Interim Results

Aukett Fitzroy Robinson Group Plc (“AFR” or the “Group”), the international practice of architects and interior design specialists, is pleased to announce its interim results for the period ended 31 March 2010.

Highlights

·      Continuing improvement in financial performance

·      Pre tax loss reduced to £299,000 (2009: loss of £1,216,000).

·      £488,000 reduction in net debt through cash generation

·      UK operations generated profit of £22,000 (2009: loss of £1,794,000)

·      German operation in Berlin performing strongly

·      Improved order pipeline of projects with an estimated future fee value of up to £80m

·      Balance sheet remains strong despite reduced revenues

·      Cost reductions of £3,500,000 achieved

Nicholas Thompson, Chief Executive Officer of Aukett Fitzroy Robinson said:

“We have maintained a strong and highly skilled team of people which has enabled us to continue to win commissions in a difficult market. This, coupled with the awards we have won demonstrates the regard with which our work is held within the industry.

With a stable cash position, strong brand and track record in commercial markets that are experiencing signs of recovery, we believe that we are well placed to benefit from any sustained upturn as confidence and funding returns to the property development market.”

Enquiries

Aukett Fitzroy Robinson – 020 7636 8033

Nicholas Thompson, Chief Executive Officer

Duncan Harper, Group Finance Director

finnCap – 020 7600 1658

Corporate Finance Clive Carver / Rose Herbert

Corporate Broking Simon Starr / Stephen Norcross

Hermes Financial PR

Chris Steele – 07979 604687

Trevor Phillips – 07889 153628

Interim statement

Overview

We are delighted to report a substantially improved financial position with half year losses before tax reduced by 75% to £299,000 (2009: loss of £1,216,000).

Whilst revenues have continued to fall, due to the reduced demand for professional services and the ongoing standstill on some projects, we have managed our expenditure downwards by more than the revenue fall.

During this period we have continued to add to our order pipeline which includes some 20 schemes with a total construction value of £2.1bn and an estimated future fee value of up to £80m, on projects each over £10m in construction value.

Summary of results

Group revenues for the six months to 31 March 2010 fell by half to £4,081,000 (2009: £8,177,000) principally due to a slow down in our Russian workload and a reduced level of activity in our Middle East commercial markets.

Our operating loss reduced substantially to £392,000 (2009: loss of £1,284,000). After accounting for net interest receivable of £28,000 (2009: net interest payable £5 000), our share of profits after tax from associates and joint ventures of £65,000 (2009: £73,000) and a taxation credit of £60,000 (2009: credit of £358,000) the loss for the period was £239,000 (2009: loss of £858,000).

During the six months we have been pro-active in cash management and have generated £488,000 of additional cash flow to reduce net debt to £905,000 at the end of March 2010.

Operations

In previous reports we have stated that we would trade through these difficult times and retain a skill base appropriate to the size of our organisation required by our client base. This has been achieved over the past two years by staff and overhead reductions in most of our network. In the current environment we are optimising our use of resources both across projects and by offices working jointly on projects to avoid unnecessary costs.

The UK operation achieved a profit in the period of £22,000 (2009: loss of £1,794,000) even though UK commercial activity was subdued during the first half. This successful result was due to the continued cost reduction and expenditure recovery measures such that overall costs fell by 66% compared to the revenue fall of 41%. Revenue fell to £3,253,000 (2009: £5,512,000).

UK project-based fee income performed well during the period achieving 77% of prior year revenues. Our six largest projects account for only 40% of UK revenues. This demonstrates the spread of revenue, across a number of commercial sectors including offices, hotels and retail thus giving comfort to the sustainability of our income generation. The main fall in UK revenue came from the delay in UAE instructed projects and provisions totalling £531,000 resulting in a reduction in revenue to £503,000 (2009: £1,722,000).

The anticipated reduction in public sector spending over the next few years is unlikely to have any direct impact on the UK operation as less than 5% of revenue is from this source.

Russia endured the most difficult conditions within the group with a loss of £342,000 (2009: profit of £595,000). Revenue fell to £181,000 (2009: £1,908,000) as clients had to put projects on hold or were taken over by the funding bank. This occurred in both Moscow and the wider CIS market. Action was taken locally to reduce staffing levels and costs. Expenditure fell by an underlying 80% compared to the revenue fall of 90%, however, one-off cost provisions restricted the cost reduction to nearer 60% in the period.

