ARL.L Regulatory News (ARL)

27 Apr 2006 07:02

SMC Group Plc27 April 2006 27th April 2006 SMC GROUP PLC ("SMC", "the Company" or "the Group") Preliminary Results for the Year ended 31st December 2005 SMC Group Plc ("SMC" or "the Group") SMC Group, the leading group of architects and designers, announces maidenpreliminary results for the year ended 31 December 2005. Highlights: • Turnover grown by 159% to £13.5m • Profit before tax grown by 280% to £2.9m • Gross profit margin grown by 182% to £7.4m • EBITDA grown by 218% to £3.7m • Profit after tax grown by 263% to £1.9m • Fully diluted earnings per share grown by 196% up from 3.21 p to 6.28p • Proposed maiden dividend of 1p per share • Clients now totalling in excess of 250 • Contract wins exceeded £600m of construction value, representing circa £6m in new stage fees to SMC • Completed six earnings-enhancing acquisitions since admission to AIM comprising Corstorphine & Wright Hills Erwin, Philip Lees & Associates, DTR:UK, Covell Matthews, Ian Penrose Architects and Alsop Architects Commenting on the results, Stewart McColl, Chief Executive of SMC stated: "I am delighted to report an excellent set of maiden full year results thatreflect the considerable progress we have made since joining AIM. We firmlybelieve that an opportunity exists to create an architectural and designbusiness of international scale through a strategy of both organic andacquisition led growth. The new financial year has started well and we lookforward to continuing to deliver value for shareholders." For further information please contact: SMC GroupStewart McColl Chief Executive 020 7495 5335 Bell Pottinger Corporate & FinancialDavid Rydell/Geoff Callow/Chris Hamilton 020 7861 3232 Noble & CompanyMatthew Hall/Rory Boyd 020 7763 2200 SMC GROUP PLCCHAIRMAN'S STATEMENT The single most significant milestone in the growth of the SMC Group during 2005was admission to AIM on the 10th of June. The IPO process provided the fundingto enable the implementation of our strategy of organic and acquisitive growth.I am therefore particularly pleased to report that since admission the SMC Grouphas continued to achieve growth in line with market expectations. In September 2005 we announced our interim results, clearly demonstrating thatSMC was performing as expected. I am pleased to report that this level ofperformance has continued throughout the second half of the year. At the time of flotation the Group implemented two modest but strategicacquisitions and, in October 2005, we completed our first post-flotationacquisition. Whilst these acquisitions contribute to the Group's financialperformance for only part of the year, I can confirm that each transaction hasalready proved to be earnings enhancing. These deals brought us further geographical reach across Northern England withthe addition of offices in Liverpool, Lancaster and Birmingham. Subsequentlycertain offices, two in each of Leeds and Manchester where we already hadrepresentation, have integrated with sister companies to recognise efficienciesand capitalise upon joint marketing and resource strengths. The strategy to increase our geographical representation is one that is partlydriven by the desire to meet the needs of developer clients with a nationalportfolio. These are often London based but with a requirement for localknowledge. It also gives the opportunity to service the regionally-based nichedeveloper who may only work with his local architect. Moreover this strategy iscompatible with the government's Building Schools for the Future programme(BSF), a commitment to invest £60bn in new school development throughout Englandover the next 10-15 years. Contractors and developers participating in thisprogramme see the benefits of 'local community' knowledge and hence the specificreason for SMC forming a new education focussed division led by experiencedindividuals from various Group company offices, proactively approaching thecontractor market. During the year we welcomed three new Directors to the Board, twonon-executives, Maxwell Hutchinson and Robert Tyrrell, and one executivedirector, Gordon Watson. They bring together a considerable pool of knowledgeand contacts with both clients and our peers and, in Robert Tyrrell's casespecifically, extensive understanding of the socio-economic, demographic andpolitical issues