Interim Results
Aukett Fitzroy Robinson Group Plc
Tuesday June 21st 2011
Interim Results
For the Six Months ended 31 March 2011
Aukett Fitzroy Robinson Group Plc, the international practice of architects and interior design specialists, is pleased to announce its interim results for the six month period ended 31 March 2011.
Highlights
Construction markets generally remain depressed
Commitment to retaining core capabilities has resulted in continuation of prestige project wins in the United Kingdom and Russia
New projects in Russia have enabled a major turnaround with revenue up 150% and losses reduced to £54,000 (2010: £501,000)
Overall first half post tax losses grew to £633,000 (2010: £239,000)
Group revenues were £3.1m (2010: £4.1m)
Second half expected to be profitable as a result of new projects
Nicholas Thompson, Chief Executive Officer commented:
“Construction markets remain very depressed but we feel that our continuing strategy of maintaining our core expertise has been vindicated by a significant number of prestige contract wins which give us reason to be positive in the medium term”.
Enquiries
Aukett Fitzroy Robinson – 020 7843 3000
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
In previous statements I explained that our business model had been adapted to accommodate the changed circumstances in our market place. This foresaw a continuation of the depressed state of the construction market and the associated fall in demand for architectural services. A major element of this business model was for the group to maintain the ability to bid for and complete flagship projects in our three hubs of London, Moscow and Abu Dhabi. This model leads to a mismatch between revenue generation and cost levels, and inevitably has an adverse impact on bottom line performance in the short term.
As a result the loss for the half year is worse than in the prior year and amounts to £633,000 after tax credits (2010: loss of £239,000 after tax credits).
These losses have been funded from our cash reserves and without any recourse to external refinancing.
I am pleased to report that the group has won a number of new projects in both Russia and, more recently, in the UK. The pick up in Russia came too late to impact the half year result and the UK wins will start to benefit the group in the second half.
Summary of results
Group revenues fell to £3.1million (2010: £4.1million) with the UK and Central Europe seeing falls of 15% and 55%, respectively; and the Middle East revenue falling away as new instructions failed to materialise in the period. Russian revenues lifted by nearly 150% following the second quarter hotel wins in various regional cities.
Our operating losses grew to £888,000 (2010: £392,000). After accounting for net interest payable of £11,000 (2010: receivable £28,000), our share from associates and joint ventures of £79,000 (2010: £65,000) and before a taxation credit of £187,000 (2010: credit of £60,000) the pre-tax loss for the period was £820,000 (2010: pre-tax loss of £299,000).
As stated above part of our cash reserve and facilities has been utilised to maintain our resource platform resulting in net debt of £409,000 (30/9/2010: net funds £139,000).
Operations
The UK operation’s revenues were, as expected, disappointing at £2.34million (2010: £2.75million) as client instructions on previously won projects progressed more slowly than anticipated. This resulted in losses of £567,000 against a prior year profit of £617,000, the latter of which contained one-off recoveries on litigation activity.
During the period the UK has been very successful in winning a number of new projects. The London studio won a high profile design competition for a 21,000 square metre new build academic building to house the School of Public Health for Imperial College, and at the same time has been instructed to target planning on a number of other buildings with an indicative footprint of 75,000 square metres for the same client. Additionally a retail client of long-standing has instructed refurbishment of an existing store with a construction value of £20m. Finally a major corporate client has asked us to interior design its offices in Stockholm, Frankfurt and Moscow along with further design work to its London offices. We are also continuing with a number of feasibility studies in the City and West End of London which should crystallise into full appointments later this year. These projects underpin our income projections in the second half of the year.
Russia has successfully lifted revenues to £447,000 (2010: £181,000) with the effect of reversing the prior year loss of £501,000 into a much reduced loss of £54,000. We reported earlier this year on the project wins of a number of new hotel based instructions in the regional cities of Kazan and Krasnoyarsk, and the winter Olympic city of Sochi on the Black Sea coast. They are all now progressing through the planning and building regulation stages. In order to deal with these projects our Moscow studio has doubled in staff numbers over the past three months to thirty seven which was only possible due to the retained core team having the relevant skills for the projects involved.
Our third hub in Abu Dhabi was quiet during the period as clients’ completed existing projects but did not instruct many new ones. Our extensive enquiry book covers a number of countries in the region which vindicates our commitment to the Middle East. In view of the lack of revenue we have rationalised the cost base down to reflect the minimum necessary investment to remain in this key market and have entered into a number of local partnering agreements to secure new work.
Elsewhere, in our fourth segment of operations in Continental Europe, our studios in Poland and the Czech Republic have suffered from a contracting market with few opportunities. Poland with its focus on the Warsaw market was particularly badly affected especially when its main client, Polkomtel, became a bid target. The Czech Republic also saw its market shrink but was successful in earning revenue from markets outside of its main sector skills. Overall continental European revenues fell to £288,000 (2010: £647,000).
