29 Mar 2010 07:00
29th March 2010
Archial Group Plc
Preliminary results for the year ended 31 December 2009
Archial Group Plc ("Archial" or the "Group") (ARL.L), the architects and design business, announces its Preliminary Results for the year ended 31 December 2009.
Financial Highlights:
·; Robust results driven by successful control and efficiency measures implemented in unprecedented recessionary conditions
·; Turnover of £33.9m (2008: £42.6m)
·; Gross margins maintained at 47%
·; £9.7m of annualised cost reduction delivered since January 2008
·; EBITDA* of £4.4m (2008: £6.5m)
·; EBITDA* margin 13.1% (2008: 15.2%)
·; Exceptional costs of £16.3m (2008 : £1.2m)
·; Positive PBT* of £1.5m (2008: £2.6m)
·; Loss before tax (post exceptional) of £14.7m (2008: profit of £1.5m)
·; Net indebtedness reduced by £0.7m to £13.5m
·; WIP days and debtors days reduced to 38 and 85 respectively (2008: 72 and 107)
·; Banking facilities of £15m renewed with improved terms until September 2013
·; Final settlement of deferred consideration in January 2010 of £135,000
Operational Highlights:
·; Weathered the worst market conditions for several generations
·; Won significant national and international architectural awards
·; Deliberate diversification of current forward order book both to improve defensive characteristics and position the business for growth:
o 33% UK public sector
o 35% UK private sector
o 32% international
·; International growth plan being delivered - 32% of future instructed revenue from overseas up from 13% in 2008
·; Good order book visibility at March 2010 - 79% of revenue instructed for the full year (January 2009: 71%).
·; Excellent pipeline of qualified opportunities of £53m in addition to instructed work
·; Integration of operating businesses now complete
·; John Taylor appointed as Chief Financial Officer on 1st June 2009
* pre exceptional costs
Chris Littlemore, CEO of Archial Group Plc said:
"The unprecedented market conditions have placed significant challenges on every business in the construction and related sectors. By comparison with our peers and construction related support service companies, we have not only maintained our gross margin, but have restricted the drop in revenue to only 20%. Measured against other comparable firms that have reported revenue declines in the range of between 25 and 40%, we believe ours is a very credible performance. Our International business has assisted greatly in this regard, and we plan to continue to develop our business overseas further as a key strategic aim.
The restructuring of the Company during 2008 and early 2009 prepared us for difficult decisions and we have been pro-active in taking out costs where necessary to counter the recession. The appointment of John Taylor as our new CFO has brought a new era to the financial control of the business, and whilst there are significant exceptional costs resulting in a loss before tax for 2009, we emerge into 2010 in a very fit and lean state with a strong order-book and pipeline.
Having completed the essential elements of a two year rationalisation and re-structuring plan, we believe that Archial is now robustly positioned to move into the next phase of its development, and to ride out the current UK economic conditions with a clear strategy for further international growth.
Market conditions remain tough but trading is robust and in line with the Board's expectations.
2009 was a year of continued progress and change in a period of extreme difficulty and I would like to take this opportunity to thank all of my colleagues throughout the business for their continued support and hard work"
For further information:
| Archial Group Plc Chris Littlemore, Chief Executive Officer John Taylor, Chief Financial Officer
| Tel: +44 (0)20 7580 0400 |
| Numis Securities Limited Nominated Adviser: Stuart Skinner/ Brent Nabbs Corporate Broking: James Serjeant
| Tel: +44 (0)20 7260 1000 |
| Financial Dynamics Billy Clegg/ Georgina Bonham | Tel: +44 (0)20 7831 3113 |
CHAIRMAN'S STATEMENT
Sir Rodney Walker
Introduction
Following what has arguably been the most difficult period for the architectural and construction sector for as long as most can remember, we are pleased with our full year outcome for 2009 which has been achieved as a result of strong leadership from senior management and financial sacrifices throughout the Company.
It has been necessary to make further provision for exceptional costs which included redundancy payments, cost associated with reducing our UK office base from 22 to 17 and adopting a more prudent approach to provisioning against amounts recoverable against contracts as projects are cancelled or postponed. These changes however have not reduced our overall geographic coverage as the driver behind these closures has been to consolidate multiple locations into a more efficient office estate.