that influence the decisions our clients make when directingtheir investments. Maxwell, a practicing architect and a former President of theRIBA, is particularly well connected within the architectural profession. Asindependent non-executives, Maxwell and Robert will contribute to our Group'sresponsibilities within the principles of ensuring good governance. As stated in our maiden interim report, SMC is first and foremost a commercialbusiness. The product of the business is architecture, very good architecturethat contributes to the success of our client's own businesses and enhances thelives of the people who experience it. Stewart McColl, our Chief Executiveadmits to being passionate about business and architecture, and is drivingsuccess in both, with a determination to see a lasting marriage of the higheststandards of creativity and invention with significant financial rewards. Inthat light, the business continues to seek earnings enhancing acquisitionopportunities, including architecture businesses renowned for their designquality. In addition to reporting financial success, I am delighted to record thatthrough the year SMC businesses have received recognition for their contributionto the built environment. This includes awards for energy-efficient andsustainable buildings, where we have applied design principles that will have anever increasing relevance to our marketplace. And now, as we enter the second quarter of 2006, I can report that the businesshas continued to pursue its strategy in the form of three additionalacquisitions. We have also completed a successful fundraising which will assistfurther expansion. Since the year end we have welcomed a new Finance Director to the Board, RobertBoardman, to replace David Pedley. David will remain as Company Secretary and asconsultant to the Group until the end of June 2006. I would like to take thisopportunity to record how much David deserves our appreciation for hisconsiderable efforts over the years and in particular during the flotationprocess. Indeed, I would like to thank all my fellow Directors, all staff andour shareholders for their support and contribution to the success of the SMCGroup Plc through 2005 and beyond. The new financial year has started well and I therefore remain confident thatSMC will continue to return value to shareholders as we undertook to do when wefirst approached the investment marketplace. In that light I can confirm thatSMC is proposing a maiden dividend for 2005, payable in June 2006. Sir Rodney WalkerChairman (Non-executive) SMC GROUP PLCCHIEF EXECUTIVE'S STATEMENT I am delighted to present my statement to you following such an important andsuccessful period in the development of SMC Group Plc. 2005 was a significant year in the evolution of SMC Group with the completion ofthe Admission to AIM and a number of acquisitions. However, the business alsoexperienced strong organic growth which together with these acquisitions helpedturnover grow by 159% to £13.5m (2004: £8.5m), profit before tax grow by 280% to£2.9m (2004: £1m) and fully diluted earnings per share grow by 196% to 6.28p(2004: 3.21p). This growth also means we will be paying a maiden dividend of 1pper share in June 2006. It is customary for a Chief Executive to thank colleagues in the closingstatement of a report. However I would like to record here at the outset, onbehalf of the Board and founding shareholders our very great appreciation forthe contribution made by so many people to all that has been achieved duringthis and previous years in the development of our business. I would like tothank Sir Rodney in particular for his support, guidance and encouragement sincehe joined us as Chairman in November 2004. Review of the year Contract wins During the year we won a significant number of new contracts throughout ourbusiness units and across several market sectors. This illustrates how new andrepeat business remains a central focus for our colleagues and reflects ourdetermination to maintain a balanced approach to growth, avoiding dependency onsingle market sectors. Cumulatively, these wins exceeded £600m of constructionvalue, representing new fees to SMC of approximately £6m (accounting for earlystages of work secured). Acquisitions In line with our strategy outlined at the time of the AIM Admission, we havecompleted a number of acquisitions