TIDMAUK
RNS Number : 3598A
Aukett Swanke Group PLC
07 June 2016
Aukett Swanke Group Plc
Interim Results
For the six months ended 31 March 2016
Aukett Swanke Group Plc, the international practice of
architects, interior design specialists and engineers, is pleased
to announce its interim results for the six month period ended 31
March 2016.
Highlights
-- Revenues up 9% at GBP10.0m (2015: GBP9.2m)
-- Profit before tax lower at GBP417,000 (2015: GBP815,000)
-- Net funds of GBP1.5m (GBP1.9m at 30 September 2015) after net
debt of GBP0.5m to fund acquisition
-- Earnings per share 0.17p (2015: 0.43p)
-- Interim dividend 0.07 pence per share (2015: 0.11 pence per share)
-- Acquisition of Shankland Cox Limited augments United Arab
Emirates presence to over 100 staff
Commenting on today's interim results announcement, CEO Nicholas
Thompson said;
"The EU Referendum in the UK has clearly impacted these results
and is likely to do so for the full financial year. Encouragingly
the Group has benefitted from its recent investment in the UAE. In
addition we anticipate improved performance in both Germany and
Turkey in the second half."
Enquiries
Aukett Swanke Group Plc - 020 7843 3000
Nicholas Thompson, Chief Executive Officer
Beverley Wright, Chief Financial Officer
finnCap - 020 7220 0500
Corporate Finance: Julian Blunt/James Thompson
Corporate Broking: Alice Lane
Hermes Financial PR
Trevor Phillips - 07889 153628
Chris Steele - 07979 604687
Interim statement
Overview
We are pleased to report another period of profitability.
The result for the half year is lower than the prior year at
GBP417,000 (2015: GBP815,000) reflecting a slowdown in continuing
United Kingdom ("UK") instructions on existing projects as the
market pauses for the outcome of the EU Referendum which has been
partially offset by an improvement in the United Arab Emirates
("UAE") following recent investments. Revenues at GBP10.0m (2015:
GBP9.2m) represent further progress in our aim to grow the size of
the organisation with revenues less sub consultant costs improving
by 11% to GBP9.1m (2015: GBP8.2m). This growth has been achieved
through non UK revenues which are now 33% of the total (2015:
18%).
Acquisition of Shankland Cox Limited ("SCL")
The first half saw our second acquisition in the UAE in less
than twelve months; which provides a game changing move for our
operation in that geography. The consideration for SCL at a maximum
of AED 16m (GBP2.97m) represents the book value of the company. The
consideration is phased to take account of, firstly, the net cash
available and, secondly, the recoverability of debtors and work in
progress. Our bankers, Coutts, have provided a term loan equal to
the initial consideration thus allowing us to maintain our
operational working capital at a gross cash position which remains
at GBP2.6m (30 September 2015: GBP2.5m), including SCL's cash
balances. The enlarged size of our organisation continues to
improve our service offer in the region.
Business Model Re-Structure
With the SCL acquisition we progressed the re-balancing of our
business which now comprises three main geographies: the UK centred
on London; Continental Europe comprising the Czech Republic,
Germany, Russia and Turkey; and the Middle East - United Arab
Emirates - including Abu Dhabi, Al Ain, Dubai and Ras Al Khaimah.
These geographies are broadly equal in size by staff numbers and
will be managed on that basis in the future.
United Kingdom
Revenue at GBP6.7m (2015: GBP7.5m) is 11% down on the prior year
but profits have fallen by more to GBP498,000 (2015: GBP927,000) as
equivalent cost reductions were difficult to achieve in the short
term. Economic data on the state of the UK construction industry
performance and direction is inconclusive which has meant that our
revenues are reverting to our core markets' strengths as peripheral
sectors find new business in short supply. These results also
reflect the early impact of the EU Referendum in June 2016 which is
typified by two negative characteristics: firstly apprehension at
committing to significant post planning services (we have 2m ft(2)
of developments - all with planning consents outside London in this
category), and a more specific anomaly with Heads of (leasing)
Terms including 'Brexit' clauses. Management is now focused on
rebalancing the cost profile of the business to reflect the current
slowdown which may be impacted more by the Referendum than
previously thought. Encouragingly our new work enquiry rate remains
buoyant and we expect new instructions to flow through from
July.
Our current workload is impressive with over 1.5m ft(2) under
construction outside London including three schemes in Cambridge,
two schemes for Goodman, offices in Hemel Hempstead, Bristol,
Reading and West London, and a retail scheme in Colchester. Inside
the capital we continue to deliver four significant Aukett Swanke
designed projects, with our executive arm, Veretec adding a further
six projects.
