the year were £7,920,000 (2009: £14,948,000).
The loss before tax in the second half of £490,000 was higher than the first half loss of £299,000 principally due to the cost of holding teams in our key operating locations. This was an expedient action in order to safeguard our order book and prospects of being invited to bid for new projects as they arise.
Since our last report in June we have continued to successfully recover outstanding fee balances on projects that either went on hold or were subject to some form of formal collection activity. We have now returned to a net funds position of £139,000 (2009: net debt of £1,393,000), having generated £1,544,000 of net cash inflows before financing during the year.
Review of operations
Whilst the European commercial construction market has contracted we have continued to retain a core of skilled architects and designers across our network of offices. This is to ensure that we can service our existing client base and remain competitive in securing new commissions as they come to the market; the ability to resource projects with appropriate design skills being a key client requirement. This strategy has consequences for both short-term operating performance and cash leakage as evidenced by the second six months result where revenue slipped by some £242,000 but only £51,000 was achieved in cost reductions.
UK revenue at £6,210,000 (2009: £10,094,000) is 38% down on the previous year, however, losses are sharply down at £209,000 (2009: £3,009,000) reflecting a significant rebalancing of the operational cost model which is now more closely aligned with anticipated levels of future revenue. The UK figures include those of the Middle East due to such projects being mainly resourced from London. Excluding the Middle East work the UK performed well against the decline in project enquiries by winning more than its share of market opportunities and achieving 95% of prior year revenues, broadly in line with market activity. The fall in Middle East income made up the bulk of the reduction in revenues and reflected the financial problems in Dubai affecting our key Abu Dhabi market.
A number of projects were completed during the year including the £100m refurbishment of Queen Anne’s Gate for Land Securities, a project we originally completed in 1972; and a new headquarter building for NAPP Pharmaceuticals (£50m) in Cambridge. Both of these projects won British Council of Offices regional awards. Additionally, the first non-City located Crowne Plaza hotel was completed at Heythrop Park, Oxfordshire for the Firoka Group and was opened by the Prime Minister.
The first phase of a 1m sq ft site in West London that we master-planned for Imperial College has commenced with planning consent received (in 9 months) for a 600 bed post graduate accommodation facility. We have started work on the £150m refurbishment of 123 Victoria Street for Land Securities and completed the pre-tender and site phase for BAM Construction on a 250,000 sq ft office development in London through our executive architecture arm – Veretec.
We were delighted to have been appointed by GE to breathe new life into the iconic Ark building on the Great West Road, Hammersmith. An extension to a retail department store along with an adjacent new office block was completed for Fenwick in Bond Street. Other projects included the site phase for a new sustainable Marks & Spencer store in Cheshire, a research facility for Vestas on the Isle of Wight, a new building for the National Air Traffic Service in Bournemouth and the interior design for a Radisson Edwardian hotel in Guildford.
Since the year end we have been appointed on projects in London’s West End by the Grosvenor Estate, Great Portland Estates, PRUPIM, and The Royal College of Surgeons.
The Russian market experienced a major market retrenchment as projects were suspended. In 2009 a significant number of development companies were taken over by their funding bank with the consequent delay and reduction in project opportunities. Those projects that were eventually commissioned were the subject of considerable fee discounting, by up to half previous rates. As we did not follow this practice our revenues continued to fall. Revenues fell by 88% to £408,000 (2009: £3,506,000) with a loss being an inevitable consequence: £669,000 (2009: profit of £1,249,000). This loss accounted for 85% of the group’s result. In recent months we have successfully bid on a number of new projects, across Russia, at normal commercial rates, which should reverse the position in 2011.
Our two offices in Continental Europe in Poland and Czech Republic experienced different market conditions. In Poland GDP has risen but construction reflected only a small proportion of this improvement. In the Czech Republic there was a moratorium on government spending and a consequent contraction in building work generally. However, revenues from these operations fell only marginally to £1,302,000 (2009: £1,348,000) and through early management action on costs, pre tax losses were reduced to only £5,000 (2009: loss of £207,000). Projects include a roll out of HSBC retail units, a fit-out for Microsoft and new instructions from Aqua Bank.
Our joint ventures in Germany enjoyed continuing success with our share of the profit after tax being £94,000 (2009: £91,000). Since the year end we have been appointed by Macquarie Bank for an office fit-out in Frankfurt.
