Aukett Swanke Regulatory News (AUK)

15 Jan 2008 07:00

Aukett Fitzroy Robinson Group PLC15 January 2008 Embargoed until 7am on Tuesday 15 January 2008 Aukett Fitzroy Robinson Group Plc Preliminary announcement of results for the year ended 30 September 2007 Aukett Fitzroy Robinson Group Plc, the international practice of architects andinterior design specialists, announces its preliminary results for the yearended 30 September 2007. Key highlights • Group turnover up 21% to £19.7m with strong growth in the UK hotel and retails sectors, and Russian operation. • Profit before tax up £1.6m to £2.4m as a result of turnover and margin growth. • 136% growth in earnings to 1.06 pence per share. • Strong cash flow with £1.8m of net cash inflow before financing leading to the elimination of net debt. • Shareholders' funds up 45% including net cash of £1.7m. • Recommencement of dividend payments with 0.2 pence per share paid in September 2007. Nicholas Thompson, Chief Executive Officer of Aukett Fitzroy Robinson commented: "Having now achieved two years of improving profitability, we are cautiouslyoptimistic as we embark upon a period where we need to maintain our currentfinancial performance and improve both the transparency and quality of ourincome in the longer term." Enquiries Aukett Fitzroy Robinson - 020 7636 8033Nicholas Thompson, Chief Executive OfficerDuncan Harper, Group Finance Director JM Finn - 020 7600 1658Sam SmithClive Carver Adventis Financial PR - 020 7034 4759Chris SteeleTarquin Edwards Chairman's statement I am delighted to report a further year of real financial progress. At the half year we said that we expected to meet the then market expectationfor financial performance which we have done with profit before tax rising to£2.37m (2006: £0.79m). This improvement in our financial performance allowed us to reorganise ourcapital structure thereby enabling a return to dividend payment with an initialsum of 0.2p per share, which is reflected in these results. The business now focuses upon those areas of the commercial property marketsboth in the UK and throughout our international operation where we believe thereare proven long-term project opportunities to access better levels of fee incomeand where the group has a clear competitive advantage. Finally, after my return to the company in March 2004 and seeing it prosper, Ihave decided to retire as Chairman at the next annual general meeting. It hasbeen a pleasure to be a part of the revival of Aukett Fitzroy Robinson in itsmerged form and I am also delighted to have accepted the position of HonoraryPresident of the company for the next two years. I leave an experienced and capable management team, whose commitment and loyaltyshould maintain the group's return to growth and prosperity. Gerry DeightonChairman15 January 2008 Chief Executive Officer's report Introduction 2007 has been another positive year for the group. Our actual financialperformance is underpinned by the significant efforts that were made to improveboth the quality of our income stream in previous periods and the size ofprojects generated throughout our operations: the result of which isself-evident in these financial statements. Financial overview The group achieved a profit before tax of £2.37m (2006: £0.79m) on turnover of£19.75m (2006: £16.28m). This result is all the more encouraging as it was achieved after paying staffbonuses of some £0.91m (2006: £0.04m) which produces an underlying gross profitof £3.28m (2006: £0.83m). During the year group net borrowings were eliminated and the year ended with anet cash surplus of £1.69m (2006: net debt £0.18m) which fully reflects theimpact of our consistent contract and invoicing regime which was implementedfollowing the merger in 2005. Review of operations Our operations in both the UK and countries where we have international officesperformed well during the year. Additionally, we have international projects inother locations including the United Arab Emirates, France, Ukraine, Kazakhstanand the Islands of Cape Verde. As with many other professional consultants engaged in the construction basedindustries, we have suffered from the lack of suitably qualified staff tosupport both existing commissions and market opportunities to their full extent.This phenomenon is not limited to the UK and has been noticeable in all ouroffice locations where we have sought to increase our workload, with theexception of Germany. To an extent, the impact of this skill shortage has beenmitigated by the increasing number of larger projects that we have won, wherethe gestation period up to the requirement for production information (theproject stage with the highest concentration of staff) is spread over a longerperiod than has hitherto been the case on a historically smaller projectportfolio. In recent months we have seen a softening of the resource marketwhich should alleviate this situation. For the second year