both during the year and after the year end. In October 2005 we purchased DTR:UK, an architectural practice that provides uswith exposure to growth areas in the North of England, adding offices inManchester, Liverpool, Leeds and Birmingham. Although this business, rebrandedSMC DTR:UK, contributed only two months worth of turnover to our 2005 figures,it already had approximately 75% of 2006 budgeted turnover committed at the timeof the acquisition, therefore we look forward to recognising a full yearscontribution in 2006. SMC Corstorphine & Wright Hills Erwin, one of the two acquisitions completed atthe time of the IPO, has integrated with SMC DTR:UK to benefit from sharedmarketing and staff resource. This has been a local initiative endorsed by theGroup. Coincidentally, a similar situation had already occured with the othercompany acquired at IPO, Philip Lees & Associates. They integrated with SMCGower Architects in Leeds for the same reasons, with Philip Lees graduallytaking over the leading role in advance of the retirement of SMC Gower'sManaging Director, Gordon Finch. Gordon Finch will retain a marketing role and Iwould like to record that the SMC Group owes a considerable debt of gratitude tohim for his constant support since the acquisition of William Gower & Partnersin June 2001. This was the first acquisition completed by the Group in pursuitof its strategy and was undoubtedly a milestone in our development. Since the beginning of 2006 we have completed the acquisitions of CovellMatthews and Ian Penrose Architects adding offices in Exeter, Plymouth andCambridge. These provide further UK geographic reach into the South West, EastAnglia, the Home Counties and Central England. We were also delighted to complete a further aspect of our strategy, byacquiring Alsop Architects (to be rebranded SMC Alsop), a highly creative designteam. SMC Alsop brings us a second London studio with representation in NorthAmerican markets through Toronto, and the Far East through Singapore, Shanghaiand Beijing. Attracting the RIBA Stirling Prize-winning design team led byProfessor Will Alsop OBE RA with such a high creative reputation, hasconsiderably heightened the overall SMC profile amongst our peers and both ourcurrent and potential clients. New Directorships In November we announced the appointment to the SMC Board of three newDirectors. Gordon Watson, whom I have worked with since 1978, shares thebusiness development role with me and focuses on both new client business andpotential new acquisitions. Gordon is one of three Executive Directors on theSMC Group Board. Maxwell Hutchinson, a former President of the Royal Institute of BritishArchitects (RIBA), a practising architect who is now well known for histelevision and radio broadcasting on issues mainly related to the builtenvironment, joins as a Non-executive Director. Maxwell through his role at theRIBA and high profile commentary is extremely well connected within ourprofession and we are therefore asking him to play a major part in furtherraising the Group's profile, particularly amongst our peer groups. Robert (Bob) Tyrrell, also a broadcaster but from a background of forecastingpolitical, socio-economic and demographic trends, joined us as a non-executiveDirector. Bob, who is Chairman of Demos, the independent public policy thinktank, and presents the Radio 4 'Analysis' programme, worked with me in the pastin his capacity as Chairman of The Henley Centre for Forecasting. Bob's role isadvising the Group on the global and local issues that impact upon theinvestment decisions implemented by our clients and raising our profile inpolitical and governmental areas. On the 22nd of November, Bob purchased 52,500ordinary shares in SMC at a price of 93p per share, a further demonstration ofhis commitment to our future. In March 2006, we announced that the Board welcomed Robert Boardman as our newFinance Director, replacing David Pedley who resigned to pursue his otherinterests. David remains as a consultant and as Company Secretary until 30thJune 2006 to ensure a smooth handover to Robert. David's contribution has beenconsiderable and his role in the flotation process invaluable. I would thereforelike to take this opportunity to thank him for his support over the years. Robert Boardman joins the Board from finance director positions at Stanelco