Half Year Results and Trading Update 9 th February 2017 Stephen Toole
Work generated – 1 st half • Work generated by Planning for other teams was a net £2.4m, which is consistent with last year - note data accuracy relies on jobs being set up by the team originating the work • Planning teams generating a net 25%+ of their own fee income for other teams comprised Reading (at 43%), Solihull, Ebbsfleet and Cambridge • Masterplanning Bristol the most effective net referrer of work within Design at a very creditable 55% • 24% of total fee income was cross referred between teams in the 1 st half, consistent with last year – improving this is key to our growth strategy • £15.8m fees invoiced in the 1 st half was £0.2m less than last year, although the 2 nd quarter’s trading was ahead of the 1 st - encouraging in light of the Brexit vote 2
Fees – top 20 clients • The house builders continue to feature strongly at 52% (2015/16: 46%) of the top 20 clients’ fees and 29% of total fees (2015/16: 27%) • This reverses the recent trend where we have been gradually reducing this % • Nonetheless encouraging to note 7 new entrants into the top 20 from a year ago, as evidence of our strategic diversification as a business: – Helical and Church Commissioners (re-appearing) – Segro (Solihull planning) – One Works (KAAR international) – Hermes Fund Managers (primarily Reading architecture) – Robertson Homes (Pennywell multi disciplinary) – Galliard (primarily London architecture) 3
Fees – revised budget • The revised fee budget for the year is £32.3m, a 2% fall against last year’s fees overall and £1.74m less than that originally budgeted in May • The re-budget equates to fees of £2.75m/month for the 2 nd half (which we’ve achieved in the 3 rd quarter) • Our Town Planning and Landscape businesses are trading ahead of the May budget and are still expected to show marginal growth overall in the year, whereas Design is now being re-budgeted to be down by 6.5% • The reduction in internally referred Research and EIA has resulted in a 23% adjustment in re-budgeted fees (36% Research and 9% Environmental) • International work is holding up, although the cash flow profile in this business continues to be challenging 4
Historic and budgeted total income £35,000,000 £30,000,000 £25,000,000 £20,000,000 Expenses £15,000,000 Fees £10,000,000 £5,000,000 - 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 Revised Budget 2016-17 5
Cost decisions post the Brexit vote • Staff costs – annualised salary costs increased by £700k inclusive of NI following the recent promotions, pay and benefits review • Only limited recruitment in the 2 nd half is being proposed to manage overall staff numbers, which also saves £110k in recruitment costs • A £170k reduction in IT costs assumed against the May budget, net of retaining a £30k contingency for laptop replacements • A £70k net reduction to the Marketing budget • In aggregate, central overheads are being reduced by £300k in the revised budget 6
Contractual profit share (PSB) • The profit assumption has been reduced to £49k per share in the re-budget, reflecting the £2.1m less income and £1.6m less costs having taken action early • Our business plan objective was to get to £60k profit per share by 2016/17, but Brexit has probably put paid to growing profit beyond last year’s £57.6k per share - for now at least • Achieving £49k per share PSB would equate to a 15% decrease on the last 2 years but we proceeded with a pay and benefits review, even though income is likely to be down this year • If this were to be the eventual profit outturn then the final top-up PSB payment next May would be half that paid out last year, everything else being equal, however this is only a budget The re-budget assumes £0.5m less fees in the 2 nd half than last • year and there is capacity to deliver a further £0.5m fees beyond that i.e. £5k more PSB per share • In light of Brexit, the Partners have taken the view that a trading outturn for the year in the range £49k to £54k per share PSB would represent an excellent result 7
Historic and budgeted PSB and profit £14,000,000 £12,000,000 £10,000,000 £8,000,000 Profit share paid (incl. 10% NI) £6,000,000 Profit before tax £4,000,000 £2,000,000 - 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 re-budget 8
Practice Survey Update 2017 Results 9
Actions following previous surveys • Support for those in managerial positions, including the introduction of a new People Management workshop • Improvements to the new starter process, including an enhanced and more comprehensive central induction day. • Continued enhancement to flexible benefits, with the introduction of Private Medical Insurance for Associates and matched pension contribution increasing to 5% from November 2016. • Improved communication of flexible benefits, including production of information cards which were distributed to all staff ahead of the enrolment window in November • Greater encouragement of CSER activities, including use of the available charity day across the Practice and our corporate partnership with Shelter • Greater support for those completing professional qualifications, including the establishment of an APC study group 10
Overall engagement scores (vs previous years) 11
8 factors of engagement 12
Practice results by factor v 2016 5.7 (-1%) 5.5 (0%) (0%) 5.3 (0%) 5.1 (-1%) (+6%) 4.9 4.7 (-2%) (+3%) 4.5 4.3 4.1 Leadership Personal Growth Wellbeing Fair DealGiving Something Back My Company My Manager My Team Barton Willmore - (BCI Survey 2017) Barton Willmore - (BCI Survey 2016) 13
Practice results by job level v 2016 6 5.8 5.5 (+1%) 5.2 (0%) (+1%) 4.9 (-2%) 4.6 4.3 Staff Senior Associate Director Barton Willmore - (BCI Survey 2017) Barton Willmore - (BCI Survey 2016) 14
What makes this a great workplace? • Interesting and varied projects and good clients • Pride in working for a reputable and respected organisation • Opportunities for development – supportive and encouraging managers, training courses and being given responsibility to take ownership of own role • The people - friendly, approachable, supportive • Supportive teams – effective structure, collective spirit, good cross-sharing of skills • Social events which help bring a friendly atmosphere and dynamic to the workplace • Flexibility – comments here included flexible working hours in recognition of personal commitments and family pressures, trust in staff to manage their own time and hours and a good work/life balance • Approachable and knowledgeable people and management • Integrated and cross-discipline working which adds value to professional experience and to projects • Reward – variety of flexible options, fair pay, effort being rewarded and acknowledged • Autonomy given to individuals to progress, develop and be creative in their roles 15
What would make this a better workplace? • Improved communication and support from managers. Some also commented on wanting their managers to be more visible • More social events to encourage interaction, team building and morale • Greater collaboration, knowledge sharing and communication between teams – including the opportunity to work with people from other offices and understanding what other teams do • A greater awareness of a ‘one practice’ ethos as opposed to competition between teams and offices • Some commented on working pressure and having to work significant (unrecognised) overtime to meet deadlines. This was referenced alongside resourcing needs in some teams • Greater understanding of the promotions process / requirements for promotion • Greater flexibility – comments here included suggestions for greater ability to work from home or out of other offices, and more flexible working hours • There is an awareness of the impact of Brexit and some have commented they would like more transparent communication regarding Practice strategy and decisions 16
Proposed actions for 2017 1. Provision of further support, including tips, tools and techniques to managers, specifically in response to reductions in My Manager scores regarding motivation, support and information sharing. 2. Investigation into the lower levels of engagement amongst Seniors this year, specifically with relation to Fair Deal and Personal Growth. One area to focus on will be training needs and preferences (including CPD), especially amongst our experienced Seniors. 3. Improved communication between Partners (Senior Management) and our people, to address a perception of poor conflict management and active listening. 4. Investigation into why engagement levels are consistently lowest this year for those with 2-3 years’ service. 5. Whenever possible, encourage greater communication and collaboration across different teams, offices and disciplines in response to the considerable written feedback and desire for this within the survey comments. 6. More transparent discussions of survey results with staff at office level, with a suggestion being that each office looks to make at least one improvement in 2017. 17
Benefits Update
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