ARL.L Regulatory News (ARL)

29 Jul 2005 07:02

SMC Group Plc29 July 2005 SMC GROUP PLC (the "Company") CONTRACT WINS Since the Company's admission to AIM on 10 June, SMC Group Plc announces that ithas been the successful bidder for eight new architectural contracts. Theultimate construction value of these contracts is still the subject of finalnegotiation but SMC Group believes, in aggregate, the value will be of materialinterest to shareholders. SMC Group will update the market in due course. Furthermore, the company will be announcing its half year results (to end June2005) on the 5th September 2005. - ends - For further information SMC Group Plc 020 7495 5335Stewart McColl Bell Pottinger 020 7861 3232David Rydell/Chris Hamilton The Company SMC Group Plc is the holding company for a group of chartered architects,planners and designers. It has established expertise in a broad range ofsectors, including residential, retail, industrial, workplace, leisure andeducation. The Group has national UK coverage, with offices in London, Warwick,Manchester, Leeds and Lancaster, and is engaged in a range of projectsthroughout the UK, in Eire and in parts of mainland Europe. The Company's core strategy has been to create an architectural group with thescale and expertise to access the most profitable schemes across a range ofsectors and geographical locations. The Group intends to focus on its organicgrowth, increasing its share of the UK market and securing larger, higher marginprojects. The Group plans to complement this organic growth withearnings-enhancing acquisitions in order to consolidate its geographic andsector coverage. The Group traded very successfully in 2004. Organic growth resulted in a 43%increase in the Group's turnover between 2003 (£5.7 million) and 2004 (£8.1million), profit before tax of £1.0 million in 2004, and 2004 gross margin andEBITDA margin of 50% and 21%, respectively. The Group has a client base of 72, including Arena Leisure, British Land, CanaryWharf Group, Knightsbridge Estates, Land Securities, Morgan Stanley and WmMorrisons Supermarkets, 61 of which are currently fee generating. According to construction consultants, Davis Langdon LLP, total fee revenues forarchitectural services in the UK in 2004/05 are estimated to be approximately £3billion, and the market has grown at a rate of c. 5% per annum over the lastthree years. Davis Langdon LLP also estimate total global fee revenues in 2004/05 to be approximately £80 billion. The Group has over 140 employees with wide-ranging skills. The Group tends towork on contracts of between one and three years' duration, with fees amountingtypically to 3-5% of build cost. A key component in the Group's organic growth has been the high level of repeatbusiness: approximately 50% of all projects currently underway represent repeatbusiness from existing clients. Furthermore, the Group benefits from long-termrevenue visibility: approximately 80% of forecast turnover in 2005, and 40% offorecast turnover in 2006, is already contracted. SMC Group Plc's core strategy has been to create an architectural group with thescale and expertise to access the most profitable schemes across a range ofsectors and geographical locations. The growth in larger projects, such astown-centre regeneration, schools and hospitals, and mixed-use developments,over the last decade has benefited the larger, integrated architecturalpractices. On such schemes, clients demand practices with skills across a rangeof market sectors, and able to contribute to the process of determining projectviability. Group Structure and History Stewart McColl, chief executive, formed SMC Group Plc in 1996. Since then theGroup has grown through a combination of strategic acquisitions and organicgrowth. In November 2004, the Company appointed Sir Rodney Walker as its newnon-executive chairman in view of his track record of successfully guiding anumber of companies through the process of admission to AIM and successfultrading beyond. The Group is focussing wherever possible on higher marginprojects and, as it grows, is looking for opportunities to rationaliseaccountancy functions and office space and identify efficiencies throughout theGroup by implementing best practice. The Group is structured in such a way that the most appropriate skills can bebrought together to ensure that the maximum benefits are realised for specificprojects and clients. It is often the case that more than one of the Groupcompanies may be contributing to the same project, particularly on mixed-usedevelopment sites. For example, the €120 million Scotch Hall project inDrogheda, Eire, has involved input from SMC Group Architects, SMC GowerArchitects and the association with Douglas Wallace Architects & Designers.Similarly, SMC Group Architects and SMC Zeidler both contribute to a £92 millionretail, office and residential project in Knightsbridge, London. SMC GroupArchitects is working with SMC Corstorphine & Wright on the implementation oftwo schools in Islington, London. The design leaders within the Group increasingly gain from networking with eachother, sharing knowledge, experience and projects and offering a total designservice across international boundaries. This information is provided by RNS The company news service from the London Stock Exchange