Aukett Swanke Regulatory News (AUK)

18 Jun 2009 07:00



Embargoed until 7am on Thursday 18 June 2009

Aukett Fitzroy Robinson Group Plc

Interim Results

for the six months ended 31 March 2009

Aukett Fitzroy Robinson Group Plc, the international practice of architects and interior design specialists, announces its interim results for the six months ended 30 September 2009.

Key highlights

Nicholas Thompson, Chief Executive Officer of Aukett Fitzroy Robinson commented:

"In the face of the steady downward trend in our markets we have progressively taken steps to reduce our operating costs. Given the size of our secured, but uninstructed order book, we remain confident that we will be able to trade through this downturn and return to growth with our long term client base as and when market sentiment and economic activity improves."

Enquiries

Aukett Fitzroy Robinson - 020 7636 8033

Nicholas Thompson, Chief Executive Officer

Duncan Harper, Group Finance Director

FinnCap - 020 7600 1658Sam SmithClive Carver

Hermes Financial PR

Chris Steele - 07979 604687

Tarquin Edwards - 07879 458364

  Interim statement

Overview

We have highlighted in previous reports the inevitable impact on the property industry of the global economic recession. These interim results now clearly reflect the depressed level of activity in the property market throughout our network, particularly in the UK and Continental Europe. This downturn has been compounded by a reduction in availability of funding for new developments with consequential delays to a number of projects.

Against this background the group produced a loss before tax in the first six months of £1,216,000 (2008: profit £1,182,000).

Summary of results

Revenue for the first six months decreased to £8,177,000 (2008: £11,277,000), a fall of 27% principally from the reduced number of project opportunities and a decline in client instructions beyond the planning phase of projects. 

An operating loss of £1,284,000 (2008: Profit £1,193,000) reversed last year's result. After accounting for joint venture profits of £73,000 (2008: loss £13,000), net interest payable of £5,000 (2008: receivable £2,000) and a taxation credit of £358,000 (2008: charge £380,000) the loss for the period was £858,000 (2008: profit £802,000).

During the period the group incurred a number of one-off costs reflecting the changing nature of the markets and the need to reduce our on-going exposure to certain expenditures. These costs amounted to £945,000 and more details of the three amounts making up this sum are given below.

In these turbulent conditions our group net cash position has held up at £238,000 (2008: £1,652,000) compared to our year end position of £410,000.

Operations

The impact of the global economic downturn has been felt across our network of offices in reduced activity levels, notably in the UK, where revenues fell by £2,716,000 to £5,512,000 (2008: £8,228,000) reflecting a 33% reduction. 

Twelve planning applications with a construction value of £1.5bn were in progress during the period and of these ten have so far received consent. However, to date only two of these schemes, with a construction value of £40m, have proceeded to the next stage reflecting the cautiousness in the client market due to tenant scarcity and also the general lack of funding due to the terms imposed by lenders for equity participation from developers.

During the period the UK moved its main office location resulting in a number of one-off costs amounting to £475,000. 

The most significant factor affecting the UK results related to operations in the Middle East. A re-appraisal of on-going projects resulted in some fees being renegotiated and others being delayed whilst such negotiations took place. This reduced revenue in the period by some £585,000. Additionally, the UK operation retained a number of staff in excess of the optimum in respect of a project that was won in February but later had the award withdrawn. Up to 40 staff would have been allocated to the project had it proceeded. This resulted in additional staff costs in the period of £120,000. 

Internationally Russia's performance was mixed with a number of major projects being cancelled or delayed due to funding difficulties in the early part of the financial year. This was offset by the success in winning a new mixed use scheme on the Moscow River totalling more than 5,200,000 sq ft. of development in January 2009. Revenue remained largely unchanged at £1,908,000 (2008: £1,874,000) with profits of 31% (£595,000). However there remains a residual level of uncertainty on all projects in the current economic environment.

Continental Europe suffered from a similar decline in activity to the UK with revenues falling to £757,000 (2008: £1,175,000) a decline of 36%. Such a rapid reduction in revenue negates the possibility of achieving a profit and the small loss produced is considered a success in the circumstances.

The improving performance of our associate in Berlin was encouraging where, after many years of minimal profits, a number of projects have been won including the Bundesdruckerei development and the Louisencenter retail development.