Outlook
We are beginning to see early signs of an increase in enquiries from the private sector for new work in the UK, but with the anticipated constraint in publicly funded work after the election this year, we remain cautious about any material growth in fees from within the UK in the short term.
One of the highlights of the last 12 months has been the development of our business from the overseas markets. Overseas income in 2009 accounted for 17% of total revenues, up from 13% in 2008. We believe this will increase to over 30% in 2010 and to around 50% of total revenues by 2012. In the past 12 months, having secured work in new territories, we have been able to grow our presence in Abu Dhabi in addition to our established offices in Singapore, Kuala Lumpur, Beijing and Shanghai. We are also looking to create bases in Vietnam and Canada in 2010. The recent announcement of the merger of our Alsop and Sparch brands has been well received by the architectural community and our clients. These businesses have already built an enviable reputation for signature architecture around the World and we believe that the merger of the two businesses will further strengthen their reputations and open new opportunities for their award winning architecture.
We have once again begun to explore acquisition opportunities in the UK and overseas and are already in advanced discussions with several parties where the geographical or sectoral synergy can help develop our offering to clients. We have established co-operative working relationships with other firms in the professional services sector with a global presence which complements our own.
Our progress has not been without sacrifice. We have reduced staffing numbers by 25% of which the largest proportion has come from the support staff. All remaining staff have demonstrated their professionalism by remaining committed to fulfilling their clients work whilst sharing in the Group wide salary sacrifice which has been necessary for the business to remain competitive in our market.
For all these reasons and despite the challenges which lay ahead, we look forward to 2010 and beyond with confidence in the belief that we will successfully continue to grow the business.
Sir Rodney Walker
Non-executive Chairman
26 March 2010
CHIEF EXECUTIVE'S REVIEW
Chris Littlemore
Introduction
2009 was the most challenging year for the construction industry and related professions in living memory. The Board is therefore pleased to be reporting these results in this context, and whilst a loss after tax and exceptionals is reported, we enter 2010 with confidence that a new regime of financial control, a clear business strategy of international growth and simplified clear branding offer a very positive future for the Group.
We have controlled the costs of the business in the last 12 months to maintain a gross margin of 47% which is identical to that achieved in 2008. A decline in revenue, inevitable in the unprecedented market conditions, imposed challenging trading conditions on the whole construction sector. A pre exceptional EBITDA of £4.4m was returned with a significant increase in the Gross Margin being delivered in the second half of the year from 44% in H1 to 50% in H2, following the implementation of further rationalisation and cost management across the Group.
During the past two years, we have delivered significant change within the organisation, rationalising costs and structures, integrating the constituent offices within each brand and fully exploiting the newly defined brand offers of the business. We now enter a new phase of development and look to grow in international markets, primarily organically, and through acquisition in target sectors and geographies in the UK. In executing this strategy, we will ensure an appropriate balance is maintained between our public and privately funded work in the UK, whilst constantly seeking to increase international revenue.
Archial remains at the forefront of the profession and is one of the largest architecture groups based in the UK, with an exciting fast growing international revenue stream which has improved from 13% of turnover in 2008 to 17% in 2009 and currently makes up 32% of our order book.
Restructuring, Integration and Re-branding
The corporate restructuring and overall harmonisation of the business, which commenced in 2008 and concluded in early 2009, has borne fruit with significant benefits being derived from the support disciplines of Marketing, HR and IT. With the arrival of John Taylor, our new CFO in June 2009, a further significant re-structuring of the finance team has been undertaken leading to a centralisation and an overall reduction in support personnel and cost base. In addition to this, we have appointed a Commercial Director to rationalise and improve commonality of approach in commissions, bidding, and terms and conditions of engagement. In addition to the £9.7m of annualised cost reduction delivered since January 2008, we have commissioned a Facilities Management consultancy to examine our complete external supply chain with an expectation of further savings being achieved on an annual basis.
In order to maximise the growing international presence and capability, the Stirling Prize winning international brand of Alsop has been combined with that of our Asian businesses in China and Singapore, 'Sparch', to form The Sparch Group trading as 'Alsop Sparch' in Western Europe and the Americas and continuing to trade as 'Sparch' in Asia.
