TIDMAUK

RNS Number : 5236I

Aukett Swanke Group PLC

20 June 2017

Embargoed until 7:00am on 20 June 2017

Aukett Swanke Group Plc

Interim results

For the six months ended 31 March 2017

Aukett Swanke Group Plc, the international practice of architects and interior design specialists and engineers, is pleased to announce its interim results for the six month period ended 31 March 2017.

Highlights

Revenues down 9% at GBP9.1m

Net cash at GBP1.56m with net funds of GBP594,000

Loss before tax of GBP358,000

Commenting on today's interim results announcement, CEO Nicholas Thompson said;

"All Group operations have worked hard to maintain revenues during the period although some markets have continued to weaken, resulting in decreased earnings. This coupled with some specific write downs offset by claim recoveries, has resulted in losses which has hampered the development of our three hub structure. We are, however, pleased to report that we have maintained our liquidity strength."

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/ Corporate Broking: Alice Lane

Investor/Media enquiries

Ben Alexander - 07926 054111

Interim statement

Overview

As previously announced, the results for the six months to 31 March show a decline in revenues and a loss for the period. Revenues are 9% lower at GBP9.1m (2016: GBP10.0m) and the loss after tax is GBP345,000 (2016: profit GBP466,000) which has been offset by a settlement claim in respect of a recent acquisition in the sum of GBP572,000.

The United Arab Emirates ("UAE") saw an increase in revenues of 44% but this was offset by the decline in United Kingdom ("UK") revenues of 32%, with our wholly owned Continental Europe offices' revenues continuing to fall. Whilst the results are well below recent performances the Group has continued to reshape the structure of its operations and has expanded its Middle East business, so that, as intended, our operations are now more evenly balanced as we move forward. This balance is a key strategic priority in order to provide the Group with some resilience to the cyclical markets in which we operate.

We are pleased to report that cash has held up well since the year end and stands at GBP1.56m (30 September 2016: GBP1.84m). The Group has conserved its cash position during the period to assist in mitigating the impact of the losses; to cover licensing requirements in the UAE and to maintain liquidity strength for the future. Net funds remain positive at GBP594,000 (30 September 2016: GBP790,000) and we have continued to reduce our long term debt (drawn down on the acquisition of Shankland Cox Limited ('SCL')), which is denominated in US dollars.

United Kingdom

Revenues at GBP4.6m (2016: GBP6.7m) are disappointing and reflect a lack of new market instructions as historic projects came to a conclusion in the period.

During the first six month period and over the remainder of the year we have some 20 major project completions in London and the UK regions. These include: three offices in Cambridge with the Bradfield Centre, Biomed Realty at Granta Park and Radio House; two major refurbishments in the West End - Verde for Tishman Speyer and the Adelphi Building phase 3 on The Strand for Blackstone; and a number of Veretec (our specialist executive delivery operation) projects including a retail store in Durham, head office buildings on Bishopsgate and Liverpool Street, monitoring at Derwent's White Collar Factory at Old Street and a residential scheme at Earls Court. Around half that number of projects will continue onto site into 2018, reflecting the decline in UK construction output statistics, before new instructions begin to contribute.

Given the comparatively high fixed operating costs and the need to retain core staff, cost reductions could not exactly match falls in revenue, although some GBP1.4m of savings was achieved. The result was a loss of GBP211,000 (2016: profit GBP498,000). Cost reduction remains a focus and following the half year the operation has surrendered part of its London leased property portfolio providing a future net cost saving of GBP230,000 per annum.

With the construction market having previously peaked we do not expect to see higher volumes in the immediate future. However recent enquiries both in London and the UK regions provide some confidence that that the general development market has adapted to a post Brexit future.

Middle East - United Arab Emirates

The UAE market is relatively subdued at present but is expected to grow in 2018 as it adapts to reduced oil prices and a more mature market model. Our current scale of operation remains competitive in this restricted environment and work is still buoyant in sectors where a large proportion of commissions reflect midsized projects in the post contract phase. Our revenues continued to climb following the benefit of a full half year contribution from SCL and now stand at GBP4.2m (2016: GBP2.9m) for the six months. However only a small profit of GBP121,000 (2016: GBP243,000) was generated. John R Harris & Partners ('JRHP') performed satisfactorily and contributed to the result as did our original Aukett Fitzroy International ('AFRI') operation.