Finally, the group has three major claims for fees under existing contracts with clients. Two of these claims relate to additional work performed whilst the third relates to the fee due where recovery litigation is at an advanced stage

The directors have made estimates that they consider reasonable and prudent of the most probable outcome of these three claims based upon available information including historical precedents and professional advice. However, a different outcome from any of these claims from that anticipated could increase or decrease the group's year end results. Any associated costs have been written-off as incurred. 

People 

The decline in group revenue has necessitated the need to address staff levels, particularly in the UK. Over the past twelve months we have reduced staff numbers in the UK by 22% covering both agency and permanent staff including a reduction in the number of practice directors. The cost of this action resulted in one-off costs of £350,000. Further staff reductions currently in progress increase the reduction to 36% which will result in annualised savings of £2.9m.

It is a necessary aspect of our business that we retain resource capacity in the sectors in which we operate and therefore there will remain an element of over-employment until development activity reaches a new, and probably lower, equilibrium. 

As part of our long term aim to support the business as it grows we are pleased to announce that Anthony Simmonds, a qualified accountant and former senior partner of a top 50 accountancy practice, will be joining the board as an Independent Non-Executive Director.

Dividends

The half year loss and consequent reduced cashflow has negated the ability of the group to pay an interim dividend. The Board will review the position at the year end with a view to restoring the dividend when profits and cashflow allow.

Prospects

At this moment we see no firm evidence of any upturn and therefore in the short term management attention will focus on the continuing need to lower our cost base to reflect current trading activity. In the longer term, when markets recover, we will revert to our corporate objective to increase revenues to £25m. 

Given the steps already taken to reduce our operating costs and in view of our considerable secured, but uninstructed order book, we remain confident that we will be able to trade through this downturn and return to growth with our long term client base as and when market sentiment and economic activity improves.

18 June 2009

  Independent review report to

Aukett Fitzroy Robinson Group Plc

Introduction

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2009 which comprises the consolidated income statement, consolidated statement of recognised income and expense, consolidated balance sheet, consolidated cash flow statement, and the related explanatory notes 1 to 9. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report, including the conclusion, has been prepared for and only for the company for the purpose of meeting the requirements of the AIM Rules for Companies and for no other purpose. We do not, therefore, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing and presenting the half-yearly financial report in accordance with the AIM Rules for Companies.

As disclosed in noted 1, the annual financial statements of the group are prepared in accordance with International Financial Reporting Standards and International Financial Reporting Interpretations Committee ("IFRIC") pronouncements as adopted by the European Union.

The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with the measurement and recognition criteria of International Financial Reporting Standards and International Financial Reporting Interpretations Committee ("IFRIC") pronouncements, as adopted by the European Union.

Our responsibility

Our responsibility is to express to the company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

  Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2009 is not prepared, in all material respects, in accordance with the measurement and recognition criteria of International Financial Reporting Standards and International Financial Reporting Interpretations Committee ("IFRIC") pronouncements as adopted by the European Union, and the AIM Rules for Companies.

Baker Tilly UK Audit LLP

Chartered Accountants

2 Bloomsbury Street

London, WC1B 3ST

18 June 2009

  Consolidated income statement

For the six months ended 31 March 2009

	Note	Unaudited six months  to 31 March 2009 £'000	Unaudited six months to 31 March 2008 £'000	Audited year to 30 September 2008 £'000
Revenue	2	8,177	11,277	22,598
Sub consultant costs		(2,172)	(2,868)	(5,623)
Revenue less sub consultant costs		6,005	8,409	16,975
Personnel related costs		(5,138)	(5,526)	(10,751)
Office related costs		(1,388)	(869)	(1,715)
Other operating expenses		(1,111)	(1,038)	(2,450)
Other operating income		348	217	331
Operating (loss) / profit		(1,284)	1,193	2,390
Finance income		16	40	70
Finance costs		(21)	(38)	(82)
(Loss) / profit after finance costs		(1,289)	1,195	2,378
Share of results of associate & joint ventures		73	(13)	37
(Loss) / profit before income tax		(1,216)	1,182	2,415
Income tax		358	(380)	(687)
(Loss) / profit for the year attributable to equity holders of the company		(858)	802	1,728
Basic (losses) / earnings per share	3	(0.59)p	0.55p	1.19p
Diluted (losses) / earnings per share	3	(0.59)p	0.55p	1.19p
Dividends per share	4	0.11p	-	0.10p

 