Continental Europe
Our business in this geography comprises a mixture of
wholly-owned subsidiaries, joint ventures and an associate. Overall
the half year result has fallen due to losses in Russia and Turkey
along with a lower contribution from Germany.
Turkey (100% owned) - this operation has started to recover from
the market challenges created by the fall in oil prices and
currency decline, and the sequence of local and central government
elections in 2014 and 2015. There have been a number of significant
new commissions from NIDA Insaat, GE, Vodafone, Allianz Turkey,
FIBA Gayrimenkul, Cengiz Insaat, Nurol GYO and Yuksel Insaat. The
first half results do not yet reflect this recent success due to
delays arising from ongoing changes to Municipality building
regulations and due to a court ruling against developer choice on
the use of zoning regulations from June 2015 which was subsequently
over-ruled by the Government in February 2016. These events coupled
with the continuing geo-political situation, saw our first quarter
earnings stall. We have since recovered this position and expect to
return the operation to a full year's profit by the end of the
second half. With GDP being forecast as one of the highest in
Europe and our location within the commercial capital, Istanbul, we
remain committed to this location.
Russia (100% owned) - significant management time has been spent
on incrementally downsizing this operation since 2014, following
the currency decline and imposition of international sanctions,
which contained losses to a manageable level by the end of 2015.
However, in H1 revenues fell by over 67% to GBP227,000 (2015:
GBP692,000) which could not be mitigated by cost reductions alone
and our losses widened to GBP118,000 (2015: loss GBP11,000) of
which GBP44,000 is notionally recharged by the UK. Breakeven by the
year end is unlikely and so we are re-structuring the business to a
single corporate entity to remove any residual duplicated costs. On
a brighter note the office won the Best Office Award 2016 with a
design for Japan Tobacco International. This follows the Arcus III
win in 2015.
The Czech Republic (50% joint venture) - with little economic
activity and no political direction this market offers few
opportunities. However, the local skill base is being utilised
within the Group to support major projects in both Germany and the
UK with a positive outcome for the Group as a whole and this has
produced a small surplus of GBP6,000 (2015: GBP3,000).
Germany (25% associate - Berlin) - our best European operation
continues to perform well. Continued instructions from repeat
clients such as KfW bank, Siemens, Stone Brewing, Berlin Airport
and Hochtief along with other major developments in the city have
maintained our market position. The H1 share of the result is below
last year at GBP65,000 (2015: GBP150,000) as the office carried
expansion costs in anticipation of new instructions - which have
started to follow through with the $230m Mercedes Platz in East
Berlin and at the Allianz HQ in Aldershof. A considerable
improvement is expected in the second half.
Germany (50% joint venture - Frankfurt). The office has had a
successful start to the year by winning a major drawing programme
for Hochtief, two further commissions from Microsoft and numerous
landlord and tenant instructions on the Messe Tower for Tishman
Speyer. This has improved longer term revenue visibility.
Middle East - United Arab Emirates
With a full six months contribution from John R Harris &
Partners revenues jumped to GBP2.9m (2015: GBP0.4m) and prior year
losses converted into a profit of GBP83,000 (2015: loss
GBP91,000).
Whilst SCL was acquired in February 2016 we assumed the balance
sheet with effect from 31 December 2015 which gave rise to a small
amount of goodwill arising through short term losses. SCL
contributed GBP683,000 to H1 revenues.
Prior to the half year we won our first major project with
former client Aldar on Yas Island, Abu Dhabi for a new build
370-key hotel for operator Mövenpick. Part of the winning
submission was supported by the enlarged resource available to the
Group in the UAE.
Group costs
These fell by GBP103k during the period as a result of reduced
M&A costs and some minor exchange gains.
Prospects
We approach H2 with a certain degree of caution as the post
planning order book in the UK may take longer to unwind following
the EU Referendum than expected. In addition we have yet to
eliminate the losses in Russia which requires a higher level of
sustainable fee income. On the positive side we anticipate
continued progress in our UAE performance as the enlarged entity
gathers momentum with new and larger enquiries along with
significant improvements in both Turkey and Germany.
In consequence of the economic climate but maintained cash
positon we resolved to declare a slightly reduced interim dividend
of 0.07 pence per share (2015: 0.11 pence per share) which will be
paid on Monday 10 October 2016 to shareholders on the register at
the close of business on Friday 9 September 2016.