Following its acquisition SCL had been the subject of a downsizing and restructuring exercise across two of its offices which resulted in additional costs and some additional bad debt provisions. This is an ongoing process which will be concluded principally during the fourth quarter. We then expect growth and anticipate that JRHP will also better its performance in the second half additionally supported in part by project income initially generated by AFRI. With SCL now emerging from post acquisition issues, we will be integrating all 3 businesses under the Aukett Swanke brand in order to gain the full benefit of the enlarged platform that we now have.

Continental Europe

Our business in this geography comprises a mixture of wholly owned subsidiaries, joint ventures and an associate. The geography has endured a wide range of economic and geopolitical conditions ranging from the continued strength of the mature market in Germany, relative stability in Russia to considerable uncertainty in Turkey following the attempted coup, the ongoing State of Emergency and the recent referendum.

As previously reported the half year result has fallen due to losses in Russia and Turkey along with a lower contribution from Germany.

Wholly owned operations

Russia and Turkey reported losses. Russia has been downsized to a minimal level and Turkey suffered from a reversal of project income following the sale of a site in the pre referendum period. As such revenues fell to GBP331,000 (2016: GBP436,000)

Project highlights for the period include:

-- The first phase of our three residential apartment towers totalling 42,000 sqm for Comstrin in Perm, Siberia and the 38,000 sqm luxury Monet apartment tower in Moscow are nearly complete. -- Our Japan Tobacco International fit out at the Moscow City development won the Best Office Awards for 2016 at both the Office Next and MCFO awards. -- The Istanbul office completed over 150,000 sqm of space as a part of the Nidakule Atasehir Kuzey and Guney Office Campus development. -- The Cengiz Konya office headquarters' project also completed during this year together with over 24 floors of accommodation for Allianz in their Allianz Tower in Izmir.

Joint ventures and associates

-- Completed projects include the interior design of the new Microsoft digital workplace offices in Zurich and Geneva, and nearing completion in August 2017 the 130 room luxury Fontenay Hotel in Hamburg.

-- Projects in progress include the 100,000 sqm Mercedes Platz commercial office, retail and leisure centre for Anschutz through Hochtief in Berlin; two interior design projects of 65,000 sqm and 17,000 sqm for a major insurance company on a campus in Cologne and a high rise building in Frankfurt am Main; a further 20,000 sqm laboratory and R&D centre for Agilent Technologies in Waldbronn for Hochtief; and ongoing tenant fit out projects for Blackstone at the Messe Turm in Frankfurt.

-- Our Prague office saw the completion of a significant phase of the production facility and HQ building for the SAB Miller brewery and a 3,000 sqm fit out for Rockwell Automation.

All three of Berlin, Frankfurt and Prague were profitable. Berlin was less so than in 2016 due to a major project not being formally signed by the half year end. Frankfurt has benefitted from a number of larger and continuing instructions from Deutsche Bank and Hochtief. Prague has assisted other offices in the Group to augment its more limited local market opportunities.

Due to a combination of reduced management time and mitigation of economic and / or geopolitical factors which cannot be avoided, a joint venture is our preferred model in Continental Europe. As such we are progressing a strategy of implementing this for the geography as a whole.

Group costs

These were held during the period at GBP95,000 (2016: GBP70,000).

Prospects

With many of our operations in a loss situation we will continue to focus on cost savings in the second half whilst ensuring that we retain the core skills required to deliver our services to clients in order to return the Group to profitability.

Whilst we believe we have reached the bottom of the cycle in the UK, there is no immediate sign of a strong sustainable recovery in this market. We feel more confident about the Brexit impact having been weathered. However, with the recent UK general election result creating a hung parliament it is more likely that this business may now face a longer period of uncertainty than was hitherto expected. The UAE still represents our best opportunity for profitable growth in the second half and we will focus on that. Continental Europe should return a positive result in the second half. Overall we currently foresee a loss situation for the year pending a return to positive results for our Group.

We recognise that our business is sensitive to market changes and that minor setbacks can have a disproportionate impact on performance in the short term. However that is the norm for operations such as ours in cyclical industries. With that in mind we have pursued our strategy of balancing the Group's businesses economically as well as politically. Evidencing this, our total revenues (including 100% of the joint ventures) which are now predominantly non sterling denominated, demonstrate our platform of three broadly equal sized operations. The balance that this brings is key to our medium term outlook.

