There was once a time when having professional qualifications was a sure way of avoiding redundancy. But no longer. Bankers, surveyors, engineers are all being made redundant and now I read that lawyers at some of London's swankiest legal firms are being shown the door. When that happens, we know things are serious.
Another profession uncomfortably aware of the dearth of work is that of architecture. With the economy sinking and property values falling, there are not too many organisations that feel much like planning new buildings. Architectural draftsmen are sitting at their easels, twiddling their pencils and longing for a juicy commission.
Two major architectural firms, Arup and Conran, have been laying off their professional staff. But one small penny share company is weathering the storm. In fact, it's so confident of its prospects that it's raised its annual dividend. Not too many companies are doing that at the moment. This is worth a good look.
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Well-placed to survive the recession
The company is Aukett Fitzroy Robinson (LON:AUK). If you are a long-time reader of my Red Hot Penny Shares newsletter, you may know the name. We bagged a 67% profit in it back in 2007. Since then the share price has slithered all the way back down to the level at which I originally tipped it. Given the economic background that is hardly surprising.
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But Aukett should have no difficulty surviving the recession. That's due to some very smart moves made by its chief executive Nicholas Thompson. Thompson, an accountant, was brought in to rescue Aukett after a botched merger with Fitzroy Robinson in 2005. Having turned the business round once, he does not want to have to do so again. So he has made two key strategic decisions.
First of all he has avoided making an acquisition. Having stated some time ago that his aim was for Aukett to achieve annual revenues of £25m, it would have been all too easy to rush into a deal. Thompson looked closely at struggling UK rival SMC, but in the end this came to nothing and Thompson has walked away from a number of other deals since then. So Aukett goes into what will unquestionably be a tough year with cash on its balance sheet. This will make it the envy of its rivals, and could allow Aukett to make a deal on really attractive terms in the next year or two.
Thompson's other smart move was to shift the business away from the UK. He admitted to me that the downturn of domestic work was more severe than he had anticipated. He said that while several UK clients have received planning permission for major schemes there is no knowing when work will start or how quickly it will proceed.
But fortunately Aukett is busy overseas. It has long had a presence in Eastern Europe, where it has offices in five different countries and last year it picked up a contract for the design of a massive 4,000,000 sq ft office complex. This is for a single tenant and, to give you an idea, this building is some eight times larger than the City's Swiss Re Tower the Gherkin'.
Expanding into the oil rich Gulf States
But the really striking achievement last year was successful return, after an absence of thirty years, to the Middle East. Aukett booked £5m of work last year in Abu Dhabi, where it is designing seven hotels for the ALDAR group. And while Thompson is wary of Dubai, where the property market is heading down, he is keen for Aukett to expand into the oil and gas rich states of Qatar, Oman and Saudi Arabia.
The outlook for further appointments overseas is good, and these come with a particular advantage. Much of the basic drawing and design work can be done in London, where thanks to the depreciation of Sterling, the cost is cheap.
So while other UK architects will be wondering where their next job is coming from, Aukett's international presence should keep the London office busy. Thompson's strategy has been vindicated and shareholders can at least enjoy a dividend while waiting for the good times to return.
This article is taken from Tom Bulford's free daily email Penny Sleuth'.