In the UK, the principal operating business remains as Archial Architects. A further specialist team within the Group, "Archial Sustainable Futures", cross sells its industry leading expertise in 'Green Design' as well as earning revenue in its own right.
The following table sets out the operational office locations of the Group:
| ARCHIAL ARCHITECTS
Aberdeen Bedford Birmingham Bournemouth Cambridge Edinburgh Exeter Glasgow Inverness Ipswich Leeds London Manchester Newcastle Plymouth Warwick
| SPARCH GROUP (comprising Alsop Sparch and Sparch Asia)
Abu Dhabi Beijing Kuala Lumpur London Shanghai Singapore
Planned for 2010:
Toronto Vietnam |
Our service to our clients continues to focus strategically on five key values which form the philosophy of an intelligent architectural delivery that we provide. These are:
·; Creative Integrity
·; Economic Performance
·; Environmental Responsibility
·; Social Contribution
·; Personal Experience
We believe that every project can be measured with its own blueprint strategy against these criteria, and the successful delivery in consultation with our clients and all stakeholders, ensures that we deliver good design capable of scrutiny by all. We maintain that this approach ensures we deliver a quality project and that we are able to 'make life better through intelligent architecture'.
Business Review
During 2009 after essential spend on downsizing and re-organisation costs net debt as at 31st December 2009 has reduced from £14.5m to £13.8m. With our strict controls on costs and cash, our bankers HBOS remain very supportive and agreed and renewed a favourable financing structure of £15m facilities until September 2013.
For the year to 31 December 2009, fees generated from Archial Architects Ltd contributed £26.4m turnover (2008 : £34.7m) and £4.8m pre-exceptional profit before tax (2008 : £5.8m) to the Group. The newly combined 'Sparch Group' including 'Alsop Sparch and the two 'Sparch' businesses in Singapore and China contributed £7.3m turnover (2008 : £7.4m) and produced £1.6m pre-exceptional profit before tax (2008 : £2.4m). Sparch Group grew revenues in China by 84% in 2009 and developed new markets such as UAE and Vietnam resulting in the expectation for 2010 of 32% of Group revenue coming from overseas markets.
Group costs, which include Archial Services Limited, were reduced during the year from £5.6m in 2008 to £4.5m. Archial Services, which delivers our Archial Sustainable Futures business, produced £0.2m revenue for 2009 (2008 : £0.36m).
The key element in our control of the costs of the business has been to concentrate on the combination of group level efficiencies that had been missing from the organisation prior to 2008, which by their nature require a period of time to fully roll-out. The changes implemented have sought at all times and wherever possible to extract cost from the business where it is non-revenue earning and protect the skill base that generates fees.
Exceptional costs in the year fall into 4 areas:
| Provisions against amounts recoverable on long term contracts | £7.8m |
| Provisions against trade receivables | £2.9m |
| Redundancy and reorganisation costs Permanent diminution in value of intangibles | £3.8m £1.8m |
Provisions against amounts recoverable on long term contracts and trade receivables follow a review by the Board, which concluded that in the current economic and trading environment a more prudent approach to provisioning was warranted. The redundancy and re-organisation costs reflect costs incurred and the permanent diminution in value of intangibles relate to the carrying value of legacy trade names no longer used by the Group.
The prospects for 2010 and beyond were reinforced in the second half of 2009 by an ongoing inflow of new project wins from both international and UK operations secured since the interim results in September 2009.
The Group order book is currently £30m and contains a near doubling of the proportion of international work and a reduced contribution from the UK public sector. The majority (79%) of our anticipated turnover for 2010 is however already instructed and included within this figure. This is exclusive of a strong and growing pipeline of potential work of £53m, not included in the forward order book. This increase in the pipeline of £7m since our last reported trading update in January 2010 gives us a degree of measured confidence for the future, especially as large elements are made up of private and internationally sourced revenue.