Consolidated statement of recognised income and expense

For the six months ended 31 March 2009

		Unaudited six months  to 31 March 2009 £'000	Unaudited six months to 31 March 2008 £'000	Audited year to 30 September 2008 £'000
Currency translation differences		1	85	90
Net income recognised directly in equity		1	85	90
(Loss) / profit for the period		(858)	802	1,728
Total gains and losses recognised in year attributable to equity holders of the company		(857)	887	1,818

 

Consolidated balance sheet

At 31 March 2009

	Note	Unaudited As at 31 March  2009 £'000	Unaudited As at 31 March 2008 £'000	Audited As at 30 September 2008 £'000
Non current assets
Goodwill		1,596	1,596	1,596
Property, plant & equipment		550	246	275
Investment in associate		136	34	77
Investment in joint venture		16	16	26
Deferred tax		123	174	122
Total non current assets		2,421	2,066	2,096
Current assets
Trade and other receivables		10,207	9,316	10,699
Current tax		585	33	34
Cash and cash equivalents	6	1,176	2,740	1,423
Total current assets		11,968	12,089	12,156
Total assets		14,389	14,155	14,252
Current liabilities
Trade and other payables		(7,687)	(6,916)	(6,924)
Current tax		(2)	(1,023)	(294)
Short term borrowings	6	(150)	(150)	(150)
Provisions		(626)	-	-
Total current liabilities		(8,465)	(8,089)	(7,368)
Non current liabilities
Long term borrowings	6	(788)	(938)	(863)
Deferred tax		(240)	-	(108)
Total non current liabilities		(1,028)	(938)	(971)
Total liabilities		(9,493)	(9,027)	(8,339)
Net assets		4,896	5,128	5,913
Capital and reserves
Share capital	7	1,456	1,456	1,456
Foreign currency translation reserve	7	131	125	130
Retained earnings	7	867	799	1,725
Other distributable reserve	7	2,442	2,748	2,602
Total equity attributable to  equity holders of the company	7	4,896	5,128	5,913

 

 

Consolidated cash flow statement

For the six months ended 31 March 2009

 

	Note	Unaudited six months  to 31 March 2009 £'000	Unaudited six months to 31 March 2008 £'000	Audited year to 30 September 2008 £'000
Cash flows from operating activities
Cash generated from operations	5	564	7	(65)
Interest paid		(21)	(39)	(82)
Income taxes paid		(348)	(102)	(993)
Net cash from / (used in) operating activities		195	(134)	(1,140)
Cash flows from investing activities
Purchase of property, plant & equipment		(399)	(77)	(225)
Interest received		16	44	70
Dividends received from associate		43	-	-
Net cash used in investing activities		(340)	(33)	(155)
Cash flows from financing activities
Repayment of bank loan		(75)	(37)	(112)
Dividends paid		-	-	(146)
Net cash used in financing activities		(75)	(37)	(258)
Net change in cash & cash equivalents		(220)	(204)	(1,553)
Cash & cash equivalents at start of period		1,423	2,819	2,819
Currency translation differences		(27)	125	157
Cash & cash equivalents at end of period	6	1,176	2,740	1,423

  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 2009 and on the basis of the accounting policies expected to be used in those financial statements. The significant accounting policies of the group are set out below.

2 Segmental reporting

The group's operations currently comprise a single business segment and three separately reportable geographical segments. 

Geographical segments are based on the location of the group's offices from which the services are delivered. Group level activities (such as finance and marketing) are integrated within the United Kingdom operations and hence their costs are reported within the United Kingdom segment. The group's associate and joint ventures are all based in Continental Europe.

 

Segment revenue		Unaudited Six months  to 31 March 2009 £'000	Unaudited Six months to 31 March 2008 £'000	Audited Year to 30 September 2008 £'000
United Kingdom		5,512	8,228	17,279
Continental Europe		757	1,175	2,459
Russia and former CIS		1,908	1,874	2,860
Total revenue		8,177	11,277	22,598

 

Segment result		Unaudited Six months  to 31 March 2009 £'000	Unaudited Six months to 31 March 2008 £'000	Audited Year to 30 September 2008 £'000
United Kingdom		(1,794)	694	1,730
Continental Europe		(85)	235	497
Russia and former CIS		595	264	163
Operating (loss) / profit		(1,284)	1,193	2,390
Net finance costs		(5)	2	(12)
Share of results of associate & joint ventures		73	(13)	37
(Loss) / profit before income tax		(1,216)	1,182	2,415