Our joint venture in Frankfurt and associate in Berlin both returned improvements in profit – which is reported after tax. The Berlin result included a large planning fee in relation to a consent gained on a new hotel in the city for a Central European client. This helped contain overall losses in Continental Europe at £18,000 (2010: Loss of £8,000).
Project review
During the period under review we have continued to improve both the quality of our client base and project work and in consequence our order book. New clients during the period include Macquarie Bank, Tishman Speyer, and Infosys in Germany; a leading conglomerate and London & Regional (UK) in Russia; Google, RoBiN Oil, DB Schenker and White & Case in the Czech Republic, and, Grosvenor, Scottish Widows and Orchard Street in the UK. At the same time we have repeat project instructions from Fenwick, GE, Great Portland Estates and Imperial College.
Prospects
The UK property market continues to report growth in commercial rents in London, an area where we have both a demonstrable track record in gaining planning consents and where our key clients are focusing their development attention. This improvement in our UK market coupled with new development instructions in Russia provides a more sustainable outlook for the group going forward.
The Board continues to invest and support its key operations and the recent upturn in enquiries and resultant commissions provides both the quantifiable return to this strategy and a much needed impetus to the group’s revenue projections in the second half.
Providing our current projects proceed as expected the group should return to profit in the second half thereby helping to reduce the full year loss.
Nicholas Thompson
Chief Executive Officer
20 June 2011
Consolidated income statement
For the six months ended 31 March 2011
Note | Unaudited
six months to 31 March 2011 £’000
|
Unaudited
six months to 31 March 2010 £’000
|
Audited
year to 30 September 2010 £’000 |
|
Revenue | 2 | 3,076 | 4,081 | 7,920 |
Sub consultant costs | (309) | (651) | (1,078) | |
Revenue less sub consultant costs | 2,767 | 3,430 | 6,842 | |
Personnel related costs | (2,542) | (2,723) | (5,417) | |
Office related costs | (633) | (637) | (1,152) | |
Other operating expenses | (510) | (522) | (1,289) | |
Other operating income | 30 | 60 | 78 | |
Operating loss | (888) | (392) | (938) | |
Finance income | 4 | 60 | 106 | |
Finance costs | (15) | (32) | (51) | |
Loss after finance costs | (899) | (364) | (883) | |
Share of results of associate & joint venture | 79 | 65 | 94 | |
Loss before tax | 2 | (820) | (299) | (789) |
Tax credit | 187 | 60 | 210 | |
Loss for the period attributable to
equity holders of the company |
(633) |
(239) |
(579) |
|
Basic losses per share | 3 | (0.43)p | (0.16)p | (0.40)p |
Diluted losses per share | 3 | (0.43)p | (0.16)p | (0.40)p |
Consolidated statement of comprehensive income
For the six months ended 31 March 2011
Unaudited
six months to 31 March 2011 £’000
|
Unaudited
six months to 31 March 2010 £’000
|
Audited
year to 30 September 2010 £’000 |
||
Loss for the period | (633) | (239) | (579) | |
Other comprehensive income: | ||||
Currency translation differences | 23 | 55 | (6) | |
Other comprehensive income for the period | 23 | 55 | (6) | |
Total comprehensive income for the period
attributable to equity holders of the company |
(610) |
(184) |
(585) |
Consolidated statement of financial position
At 31 March 2011
Note | Unaudited
at 31 March 2011 £’000
|
Unaudited
at 31 March 2010 £’000
|
Audited
at 30 September 2010 £’000 |
|
Non current assets | ||||
Goodwill | 1,596 | 1,596 | 1,596 | |
Property, plant & equipment | 355 | 425 | 375 | |
Investment in associate | 214 | 103 | 152 | |
Investment in joint venture | 3 | 2 | – | |
Deferred tax | 583 | 282 | 329 | |
Total non current assets | 2,751 | 2,408 | 2,452 | |
Current assets | ||||
Trade and other receivables | 3,361 | 6,850 | 3,955 | |
Current tax | 57 | 60 | 109 | |
Cash and cash equivalents | 5 | 476 | 467 | 946 |
Total current assets | 3,894 | 7,377 | 5,010 | |
Total assets | 6,645 | 9,785 | 7,462 | |
Current liabilities | ||||
Trade and other payables | (2,363) | (3,811) | (2,561) | |
Current tax | (24) | – | – | |
Short term borrowings | 5 | (397) | (672) | (213) |
Provisions | (166) | (255) | (220) | |
Total current liabilities | (2,950) | (4,738) | (2,994) | |
Non current liabilities | ||||
Investment in joint venture | – | – | (19) | |
Long term borrowings | 5 | (488) | (700) | (594) |