Nicholas Thompson
Chief Executive Officer
6 June 2016
Consolidated income statement
For the six months ended 31 March 2016
Note Unaudited Unaudited Audited
six months six months year to
to 31 to 31 30 September
March March 2015
2016 2015 GBP'000
GBP'000 GBP'000
Revenue 3 10,007 9,164 18,668
Sub consultant costs (869) (933) (1,782)
------------ ------------ --------------
Revenue less sub consultant
costs 9,138 8,231 16,886
Personnel related costs (6,725) (5,641) (11,464)
Property related costs (1,286) (1,357) (2,730)
Other operating expenses (1,062) (907) (1,715)
Other operating income 290 338 626
------------ ------------ --------------
Operating profit 355 664 1,603
Finance income 8 - 3
Finance costs (11) (8) (13)
------------ ------------ --------------
Profit after finance
costs 352 656 1,593
Share of results of
associate and joint
ventures 65 159 277
------------ ------------ --------------
Profit before tax 3 417 815 1,870
Taxation (111) (107) (215)
------------ ------------ --------------
Profit for the period 306 708 1,655
------------ ------------ --------------
Profit attributable
to:
Owners of Aukett Swanke
Group Plc 283 708 1,653
Non controlling interests 23 - 2
------------ ------------ --------------
306 708 1,655
------------ ------------ --------------
Earnings per share
Basic 4 0.17p 0.43p 1.00p
Diluted 4 0.17p 0.43p 1.00p
------------ ------------ --------------
Consolidated statement of comprehensive income
For the six months ended 31 March 2016
Unaudited Unaudited Audited
six months six months year to
to 31 to 31 30 September
March March 2015
2016 2015 GBP'000
GBP'000 GBP'000
Profit for the period 306 708 1,655
Other comprehensive
income:
Currency translation
differences 129 (101) (201)
Other comprehensive
income for the period 129 (101) (201)
Total comprehensive
income for the period 435 607 1,454
------------ ------------ --------------
Total comprehensive
income is attributable
to:
Owners of Aukett Swanke
Group Plc 401 607 1,451
Non controlling interests 34 - 3
------------ ------------ --------------
435 607 1,454
------------ ------------ --------------
Consolidated statement of financial position
At 31 March 2016
Note Unaudited Unaudited Audited
at 31 at 31 at 30
March March September
2016 2015 2015
GBP'000 GBP'000 GBP'000
Non current assets
Goodwill 2,541 1,825 2,283
Other intangibles 787 550 818
Property, plant and
equipment 539 630 563
Investment in associate
and joint ventures 446 394 354
Deferred tax 243 254 288
---------- ---------- -----------
Total non current assets 4,556 3,653 4,306
Current assets
Trade and other receivables 10,155 5,578 6,430
Current tax - 15 -
Cash and cash equivalents 6 2,567 2,540 1,873
---------- ---------- -----------
Total current assets 12,722 8,133 8,303
Total assets 17,278 11,786 12,609
Current liabilities
Trade and other payables (8,475) (5,970) (5,833)
Short term borrowings 6 (223) - -
Provisions - - -
Current tax (120) (156) (117)
Total current liabilities (8,818) (6,126) (5,950)
Non current liabilities
Long term borrowings 6 (891) - -
Provisions (1,025) (112) (354)
Deferred tax (50) (66) (54)
Total non current liabilities (1,966) (178) (408)
Total liabilities (10,784) (6,304) (6,358)
Net assets 6,494 5,482 6,251
---------- ---------- -----------
Capital and reserves
Share capital 1,652 1,652 1,652
Merger reserve 1,176 1,176 1,176
Foreign currency translation
reserve (158) (175) (276)
Retained earnings 2,084 856 1,801
Other distributable
reserve 1,610 1,973 1,791
---------- ---------- -----------
Total equity attributable
to
equity holders of the
Company 6,364 5,482 6,144
---------- ---------- -----------
Non controlling interest 130 - 107
Total equity 6,494 5,482 6,251
---------- ---------- -----------
Consolidated statement of cash flows
For the six months ended 31 March 2016
Note Unaudited Unaudited Audited
six months six months year to
to 31 to 31 30 September
March March 2015
2016 2015 GBP'000
GBP'000 GBP'000
Cash flows from operating
activities
Cash from operations 5 2,083 1,032 1,443
Interest paid (11) (8) (13)
Taxation paid (63) (58) (238)
------------ ------------ --------------
Net cash from operating
activities 2,009 966 1,192
Cash flows from investing
activities
Purchase of property,
plant and equipment (31) (125) (163)
Sale of property, plant
and equipment - - 2
Acquisition of subsidiary,
net of cash acquired (2,425) - (824)
Interest received 8 - 3