Plcand previously Durlacher Corporation Plc. He brings knowledge of the publicmarkets and extensive financial and accounting experience. Robert also hasexperience in acquisitions, fundraisings and other corporate transactions. We welcome all four to the SMC Board. Formation of a new Division In December, in response to the Government's initiative under the BuildingSchools for the Future (BSF) programme, a commitment to spend £60bn on newschools over the next 10 - 15 years, we announced the formation of a newdivision to be called SMC Education. Designed to proactively tap into thefacilities management and contracting markets bidding for BSF projects, SMCEducation brings together Educationalists and Community Liaison Officers to workwith our architects and designers to assist in the success of bidding processes.It recognises the importance of local contact and community relations to schoolgoverning bodies and local authorities, while capitalising upon our Group'sconsiderable portfolio in secondary schools, colleges and universities. Ourincreasing national office network is ideally placed to assist the BSF programmeand we will continue to pursue opportunities in this market, including seekingearnings-enhancing acquisitions which further extend the geographicaladvantages. We expect to see the full benefits of this initiative developthrough 2006 and beyond. Outlook Looking forward, SMC will continue to maintain a balanced approach to growthavoiding any over dependency on single market sectors. Geographic gaps in localmarkets that we will aim to fill at the right time and price include Scotland,Wales, and Ireland. We are also reviewing some opportunities that may broadenour international reach, although the UK remains our first priority. In terms ofsector gaps, although we have individuals within our Group who have extensiveexperience in transportation, this sector still represents a very low percentageof our work at around 2% yet is one of the most lively sectors in the UK andinternationally. Equally, leisure and sports related markets are an attractionto us, not exclusively because of the 2012 London Olympics, and we would like toacquire in this sector. In addition to our architectural interests, we see opportunities to grow withcomplementary design services such as interior, graphic and product design,sectors in which there are some highly creative and profitable companies. It isworth making clear, however, that we have no plans to move away from our coreexpertise of design excellence. It gives me considerable satisfaction to report that we have fulfilled theundertakings offered to the investment community during the year and I amconfident that we can continue to do so as our strategy unfolds through 2006 andbeyond. As I alluded to in my opening statements, this has all been possiblebecause of the dedicated and tireless efforts of my colleagues, all of whom areshareholders in our business. We all look forward to working together with youin the future with great enthusiasm and optimism. Thank you. Stewart McCollChief Executive SMC Group PlcCONSOLIDATED PROFIT AND LOSS STATEMENTFor the year ended 31 December 2005___________________________________________________________________________ Continuing Acquisitions Total Total operations 2005 2005 2005 2004 Notes £ £ £ £ TURNOVERGroup and share of joint venture 11,687,195 1,823,536 13,510,731 8,481,176Less: share of joint venture turnover (414,147) - (414,147) (391,794) Group Turnover 11,273,048 1,823,536 13,096,584 8,089,382 Cost of sales (5,107,475) (556,179) (5,663,654) (4,005,545) GROSS PROFIT 6,165,573 1,267,357 7,432,930 4,083,837 Administrative expenses (3,391,397) (407,974) (3,799,371) (2,421,421) Depreciation (146,905) (19,234) (166,139) (112,328)Goodwill amortization (161,220) (61,027) (222,247) (115,600)Other operating income 6,000 - 6,000 6,000 Group Operating Profit 2,472,051 779,122 3,251,173 1,440,488 Share of operating profit of joint venture 24,309 29,733 TOTAL OPERATING PROFIT 3,275,482 1,470,221 Interest receivable 27,798 22,448Interest payable (434,979) (467,450) PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 2,868,301 1,025,219 Taxation (1,005,150) (316,409) PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 1,863,151 708,810 Basic earnings per ordinary share (in pence) 1 6.41 3.21 Diluted earnings per ordinary