Half Yearly Report

RNS Number : 0843U
Aukett Fitzroy Robinson Group PLC
18 June 2009
 



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


  • 27% fall in group revenue to £8.2m (2008: £11.3m) as a result of the continuing depressed property markets in the UK and Continental Europe.
  • Good performance from Russian operation with stable revenue and profits increasing to £595,000 (2008: £264,000).
  • One off costs in the UK of £945,000 relating to restructuring and relocation.
  • Group loss before tax of £1.2m (2008: profit of £1.2m)
  • Cash balances of £1.2m exceed debt of £0.9m
  • Within the UK we have obtained planning approval for twelve major projects with a combined construction value of £1.5bn 
  • 36% reduction in UK staffing levels will produce an annualised saving of £2.9m



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 1658
Sam Smith
Clive 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 networkparticularly 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

LondonWC1B 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:


 


Earnings
 
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 for the period
 
(858)
802
1,728
 
 

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 200have 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.comand from the registered office of the company (36-40 York WayLondonN1 9AB).



This information is provided by RNS
The company news service from the London Stock Exchange
 
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