SMC profits below expectations

Architecture and interior design practice SMC Group has recorded a drop in pre-tax profits for 2006, falling from £2.5m to £1.6m year on year. The figures follow a profit warning and management reshuffle earlier this year.

However, the group reported a turnover increase of 131 per cent for the year, rising from £13.5m to £31.3m.

SMC reorganised its senior management in February, shifting chief executive Stewart McColl to the position of deputy chairman. At the same time, chairman Sir Rodney Walker stepped up to the role of executive chairman.

A profit warning released in January this year knocked about a third off the company’s share price in one day.

The group acquired architect Will Alsop’s practice in March 2006, renaming it SMC Alsop. Overall, SMC completed nine acquisitions in 2006 and its number of employees increased from 175 to 655. Additionally, the number of offices rose from nine to 29. Analysts have noted that McColl’s acquisition spree stretched the group’s finances.

Walker says that although profits are a significantly below original market expectations, at the end of the first quarter of this year the group had already secured 65 per cent of market expectations for turnover this year.

The group’s shares have fallen more than 70 per cent since the start of the year, but increased by 33.5p yesterday, to 88.5p.

Since its acquisition, SMC Alsop has completed a number of high profile buildings in central London, including the Institute of Cell and Molecular Science at the University of London and Palestra, an office development in Southwark.