Deferred tax | (13) | (142) | (51) | |
Total non current liabilities | (501) | (842) | (664) | |
Total liabilities | (3,451) | (5,580) | (3,658) | |
Net assets | 3,194 | 4,205 | 3,804 | |
Capital and reserves | ||||
Share capital | 1,456 | 1,456 | 1,456 | |
Foreign currency translation reserve | 200 | 238 | 177 | |
Retained earnings | (904) | 69 | (271) | |
Other distributable reserve | 2,442 | 2,442 | 2,442 | |
Total equity attributable to
equity holders of the company |
3,194 |
4,205 |
3,804 |
Consolidated statement of cash flows
For the six months ended 31 March 2011
Note | Unaudited
six months to 31 March 2011 £’000
|
Unaudited
six months to 31 March 2010 £’000
|
Audited
year to 30 September 2010 £’000 |
|
Cash flows from operating activities | ||||
Cash (used in) / generated from operations | 4 | (491) | (62) | 977 |
Interest paid | (15) | (32) | (51) | |
Income taxes (paid) / received | (27) | 448 | 410 | |
Net cash (used in) / from operating activities | (533) | 354 | 1,336 | |
Cash flows from investing activities | ||||
Purchase of property, plant & equipment | (36) | (11) | (20) | |
Sale of property, plant & equipment | 2 | – | 5 | |
Interest received | 4 | 14 | 104 | |
Dividends received from associate | – | 123 | 119 | |
Net cash (used in) / from investing activities | (30) | 126 | 208 | |
Cash flows from financing activities | ||||
Repayment of bank loan | (75) | (75) | (150) | |
Payment of asset finance liabilities | (31) | (31) | (63) | |
Net cash used in financing activities | (106) | (106) | (213) | |
Net change in cash, cash equivalents
and bank overdraft |
(669) |
374 |
1,331 |
|
Cash, cash equivalents and bank
overdraft at start of period |
946 |
(373) |
(373) |
|
Currency translation differences | 15 | 8 | (12) | |
Cash, cash equivalents and bank
overdraft at end of period |
5 |
292 |
9 |
946 |
Consolidated statement of changes in equity
For the six months ended 31 March 2011
Share capital £’000 |
Foreign
currency translation reserve £’000
|
Retained earnings £’000 |
Other distributable reserves £’000 |
Unaudited Total £’000 |
|
At 1 October 2010 | 1,456 | 177 | (271) | 2,442 | 3,804 |
Loss for the period | – | – | (633) | – | (633) |
Currency translation
differences |
– |
23 |
– |
– |
23 |
At 31 March 2011 | 1,456 | 200 | (904) | 2,442 | 3,194 |
For the six months ended 31 March 2010
Share capital £’000 |
Foreign
currency translation reserve £’000
|
Retained earnings £’000 |
Other distributable reserves £’000 |
Unaudited Total £’000 |
|
At 1 October 2009 | 1,456 | 183 | 308 | 2,442 | 4,389 |
Loss for the period | – | – | (239) | – | (239) |
Currency translation
differences |
– |
55 |
– |
– |
55 |
At 31 March 2010 | 1,456 | 238 | 69 | 2,442 | 4,205 |
For the year ended 30 September 2010
Share capital £’000 |
Foreign
currency translation reserve £’000
|
Retained earnings £’000 |
Other distributable reserves £’000 |
Audited Total £’000 |
|
At 1 October 2009 | 1,456 | 183 | 308 | 2,442 | 4,389 |
Loss for the period | – | – | (579) | – | (579) |
Currency translation
differences |
– |
(6) |
– |
– |
(6) |
At 30 September 2010 | 1,456 | 177 | (271) | 2,442 | 3,804 |
Notes to the interim results
1 Basis of preparation
The financial information presented in this interim report has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards (‘IFRS’) as adopted by the EU that are expected to be applicable to the financial statements for the year ending 30 September 2011 and on the basis of the accounting policies expected to be used in those financial statements.
2 Operating segments
On 1 October 2010 changes were made to the presentation of segmental financial information which group management uses to make decisions about operating matters, and therefore in accordance with IFRS 8 “Operating segments” these changes have been reflected in the information presented below (and prior period comparatives appropriately restated). The principal changes made were:
· To separate the group’s Middle East operation from the United Kingdom operation reflecting the implementation of separate management and reporting structures.
· To separate group costs relating to the AIM listing from the United Kingdom operation.
· To attribute revenues and costs between segments in line with the group’s management structure.
The group now comprises a single business segment and four separately reportable geographical segments (together with a group costs segment).
The group’s associate and joint venture are both based in Continental Europe.