People
For a second year we extend our considerable thanks to all of our staff who have endured continuing financial restraint in terms of remuneration and reduced working time in order that we might retain our core architectural design and administration skills.
The Directors are aware of the personal hardship this has caused and are cognisant of the need to restore individual positions as quickly as the economics allow.
Shortly after the year end two non-executive directors retired from the board. Both will continue to work with the group. Raul Curiel who was formerly Chairman of Fitzroy Robinson, and European Managing Director of Aukett Fitzroy Robinson, prior to moving to a non-executive role, is to become a consultant and will assist in both our European marketing and overseas expansion plans. Lutz Heese continues as our joint venture partner in Germany and stands down after six years as a non-executive director of the company.
The board wishes to express its considerable gratitude and thanks to both Raul and Lutz for their wise counsel and the enlightened thoughts that they brought to the board.
John Vincent, Managing Director of the UK operation has joined the board as an executive director. John is an expert in sustainable buildings having completed the BREEAM excellent Barclaycard HQ in 1996 – one of the first of its kind, and more recently led the team on the Queens Anne’s Gate project also rated BREEAM excellent.
Corporate strategy
In 2010 we have concentrated our efforts in those markets that have exhibited resilience to the downturn in commercial development. This has resulted in a number of new instructions in London. Regional opportunities in the UK have been limited due to the lack of available funding and both commercial and residential clients returning to the more lucrative London market.
Illustrating this point we have projects in the capital from: Imperial College in West London, a masterplan for a private college in Kensington; a major refurbishment in Victoria; a new masterplan in Mayfair; an office re-modelling in Berkeley Square; a re-development in Covent Garden; a redevelopment of an office block in the City and we continue to assist a client with tenant presentations at The Royals in East London. Our track record in gaining planning consents has contributed greatly to this success.
We remain committed to both Russia and the Middle East and have maintained key staff in both regions. Vindication of this decision has been seen in an increase in bidding opportunities across Russia particularly in the hotel sector, and we anticipate further commercial opportunities in the Middle East in the latter half of 2011 as funding returns to the UAE commercial market.
We continue to apply limited resources to those market sectors and geographies that we believe may benefit the group in the longer term.
Summary
We have started to see positive signs of recovery in the commercial development markets in which we operate but the rate of project enquiry remains subdued as does the pace at which projects, once commissioned, actually progress. Our current business model has been adapted to accommodate these changed circumstances which we believe will continue in the medium term.
During the forthcoming period we will continue to deliver projects for our clients to exacting standards and concentrate on the quality of our international order book in order to ensure that we can maximise our performance as the recovery gains momentum.
Nicholas Thompson
Chief Executive Officer
1 February 2011
Consolidated income statement
For the year ended 30 September 2010
|
Note |
2010 |
2009 |
|
|
Revenue |
3 |
7,920 |
14,948 |
|
Sub consultant costs |
(1,078) |
(3,868) |
|
|
Revenue less sub consultant costs |
6,842 |
11,080 |
|
|
Personnel related costs |
(5,417) |
(9,135) |
|
|
Office related costs |
(1,152) |
(2,200) |
|
|
Other operating expenses |
(1,289) |
(2,164) |
|
|
Other operating income |
78 |
290 |
|
|
Operating loss |
(938) |
(2,129) |
|
|
Finance income |
4 |
106 |
219 |
|
Finance costs |
4 |
(51) |
(57) |
|
Loss after finance costs |
(883) |
(1,967) |
|
|
Share of results of associate and joint venture |
94 |