Dividends received from
associate - 115 278
------------ ------------ --------------
Net cash used in investing
activities (2,448) (10) (704)
Net cash flow before
financing activities (439) 956 488
Cash flows from financing
activities
Bank loan 1,114 - -
Repayment of bank loan - (113) (113)
Dividends paid - (178) (360)
Net cash used in financing
activities 1,114 (291) (473)
Net change in cash,
cash equivalents
and bank overdraft 675 665 15
Cash, cash equivalents
and bank
overdraft at start of
period 1,873 1,891 1,891
Currency translation
differences 19 (16) (33)
------------ ------------ --------------
Cash, cash equivalents
and bank
overdraft at end of
period 6 2,567 2,540 1,873
------------ ------------ --------------
Consolidated statement of changes in equity
For the six months ended 31 March 2016
Share Foreign Retained Other Merger Total Non-controlling Total
capital currency earnings distributable reserve Interests Equity
translation reserve
reserve GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- ------------ ---------- -------------- --------- --------- ---------------- ---------
At 1 October
2015 1,652 (276) 1,801 1,791 1,176 6,144 107 6,251
Profit for
the year - - 283 - - 283 23 306
Other
comprehensive
income - 118 - - - 118 11 129
Non
controlling
interest
arising
on business
combination - - - - - - (11) (11)
Dividends
paid - - - (181) - (181) - (181)
--------------- --------- ------------ ---------- -------------- --------- --------- ---------------- ---------
At 30
September
2016 1,652 (158) 2,084 1,610 1,176 6,364 130 6,494
--------------- --------- ------------ ---------- -------------- --------- --------- ---------------- ---------
For the six months ended 31 March 2015
Share Foreign Retained Other Merger Total Non-controlling Total
capital currency earnings distributable reserve Interests Equity
translation reserve
reserve GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- ------------ ---------- ---------------- --------- --------- ---------------- ---------
At 1 October
2014 1,652 (74) 148 2,151 1,176 5,053 - 5,053
Profit for
the year - - 708 - - 708 - 708
Other
comprehensive
income - (101) - - - (101) - (101)
Non
controlling
interest - - - - - - - -
arising
on business
combination
Dividends
paid - - - (178) - (178) - (178)
--------------- --------- ------------ ---------- ---------------- --------- --------- ---------------- ---------
At 31 March
2015 1,652 (175) 856 1,973 1,176 5,482 - 5,482
--------------- --------- ------------ ---------- ---------------- --------- --------- ---------------- ---------
For the year ended 30 September 2015
Share Foreign Retained Other Merger Total Non-controlling Total
capital currency earnings distributable reserve Interests Equity
translation reserve
reserve GBP'000
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------- --------- ------------ ---------- ---------------- --------- --------- ---------------- ---------
At 1 October
2014 1,652 (74) 148 2,151 1,176 5,053 - 5,053
Profit for
the year - - 1,653 - - 1,653 2 1,655
Other
comprehensive
income - (202) - - - (202) 1 (201)
Non
controlling
interest
arising
on business
combination - - - - - - 104 104
Dividends
paid - - - (360) - (360) - (360)
--------------- --------- ------------ ---------- ---------------- --------- --------- ---------------- ---------
At 30
September
2015 1,652 (276) 1,801 1,791 1,176 6,144 107 6,251
--------------- --------- ------------ ---------- ---------------- --------- --------- ---------------- ---------
Notes to the interim report
1 Basis of preparation
The financial information presented in this interim report has
been prepared in accordance with the recognition and measurement
principles of International Financial Reporting Standards ('IFRS')
as adopted by the EU that are expected to be applicable to the
financial statements for the year ending 30 September 2016 and on
the basis of the accounting policies expected to be used in those
financial statements.
2 Business combination
On 10 February 2016 the group acquired 100% of the issued share
capital of Shankland Cox Limited, a company incorporated in England
and Wales but operating through 4 branches in the United Arab
Emirates.
The total consideration, all to be paid in cash, was structured
as follows:
-- AED 4.5m on completion.
-- AED 1.5m upon release of banking guarantees, paid after the reporting date.
