RMJM blames profit slide on global conditions

PROFITS at RMJM, the Edinburgh-based global architecture firm where Sir Fred Goodwin now works as an adviser, suffered as projects were put on hold or cancelled amid the most difficult business conditions the company has seen.

Latest accounts for the company behind buildings including the Scottish Parliament, the Falkirk Wheel and Abu Dhabi's Capital Gate also showed its bank borrowings rose to 18.4 million from 11.3m to provide extra headroom to cope with the impact of the global economic downturn.

Pre-tax profits in the year to 30 April 2009 fell to 5.7m from 7.9m in 2008, according to accounts filed six months late while the company renegotiated its banking facilities.

Despite the economic downturn, turnover increased by 22 per cent to 121.8m from 99.9m, highlighted by the directors in their report to the accounts as a "significant achievement".

The directors said: "It is also testament to the efforts of all our people during the year in ensuring RMJM remains competitive and continues to operate at the very top of a market which has been severely impacted by the global financial crisis."

It is understood the figures for the firm's latest financial year, up to 30 April 2010, will be broadly in line with 2009's performance.

The increase in bank borrowings secured by the company provides a facility through to November 2013. Although the company said it believes the current bank facilities are sufficient for the "foreseeable future", it has discussed further borrowing with bankers.

The directors' report said: "No matters have been drawn to (the group's] attention to suggest that amended facilities if required may not be forthcoming on acceptable terms."

The company said "ill conceived short-term practices in relation to pricing" in the markets it operates in led to the most difficult commercial conditions ever seen by the business during the year.

But the firm said its backlog of work was now returning to levels seen before the recession in most regions.

Asia was the first to show signs of recovery with the Middle East, Europe, and the US following.

RMJM's Asian business has now returned to pre-recession activity levels with significant growth expected over the next 12 months in what it believes will be a strong China and wider Asian market.

The group's order book currently stands at more than 85m and is continuing to increase.

Projects RMJM is currently involved with include design work for the 2014 Commonwealth Games in Glasgow.

During the year, staff numbers rose slightly to 1,168 from 1,125 but payroll costs rose to 55.7m from 43.1m.

At the height of the recession, RMJM axed 60 jobs at its operations around the world, including in its Edinburgh and Glasgow offices. It also asked staff to take a 10 per cent pay cut.

The highest-paid director, presumed to be group chief executive Peter Morrison, received a pay package of 390,000, down from 478,000.

Total boardroom pay fell to 1.39m from 2.8m.

In January this year the firm confirmed it had appointed former RBS chief executive Goodwin as an adviser and business developer.

z