Although cash remains strong the Board has decided it will continue to review the decision to recommend a dividend until there is a return to profitability.

Finally, may I add a comment on a post period event that, at the Architect's Journal Annual Awards 2017 held only last week, Aukett Swanke's "Veretec" were again named as 'Executive Architect of the Year'. The accolade of our peer group is a demonstration of the excellent work and dedication of our staff and underpins our confidence in the future. It reinforces our commitment to keeping our teams together and maintaining our levels of service.

Nicholas Thompson

Chief Executive Officer

19 June 2017

Consolidated income statement

For the six months ended 31 March 2017

 
                                 Note     Unaudited     Unaudited         Audited 
                                         six months    six months         year to 
                                              to 31         to 31    30 September 
                                              March         March            2016 
                                               2017          2016         GBP'000 
                                            GBP'000       GBP'000 
                                                       (restated) 
 Revenue                          3           9,070        10,007          20,841 
 
 Sub consultant costs                         (998)         (869)         (2,431) 
                                       ------------  ------------  -------------- 
 Revenue less sub consultant 
  costs                                       8,072         9,138          18,410 
 
 Personnel related costs                    (6,795)       (6,725)        (13,929) 
 Property related costs                     (1,343)       (1,286)         (2,632) 
 Other operating expenses                   (1,323)       (1,062)         (1,901) 
 Other operating income           4             934           450             732 
                                       ------------  ------------  -------------- 
 Operating (loss) / profit                    (455)           515             680 
 
 Finance income                                   -             8               8 
 Finance costs                                 (18)          (11)            (28) 
                                       ------------  ------------  -------------- 
 (Loss) / profit after 
  finance costs                               (473)           512             660 
 
 Share of results of 
  associate and joint 
  ventures                                      115            65             267 
                                       ------------  ------------  -------------- 
 (Loss) / profit before 
  tax                             3           (358)           577             927 
 
 Taxation                                        13         (111)           (106) 
                                       ------------  ------------  -------------- 
 
 (Loss) / profit for 
  the period                                  (345)           466             821 
                                       ------------  ------------  -------------- 
 
 (Loss) / profit attributable 
  to: 
    Owners of Aukett Swanke 
     Group Plc                                (342)           443             772 
    Non controlling interests                   (3)            23              49 
                                       ------------  ------------  -------------- 
                                              (345)           466             821 
                                       ------------  ------------  -------------- 
 
 Earnings per share 
 Basic                            5         (0.21)p         0.27p           0.47p 
 Diluted                          5         (0.21)p         0.27p           0.47p 
                                       ------------  ------------  -------------- 
 
 
 
 

Consolidated statement of comprehensive income

For the six months ended 31 March 2017

 
                                    Unaudited     Unaudited         Audited 
                                   six months    six months         year to 
                                        to 31         to 31    30 September 
                                        March         March            2016 
                                         2017          2016         GBP'000 
                                      GBP'000       GBP'000 
                                                 (restated) 
 (Loss) / profit for the 
  period                                (345)           466             821 
 
 Other comprehensive income: 
 Currency translation 
  differences                              37           113             424 
 Other comprehensive income 
  for the period                           37           113             424 
 
 Total comprehensive (loss) 
  / income for the period               (308)           579           1,245 
                                 ------------  ------------  -------------- 
 
 Total comprehensive (loss) 
  / income is attributable 
  to: 
    Owners of Aukett Swanke 
     Group Plc                          (296)           545           1,158 
    Non controlling interests            (12)            34              87 
                                 ------------  ------------  -------------- 
                                        (308)           579           1,245 
                                 ------------  ------------  -------------- 
 

Consolidated statement of financial position

At 31 March 2017

 
                                  Note   Unaudited     Unaudited         Audited 
                                             at 31         at 31         year to 
                                             March         March    30 September 
                                              2017          2016            2016 
                                           GBP'000       GBP'000         GBP'000 
                                                      (restated) 
 Non current assets 
 Goodwill                                    2,422         2,347           2,409 
 Other intangibles                           1,001         1,100           1,056 
 Property, plant and 
  equipment                                    346           568             506 
 Investment in associate 
  and joint ventures                           667           446             710 
 Deferred tax                                  219           243             219 
                                        ----------  ------------  -------------- 
 Total non current assets                    4,655         4,704           4,900 
 