share (in pence) 1 6.28 3.21 The Directors will propose a dividend of 1p per ordinary share to the annualgeneral meeting based on the financial statements for the year ended 31 December2005. No separate statement of total recognised gains and losses has been presented asall such gains and losses have been dealt with in the profit and loss account. SMC Group PlcCONSOLIDATED BALANCE SHEETAs at 31 December 2005___________________________________________________________________________ 2005 2004 £ £ Notes FIXED ASSETSIntangible assets 9,671,399 3,224,368Tangible assets 618,181 382,158 Investment in joint venture:Share of gross assets 377,717 261,852Share of gross liabilities (334,669) (245,982) TOTAL FIXED ASSETS 10,332,628 3,622,396 CURRENT ASSETSDebtors: amount falling within one year 10,508,158 5,675,807Cash at bank and in hand 791 635 10,508,949 5,676,442 CREDITORS: amounts falling due within one year (5,638,583) (5,213,808) NET CURRENT ASSETS 4,870,366 462,634 TOTAL ASSETS LESS CURRENT LIABILITIES 15,202,994 4,085,030 CREDITORS: amounts falling due after more than one year (4,237,829) (1,872,056) PROVISIONS FOR LIABILITIES AND CHARGES (1,932,364) (1,250,000) NET ASSETS 9,032,801 962,974 CAPITAL AND RESERVESCalled up share capital 2 172,792 110,375Share premium account 4,060,176 408,625Shares to be issued 1,900,000 -Merger reserve 742,707 -Shares held by SIP Trust (150,000) -Profit and loss account 2,307,126 443,974 EQUITY SHAREHOLDERS' FUNDS 3 9,032,801 962,974 SMC Group PlcCONSOLIDATED CASH FLOW STATEMENTFor the year ended 31 December 2005___________________________________________________________________________ Notes 2005 2004 £ £ Net cash flow from operating activities 4(a) (141,006) 242,962Returns on investments and servicing of finance 4 (b) (355,668) (409,196)Taxation (209,205) (297,955)Capital expenditure and financial investments 4 (b) (107,538) (66,639)Acquisitions 4 (b) (2,658,703) (25,000) CASH OUTFLOW BEFORE FINANCING (3,472,120) (555,828) Financing 4 (b) 3,803,841 (184,991) INCREASE / (DECREASE) IN CASH IN THE YEAR 331,721 (740,819) RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT Increase / (decrease) in cash in the year 4 (c) 331,721 (740,819)Cash (inflow) / outflow from change in debt (247,166) 184,991 Change in net debt resulting from cash flows 84,555 (555,828)New finance leases (115,228) (118,880) Movement in net debt in the year (30,673) (674,708) OPENING NET DEBT AT 1 JANUARY 2005 (4,699,186) (4,024,478) CLOSING NET DEBT AT 31 DECEMBER 2005 4 (c) (4,729,859) (4,699,186) NOTES TO THE FINANCIAL INFORMATION 1. EARNINGS PER SHARE 2005 2004 Pence pence Weighted average number of shares 29,086,209 22,075,000Retained profits 1,863,151 708,810 Basic earnings per share (pence per share) 6.41 3.21 Weighted average number of shares 29,086,209 22,075,000Dilutive potential shares 591,348 - Fully diluted earnings per share (pence per share) 6.28 3.21 PAT 1,863,151 708,810Add back goodwill amortization 222,247 115,600 Adjusted basic earnings per share before goodwill amortisation (penceper share) 7.17 3.73 Adjusted fully diluted earnings per share before goodwill amortisation(pence per share) 7.03 3.73 2. SHARE CAPITAL 2005 2004 £ £ Ordinary share at Ordinary share 0.5p each at £1 each Authorised:75,000,000 ordinary shares of 0.5p each 375,000 150,000 Allotted & issued:34,558,372 ordinary shares of 0.5p eachFully paid 172,792 73,249Part-paid - 37,126 172,792 110,375 Shares issue On 6 June 2005 each authorised, issued and un-issued ordinary share of £1 wassub-divided into 200 ordinary shares of 0.5 pence each. The authorised sharecapital of the company was increased from £150,000 to £375,000 by the creationof 45,000,000 ordinary shares ranking pari passu with the existing ordinaryshares. On 6 June 2005 prior to admission on AIM, the number issued and fully paid was22,075,000 ordinary shares. On admission, an additional 10,675,934 ordinaryshares were placed on AIM. In addition, 348,837 ordinary shares were issued aspart of the consideration for the acquisition of Philip Lees and Associateslimited and 697,675 ordinary shares were issued as part of the consideration forthe acquisition of Corstorphine & Wright Hills Erwin limited. On 6 June 2005, 348,837 ordinary shares were issued to the SIP Trust. On 27 October 2005, 412,089 ordinary shares were issued as part of