Significant Contracts Update
A representative sample of the instructions received in Q4 2009 and 2010 to date are:
In Asia:-
·; 'Eco Campus' Science Park in China of 3 million sq ft for Kingboard Chemical at Kunshan Huaqiao, Shanghai. This will represent one of the first leading energy focused developments of this kind in China for which the client is seeking to aggressively pursue a LEED* gold rating
·; Starhill Retail Refurbishment Kuala Lumpur - 30,000 sq ft
·; Petaling Jaya, Kuala Lumpur, masterplan for 850,000 sq ft retail and office development
·; Qingdao, China Architecture and Interior Design of 150,000 sq ft Entrepreneur Clubhouse
*Leadership in Energy and Environmental Design
In UAE:-
·; Extension to work on Zayed Sport City - 880 residential units in Abu Dhabi
·; Masterplanning Project on Reem Island
In Canada:-
·; Further Extensions to TTC Finch West and Steeles West Underground projects
In the UK:-
·; Ministry of Justice - Site Assessment and Concept Design Framework Commission
·; Training facility in West Country for MOD
·; MOD Project - Falkland Islands
·; Simulator Training Building - South West England for MOD
·; Three residential projects in South England
·; Two residential projects in the East Midlands
·; Carnegie Primary School Project - Dunfermline
·; Education Technical Advisory Services - additional contracts for Durham, Redcar and Cleveland
·; New Schools in Rochdale and Doncaster.
·; Inverclyde Schools Campus of three schools projects
·; Two Hotels and Mixed Use Facilities in Central Cardiff
Summary and Outlook
While the current economic climate is clearly challenging, and will remain so for some time in the UK, we have strong forward order book visibility, significant growth in our international offices and a good balance of revenue from private and public sources. Through our restructuring programme we were able to reduce our cost base at an early stage in the market downturn and have continued to maintain a strict control of costs throughout.
Our focus for 2009 was the rebranding of the Group, finessing of the support disciplines and control of costs in a reducing market. These principle areas have been addressed bringing to a completion the initial re-structuring of the business I sought from early 2008. We are now well placed to grow internationally and benefit from the expected strong GDP growth in the Middle East and Asia. We see this area as a key element for our future. Combining this with our other international and UK delivery and our universal and proven quality service and design skill, we are confident we will be able to develop.
2009 was again a year of progress and change in extremely difficult circumstances. We are pleased to have weathered the storm and established a strong platform for growth both at home and internationally.
I would like to take this opportunity to thank the Chairman, the rest of the board and all of my colleagues throughout the business for their continued support and hard work. With their help we are well placed to deliver the next stages of our business plan.
Chris Littlemore
Chief Executive
26 March 2010
Archial Group Plc
GROUP INCOME STATEMENT
for the year ended 31 December 2009
|
The Directors will not propose a dividend to the annual general meeting based on the financial statements for the year ended 31 December 2009.
*Earnings before interest, tax, depreciation and amortisation.
Archial Group Plc
STATEMENT OF COMPREHENSIVE INCOME
at 31 December 2009
|
|
| 2009 £000 | 2008 £000 |
| Loss / (Profit) for the period |
| (11,498) | 1,432 |
| Exchange difference on translation |
| (372) | 695 |
| Other comprehensive (loss) / income for the period, net of tax |
|
(372) | 695 |
| Total comprehensive (loss) / income for the period, net of tax |
| (11,870) |
2,127 |
Archial Group Plc
STATEMENT OF FINANCIAL POSITION
at 31 December 2009
___________________________________________________________________
|
|
Notes | 2009 £000 | 2008 £000 |
| Non-Current Assets |
|
|
|
| Goodwill | 13 | 21,289 | 21,196 |
| Other intangible assets | 14 | 11,212 | 14,088 |
| Property, plant and equipment | 15 | 1,258 | 1,893 |
| Financial assets | 18 | - | 1,706 |
| Total Non-Current Assets |
| 33,759 | 38,883 |
|
Current Assets |
|
|
|
| Trade and other receivables | 19 | 14,099 | 24,648 |
| Cash and short term deposits | 20 | - | 226 |
| Total Current Assets |
| 14,099 | 24,874 |
| Total Assets |
| 47,858 | 63,757 |