 Current assets 
 Trade and other receivables                 8,477         9,534           9,227 
 Cash and cash equivalents         7         1,555         2,567           1,839 
                                        ----------  ------------  -------------- 
 Total current assets                       10,032        12,101          11,066 
 
 Total assets                               14,687        16,805          15,966 
 
 Current liabilities 
 Trade and other payables                  (5,626)       (7,853)         (6,553) 
 Short term borrowings             7         (256)         (223)           (247) 
 Provisions                                   (98)             -            (90) 
 Current tax                                   (8)         (125)            (12) 
 Total current liabilities                 (5,988)       (8,201)         (6,902) 
 
 Non current liabilities 
 Long term borrowings              7         (705)         (891)           (802) 
 Provisions                                (1,029)       (1,025)           (973) 
 Deferred tax                                 (84)          (50)           (100) 
 Total non current liabilities             (1,818)       (1,966)         (1,875) 
 
 Total liabilities                         (7,806)      (10,167)         (8,777) 
 
 Net assets                                  6,881         6,638           7,189 
                                        ----------  ------------  -------------- 
 
 
 Capital and reserves 
 Share capital                               1,652         1,652           1,652 
 Merger reserve                              1,176         1,176           1,176 
 Foreign currency translation 
  reserve                                      156         (174)             110 
 Retained earnings                           2,231         2,244           2,573 
 Other distributable 
  reserve                                    1,494         1,610           1,494 
                                        ----------  ------------  -------------- 
 Total equity attributable 
  to 
  equity holders of the 
  Company                                    6,709         6,508           7,005 
                                        ----------  ------------  -------------- 
 
 Non controlling interests                     172           130             184 
 
 Total equity                                6,881         6,638           7,189 
                                        ----------  ------------  -------------- 
 

Consolidated statement of cash flows

For the six months ended 31 March 2017

 
                                Note     Unaudited     Unaudited         Audited 
                                        six months    six months         year to 
                                             to 31         to 31    30 September 
                                             March         March            2016 
                                              2017          2016         GBP'000 
                                           GBP'000       GBP'000 
                                                      (restated) 
 Cash flows from operating 
  activities 
 Cash (outflow) / inflow 
  from operations                6           (276)           122             104 
 Interest paid                                (18)          (11)            (29) 
 Taxation paid                                 (2)          (63)            (99) 
                                      ------------  ------------  -------------- 
 Net cash (outflow) / 
  inflow from operating 
  activities                                 (296)            48            (24) 
 
 Cash flows from investing 
  activities 
 Purchase of property, 
  plant and equipment                         (11)          (31)           (147) 
 Sale of property, plant 
  and equipment                                  2             -               4 
 Acquisition of subsidiary, 
  net of cash acquired                           -         (484)           (761) 
 Interest received                               -             8               8 
 Dividends received from                       151             -               - 
  associate 
                                      ------------  ------------  -------------- 
 Net cash inflow / (outflow) 
  from investing activities                    142         (507)           (896) 
 
 Net cash outflow before 
  financing activities                       (154)         (459)           (920) 
 
 Cash flows from financing 
  activities 
 Proceeds from bank loan                         -         1,114           1,123 
 Repayment of bank loan                      (128)             -           (175) 
 Dividends paid                                  -             -           (181) 
 Net cash (outflow) / 
  inflow from financing 
  activities                                 (128)         1,114             767 
 
 Net change in cash, 
  cash equivalents 
  and bank overdraft                         (282)           655           (153) 
 
 Cash, cash equivalents 
  and bank 
  overdraft at start of 
  period                                     1,839         1,873           1,873 
 Currency translation 
  differences                                  (2)            39             119 
                                      ------------  ------------  -------------- 
 Cash, cash equivalents 
  and bank 
  overdraft at end of 
  period                          7          1,555         2,567       1,839 
                                      ------------  ------------  -------------- 
 

Consolidated statement of changes in equity

For the six months ended 31 March 2017

 
                     Share        Foreign    Retained           Other     Merger      Total             Non      Total 
                   capital       currency    earnings   distributable    reserve                controlling     Equity 
                              translation                     reserve                             interests 
                                  reserve 
                   GBP'000        GBP'000     GBP'000         GBP'000    GBP'000    GBP'000         GBP'000    GBP'000 
---------------  ---------  -------------  ----------  --------------  ---------  ---------  --------------  --------- 
 At 1 October 
  2016               1,652            110       2,573           1,494      1,176      7,005             184      7,189 
 