running, our commercial office and hotel sector groups haveperformed well. Our commercial office group is currently working on a number ofsignificant projects for its retained client base which includes: Goodman,Development Securities, Jarrold, Land Securities and Great Portland Estates. The hotel team has five major projects that are underway both in the UK andinternationally. These cover both Grade I & II listed conversions for high networth private clients and new build opportunities within the branded hotelmarket - an area we see for future expansion. Our specialist interiors team support the main architectural sectors and have anumber of commissions with Radisson Edwardian, Radisson SAS and Hilton. Both our transport team and Veretec, our executive architecture arm, performedat a similar level to the prior year with work on the upgrading of FarringdonStation in London and for major contractors including Taylor Woodrow, Wates andKier. The retail group had one of its best years for some time, having concentrated onthe 'green' agenda and captured ten new commissions from one of the UK's premierretailers under this heading, whilst at the same time maintaining exposure inthe bespoke retail market with a commission for Dunhill in London's West End. Outside of London, our two regional offices in Bristol and Southampton continuedto win significant projects in their local markets. The Bristol office currentlyhas six projects at the planning application stage of which three were wonduring the current year. Due to its recent success, the Bristol office isplanning to relocate to larger premises within the city during the new financialyear. The newly opened Southampton office had a variable year with a number of theinitial opportunities not proceeding. However, the office achieved a planningconsent for the new headquarters of Linden Homes and has currently secured a newcommission for a 200 unit residential apartment block and is negotiating on a£60m mixed-use scheme both of which will enable the team to expand over theforthcoming period. Internationally, Russia continues to perform well with a further four contractsbeing signed during the current year which have a combined contract value of$240m. In addition, the Moscow office is now converting residentialopportunities in Sochi, a Black Sea resort, in the Krasnodar region and in theUkraine for Conrad Hilton. Our offices in Prague and Bratislava further improved on last year's excellentresults, and continue to enjoy a range of new enquiries from a broad spectrum ofcommercial clients. Poland, as reported at the interim stage has yet to achieve a better balance inits business model and continued to be loss-making in the second half. However,local management is working with group executives on a number of alternativeincome generating options in order to maintain our position in this strategicmarket. Both of our German joint ventures were profitable during the year, arising outof a resurgence in the economic activity in this country. Berlin, particularly,has seen an increase in the number and size of project opportunities. In both Romania, where we have a joint venture, and in the adjacent market ofBulgaria, commissions are based upon individual project opportunities. People As part of our succession programme, we have appointed six new operationaldirectors within the UK business. The group provides a formal career path fortalented individuals which is underpinned by further training and coaching toimprove their skills and maintain both the design quality and managementrequirements of the business. Internationally, we have appointed six staff tothe position of associate director in the UK, Moscow, Prague and Warsaw. Duncan Harper joined us as Group Finance Director in August. Duncan is achartered accountant and comes with senior finance experience at Avesco and atConnect Mortgages where he was Finance Director. Duncan trained with Coopers &Lybrand. I would also like to pay a special tribute to our Chairman, Gerry Deighton, whohas presided over the merger process and the restoration of Aukett FitzroyRobinson's market reputation to the point where we have a robust and sustainablebusiness model in terms of both architectural skill and financial management.His good counsel has been much appreciated by his board colleagues. Corporate strategy Our corporate strategy established in 2005 remains to double turnover to £25m by2010, whilst improving margins. These results show that we are on-track toachieve that objective. Much of our attention has now been focused on ensuringthat our design and delivery systems, and the skills that are necessary tounderpin our work, are both maintained and improved as we strive to achieve ourfinancial objectives. There has been much speculation and commentary on the prospects of a downturn inthe UK commercial property market - which we consider well founded - but webelieve our diversified business model allows