Aukett Fitzroy Robinson Group Plc (AUK)
2006 PRELIMINARY RESULTS ANNOUNCEMENT
Aukett Fitzroy Robinson Group Plc (“Aukett Fitzroy Robinson”), the international group of architects and designers, announces its preliminary results for the twelve months ended 30 September 2006. Aukett Fitzroy Robinson provides creative design, commercial awareness and efficient delivery of high quality projects; with specific expertise in offices, retail, interiors, hotels, transportation, laboratories, residential, urban and landscape design, industrial, historic buildings, mixed-use and leisure facilities.
|Twelve months ended 30 September||2006||2005|
|· Group turnover (£000)||16,284||12,611|
|· Operating profit (£000)||840||236|
|· Profit before tax (£000)||786||159|
|· Earnings per share (pence)||0.45||0.02|
Key Points of Statement:
|*||Major profits recovery backed by strong cash flow|
|*||Net debt reduced by £1.2m in twelve months|
|*||Strengthened both UK and European structures|
|*||UK market for commercial architectural services buoyant|
|*||In overseas markets, Russia continues to outperform expectations|
|*||Strong order book for both 2006/07 and 2007/08|
CEO Nicholas Thompson said:
“I see the future of the Company as extremely encouraging with opportunities for further improvements in operating efficiency through off-shoring of work to our European network; development of income growth through the winning of larger project commissions and enhanced shareholder value through a more active merger and acquisitions programme. Over the next twelve months, we expect the Company to improve upon its current year’s performance.”
|Aukett Fitzroy Robinson Group Plc||www.aukettfitzroyrobinson.com|
|Nicholas Thompson, CEO||Tel: 020 7636 8033|
|Peter Binns, Adventis||Tel: 020 7034 4760|
|Sam Smith, JM Finn & Co – Corporate Finance||Tel: 020 7997 8352|
|Ed Frisby, JM Finn & Co – Corporate Finance||Tel: 020 7997 8413|
|Leslie Kent, JM Finn & Co – Specialist Sales||Tel: 020 7997 8324|
AUKETT FITZROY ROBINSON GROUP PLC
Preliminary Statement for the twelve months ended 30 September 2006
The past twelve months have seen the Company make significant progress towards restoring its financial and market position. There has been much to celebrate both in terms of rising profitability and reduction in net debt, combined with a plethora of contract gains and a number of architectural awards.
The group achieved a profit before tax of £0.79m (2005: £0.16m) on turnover of £16.28m (2005: £12.61m). I commented in the last Annual Report about the implementation of a more consistent contract appointment and invoicing regime along with a more focused debtor recovery programme. This has demonstrably borne fruit with the Group net debt position improving in advance of profit and reducing by £1.20m to £0.18m.
Review of operations
The UK market for commercial architectural services is buoyant with strong demand in most sectors in which we operate. This has led to an industry wide tightening of resource available in the market.
We believe that we are winning more than our share of available project opportunities and, in certain areas, building up a more dominant market position. We do continue to closely monitor our staffing requirements and reallocate staff according to project and sector needs. This flexibility, together with the strength of the brand for attracting talented staff, has ensured that we have been able to successfully manage our resourcing commitments as our income has grown.
Our Commercial Office and Hotel sector groups have shown particularly strong performance, reflecting the specific skills that we offer clients. Commercial Offices have won a number of significant contracts from major developers, which has secured their workload for the next few years. Likewise, the Hotels team has secured a number of commissions for new hotels from existing high-profile hotel operators and several one-off development opportunities at the top end of the market. In order to consolidate our position in the luxury hotel market, we have recently strengthened our team at director level, having taken on a key individual from one of our main competitors.
Our Transport and Retail teams have widened their client LOCATIONS & CONTACTSs and are, accordingly, starting to build their teams to service secured work. We believe that both of these sectors have the potential to grow over the next financial period.