91 |
|
|
Loss before tax |
(789) |
(1,876) |
|
|
Tax credit |
9 |
210 |
459 |
|
Loss for the year attributable to |
(579) |
(1,417) |
|
|
Basic losses per share |
10 |
(0.40)p |
(0.97)p |
|
Diluted losses earnings per share |
10 |
(0.40)p |
(0.97)p |
|
Dividends per share |
11 |
– |
0.11p |
Consolidated statement of comprehensive income
For the year ended 30 September 2010
|
2010 |
2009 |
||
|
Loss for the year |
(579) |
(1,417) |
|
|
Other comprehensive income: |
|||
|
Currency translation differences |
(6) |
53 |
|
|
Other comprehensive income for the year |
(6) |
53 |
|
|
Total comprehensive income for the year |
(585) |
(1,364) |
Consolidated statement of financial position
At 30 September 2010
|
2010 |
2009 |
||
|
Non current assets |
|||
|
Goodwill |
1,596 |
1,596 |
|
|
Property, plant and equipment |
375 |
473 |
|
|
Investment in associate |
152 |
175 |
|
|
Deferred tax |
329 |
398 |
|
|
Total non current assets |
2,452 |
2,642 |
|
|
Current assets |
|||
|
Trade and other receivables |
3,955 |
9,609 |
|
|
Current tax |
109 |
622 |
|
|
Cash and cash equivalents |
946 |
472 |
|
|
Total current assets |
5,010 |
10,703 |
|
|
Total assets |
7,462 |
13,345 |
|
|
Current liabilities |
|||
|
Trade and other payables |
(2,561) |
(6,230) |
|
|
Current tax |
– |
(128) |
|
|
Short term borrowings |
(213) |
(1,058) |
|
|
Provisions |
(220) |
(435) |
|
|
Total current liabilities |
(2,994) |
(7,851) |
|
|
Non current liabilities |
|||
|
Investment in joint venture |
(19) |
(7) |
|
|
Long term borrowings |
(594) |
(807) |
|
|
Deferred tax |
(51) |
(291) |
|
|
Total non current liabilities |
(664) |
(1,105) |
|
|
Total liabilities |
(3,658) |
(8,956) |
|
|
Net assets |
3,804 |
4,389 |
|
|
Capital and reserves |
|||
|
Share capital |
1,456 |
1,456 |
|
|
Foreign currency translation reserve |
177 |
183 |
|
|
Retained earnings |
(271) |
308 |
|
|
Other distributable reserve |
2,442 |
2,442 |
|
|
Total equity attributable to |
3,804 |
4,389 |
Consolidated statement of cash flows
For the year ended 30 September 2010
|
2010 |
2009 |
||
|
Cash flows from operating activities |
|||
|
Cash generated from / (used by) operations |
977 |
(860) |
|
|
Interest paid |
(51) |
(57) |
|
|
Income taxes received / (paid) |
410 |
(385) |
|
|
Net cash inflow / (outflow) from operating activities |
1,336 |
(1,302) |
|
|
Cash flows from investing activities |
|||
|
Purchase of property, plant and equipment |
(20) |
(433) |
|
|
Sale of property, plant and equipment |
5 |
3 |
|
|
Acquisition of subsidiary (net of cash acquired) |
– |
8 |
|
|
Interest received |
104 |
28 |
|
|
Dividends received |
119 |
44 |
|
|
Net cash generated from / (used in) investing activities |
208 |
(350) |
|
|
Net cash flow before financing activities |
1,544 |
(1,652) |
|
|
Cash flows from financing activities |
|||
|
Repayment of bank loans |
(150) |
(173) |
|
|
Inception of asset finance arrangements |
– |
184 |
|
|
Payment of asset finance liabilities |
(63) |
(27) |
|
|
Dividends paid |
– |
(160) |
|
|
Net cash used in financing activities |
(213) |
(176) |
|
|
Net change in cash, cash equivalents and |
1,331 |
(1,828) |
|
|
Cash and cash equivalents and bank |
(373) |
1,423 |
|
|
Currency translation differences |
(12) |
32 |
|
|
Cash, cash equivalents and bank |
946 |
(373) |
|
Consolidated statement of changes in equity
For the year ended 30 September 2010
|
Share capital |
Foreign currency |
Retained earnings |
Other |
Total |
|
|
At 1 October 2008 |
1,456 |
130 |
1,725 |
2,602 |
5,913 |
|
Total comprehensive income for the year |
– |
53 |
(1,417) |
– |
(1,364) |
|
Dividends paid |
– |
– |
– |
(160) |
(160) |
|
At 30 September 2009 |
1,456 |
183 |
308 |
2,442 |
4,389 |
|
Total comprehensive income for the year |
– |
(6) |
(579) |
– |
(585) |
|
Dividends paid |
– |
– |
– |
– |
– |
|
At 30 September 2010 |
1,456 |
177 |
(271) |
2,442 |
3,804 |
Notes to announcement of final audited results
1 Basis of preparation
The financial information presented in this announcement has been prepared in accordance with International Financial Reporting Standards as adopted by the European Union (‘IFRS’) and the Companies Act 2006 as applicable to Companies reporting under IFRS.