| Current Liabilities |
|
|
|
| Trade and other payables | 21 | 9,359 | 9,232 |
| Current tax liabilities |
| 1,110 | 848 |
| Interest bearing loans and borrowings | 22 | 4,342 | 2,303 |
| Provisions | 23 | 454 | 3 |
| Total Current Liabilities |
| 15,265 | 12,386 |
| Net Current (Liabilities) / Assets |
| (1,166) | 12,488 |
| Non-Current Liabilities |
|
|
|
| Trade and other payables | 21 | 419 | 573 |
| Interest bearing loans and borrowings | 22 | 9,500 | 12,240 |
| Provisions | 23 | 301 | 425 |
| Deferred tax liabilities | 10d | 230 | 3,925 |
| Total Non-Current Liabilities |
| 10,450 | 17,163 |
| Total Liabilities |
| 25,715 | 29,549 |
| NET ASSETS |
| 22,143 | 34,208 |
|
|
|
|
|
| Equity Attributable to Shareholders of the Parent |
|
|
|
| Share Capital | 27 | 1,190 | 1,190 |
| Share premium |
| 25,803 | 25,803 |
| Merger reserve |
| 8,106 | 8,106 |
| Treasury Shares |
| (158) | (158) |
| Movement in Equity - Foreign Exchange |
| 323 | 695 |
| Retained Earnings | 28 | (13,121) | (1,428) |
| Total Equity |
| 22,143 | 34,208 |
Archial Group Plc
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2009
|
|
Notes | 2009 £000 | 2008 £000 |
|
|
|
|
|
| Operating Activities |
|
|
|
| Cash generated by operations (pre exceptional cash costs) |
| 4,772 | 4,412 |
| Exceptional cash costs |
| (2,662) | (1,121) |
| Cash generated by operations (post exceptional cash costs) | 30a | 2,110 | 3,291 |
| Tax paid |
| (170) | (689) |
| Net Cash Flow from Operating Activities |
| 1,940 | 2,602 |
|
|
|
|
|
| Investing Activities |
|
|
|
| Interest received |
| 4 | 134 |
| Purchases of property, plant and equipment |
| (287) | (898) |
| Sale of property, plant and equipment |
| 31 | 41 |
| Payments for subsidiaries | 30b | (383) | (7,978) |
|
|
|
|
|
| Net Cash Flow Used in Investing Activities |
| (635) | (8,701) |
|
|
|
|
|
| Financing Activities |
|
|
|
| Interest paid |
| (830) | (1,283) |
| Dividends paid to equity holders of the parent |
| - | - |
| New bank loans |
| - | - |
| Repayment of bank loans |
| (2,475) | (1,875) |
| Proceeds from issue of new shares |
| - | 13,111 |
| Redemption of loan notes |
| - | (235) |
| Repayment of capital element of finance lease obligations |
| (63) | (172) |
| Net Cash Flow From Financing Activities |
| (3,368) | 9,546 |
| (Decrease) / Increase in Cash and Cash Equivalents |
| (2,063) | 3,447 |
| Cash and cash equivalents at beginning of the period |
| 226 | (3,221) |
| Cash and Cash Equivalents at the End of the Period | 30c | (1,837) | 226 |
|
|
|
|
|
Archial Group Plc
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2009
(in £'000)
|
| Share Capital | Share Premium | Merger Reserve | Treasury Shares | Foreign Exchange | Retained Earnings | Total Equity |
| Balance at 31 December 2008 |
1,190 |
25,803 |
8,106 |
(158) |
695 |
(1,428) |
34,208 |
| (Loss) for the year | - | - | - | - | - | (11,498) | (11,498) |
| Foreign Exchange Movement | - | - | - | - | (372) | - | (372) |
| Total comprehensive income and expense for the year |
- |
- |
- |
- |
(372) |
(11,498) |
(11,498) |
| Share Option Credit | - | - | - | - | - | (195) | (195) |
|
|
|
|
|
|
|
|
|
| Balance at 31 December 2009 | 1,190 | 25,803 | 8,106 | (158) | 323 | (13,121) | 22,143 |
|
| Share Capital | Share Premium | Merger Reserve | Treasury Shares | Foreign Exchange | Retained Earnings | Total Equity |
| Balance at 31 December 2007 as restated | 248 | 13,634 | 8,106 | (158) | - | (2,471) | 19,359 |
| Profit for the period as restated | - | - | - | - | - | 1,432 | 1,432 |
| Foreign Exchange Movement | - | - | - | - | 695 | - | 695 |
| Total comprehensive income and expense for the period |
- |
- |
- |
- |
695 |
1,432 |
2,127 |
| Share Option Credit | - | - | - | - | - | (389) | (389) |
| Issue of share capital | 942 | 14,128 | - | - | - | - | 15,070 |
| Share Issue Costs | - | (1,959) | - | - | - | - | (1,959) |
|
|
|
|
|
|
|
|
|
| Balance at 31 December 2008 | 1,190 | 25,803 | 8,106 | (158) | 695 | (1,428) | 34,208 |
Notes to financial information:
1. GOING CONCERN
The Board of Directors regularly monitors the ability of the Group to meet its liabilities as they fall due for the foreseeable future against the facilities and funding options open to it. The Board of Directors adopts the going concern basis of preparation of the financial statements if in its assessment it has a reasonable expectation that the Group has adequate resources to continue for the foreseeable future.