 Loss for the 
  period                 -              -       (342)               -          -      (342)             (3)      (345) 
 Other 
  comprehensive 
  income                 -             46           -               -          -         46             (9)         37 
 At 31 March 
  2017               1,652            156       2,231           1,494      1,176      6,709             172      6,881 
---------------  ---------  -------------  ----------  --------------  ---------  ---------  --------------  --------- 
 
 
 

For the six months ended 31 March 2016 (restated)

 
                     Share       Foreign    Retained              Other     Merger      Total           Non      Total 
                   capital      currency    earnings      distributable    reserve              controlling     Equity 
                             translation                        reserve                           interests 
                                 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 period             -             -         443                  -          -        443            23        466 
 Other 
  comprehensive 
  income                 -           102           -                  -          -        102            11        113 
 Other 
  adjustments            -             -           -                  -          -          -          (11)       (11) 
 Dividends 
  paid                   -             -           -              (181)          -      (181)             -      (181) 
---------------  ---------  ------------  ----------  -----------------  ---------  ---------  ------------  --------- 
 At 31 March 
  2016               1,652         (174)       2,244              1,610      1,176      6,508           130      6,638 
---------------  ---------  ------------  ----------  -----------------  ---------  ---------  ------------  --------- 
 
 

For the year ended 30 September 2016

 
                     Share        Foreign    Retained           Other     Merger      Total             Non      Total 
                   capital       currency    earnings   distributable    reserve                controlling     Equity 
                              translation                     reserve                             interests 
                                  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               -              -         772               -          -        772              49        821 
 Other 
  comprehensive 
  income                 -            386           -               -          -        386              38        424 
 Other 
  adjustments            -              -           -               -          -          -            (10)       (10) 
 Dividends 
  paid                   -              -           -           (297)          -      (297)               -      (297) 
---------------  ---------  -------------  ----------  --------------  ---------  ---------  --------------  --------- 
 At 30 
  September 
  2016               1,652            110       2,573           1,494      1,176      7,005             184      7,189 
---------------  ---------  -------------  ----------  --------------  ---------  ---------  --------------  --------- 
 
 
 
 
 

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 2017 and on the basis of the accounting policies expected to be used in those financial statements.

   2          Restatement of prior period 

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 four branches in the United Arab Emirates.

At the time of publishing the interim financial statements for the six month period ended 31 March 2016, the accounting of this business combination was incomplete and provisional amounts were reported. During the 12 month post acquisition measurement period, the Group obtained additional facts and circumstances that existed at the acquisition date which, if known, would have affected the measurement of the amounts recognised at acquisition. These facts and circumstances included the fair value of trade receivables at acquisition as well as the identification and recognition of intangible assets. As prescribed by IFRS 3, these changes have been applied retrospectively and therefore the amounts previously reported for the 6 month period ended 31 March 2016 have been restated.

As a result of the restatement, provisional goodwill of GBP194,000 was removed, intangible assets of GBP313,000 were recognised and GBP160,000 of resulting negative goodwill was released to the income statement. The fair value of trade receivables at acquisition was also reduced by GBP621,000 which, under the payment mechanism, also reduced the fair value of contingent consideration at acquisition by GBP621,000.

In addition to the retrospective application of acquisition accounting noted above, amounts reported in the statement of cash flows and the reconciliation of profit before tax to net cash from operations have been corrected in accordance with IAS 8.

   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. Turkey and Russia are included within Continental Europe together with Germany and the Czech Republic.