 

Segment assets		Unaudited As at 31 March 2009 £'000	Unaudited As at 31 March 2008 £'000	Audited As at 30 September 2008 £'000
United Kingdom		10,595	11,274	11,784
Continental Europe		789	1,497	1,188
Russia and former CIS		2,145	1,127	1,021
Operating assets		13,529	13,898	13,993
Current and deferred tax		708	207	156
Investments in associate & joint ventures		152	50	103
Total assets		14,389	14,155	14,252

 

The geographical split of revenue based on the location of project sites was:

		Unaudited Six months  to 31 March 2009 £'000	Unaudited Six months to 31 March 2008 £'000	Audited Year to 30 September 2008 £'000
United Kingdom		3,530	5,535	10,675
Continental Europe		994	1,679	3,144
Russia and former CIS		1,931	2,127	3,582
Middle East		1,722	1,936	5,197
Total revenue		8,177	11,277	22,598

3 Earnings per share

The calculations of basic and diluted earnings per share are based on the following data:

 

Number of shares		Unaudited Six months  to 31 March 2009 '000	Unaudited Six months to 31 March 2008 '000	Audited Year to 30 September 2008 '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 Dividends

		Unaudited Six months  to 31 March 2009 £'000	Unaudited Six months to 31 March 2008 £'000	Audited Year to 30 September 2008 £'000
2007/08 interim dividend of 0.10p per share		-	-	146
2007/08 final dividend of 0.11p per share		160	-	-
Total dividends		160	-	146

 

5 Reconciliation of profit before income tax to net cash generated from operations

		Unaudited Six months  to 31 March 2009 £'000	Unaudited Six months to 31 March 2008 £'000	Audited Year to 30 September 2008 £'000
(Loss) / profit before income tax		(1,216)	1,182	2,415
Finance income		(16)	(40)	(70)
Finance costs		21	38	82
Share of results of associate & joint ventures		(73)	13	(37)
Depreciation		122	106	232
Change in trade & other receivables		484	(1,268)	(2,365)
Change in trade & other payables		1,242	(24)	(322)
Net cash generated from operations		564	7	(65)

 

6 Analysis of net funds

		Unaudited As at 31 March  2009 £'000	Unaudited As at 31 March 2008 £'000	Audited As at 30 September 2008 £'000
Cash and cash equivalents		1,176	2,740	1,423
Bank loans		(938)	(1,088)	(1,013)
Net funds		238	1,652	410

 

7 Consolidated statement of changes in equity

For the six months ended 31 March 2009

	Share capital £'000	Foreign currency translation reserve £'000	Retained earnings £'000	Other distributable reserves £'000	Unaudited Total £'000
At 1 October 2008	1,456	130	1,725	2,602	5,913
Loss for the period	-	-	(858)	-	(858)
Currency translation differences	-	1	-	-	1
Dividends paid	-	-	-	(160)	(160)
At 31 March 2009	1,456	131	867	2,442	4,896

For the six months ended 31 March 2008

	Share capital £'000	Foreign currency translation reserve £'000	Retained earnings £'000	Other distributable reserves £'000	Unaudited Total £'000
At 1 October 2007	1,456	40	(3)	2,748	4,241
Profit for the period	-	-	802	-	802
Currency translation differences	-	85	-	-	85
At 31 March 2008	1,456	125	799	2,748	5,128

 

For the year ended 30 September 2008

	Share capital £'000	Foreign currency translation reserve £'000	Retained earnings £'000	Other distributable reserves £'000	Audited Total £'000
At 1 October 2007	1,456	40	(3)	2,748	4,241
Profit for the period	-	-	1,728	-	1,728
Currency translation differences	-	90	-	-	90
Dividends paid	-	-	-	(146)	(146)
At 30 September 2008	1,456	130	1,725	2,602	5,913

8 Status of interim results

The interim results cover the six months ended 31 March 2009 and were approved by the board of directors on 18 June 2009. The interim results are unaudited but have been reviewed by the auditors in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom.

The interim condensed set of consolidated financial statements in the interim report are not statutory accounts as defined by Section 240 of the Companies Act 1985.

Comparative figures for the year ended 30 September 2008 have been extracted from the statutory accounts of the group for that period.

The statutory accounts for the year ended 30 September 2008 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 Sections 237(2) or (3) of the Companies Act 1985.

9 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).

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