The Group's business activities, performance, outlook and future development are set out in the Chairman's statement and CEO's review. The Group's financial position is set out in the financial statements including details of its financial risks and instruments used to mitigate these risks, including liquidity and credit risk.
The processes the directors have undertaken, and the reasons for the conclusions that they have reached, regarding the applicability of the going concern bases are detailed below. The directors have followed the FRC Going Concern and Liquidity risk guidance.
Forecasts for the group and its constituent parts have been prepared on a monthly basis to December 2011 comprising profit and loss account, balance sheets and cash flows. At the time of writing the Group has 79% of the revenue in these forecasts for the period to December 2010 already instructed and a healthy pipeline of additional opportunities.
Sensitivity analysis has been undertaken on the most important assumptions within the forecasts. Some of these relate to converting billings into cash, timing of these cash receipts and global treasury management. The working capital management assumptions contained in the forecasts show that the group should be able to operate within its currently available facilities and the directors are confident that this is the case.
The Group reduced its level of net indebtedness during 2009 by 5%, from £14.5m to £13.8m and has provision in its forecasts to meet future loan payments as they fall due. The Group currently has adequate financial facilities available as well as long term contracts with various customers and suppliers across different sectors and geographies. As a consequence the directors believe the Group is well placed to manage its business and financial risks successfully despite the uncertain economic climate. After due enquiry, including scenario testing of the Group's financial forecasts as discussed above including tests of compliance with banking covenants, and receiving from our main bankers confirmation they are not aware of any reason why they would not renew our working capital facilities beyond the renewal date in September 2010, the directors have a reasonable expectation that the Group has adequate resources to continue in business for the foreseeable future and consequently continues to adopt the going concern basis in preparing the annual report and financial statements.
2. EXCEPTIONAL COSTS
| | 2009 £000 | 2008 £000 |
| | | |
| Provisions against amounts recoverable on contracts | 7,767 | - |
| Provisions against trade receivables | 2,910 | - |
| Redundancy and reorganisation costs Permanent diminution in value of intangibles | 3,834 1,743 | 823 - |
| Aborted transaction costs | - | 298 |
| | 16,254 | 1,121 |
In the course of the year a detailed review of trade debtors and amounts recoverable on contracts was undertaken. Upon review of the recoverability of these balances and in light of the current economic climate, significant specific provisions were recorded. These amounts are deemed to be exceptional on account of their size.
Permanent diminution in value of intangible assets relates to the carrying value at 31 December 2009 of trade names. Following the group reorganisation and aggregation into Archial Architects Limited at the end of 2008, the trade names that this carrying value relates to are no longer used. Therefore the Directors believe it is no longer appropriate to carry a value in this regards on the balance sheet.
Aborted transaction costs relate to professional fees incurred in connection with potential transactions that did not proceed.
3. EARNINGS PER SHARE
Basic EPS amounts are calculated by dividing profit for the year attributable to ordinary equity shareholders of the parent company by the weighted average number of shares outstanding during the year.