us to realign our resource focusinto those areas of the market which provide greater opportunities based uponour wide skill base and track record. We have identified international brandedhotels, green retail in the UK, and Russian orientated projects, to provide themost promising opportunities to maintain our business model. Management focushas therefore shifted into these areas to compensate for any potentialreductions in revenue from traditional income flows. During the current year we entered talks with a competitor which, ifconsummated, would have created Europe's largest architectural practice. Whilstthis merger process did not proceed, we continue to seek opportunities that willimprove our market position based on strengthening our core sector skills orentering markets where there are premium income opportunities. Management willfocus on those opportunities which improve the business model whilst at the sametime enhancing earnings. Summary Having now achieved two years of improving profitability, we are cautiouslyoptimistic as we embark upon a period where we need to maintain our currentfinancial performance and improve both the transparency and quality of ourincome in the longer term. Nicholas ThompsonChief Executive Officer15 January 2008 Consolidated profit and loss account For the year ended 30 September 2007 2007 2006 £'000 £'000Turnover (including share of joint ventures) 20,302 16,677 Less share of joint ventures turnover (554) (393)Group turnover 19,748 16,284 Group operating profit 2,349 840Share of operating profit of joint ventures 62 105Share of operating profit / (loss) of associate 11 (22)Total operating profit 2,422 923 Loss on disposal of subsidiary - (15)Profit on ordinary activities before interest & taxation 2,422 908 Interest receivable and similar income 55 44Interest payable and similar charges (109) (166)Profit on ordinary activities before taxation 2,368 786 Tax on profit on ordinary activities (831) (137)Profit for the financial year 1,537 649 Basic earnings per share 1.06p 0.45pDiluted earnings per share 1.06p 0.45pDividends per share 0.20p - All turnover and operating profit arises from continuing operations. Consolidated balance sheet At 30 September 2007 2007 2006 £'000 £'000Fixed assetsIntangible assets 1,545 1,596Tangible assets 275 322Interests in joint ventures 46 19Investment in associate 14 6Fixed assets 1,880 1,943 Current assetsDebtors 8,226 6,432Cash at bank and in hand 2,819 1,341Current assets 11,045 7,773 Creditors: Amounts falling due within one year (7,664) (5,588)Net current assets 3,381 2,185 Total assets less current liabilities 5,261 4,128 Creditors: Amounts falling due after more than one year (975) (1,162)Net assets 4,286 2,966 Capital and reservesCalled up share capital 1,456 1,448Share premium account - 1,385Merger reserve - 1,542Profit and loss account 2,830 (1,409)Shareholders' funds 4,286 2,966 Consolidated statement of total recognised gains and losses For the year ended 30 September 2007 2007 2006 £'000 £'000 Profit for the financial year 1,537 649 Currency translation differences 40 (13)Total gains and losses recognised in year 1,577 636 Reconciliation of movements in consolidated shareholders' funds For the year ended 30 September 2007 2007 2006 £'000 £'000 Profit for the financial year 1,537 649 Dividends paid (291) -Retained profit 1,246 649 Currency translation differences 40 (13)Issue of new shares 34 -Net addition to shareholders' funds 1,320 636 Opening shareholders' funds 2,966 2,330Closing shareholders' funds 4,286 2,966 Consolidated cash flow statement For the year ended 30 September 2007 2007 2006 £'000 £'000 Net cash inflow from operations 2,637 1,716 Returns on investments and servicing of financeInterest received 26 44Interest paid (112) (166)Net cash outflow from returns on investments and servicingof finance (86) (122) Taxation paid (192) (65) Capital expenditurePurchase of tangible fixed assets (228) (326)Net cash outflow from capital expenditure (228) (326) Equity dividends paid (291) - Net cash inflow before financing 1,840 1,203 FinancingIssue of new shares 34 -Repayment of bank loans (187) (38)Repayment of loan notes (200) -Capital element of finance leases (9) (38)Net cash outflow from financing (362) (76) Increase in cash 1,478 1,127 Notes to the preliminary announcement 1 Basis of preparation The preliminary results for the year ended 30 September 2007 have been preparedin accordance with the accounting policies set out in the annual report andaccounts for the year ended 30 September 2006. 