Executive Architecture services (trading under the name Veretec), has started to make significant progress in its development as a unique business offering and forms an important strand in our future growth strategy. It now works with a number of the major UK contractors within a specialised part of the architectural services market to take outline building plans and develop them into specialised drawings that the contractor can use.
During the year we have opened a new office in Southampton to focus upon residential and mixed-use schemes which are continuing to be developed along the South coast. This has been positively received by our clients and the office has received a number of enquiries which are now converting into larger projects. Likewise, our Bristol office is performing strongly; having secured not only a prestigious scheme for a major office development in the St Mary le Port area of Bristol but also a partial redevelopment of Dorchester Town Centre and a new HQ building in central Bristol.
In our overseas markets, Russia continues to outperform our expectations. We now have eight signed contracts in progress with a combined contract value of approximately $700m upon which we should earn stage fees of $6m over the next few years. These projects cover circa 4.3 million sq. ft. of commercial development space. The Czech operation performed well in a competitive market and has reacted positively to the country’s recent growth in GDP with new enquiries continuing to be received. Poland has suffered from a shortage of commercial office opportunities but continues to be of strategic importance to the Group. We intend to combine the management and design skills of these three offices to improve the skill set we can offer our clients in the emerging markets of Eastern Europe.
Berlin had a difficult year due to local economic factors. However, Frankfurt has benefited from a successful period of fit-out contracts, recording its best result to date. We disposed of our Rotterdam subsidiary in December 2005 by selling our interest to our local partner.
During the year we achieved formal recognition of our design capability by winning the 2005 BCO National and Regional Award for the National Air Traffic Control Centre at Southampton and a 2005 Regional Award for South Cambridgeshire District Council’s new offices at Cambourne. In addition, the Grove Hotel in Hertfordshire won an award from Conde Nast Traveller for the 2005 Best UK Spa Retreat.
We have launched a knowledge-based initiative to bring a fresh approach to a range of topical subjects facing our clients and disseminate some of the experience that we have built up. This started with a seminar to interested parties on sustainable development, focusing on our hugely successful design for an ecological warehouse in Norfolk for Adnams brewers. This project is one of only 22 industrial projects in the UK to achieve a BREEAM (Building Research Establishment Environmental Assessment Method) ‘Excellent’ rating and brings our total buildings with such a rating to 12. We have followed this up with ‘Ahead of Time’, a research initiative into development opportunities in the area between the City and new Olympic development site which will benefit from new infrastructure projects. Further details of both matters are on our website.
In last year’s report I set out the Company’s medium term objective of doubling its turnover to £25m within five years. Having now had time to properly assess the growth potential for our various business sectors and overseas operations, we believe that this is achievable though organic growth and strategic development of our existing operations with a minimum of merger and acquisition activity.
However, the market for architectural services is becoming more concentrated as projects become larger and the ability to resource and deliver major schemes is seen as an underlying necessity, thereby requiring architectural practices to be of a certain scale. As such, we see numerous opportunities to sustainably extend our business through a series of strategic mergers and acquisitions. These will focus not only on areas of existing expertise but, more importantly, will target operations that will either enable the business to achieve an improved geographical spread or to expand into an allied key growth market. A long list of potential opportunities is being compiled and appropriate resources will be made available to develop the more promising candidates further.
Finally, our move to AIM has been a success and, with the rising fortunes of the Company, our share price has responded accordingly, increasing from a low of 2.38p in January 2006 to high of 17.875p on 9 January 2007.
I see the future of the Company as extremely encouraging with opportunities for further improvements in operating efficiency through off-shoring of work to our European network; development of income growth through the winning of larger project commissions and enhanced shareholder value through a more active merger and acquisitions programme. Over the next twelve months, we expect the Company to improve upon its current year’s performance.
All of this, of course, is only achieved with our Unique Selling Point – the staff – whose dedication, skill and commitment make all of this possible.
Chief Executive Officer
22 January 2007
Aukett Fitzroy Robinson Group Plc
14 Devonshire Street
London W1G 7AE