The calculation of the basic and diluted earnings per share is based on the following data:
|
| 2009 £000 | 2008 £000 |
|
|
|
|
| Pre Exceptional Profit for the year attributable to equity holders of the parent | 747 | 2,318 |
| Exceptional Costs incurred in the year | (16,254) | (1,121) |
| Tax credit on Exceptional Costs in the year | 4,009 | 235 |
|
(Loss) / Profit for the year attributable to equity holders of the parent |
(11,498) |
1,432 |
|
Number of shares | 2009 No. | 2008 No. |
|
|
|
|
| Weighted average number of ordinary shares for the purpose of basic earnings per share | 229,176 | 229,176 |
| - Employee share options | 122 | 122 |
| - Contingent share consideration | - | - |
| Weighted average number of ordinary shares for the purpose of diluted earnings per share | 229,298 | 229,298 |
4. TRADE AND OTHER RECEIVABLES
|
| 2009 £000 | 2008 £000 |
|
|
|
|
| Trade receivables | 9,315 | 14,631 |
| Amounts recoverable on contracts | 3,541 | 8,376 |
| Other debtors | 86 | 169 |
| Prepayments | 1,157 | 1,472 |
|
| 14,099 | 24,648 |
At 31 December 2009, £8,143,000 (2008 - £12,835,000) of trade receivables were denominated in Sterling and £1,172,000 (2008 - £1,796,000) were denominated in other foreign currencies. Debtors of £nil (2008 - £106,000) are secured against property.
Trade receivables are non-interest bearing and are generally on 30-90 days' terms and are shown net of a provision for impairment. Movements in the provision for impairment of receivables were as follows:
|
| 2009 £000 | 2008 £000 |
|
|
|
|
| At 1 January | 1,840 | 1,335 |
| Charge for the year | 3,457 | 532 |
| Amounts written back/written off | (358) | (27) |
| Fair value adjustments | - | - |
|
|
|
|
| At 31 December | 4,939 | 1,840 |
As at 31 December, the analysis of trade receivables that were past due but not impaired is as follows:
|
Year |
Total £'000 |
|
31-60 days |
61-90 days |
91-120 days |
>120 days |
|
|
|
|
|
|
|
|
| 2009 | 9,315 | 1,828 | 3,287 | 1,309 | 367 | 2,524 |
| 2008 | 14,631 | 4,303 | 3,408 | 1,553 | 1,298 | 4,069 |
The Group continually assesses the recoverability of trade receivables and the level of provisioning required. Trade receivables outstanding for more than 120 days are subject to additional review and recovery procedures.
5. INTEREST BEARING LOANS AND BORROWINGS
|
| 2009 £000 | 2008 £000 |
|
|
|
|
| Bank overdrafts | 1,837 | - |
| Bank loans | 12,000 | 14,475 |
| Obligations under finance leases (see note 25) | 5 | 68 |
|
| 13,842 | 14,543 |
|
| 2009 £000 | 2008 £000 |
| The borrowings are repayable as follows: |
|
|
| On demand or within one year | 4,342 | 2,303 |
| In the second year | 3,000 | 3,015 |
| In the third to fifth years inclusive | 6,500 | 9,225 |
|
|
|
|
|
| 13,842 | 14,543 |
| Less: amounts due for settlement within 12 months | (4,342) | (2,303) |
|
| 9,500 | 12,240 |
Bank loans at 31 December 2009 comprised:
| Lender | Date Repayable
| Interest rate
| 2009 £'000 | 2008 £'000
|
|
|
|
|
|
|
| Halifax Bank of Scotland | December 2012 | Base Rate + 3.75% | 12,000 | 13,125 |
| Singer and Friedlander | November 2011 | LIBOR + 1.75% | - | 1,350 |
|
|
|
| 12,000 | 14,475 |
The Singer and Friedlander loan was an interest only loan used to fund two properties. The capital element was repaid on sale of the two properties which occurred in September 2009. The secured assets were previously disclosed as a financial asset in note 18.
All bank overdrafts and loans are denominated in sterling. The directors estimate that the fair value of the Group's borrowings is equivalent to their carrying value. The overdraft facility is renewable in September 2010.