2 Segmental analysis The directors consider that the group's activities fall within a single businesssegment and therefore only geographical segmental analysis is shown below. Turnover by origin 2007 2006 United Rest of United Rest of Kingdom World Total Kingdom World Total £'000 £'000 £'000 £'000 £'000 £'000Turnover (including share ofjoint ventures) 15,975 4,327 20,302 13,035 3,642 16,677Less share of joint venturesturnover - (554) (554) - (393) (393)Group turnover 15,975 3,773 19,748 13,035 3,249 16,284 Turnover by destination 2007 2006 United Rest of United Rest of Kingdom World Total Kingdom World Total £'000 £'000 £'000 £'000 £'000 £'000Turnover (including share ofjoint ventures) 14,321 5,981 20,302 11,766 4,911 16,677Less share of joint venturesturnover - (554) (554) - (393) (393)Group turnover 14,321 5,427 19,748 11,766 4,518 16,284 Profit before taxation 2007 2006 United Rest of United Rest of Kingdom World Total Kingdom World Total £'000 £'000 £'000 £'000 £'000 £'000 Group 1,713 582 2,295 428 275 703Share of joint ventures - 62 62 - 105 105Share of associate - 11 11 - (22) (22)Profit before taxation 1,713 655 2,368 428 358 786 Net assets 2007 2006 United Rest of United Rest of Kingdom World Total Kingdom World Total £'000 £'000 £'000 £'000 £'000 £'000 Group 3,410 820 4,230 2,541 418 2,959Share of joint ventures - 42 42 - 1 1Share of associate - 14 14 - 6 6Net assets 3,410 876 4,286 2,541 425 2,966 3 Tax on profit on ordinary activities 2007 2006 £'000 £'000 Gross UK corporation tax 634 -Less double tax relief (58) -Net UK corporation tax 576 -Overseas tax 170 126Adjustment in respect of previous years 61 36Share of associate and joint ventures 24 1Total current tax charge 831 163 Group deferred tax - (26)Total tax charge 831 137 The differences from the standard rate of corporation tax in the UK areexplained below: 2007 2006 £'000 £'000 Profit on ordinary activities before tax 2,368 786 Profit on ordinary activities multiplied by the standardrate of corporation tax in the UK of 30% (2006: 30%) 710 236Effects of: Non tax deductible expenses 109 109 Depreciation in excess of capital allowances 8 23 Other timing differences 6 - Tax losses utilised (9) (239) Differences in overseas tax rates (28) (2) Tax relief on exercise of share options (26) - Adjustment in respect of previous years 61 36Total 831 163 4 Earnings per share The calculations of basic and diluted earnings per share are based on thefollowing data: Earnings 2007 2006 £'000 £'000 Profit for the financial year 1,537 649 Number of shares 2007 2006 Number Number Weighted average of ordinary shares in issue 145,363,844 144,813,825Effect of dilutive options 179,239 68,665Diluted weighted average of ordinary shares in issue 145,543,083 144,882,490 5 Dividends 2007 2006 £'000 £'000 Interim dividend paid of 0.2p per share 291 -Total 291 - 6 Reconciliation of group operating profit to net cash flow fromoperating activities 2007 2006 £'000 £'000 Group operating profit 2,349 840Depreciation of tangible fixed assets 275 286Amortisation of intangible fixed assets 51 51Loss on disposal of fixed assets - 61Increase in debtors (1,781) (634)Increase in creditors 1,743 1,112Net cash flow from operating activities 2,637 1,716 7 Analysis of net funds / (debt) At 1 At 30 October Cash September 2006 flow 2007 £'000 £'000 £'000 Cash 1,341 1,478 2,819Bank loans (1,312) 187 (1,125)Loan notes (200) 200 -Finance lease obligations (9) 9 -Net (debt) / funds (180) 1,874 1,694 8 Reconciliation of net cash flow to movement in net funds / (debt) 2007 2006 £'000 £'000 Increase in cash 1,478 1,127Cash outflow from repayment of bank loans 187 38Cash outflow from repayment of loan notes 200 -Cash outflow from finance lease obligations 9 38Change in net (debt) / funds 1,874 1,203 Opening net debt (180) (1,383)Closing net funds / (debt) 1,694 (180) 9 Status of preliminary announcement This preliminary announcement was approved by the board of directors on 15January 2008. The preliminary results for the year ended 30 September 2007 have been extractedfrom the group's audited statutory accounts for the year ended 30 September 2007which will be delivered to the Registrar of Companies following the company'sannual general meeting. The auditor's report on these accounts was unqualifiedand did not contain a statement under either Section 237 (2) or (3) of theCompanies Act 1985. Statutory accounts for the year ended 30 September 2006 have been delivered tothe registrar of companies and the auditors' report on these accounts wasunqualified and did not contain a statement under either Section 237(2) or (3)of the Companies Act 1985. The financial information set out in this preliminary announcement does notconstitute the group's or the company's statutory accounts for the year ended 30September 2007. 10 Annual general meeting The annual general meeting of the Company will be held at 14 Devonshire Street,London, W1G 7AE on 10:30am at Thursday 3 April 2008. 11 Annual report and accounts Copies of the annual report and accounts will be dispatched to shareholders indue course. Copies will also be available on the company's website(www.aukettfitzroyrobinson.com) and from the registered office of the company(14 Devonshire Street, London, W1G 7AE). This information is provided by RNS The company news service from the London Stock Exchange