theconsideration for the acquisition of Dempster Thrussell and Rae Limited (DTR:UK). Share options On 6 June 2005, 2,226,172 share options were granted to eligible employeeswithin the Group by the Board at a subscription price of 43p per share. On the 28 October 2005, 541,894 share options were granted to eligible employeesof SMC DTR: UK limited at a subscription price of 72.8p per share. Grant date Subscription Period within which options Number of shares Price are exercisable for which rights per share are exercisable 6/06/2005 43p 9/06/2010 5/6/2015 2,226,17228/10/2005 72.8p 28/10/2010 27/10/2015 541,894 2,768,066 3. SHARE PREMIUM ACCOUNT 2005 £GROUP1 January 2005 408,625Increase in share premium during the year 4,685,528Less expenses (1,033,977) 31 December 2005 4,060,176 Included in the expenses are amounts paid to directors and employees totalling£379,386, paid explicitly in relation to the issue of shares during the IPOlisting. 4. RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS 2005 2004 £ £ Opening equity shareholders' funds 962,974 254,164Shares issued for cash consideration (net of costs) 3,556,675 -Shares issued in connection with acquisitions 750,000 -Deferred share consideration for acquisitions 1,900,000 -Profit for the financial year 1,863,151 708,810 Closing equity shareholders' funds 9,032,801 962,974 5. CASH FLOWS 2005 2004 £ £ a - Reconciliation of operating profit to net cash flow from operating activities: Operating profit 3,251,173 1,440,488Amortisation of goodwill 222,247 115,600Depreciation of fixed assets 166,139 112,328(Profit) / loss on disposal of fixed assets (8,016) 8,112Increase in debtors (2,949,767) (1,949,598)(Decrease) / increase in creditors (822,782) 516,032 Net cash flow from operating activities (141,006) 242,962 2005 2004 £ £b - Analysis of cash flows for headings netted in the cash flow Returns on investments and servicing of finance Interest received 24,929 21,554Interest paid (373,785) (412,524)Interest element of finance lease rental payments (6,812) (18,226) Net cash outflow from returns on investments and servicing of finance (355,668) (409,196) Capital expenditure and financial investmentPurchase of tangible fixed assets (138,083) (66,639)Sale of tangible fixed assets 30,545 - Net cash outflow from capital expenditure and financial investment (107,538) (66,639) AcquisitionsConsideration paid on acquisitions (2,091,495) -Deferred consideration paid on prior year acquisition (25,000) (25,000)Bank overdraft acquired with subsidiaries (574,129) -Cash acquired with subsidiaries 31,921 - Net cash outflow from acquisitions (2,658,703) (25,000) FinancingIssue of shares (net) 3,556,675 -Redemption of loan notes (790,086) -Debt due within one year: repayment of short term borrowings (300,000) (997,414)Debt due within one year: increase in bank loan 1,437,500 888,889Capital element of finance lease rental payments (100,248) (76,466)Net cash inflow / (outflow) from financing 3,803,841 (184,991) At Other non At 31 1 January cash December 2005 Cash flow changes 2005 £ £ £ £ c - Analysis of net debt Cash in hand, at bank 635 156 791Bank overdraft (1,893,396) 331,565 (1,561,831) 331,721 Debt due within 1 year (857,900) 557,900 (300,000)Debt due after 1 year (1,744,686) (905,314) (2,650,000)Finance leases (203,839) 100,248 (115,228) (218,819) (247,166) Total (4,699,186) 84,555 (115,228) (4,729,859) 6. PURCHASE OF SUBSIDIARY UNDERTAKINGS On 10 June 2005 the Group acquired 100% of the share capital of Corstorphine andWright Hills Erwin Limited. The consideration was satisfied by the issue of697,675 ordinary shares of 0.5 p each in the Company at a price of 43p per shareand £400,000 in cash. Also on 10 June 2005 the Group acquired 100% of the share capital of Philip Leesand Associates Limited. The consideration was satisfied by the issue of 348,837ordinary shares of 0.5 p each in the Company at a price of 43p per share and£525,000 in cash. On 27 October 2005 the Group acquired 100% of the issued share capital ofDempster Thrussel and Rae (DTR) for an initial payment of £1.2 million. £900,000of the initial payment was made in cash and the remainder via the issue of412,089 shares of 0.5 p each in the Company at a price of 72.8 p per share. The balance of the consideration will be paid in stages between 30 March 2006and 1 June 2009, and will be calculated