Continental Europe, comprising operations in Poland, Czech Republic and Slovakia had a mixed set of results producing a second year of first half losses at £72,000 (2009: loss of £85,000) on revenues down 15% at £647,000 (2009: £757,000).

The results also include our share in other overseas operations. In Germany our associate office in Berlin performed well for the second year running and our joint venture in Frankfurt broke even during the period. These offices contributed £65,000 (2009: £73,000) of profit after tax.

People

We are grateful to the staff across our network who, in many cases, have sacrificed part of their personal remuneration to assist the group in these straitened times. This has contributed significantly to our ability to maintain a first-class service to our clients.

Awards

As a practice we are proud of the fact that we have won two Awards from the British Council for Offices (“BCO”) in their regional competitions. Queens Anne’s Gate is a £100m refurbishment of a building in the West End for Land Securities. Interestingly we were commissioned by Land Securities in 1972 to build out the original development. This refurbishment won the both an “excellent” BREEAM rating for environmental standards and the BCO award for refurbishment and renewal at the London and South East Awards in April 2010. Then in May 2010 our new corporate HQ for NAPP Pharmaceuticals won the BCO award in the Midlands and Eastern region for Corporate Workplace.

Prospects

Cash generation and debt recovery were a focal activity as the recession took hold. Since the half year we have continued to recover some of our older outstanding monies with some £1.0m being recovered in April and May in addition to normal cash recovery activities. We also anticipate recovering the majority of the monies due from our successful litigation once the properties upon which we have secured charges are sold. This will add over £1.2m of new cash flow when received.

Given the steps taken in cost reduction we do not foresee any further, significant reductions in operating expenditure beyond the savings of £3.5m achieved to date.

We see the UK market becoming more focused on the capital and in particular the commercial office refurbishment market. We have an enviable track record in this sector of the market and a portfolio of sixty completed buildings in the City of London dating back to the early 1980’s.  Demand for renewal of this space will coincide with the predicted recovery in commercial office rents by 2012. This provides a considerable opportunity for AFR. Additionally we work with an impressive London client base that includes Land Securities, Great Portland Estates, GE Capital, Grosvenor, Imperial College, The Mercers’ Company, Fenwick and many other prestigious organisations. 

We have maintained a strong and highly skilled team of people which has enabled us to continue to win commissions in a difficult market. This, coupled with the awards we have won demonstrates the regard with which our work is held within the industry.

With a stable cash position, strong brand and track record in commercial markets that are experiencing signs of recovery, we believe that we are well placed to benefit from any sustained upturn as confidence and funding returns to the property development market.

16 June 2010 – Consolidated income statement

 

For the six months ended 31 March 2010

	Note	Unaudited six months to 31 March 2010 £’000	Unaudited six months to 31 March 2009 £’000	Audited year to30 September2009 £’000
Revenue	2	4,081	8,177	14,948
Sub consultant costs		(651)	(2,172)	(3,868)
Revenue less sub consultant costs		3,430	6,005	11,080
Personnel related costs		(2,723)	(5,138)	(9,135)
Office related costs		(637)	(1,388)	(2,200)
Other operating expenses		(522)	(1,111)	(2,164)
Other operating income		60	348	290
Operating loss		(392)	(1,284)	(2,129)
Finance income		60	16	219
Finance costs		(32)	(21)	(57)
Loss after finance costs		(364)	(1,289)	(1,967)
Share of results of associate & joint ventures		65	73	91
Loss before income tax		(299)	(1,216)	(1,876)
Income tax		60	358	459
Loss for the period attributable to equity holders of the company		(239)	(858)	(1,417)
Basic losses per share	3	(0.16)p	(0.59)p	(0.97)p
Diluted losses per share	3	(0.16)p	(0.59)p	(0.97)p
Dividends per share	4	–	0.11p	0.11p

Consolidated statement of recognised income and expense

For the six months ended 31 March 2010

		Unaudited six months to 31 March 2010 £’000	Unaudited six months to 31 March 2009 £’000	Audited year to30 September2009 £’000
Currency translation differences		55	1	53
Net income recognised directly in equity		55	1	53
Loss for the period		(239)	(858)	(1,417)
Total gains and losses recognised in period attributable to equity holders of the company		(184)	(857)	(1,364)