-- Maximum deferred consideration of AED 9.8m dependant on the
collection of debtors and work in progress from the completion
balance sheet within 2 years from the completion date.
3 Operating segments
The Group comprises a single business segment and three
separately reportable geographical segments (together with a group
costs segment). Geographical segments are based on the location of
the operation undertaking each project.
During the period, the Group changed its operating segments as
management now considers the business is based on geographic area,
rather than by individual country. Accordingly, the Group's
operating segments now consist of the United Kingdom, the Middle
East and Continental Europe. Turkey and Russia are no longer
reported as separate reporting operating segments, but are included
within Continental Europe together with Germany and the Czech
Republic. All comparatives have been restated to reflect these
changes.
Segment revenue Unaudited Unaudited Audited
six months six months year to
to 31 to 31 30 September
March March 2015
2016 2015 GBP'000
GBP'000 GBP'000
United Kingdom 6,686 7,485 14,488
Middle East 2,885 432 2,129
Continental Europe 436 1,247 2,051
Total 10,007 9,164 18,668
------------ ------------ --------------
Segment result before Unaudited Unaudited Audited
tax six months six months year to
to 31 to 31 30 September
March March 2015
2016 2015 GBP'000
GBP'000 GBP'000
United Kingdom 498 927 1,993
Middle East 83 (91) 47
Continental Europe (94) 152 88
Group costs (70) (173) (258)
------------ ------------ --------------
Total 417 815 1,870
------------ ------------ --------------
4 Earnings per share
The calculations of basic and diluted earnings per share are
based on the following data:
Earnings Unaudited Unaudited Audited
six months six months year to
to 31 to 31 30 September
March March 2015
2016 2015 GBP'000
GBP'000 GBP'000
Profit for the period 283 708 1,653
------------ ------------ --------------
Number of shares Unaudited Unaudited Audited
six months six months year to
to 31 to 31 30 September
March March 2015
2016 2015 '000
'000 '000
Weighted average number
of shares 165,214 165,213 165,214
Effect of dilutive options 256 321 305
------------ ------------ --------------
Diluted weighted average
number of shares 165,470 165,534 165,519
------------ ------------ --------------
5 Reconciliation of profit before tax to net cash from operations
Unaudited Unaudited Audited
six months six months year to
to 31 to 31 30 September
March March 2015
2016 2015 GBP'000
GBP'000 GBP'000
Profit before tax 417 815 1,870
Finance income (8) - (3)
Finance costs 11 8 14
Share of results of associate
and joint ventures (65) (159) (277)
Goodwill written off 17 - -
Depreciation 172 176 345
Amortisation 73 25 80
Profit on disposal of
property, plant and equipment - - (2)
Change in trade and other
receivables (76) 636 597
Change in trade and other
payables 1,480 (481) (1,273)
Change in provisions 62 12 92
------------ ------------ --------------
Net cash from operations 2,083 1,032 1,443
------------ ------------ --------------
6 Analysis of net funds
Unaudited Unaudited Audited
at at at
31 March 31 March 30 September
2016 2015 2015
GBP'000 GBP'000 GBP'000
Cash and cash equivalents 2,567 2,540 1,873
Secured bank overdraft - - -
---------- ---------- --------------
Cash, cash equivalents
and bank overdraft 2,567 2,540 1,873
Secured bank loan (1,114) - -
Net funds 1,453 2,540 1,873
---------- ---------- --------------
Cash and cash equivalents 2,567 2,540 1,873
Short term borrowings (223) - -
Long term borrowings (891) - -
---------- ---------- --------------
Net funds 1,453 2,540 1,873
---------- ---------- --------------
7 Status of interim report
The interim report covers the six months ended 31 March 2016 and
was approved by the Board of Directors on 6 June 2016. The interim
report is unaudited.
The interim condensed set of consolidated financial statements
in the interim report are not statutory accounts as defined by
Section 434 of the Companies Act 2006.
Comparative figures for the year ended 30 September 2015 have
been extracted from the statutory accounts of the group for that
period.
The statutory accounts for the year ended 30 September 2015 have
been reported on by the Group's auditors and delivered to the
Registrar of Companies. The audit report thereon was unqualified,
did not include references to matters which the auditors drew
attention by way of emphasis without qualifying the report, and did
not contain a statement under Section 498 of the Companies Act
2006.
8 Further information
Copies of the interim report will be dispatched by post to
holders of 50,000 or more shares in due course. An electronic
version will be available on the Group's website
(www.aukettswanke.com).
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR LLFSRRDIRIIR
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