Fred Goodwin firm sees profits collapse 71%

ARCHITECTURAL firm RMJM, which provoked outrage when it hired disgraced Royal Bank of Scotland boss Sir Fred Goodwin, suffered a 71 per cent collapse in pre-tax profits in 2009-10, according to accounts filed yesterday.

The global practice, headquartered in Edinburgh, saw pre-tax profits slump to 1.64 million during the 12 months to 30 April 2010 from 5.7m the year before, which it blamed on the recession and many projects around the world being postponed or cancelled.

Although the accounts - which are almost six months overdue - are historic, they give an idea of the difficulties RMJM was facing in the run-up to its most recent full financial year, during which it suffered a raft of high-profile defections at its operations around the world and failed to pay staff in several locations on time.

In March, owners the Morrison family were forced to plough 8m into the company to help alleviate cash flow problems. Of this sum, 3m was a "shareholder loan" payable on 30 June next year.

Many of the difficulties with late salary payments were recently blamed by one former board member on the "ruthless" cash management by Goodwin who was hired in January 2010 on a reported six-figure salary, but has since stepped back from his role as a consultant.

No-one from RMJM was available for comment yesterday but in the accounts, group financial director John Douglas said that given the "seismic challenges" that beset the global architectural sector during the recession, "maintaining a position of profitability has been a major challenge for virtually every firm".

Turnover dropped by a third during the period, from 121.8m to 81.2m while net debt widened to 20.1m from 17.5m.

The accounts reveal that RMJM is still owed 9.9m from projects in the Middle East for the year to 30 April 2010.

The firm said it is in "commercial negotiations" to recover money due but warned that the status of these talks together with the sums involved "results in there being an uncertainty as to the timing and quantum of amounts that will ultimately be agreed and collected".

However, Douglas argued that the practice now has a "robust and expanding" order book of more than 80m and is "looking forward eagerly to the next few years, when many of the worldwide building programs which were halted due to the global financial crisis are relaunched".

Last year, RMJM underwent a major restructuring, which resulted in it cutting 150 jobs and closing a number of offices.

However, the firm also suffered from mass resignations, particularly at its operations in Hong Kong.

During the period, six members of RMJM's board stepped down, three through retirement.