Segment revenue | Unaudited
six months to 31 March 2011 £’000
|
Unaudited
six months to 31 March 2010 £’000 (as restated)
|
Audited
year to 30 September 2010 £’000 (as restated) |
|
United Kingdom | 2,341 | 2,750 | 5,746 | |
Russia and Former CIS | 447 | 181 | 430 | |
Continental Europe | 288 | 647 | 1,302 | |
Middle East | – | 503 | 442 | |
Total revenue | 3,076 | 4,081 | 7,920 |
Segment result | Unaudited
six months to 31 March 2011 £’000
|
Unaudited
six months to 31 March 2010 £’000 (as restated)
|
Audited
year to 30 September 2010 £’000 (as restated) |
|
United Kingdom | (567) | 617 | 695 | |
Russia and Former CIS | (54) | (501) | (830) | |
Continental Europe | (18) | (8) | 89 | |
Middle East | (120) | (343) | (618) | |
Group costs | (61) | (64) | (125) | |
Loss before tax | (820) | (299) | (789) |
The geographical split of revenue based on the location of project sites was:
Unaudited
six months to 31 March 2011 £’000
|
Unaudited
six months to 31 March 2010 £’000 |
Audited
year to 30 September 2010 £’000 |
||
United Kingdom | 2,136 | 2,717 | 5,675 | |
Russia and Former CIS | 460 | 181 | 416 | |
Continental Europe | 462 | 680 | 1,365 | |
Middle East | 18 | 503 | 442 | |
Rest of the World | – | – | 22 | |
Total revenue | 3,076 | 4,081 | 7,920 |
3 Earnings per share
The calculations of basic and diluted earnings per share are based on the following data:
Earnings | Unaudited
six months to 31 March 2011 £’000
|
Unaudited
six months to 31 March 2010 £’000 |
Audited
year to 30 September 2010 £’000 |
|
Loss for the period | (633) | (239) | (579) |
Number of shares | Unaudited
six months to 31 March 2011 ‘000
|
Unaudited
six months to 31 March 2010 ‘000 |
Audited
year to 30 September 2010 ‘000 |
|
Weighted average number of shares | 145,619 | 145,619 | 145,619 | |
Effect of dilutive options | – | – | – | |
Diluted weighted average number of shares | 145,619 | 145,619 | 145,619 |
4 Reconciliation of loss before tax to net cash (used in) / generated from operations
Unaudited
six months to 31 March 2011 £’000
|
Unaudited
six months to 31 March 2010 £’000
|
Audited
year to 30 September 2010 £’000 |
||
Loss before tax | (820) | (299) | (789) | |
Finance income | (4) | (60) | (106) | |
Finance costs | 15 | 32 | 51 | |
Share of results of associate & joint venture | (79) | (65) | (94) | |
Depreciation | 56 | 59 | 118 | |
Loss on disposal of property, plant & equipment | (2) | – | (5) | |
Change in trade & other receivables | 779 | 2,938 | 5,661 | |
Change in trade & other payables | (382) | (2,487) | (3,644) | |
Change in provisions | (54) | (180) | (215) | |
Net cash (used in) / generated from operations | (491) | (62) | 977 |
5 Analysis of net (debt) / funds
Unaudited
at 31 March 2011 £’000
|
Unaudited
at 31 March 2010 £’000
|
Audited
at 30 September 2010 £’000 |
||
Cash and cash equivalents | 476 | 467 | 946 | |
Secured bank overdraft | (184) | (458) | – | |
Cash, cash equivalents and bank overdraft | 292 | 9 | 946 | |
Secured bank loan | (638) | (788) | (713) | |
Asset finance liabilities | (63) | (126) | (94) | |
Net (debt) / funds | (409) | (905) | 139 |
Unaudited
at 31 March 2011 £’000
|
Unaudited
at 31 March 2010 £’000
|
Audited
at 30 September 2010 £’000 |
||
Cash and cash equivalents | 476 | 467 | 946 | |
Short term borrowings | (397) | (672) | (213) | |
Long term borrowings | (488) | (700) | (594) | |
Net (debt) / funds | (409) | (905) | 139 |
6 Status of interim results
The interim results cover the six months ended 31 March 2011 and were approved by the board of directors on 20 June 2011. The interim results are unaudited.
The interim condensed set of consolidated financial statements in the interim report are not statutory accounts as defined by Section 434 of the Companies Act 2006.
Comparative figures for the year ended 30 September 2010 have been extracted from the statutory accounts of the group for that period.
The statutory accounts for the year ended 30 September 2010 have been reported on by the group’s auditors and delivered to the Registrar of Companies. The audit report thereon was unqualified, did not include references to matters which the auditors drew attention by way of emphasis without qualifying the report, and did not contain a statement under Section 498 of the Companies Act 2006.
7 Further information
Copies of the interim report will be dispatched to holders of 10,000 or more shares 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).