Aukett Fitzroy Robinson Group Plc
Thursday 19 December 2013
Aukett Fitzroy Robinson Group Plc (“AFR” or “Group”), the international group of architects and interior designers, is pleased to announce that it has acquired the entire issued share capital of Swanke Hayden Connell Europe Ltd (“SHCE”), a major firm of architects and interior designers with offices in London, Moscow, Istanbul and Sheffield.
The total consideration for the acquisition is £1.58m comprising a cash payment from existing funds of £209,053 with the balance satisfied by the issue of 19,594,959 new ordinary shares in AFR at a price of 7.00 pence per share (“Consideration Shares”). The vendors of SHCE have agreed that for a period of 21 months from completion, subject to certain exceptions, they will not dispose of any of their Consideration Shares.
SHCE has around 95 staff in its European operations, which together with AFR’s existing international network, creates an enlarged workforce in excess of 340 staff in eight countries.
The merger of studios in both London and Moscow will provide the opportunity for cost savings in property and associated overhead expenditure following co-location.
Enlarged Group revenue will rise to £16m on a full year pro forma basis as a result of the acquisition, ahead of the Group’s stated strategic revenue target of £15m by 2014.
In the year to 31 December 2012 SHCE made a pre-tax loss of £0.56m on revenue of £6.4m, though it has traded profitably during 2013. The Board of AFR expects this to continue into 2014. SHCE has virtually no debt.
All UK based vendors who are employees of SHCE will remain employed within the enlarged Group.
The enlarged Group will trade as “Aukett Swanke”.
Background on SHCE
SHCE is the European arm of Swanke Hayden Connell Architects (“SHCA”) whose heritage dates back to 1906 when Walker & Gillette was founded in New York City. A branch office of SHCA was established in London in 1989 with a subsidiary in Istanbul in 1996. This was followed by the purchase of George Trew Dunn of Sheffield in 2002 and the establishment of a Moscow branch in 2005. SHCE was acquired by its current management via a management buy-out from SHCA in November 2005.
As an international design practice, many of SHCE’s commissions are won on the basis of its design reputation for innovative buildings and creative solutions. SHCE’s core skill set is in commercial architecture, workplace consultancy and interior design, to which it has added providing these services to projects in the healthcare, education, retail and hospitality sectors. These complement and combine well with AFR’s skill set. SHCE’s UK based directors direct their operations in London, Moscow, Istanbul and Sheffield.
SHCE has worked for numerous prestigious UK and global clients including: Bank of America Merrill Lynch, BNP Paribas, the European Medicines Agency, GlaxoSmithKline, Google, JP Morgan Chase, Land Securities, Microsoft and Symantec.
One of SHCE’s directors, David Hughes, Chief Executive of SHCE has joined the AFR Board as Deputy Chairman, together with Nick Pell, a Principal Interior Design Director who has joined the AFR Board as an Executive Director. Both have entered into new full-time contracts of employment on terms detailed in the Appendix below.
The impact of the addition of SHCE to AFR’s existing business will be to provide revenue enhancing opportunities in a wider market place, and to significantly improve its market position in both the London and Moscow market places. Current market indicators point to a rapid recovery occurring in the UK development and construction markets, and in some overseas markets in which the enlarged Group operates. AFR is already directly benefitting from this momentum in terms of its current performance which underpins the AFR Board’s confidence in the enlarged Group’s prospects.
It is expected that the merger will be earnings enhancing in the Group’s current financial year to 30 September 2014 and, following a period of integration, will also be cash generative.
Commenting on the merger, Nicholas Thompson CEO said:
“The combination of AFR and SHCE under the “Aukett Swanke” brand will significantly enhance both firms’ reputations in the market place and enable us all to deliver an ever increasing quality of service to our clients in our chosen markets. The two firms make an excellent commercial and cultural fit with complimentary services and client portfolios. The future of the merged entity can only be good for clients, staff and shareholders.”
David Hughes, Chief Executive of SHCE added that “he and his senior fee earning team were delighted to become part of Aukett Swanke” and that he sees “the fit of the combined design talent of SHCE and AFR as bringing a significant future benefit to the enlarged Group”
Application has been made for admission to AIM of the Consideration Shares with such admission expected to become effective on 27 December 2013. The Consideration Shares will rank pari passu with the existing issued share capital of AFR.
Aukett Fitzroy Robinson Group Plc – 020 7843 3000
Nicholas Thompson, Chief Executive Officer
Duncan Harper, Group Finance Director
finnCap – 020 7220 0500
Corporate Finance, Julian Blunt / Matt Goode
Corporate Broking, Simon Starr / Stephen Norcross
Hermes Financial PR
Chris Steele – 07979 604687
Trevor Phillips – 07889 153628
On 18 December 2013 David Hughes entered into a service agreement with AFR, under the terms of which he has agreed to act as an Executive Director and Deputy Chairman of AFR for a salary of £170,000 per annum plus benefits including a pension contribution. Reviews of the salary will take place at the discretion of the AFR Board. The appointment is terminable on 6 months’ notice by either David Hughes or AFR except in the first eighteen months following the acquisition when AFR will not give notice within the first 12 months. Under the terms of his service agreement, David Hughes is, inter alia, restricted from soliciting the services of any director of, or business away from, AFR during the 6 month period after he ceases to be employed by AFR.
On 18 December 2013 Nick Pell entered into a service agreement with AFR, under the terms of which he has agreed to act as an Executive Director and International Interior Design Director of AFR for a salary of £110,890 per annum plus benefits including a pension contribution. Reviews of the salary will take place at the discretion of the AFR Board. The appointment is terminable on 6 months’ notice by either Nick Pell or AFR except in the first eighteen months following the acquisition when AFR will not give notice within the first 12 months. Under the terms of his service agreement, Nick Pell is, inter alia, restricted from soliciting the services of any director of, or business away from, AFR during the 6 month period after he ceases to be employed by AFR.
Full name: David Joseph Hughes
Directorships within past 5 years:
Swanke Hayden Connell Europe Limited (current)
Swanke Hayden International Connell Limited (current)
Swanke Limited (current)
Shareholding in AFR: 2,968,933 ordinary shares (1.80%)
Full name: Nicholas (Nick) Frank Pell
Directorships within past 5 years:
Token Gestures Limited (current)
Shareholding in AFR: 2,226,700 ordinary shares (1.35%)
There are no further disclosures to be made in relation to David Hughes or Nick Pell for the purposes of paragraph (g) of Schedule 2 of the AIM rules.