RMJM suffers £11m loss as sector slumps

Deputy Business Editor

Thursday 16 August 2012

SCOTLAND'S largest architectural practice, RMJM, has slumped to a near £11 million loss as it battles against a downturn in the global construction industry.

UNIQUE: The Capital Gate tower in Abu Dhabi was a success for RMJM, but Sir Fraser Morrison admitted the firm had a difficult year. Main picture: Hyatt

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GREIG CAMERON DEPUTY BUSINESS EDITOR

Accounts filed at Companies House showed the business, which was involved in the design of the Scottish Parliament and is run by Sir Fraser Morrison and his son Peter, saw turnover dip from £81.2m to £71.6m.

Only operations in Asia saw income growth, with turnover up from £16.6m to £21.8m.In the Middle East, revenue declined from £26.8m to £20m, Europe from £21.2m to £16m and the US from £16.6m to £13.8m.That loss of revenue contributed to RMJM, which employed former Royal Bank of Scotland boss Fred Goodwin in a consultancy role after he left the bank, making a pre-tax loss of £5.36m before exceptional items in the 12 months to April 30, 2011. However, once exceptionals – including £3.7m of write downs, £1.1m of restructuring and redundancy costs, £399,000 related to office closures, £274,000 of debt issuing and £140,000 of refinancing costs – were added in, the overall loss before tax came to £10.99m.Auditors from Deloitte also highlighted concerns over £5.5m shown in RMJM's accounts as due from clients.In the accounts, James Boyle from Deloitte said there was a "significant uncertainty as to the timing and quantum of the final amounts which will ultimately be agreed and collected".He added: "The conclusion of these ongoing negotiations could materially impact the balances included in these financial statements in respect of trade debtors and amounts recoverable on contracts as well as the profit and loss account for the year."Sir Fraser, RMJM chairman, was hopeful on receiving payment for work done in the Middle East.He said: "We still have significant amounts due to the business which remain unpaid since 2008. Our clients have worked closely with us to address these issues and we are now seeing positive movement towards resolution."Sir Fraser said "difficult changes" had been "implemented effectively" in a year when average staff numbers dropped from 939 to 840.He said: "Overall, the market for architecture services is improving but has not recovered to its pre-recession levels."Our primary objective over this period has been to react defensively in rationalising our cost base whilst maintaining our global platform and positioning ourselves for growth as the market recovers."Cost reductions have included office closures, staff reductions and management restructuring to ensure we remain competitive at reduced revenue levels."Difficult times required difficult decisions, particularly where they involve people and we are very conscious that the changes we have made have not been without significant pain. We appreciate the considerable support we have had from our staff, suppliers and sub-consultant partners."Payroll costs fell from £44.8m to £41.8m, although directors' emoluments rose from £917,000 to £1.154m.David Pringle, the former chief executive for Asia and Middle East, resigned as a director in July 2010 while finance director John Douglas resigned in March 2012. The highest-paid director received emoluments of £346,000 in 2011, which was down from £456,000 in the previous year.Sir Fraser said trading has picked up in the most recent financial year, with RMJM working on projects such as the Atasehir Gardens towers in Istanbul, Turkey, while the Capital Gate tower in Abu Dhabi had won a prize for the best new building in an emerging market.The accounts also confirm Sir Fraser and the Morrison family acquired the entire debt of the company from Bank of Scotland on April 27 this year. The bank borrowings in the 2011 accounts stood at almost £20m.Sir Fraser added: "We are delighted that trading in the new financial year is very much better with the business reporting an operating profit for the 12 months to April 30, 2012."

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RMJM suffers £11m loss as sector slumps

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