The Halifax Bank of Scotland borrowings are secured over the assets of the Group companies
6. PROVISIONS
|
| Empty Property Provision
2009 £000 | Interest in Joint Venture
2009 £000 | Contingent Cash Consideration 2009 £000 | Total
2009 £000 |
| At 1 January |
|
|
|
|
| Current | - | 3 | - | 3 |
| Non current | - | - | 425 | 425 |
|
| - | 3 | 425 | 428 |
| Arising during the year | 526 | 91 | - | 617 |
| Utilised / Reassessed | - | - | (290) | (290) |
| At 31 December | 526 | 94 | 135 | 755 |
| Analysed as: |
|
|
|
|
| Current | 225 | 94 | 135 | 454 |
| Non current | 301 | - | - | 301 |
|
| 526 | 94 | 135 | 755 |
|
| Interest in Joint Venture
2008 £000 | Contingent Cash Consideration 2008 £000 | Total
2008 £000 |
| At 1 January |
|
|
|
| Current | - | 6,956 | 6,956 |
| Non current | - | 425 | 425 |
|
| - | 7,381 | 7,381 |
| Arising during the year | 3 | - | 3 |
| Utilised | - | (6,956) | (6,956) |
| At 31 December | 3 | 425 | 428 |
| Analysed as: |
|
|
|
| Current | 3 | - | 3 |
| Non current | - | 425 | 425 |
|
| 3 | 425 | 428 |
The empty property provision has arisen in 2009 as a consequence of the closure of three of the Group's offices in the course of the year where the lease obligation remains despite the vacation of the premises by the Group. There is also an additional office where it is considered that half of the office is no longer utilised so appropriate provision has been made.
The deferred contingent cash consideration provision of £425,000 was reassessed to be £135,000 at the balance sheet date.
Deferred contingent cash consideration became payable to the vendors of some previous acquisitions should the average share price of Archial Group plc rise above 9.6 pence for the three months ended 31 December 2009.
Management computed this liability to be £135,000 at the balance sheet date and would be payable on 31 January 2010.
7. CASH FLOWS
|
| 2009 £000 | 2008 £000 |
| a - Reconciliation of operating profit to net cash flow absorbed by operations |
|
|
| (Loss) / Profit before tax | (14,762) | 1,532 |
| Finance revenue | (4) | (134) |
| Finance costs | 830 | 1,283 |
| Share-based payments/(receipts) | (195) | (389) |
| Share of results of joint venture - post tax | 91 | 38 |
| Depreciation of property, plant and equipment | 891 | 799 |
| Profit on disposal of property, plant and equipment | - | - |
| Amortisation of intangible assets | 1,133 | 1,837 |
| Amortisation of trade names classified as exceptional this year | 1,743 | - |
| Movement in foreign exchange equity reserve | (372) | 695 |
| Decrease/(increase in trade and other receivables | 10,550 | (505) |
| Increase/(decrease) in trade and other payables | 2,205 | (1,865) |
| Cash generated by operations | 2,110 | 3,291 |
|
| 2009 £000 | 2008 £000 |
| b - Acquisition of Subsidiaries |
|
|
Consideration paid on acquisitions | - | - |
| Consideration paid on prior period acquisitions | (382) | (7,978) |
|
|
|
|
| Net cash flow for acquisitions | (382) | (7,978) |
|
| 2009 £000 | 2008 000 |
| c - Analysis of cash and cash equivalents |
|
|
Cash and short term deposits per balance sheet | - | 226 |
| Bank overdrafts | (1,837) | - |
| Cash and cash equivalents per cash flow statement | (1,837) | 226 |
The Group has a working capital facility of £3.0m which will be reviewed in September 2010. The bank has indicated that they intend to renew the facility.
8. POST BALANCE SHEET EVENTS
Deferred Consideration
Under the terms of the sale and purchase agreement for the acquisition of several of the group companies in previous years, a final consideration payment was payable at the end of January 2010 which was contingent on the average share price of Archial Group plc in the last quarter of 2009.
As at 31 December 2009 it was possible to compute this average share price to be 9.6 pence and this gave rise to a final consideration payment of £135,000.
This consideration was paid on 28 January 2010.
Share Incentive Plan
On 1 February 2010 the Board of Archial Group plc approved and introduced a new long-term Share Incentive Scheme for certain directors and senior management ("the Participants") of the Company.
The Board believes that the new Share Incentive Scheme is necessary to incentivise, motivate and reward key directors and senior management over the long term. The Board considers that it is essential for the interests of key directors and senior management to be fully aligned with those of shareholders to maximise shareholder value.
Corporate Reorganisation
In January 2010 the following changes in the Group's structure were implemented;
Penrose Architects Limited was renamed Archial Holdings Limited.
Big Ben Associates was renamed Sparch Group Limited.
Alsop (Consultants) Limited was renamed Alsop Sparch Limited.
9. DIVIDENDS
No dividend was declared for the year ended 31 December 2009 (2008 - £nil).