IFRS 8 “Operating segments” has been adopted which has required changes to the disclosures regarding operating segments. The group’s operating segments remain unchanged.
The amendments to IAS 1 “Presentation of financial statements” have been adopted which have required certain terminology changes and the replacement of the former statement of recognised income and expense with a statement of comprehensive income.
2 Operating segments
The group’s reportable operating segments are based on the geographical areas in which its studio undertaking the project is located.
The group’s studio in Abu Dhabi is a branch of its UK operations which provide the resources to undertake work the Middle East. The group does not maintain separate accounts for its Abu Dhabi branch office and accordingly it is included in the UK segment.
Income statement segment information
|
Segment revenue |
2010 |
2009 |
|
|
United Kingdom |
6,210 |
10,094 |
|
|
Continental Europe |
1,302 |
1,348 |
|
|
Russia and Former CIS |
408 |
3,506 |
|
|
Revenue |
7,920 |
14,948 |
|
Segment result |
2010 |
2009 |
|
|
United Kingdom |
(209) |
(3,009) |
|
|
Continental Europe |
89 |
(116) |
|
|
Russia and Former CIS |
(669) |
1,249 |
|
|
Loss before tax |
(789) |
(1,876) |
Revenue by project site
The geographical split of revenue based on the location of project sites was:
|
2010 |
2009 |
||
|
United Kingdom |
5,675 |
5,955 |
|
|
Continental Europe |
1,378 |
1,710 |
|
|
Russia and Former CIS |
416 |
3,511 |
|
|
Middle East |
429 |
3,772 |
|
|
Rest of the World |
22 |
– |
|
|
Revenue |
7,920 |
14,948 |
3 Losses per share
The calculations of basic and diluted losses per share are based on the following data:
|
Earnings |
2010 |
2009 |
|
Loss for the year |
(579) |
(1,417) |
|
Number of shares |
2010 |
2009 |
|
Weighted average of ordinary shares in issue |
145,618,693 |
145,618,693 |
|
Effect of dilutive options |
– |
– |
|
Diluted weighted average of ordinary shares in issue |
145,618,693 |
145,618,693 |
4 Cash generated from operations
|
2010 |
2009 |
||
|
Loss before income tax |
(789) |
(1,876) |
|
|
Finance income |
(106) |
(219) |
|
|
Finance costs |
51 |
57 |
|
|
Share of results of associate and joint ventures |
(94) |
(91) |
|
|
Depreciation |
118 |
253 |
|
|
Loss on disposal of property, plant and equipment |
(5) |
3 |
|
|
Goodwill written off |
– |
9 |
|
|
Change in trade and other receivables |
5,661 |
1,323 |
|
|
Change in trade and other payables |
(3,644) |
(754) |
|
|
Change in provisions |
(215) |
435 |
|
|
Net cash generated from / (used by) operations |
977 |
(860) |
5 Analysis of net funds
|
2010 |
2009 |
||
|
Cash and cash equivalents |
946 |
472 |
|
|
Secured bank overdraft |
– |
(845) |
|
|
Cash, cash equivalents and bank overdraft |
946 |
(373) |
|
|
Secured bank loan (note 20) |
(713) |
(863) |
|
|
Asset finance liabilities (note 21) |
(94) |
(157) |
|
|
Net funds / (debt) |
139 |
(1,393) |
6 Status of preliminary announcement
This announcement of final audited results was approved by the board of directors on 1 February 2011.
The financial information presented in this announcement has been extracted from the group’s audited statutory accounts for the year ended 30 September 2010 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, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain a statement under either Section 498 (2) or (3) of the Companies Act 2006.
Statutory accounts for the year ended 30 September 2009 have been delivered to the registrar of companies and the auditors’ report on these accounts was unqualified, did not include references to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain a statement under either Section 498 (2) or (3) of the Companies Act 2006.
The financial information presented in this announcement of final audited results does not constitute the group’s statutory accounts for the year ended 30 September 2010.
7 Annual general meeting
The annual general meeting of the company will be held at 10:30am on Thursday 31 March 2011 at 36-40 York Way, London, N1 9AB.
8 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 (36-40 York Way, London, N1 9AB).