 
 Segment revenue          Unaudited     Unaudited         Audited 
                         six months    six months         year to 
                              to 31         to 31    30 September 
                              March         March            2016 
                               2017          2016         GBP'000 
                            GBP'000       GBP'000 
 United Kingdom               4,573         6,686          12,142 
 Middle East                  4,166         2,885           7,383 
 Continental Europe             331           436           1,316 
 Total                        9,070        10,007          20,841 
                       ------------  ------------  -------------- 
 
 
 
 Segment result before       Unaudited     Unaudited         Audited 
  tax                       six months    six months         year to 
                                 to 31         to 31    30 September 
                                 March         March            2016 
                                  2017          2016         GBP'000 
                               GBP'000       GBP'000 
                                          (restated) 
 
 United Kingdom                  (211)           498           1,052 
 Middle East                       121           243              41 
 Continental Europe              (173)          (94)              95 
 Group costs                      (95)          (70)           (261) 
                          ------------  ------------  -------------- 
 Total                           (358)           577             927 
                          ------------  ------------  -------------- 
 
 
   4          Other operating income 
 
                                      Unaudited     Unaudited         Audited 
                                     six months    six months         year to 
                                          to 31         to 31    30 September 
                                          March         March            2016 
                                           2017          2016         GBP'000 
                                        GBP'000       GBP'000 
                                                   (restated) 
 Property rental income                     212           213             432 
 Management charges to 
  joint ventures and associates              54            54             104 
 Licence fee income                           1             3               5 
 Other sundry income                         18            20              31 
 Release of negative goodwill 
  on acquisition                              -           160             160 
 Fair value gain on the                      77             -               - 
  reduction of deferred 
  consideration 
 Gain recognised on acquisition             572             -               - 
  settlement 
                                   ------------  ------------  -------------- 
 Total other operating 
  income                                    934           450             732 
                                   ------------  ------------  -------------- 
 
   5          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            2016 
                                    2017          2016         GBP'000 
                                 GBP'000       GBP'000 
                                            (restated) 
 (Loss) / profit for the 
  period                           (342)           443             772 
                            ------------  ------------  -------------- 
 
 
 Number of shares                 Unaudited     Unaudited         Audited 
                                 six months    six months         year to 
                                      to 31         to 31    30 September 
                                      March         March            2016 
                                       2017          2017            '000 
                                       '000          '000 
 Weighted average number 
  of shares                         165,214       165,214         165,214 
 Effect of dilutive options               -           256             154 
                               ------------  ------------  -------------- 
 Diluted weighted average 
  number of shares                  165,214       165,470         165,368 
                               ------------  ------------  -------------- 
 
   6          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            2016 
                                          2017          2016         GBP'000 
                                       GBP'000       GBP'000 
                                                  (restated) 
 (Loss) / profit before 
  tax                                    (358)           577             927 
 Finance income                              -           (8)             (8) 
 Finance costs                              18            11              28 
 Share of results of associate 
  and joint ventures                     (115)          (65)           (267) 
 Goodwill impairment                         -            17              17 
 Depreciation                              173           172             359 
 Amortisation                               60            73             177 
 (Profit) / loss on disposal 
  of property, plant and 
  equipment                                (2)             -              10 
 Change in trade and other 
  receivables                              749          (76)             628 
 Change in trade and other 
  payables                               (887)         (481)         (1,583) 
 Change in provisions                       36            62              16 
 Negative goodwill                           -         (160)           (160) 
 Unrealised foreign exchange 
  differences                               50             -            (40) 
                                  ------------  ------------  -------------- 
 Net cash (outflow) / 
  inflow from operations                 (276)           122             104 
                                  ------------  ------------  -------------- 
 
   7          Analysis of net funds 
 
                               Unaudited   Unaudited         Audited 
                                   at 31          at              at 
                                   March    31 March    30 September 
                                    2017        2016            2016 
                                 GBP'000     GBP'000         GBP'000 
 Cash and cash equivalents         1,555       2,567           1,839 
 Secured bank loan                 (961)     (1,114)         (1,049) 
 Net funds                           594       1,453             790 
                              ----------  ----------  -------------- 
 
 
 Cash and cash equivalents         1,555       2,567           1,839 
 Short term borrowings             (256)       (223)           (247) 
 Long term borrowings              (705)       (891)           (802) 
                              ----------  ----------  -------------- 
 Net funds                           594       1,453             790 
                              ----------  ----------  -------------- 
 
   8          Status of interim report 

The interim report covers the six months ended 31 March 2017 and was approved by the Board of Directors on 19 June 2017. 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 2016 have been extracted from the statutory accounts of the group for that period.

The statutory accounts for the year ended 30 September 2016 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 to 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.

   9          Further information 

Copies of the interim report will be dispatched by post to holders of 100,000 or more shares in due course. An electronic version will be available on the Group's website (www.aukettswanke.com).

The company news service from the London Stock Exchange

END

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