Aukett Fitzroy Robinson plans for profitable future

A year on from the merger of architects Aukett and Fitzroy Robinson, there is a sense of change afoot at company's new office in the Regent's Park area of London.

The company said this week it was going to move from the support services index on the stock exchange and relist on the alternative investment market as Aukett Fitzroy Robinson Group from 25 April.

More importantly, the combined group made a profit last year, compared with Aukett's two years of losses, and it is winning contracts, not least as part of the winning bid for the £100m redevelopment of the Alexandra Palace in London, which it bagged in February.

Nicholas Thompson, chief executive of the enlarged company, has built an ambitious strategy for growth which involves doubling turnover from £12.5m in five years.

"We do intend to be a major player in the long-term, in the UK and the wider European market. We want to be in the top five in the UK in the next five years: that's the ambition."

Each of the company's sectors in the UK and each of the European countries where it has a presence are developing a five-year plan, and a more detailed two-year plan. Broadly speaking, most jobs will be in the £10-50m bracket, the "mainstay of the business". It works purely for the private sector, and expects that to remain the case "this side of the five-year business plan".

It has just opened an office in Southampton and has formed a strategic alliance with Spanish architect Alonso Balaguer y Arquitectos Asociados of Barcelona.

Thompson, an affable man, seems confident that he can turn the business around. He is not a trained architect but a qualified accountant with a property development and investment background. He was appointed finance director at Fitzroy Robinson in 1994 and was promoted to managing director in 2002.

He says his background is not a problem: "It is quite easy. I had a development background and I can quickly look over a scheme and see if it is financially viable."

Thompson leaves the "passionate side of architecture" to his three managing directors - Stephen Embley, John Vincent and Raul Curiel.

Thompson said that there were two main reason behind the company's decision to relist on AIM:

We want to be in the top five in the UK in the next five years: that’s the ambition

Nicholas Thompson, chief executive

"A main listing is really for large market cap businesses whereas AIM is designed for smaller quoted companies. At the moment we are registered the same as BP which is not sensible. Second, I'd like more people from the company to own shares. It is subject to the same tax policy as a private company whereby you pay less capital gains tax when you sell."

Aukett is only one of two quoted architects, the other being SMC. The similarity does not end there. Stewart McColl, chief executive of SMC, is not a stranger to financial woes, his former company having suffered in the early 1990s. At SMC he has taken a notably business-minded approach to the running of the firm, despite the fact he is a trained architect.

Ironically, SMC was close to buying Aukett but negotiations collapsed last March.

Thompson is open-minded about future acquisitions: "If the business plan review indicates a shortfall that is not deliverable internally we'd look at acquisitions.

So far the merger with Aukett has been far from plain-sailing. There were 19 redundancies, a number of resignations and office closures, and although the combined group reported a modest pre-tax profit of £159,000 in the year to 30 September 2005, the pre-merger Aukett business actually made an undisclosed loss, following on from a £1.3m pre-tax loss in 2004.

"The hardest part was dealing with the business issues of a company that had not been working," says Thompson. "Tough decisions had to be made, and inevitably we had to reduce fixed overheads."

But Thompson says that he is not daunted by the task ahead and that all the changes that were needed at Aukett were common sense: "Architects are notoriously bad at getting organised at the start of the project." He intends to change that.

Other issues at Aukett, according to Thompson, included constant over-resourcing of projects and a lack of management of its European businesses. "They had been acquired but not managed. They were just losing money and nobody was doing anything about it. We intensively manage those businesses."

In Europe there was no overlap when the two companies merged. Fitzroy Robinson had an office in Moscow and projects in France and Spain, and Aukett had offices in Poland and the Czech Republic.