October 5 2006

The SMC Group Plc, had acquired four of Scotland's established architectural practices; Parr, Jenkins and Marr, Hugh Martin and Davis Duncan, to form SMC Scotland, creating the largest single group of architects in Scotland.

The four businesses have a combined revenue of £13.4 million and were sold for £10.7 million. Deferred consideration will be payable in a combination of cash and shares based on performance over the next three years. The transactions will be funded through the companies banking facility with Bank of Scotland.
The expansion of the SMC Group, the company that bought our Alsop earlier this year, has surprised many within the architectural profession. Apparently SMC undertook research among building professionals before approaching practices this summer.

The acquisitions will provide the SMC Group with a very strong client base, particularly in retail and education. Parr Architects has a £4.5million turnover and clients that includes; BAA, City of Edinburgh Council, Hochtief Developments, Pacific Quay Developments and the University of Abertay. Jenkins & Marr (turnover £4.4 million) has a facilities management team advising on PFI/PPP procurement and clients include; BP, Sainsbury's, Teesland, Clydesdale Bank, Aberdeen City Council and Clydebank College. Davis Duncan has a £3.3 million turnover and its clients include; Next, Bank of Scotland, Canon UK, Kenmore Developments, Premier, Burrell Universities of Glasgow, Edinburgh and Caledonian and the NHS. Hugh Martin Architects's clients include; Knightsbridge Ltd, Gleneagles Hotel, Capital Shopping Centres and Marks & Spencer.

SMC Scotland will employ a total of 227 people with 81 qualified architects. Their collective resource will place them a head of the country's largest practices such as BDP employ about 60 qualified architects and RMJM who employ about 50. 

However, whether the practices will act collectively is not yet clear, previously these practices would have completed for work. Both Parr and Davis Duncan have said that their businesses will function in the same way that they have always done, although some areas, such as PR, will be handled centrally.

"We will remain a design-led practice and we are excited at the prospect of working with a bigger group. There is the potential for cracking markets that we are not operating in at the moment, for working in different sectors such as retail, the MOD and prison work," said Calum MacCalman of Davis Duncan. He admitted that these were not sectors associated with high design values, "but then people used to say that about healthcare," he added.

MacCalman, who was reluctant to say how the capital from the sale had been distributed, insists that the directors of the company have not lost control of their business, but developed a stake in a larger operation.  "All of the directors of Davis Duncan will play a role in the bigger picture; we've not become part of the SMC group to not do that."

SMC Group Plc is the holding company for a group of architects and designers with representation in 20 towns and cities throughout England and Scotland and 4 outside of the UK, in Toronto, Singapore, Shanghai and Beijing. The Company's strategy is to create an architectural group with the scale and expertise to access the most profitable commissions across a range of sectors and geographical locations. The Group wants to increase its share of the UK market by securing larger, higher margin projects, but it plans to continue to complement organic growth with earnings-enhancing acquisitions. The Group recently announced interim figures for the six months to June 2006, showing that turnover had grown by 108% to £11.5m, profit before tax grown by 42% to £1.6m and EBITDA increased by 77% to £2.6m.

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