according to the future performance ofDTR. The total consideration will be satisfied by an equal mix of loan notes andshares. Net assets acquired at fair value P Lees C&WHE DTR Total £ £ £ £ Tangible fixed assets 20,433 65,758 118,575 204,766Debtors 250,988 411,203 1,220,393 1,882,584Cash at bank and overdraft (120,073) 33,732 (455,867) (542,208)Other creditors (92,994) (408,504) (975,663) (1,477,161)Provisions for liabilities and charges - (11,300) (59,464) (70,764) 58,354 90,889 (152,026) (2,783) Goodwill on acquisition 648,646 641,612 1,554,020 2,844,278 707,000 732,501 1,401,994 2,841,495 Satisfied by:Cash paid 525,000 400,000 900,000 1,825,000Shares issued 150,000 300,000 300,000 750,000Costs of acquisitions 32,000 32,501 201,994 266,495 707,000 732,501 1,401,994 2,841,495 Goodwill on deferred consideration - - 3,800,000 3,800,000 Satisfied by:Shares to be issued - - 1,900,000 1,900,000Provision for payment of deferred consideration - - 1,900,000 1,900,000 - - 3,800,000 3,800,000 The DTR deferred consideration is dependant upon future PBT and is therefore notcurrently determinable. However, on the basis of an estimated 10% PBT growth perannum from 2005 the directors estimate a total deferred consideration of£3,800,000. 50% of the consideration will be satisfied by the issue of loannotes and 50% in ordinary shares of the SMC Group Plc. 7. POST BALANCE SHEET EVENTS The following events have occurred since the year end. Acquisitions On 2 February 2006 the Group acquired Covell Matthews Architects. £2.1m waspayable on acquisition satisfied by £1.7m in cash and the issue of 386,204shares of 0.5 p each in the Company at a price of 109.3 p per share. The balance of the consideration will be paid in stages in June 2007 and June2008, and will be calculated according to the future performance of CovellMatthews for 2006 and 2007. The total consideration will be satisfied by a mixof cash and shares of approximately 75% cash/25% shares. On 2 February 2006 the Group acquired Ian Penrose Architects. £2.0m was payableimmediately on acquisition, satisfied by a cash payment of £1.5m and the issueof 452,849 shares of 0.5 p each in the Company at a price of 109.3 p per share. The balance of the consideration will be paid in stages in June 2007 and June2008, and will be calculated according to the future performance of Ian PenroseArchitects for 2006 and 2007. The total consideration will be satisfied by a mixof cash and shares of approximately 50% cash/50% shares. On 23 March 2006 the Group acquired certain of the assets and business of AlsopDesign Limited for a consideration of £1.8 million satisfied by £900,000 in cashand the issue of 624,277 new ordinary shares of 0.5p in the Company at a priceof 144.17p per share. Certain Alsop executives will be issued with a total of 277,456 options overordinary shares in SMC under the SMC EMI Option scheme, each with an exerciseprice of 144.17p. Performance related payments based on profitability for each of the 3 years toDecember 2008 will be made to certain executives of the business satisfied by amix of cash and shares at the discretion of SMC. Placing of new ordinary shares: On 15 February 2006 the SMC Group raised £1.72 million, before expenses, by wayof a Placing of 1,707,400 new ordinary shares of 0.5p each. The placing wascompleted at a price of 101p per placing share. 8. BASIS OF PREPARATION The above financial information does not constitute statutory accounts withinthe meaning of Section 240 of the Companies Act 1985. The financial informationrelating to the year ended 31 December 2005 has been extracted from the annual accounts in respect of which the auditors have not yet signed their auditreport. The audited statutory accounts for the year ended 31 December 2005 willbe filed with the Registrar of Companies following the Annual General Meeting. The financial information relating to the year ended 31 December 2004 has been extracted from the audited statutory accounts for that year which have been filed with the Registrar of Companies and received an unqualified audit report which did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. The accounting policies adopted for the preparatio of 2005 annual accounts areconsistent with those used in the previous year. This information is provided by RNS The company news service from the London Stock Exchange