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More Downward Pressure on UK Architectural Services
Aukett's main UK revenue source - 'back-end' architectural services offered from Main Contractors - appears to be under even more threat.
"Worries about the political and economic outlook plunged the UK construction sector into its steepest decline in June since the recession that followed the financial crisis.
The IHS Markit/CIPS UK Construction Purchasing Managers’ Index (PMI) tumbled to 43.1 from 48.6 in May, widely undershooting economists’ forecasts. The latest measure of output is the worst since April 2009 and far below the 50 level that indicates no change from the previous month.
Survey respondents attributed the contraction mainly to risk aversion among clients as they struggle to predict the outcome of Brexit and the future direction of the economy.
Incoming new work fell at the fastest pace in a decade, pointing to little chance of recovery in the sector anytime soon. "
Another first half loss, brings the fifth consecutive half year loss, to a massive cumulative loss of 3236k.
Net Cash has been decimated from 2500k to 200k in but a few years.
Current Assets has crashed from 11.7m to 5.7m
Current Assets less Liabilities has crashed from a positive 5.4m to a negative 0.33m now. [6.48-6.81]
Half Year Results has shown a rapid UK decline of revenue from 7.5m in 2015, to 3.73m. Revenue is propped up by Aukett completing the ‘low value’ back-end services for other architects ‘high value’ design services @ 2.2m. Aukett’s UK front-end architectural design work has been decimated @ 1.5m.
Half Year Results has shown a rapid UAE decline of revenue from 4.2m in 2017, to now 3.5m. Another 438k loss!
In the UK, GDP is flat lining, Clients remain cautious, fees are under pressure, and projects are being put on hold or delayed due to the uncertainty of Brexit. Attracting and maintaining the best Eurozone architectural staff is under considerable threat.
The UAE has a triple threat of rising Iran/USA Tensions, Global GDP decline, and Decline of UAE Oil Demand that peaked in 2013. USA has halved their Persian Gulf oil purchases in 5 years, and it is obvious that the world is implementing the Paris Agreement: fossil fuel divestment is fully underway. UAE’s economy is still fossil fuel dependant, and it would appear that Aukett is 20-40 years too late in arriving to the UAE.
EU’s GDP in flat lining, and Brexit will not help.
Russia’s GDP is suffering from ongoing USA sanctions, and lack of opportunities. Turkey is in recession with sizeable 3.0% & 2.6% contractions in the two previous quarters, with political uncertainty, threat of USA sanctions, and lack of opportunities. Revenue halved to 234k!
The demand for architectural services looks bleak in all locations.
Results will likely be the end of this coming week. Hard to ascertain the overall sentiment but clearly the market is challenging.
Hopefully investors will are the overall UK business at break even which would a good result all things considered. I’m expecting the Middle East to be poor although I’m aware there are some bright spots in that market.
Again, Europe will be a mixed bag I expect.
We may also see the impact of IFRS being introduced as per many other companies over the last year or so.
RIBA Future Trends
May 2019, released today
Commentary from [architectural] practices this month continues to stress the difficulties caused by the Brexit impasse.
Clients remain cautious, fees are under pressure, and projects are being put on hold or delayed.
The complexity of the picture suggests an architectural market that is unsure of future workloads.
Many practices face significant downward pressure.
Uncertainty is a common theme.
As before, it is only once we have clarity on Brexit that we will have clarity on the future architectural market.
Another very tough year for Rogers Stirk Harbour + Partners (RSHP), and a very troubled outlook for Aukett’s main UK market, for staff recruitment and retention, and declining revenue.
RSHP state: “We continue to be worried about how Brexit will affect not only our own recruitment and retention of the best architectural talent from across the eurozone but how it will affect the wider UK architecture industry. Our current projections indicate the forecast turnover could further decline in the current year as we see a constriction in the UK market with a greater percentage of turnover coming from outside the UK.”
UK RIBA Future Trends heading south, confirming RSHP’s comments. May'19 figures expected this week.
GDP outlook across all Aukett’s market sectors looking under extreme pressure, from a very unstable 1.8% in UK & UAE, to 0.7% in Germany, 0.5% in Russia, and a woeful -2.6% in Turkey.
Aukett’s Half Year Interim Results expected by month end.
If RSHP is a bell-weather, and RIBA Survey giving a negative lead, I would not be surprised for a possible decline in revenue, further losses, and net cash just above zero for the Half Year and Full Year. Expecting further delays in instructions, deferred projects, and possibly further bad debts out of UAE.
Of particular concern is the absence of new UK planning approvals being posted in the Company's 'News' in 2019. The pipeline of new UK approvals looks very thin, and historic approvals may never proceed.
The UK Rent Free Period of 400k pa might make the result look more promising than it actually is, but that will only hide a poor UK outcome in the years ahead, as an additional 400k will need to be extracted from the till and the bottom line in the years ahead.
“UK construction sector shrinks as Brexit uncertainty spreads
The Markit/CIPS UK Construction Purchasing Managers’ Index recorded a reading of 48.6 for May, contracting sharply.
Commercial building was the weakest area of construction activity for the month, and many firms reported clients had opted to hold back on major spending decisions in response to Brexit uncertainty and concerns about the economic outlook.”
Brexit uncertainty plunges London practices into gloom
Architects across the capital have become increasingly despondent about their pipeline of future work, with a lack of clarity around Brexit once again blamed for uncertainty in the marketplace.
According to the latest RIBA Future Trends survey, sentiment among London practices slumped into negative territory from a score of 0 in March to -7 in April, suggesting an overall expectation of decreasing workloads.
With PM May now resigning, a Brexiteer outcome looks favorite.
More uncertainty, with a larger slump to follow.
Architectural practices aim to achieve a KPI of Fee Revenue/Fee Earning Staff of 100k – 120k /FTE.
“With the Board owning 50% of the stock this business will be sold - its just a matter of when.’
My previous point is more about ‘why would you buy them’.
If there were a 'strategic' reason, then a valuation of 50% of Revenue would make real sense.
I struggle to find a reason to buy them, considering the risk that the revenue you think you might buy, would more than likely walk straight out the door, as the main fee earners would not be constrained to stay, as they are not the main equity owners. That is a real concern for a new owner: and hence why no one has bought them to date.
Architectural practices aim to achieve a KPI of Fee Earners/Fee Earning Staff of 100k – 120k /FTE. That ensures that you can reward the main Fee Earners at the top of the market range, and provide quality dividends for the shareholders. Admin Staff are kept to an absolute minimum: eg. accounts/personal/marketing/etc
The leading architect in the UK, Fosters + Partners is delivering 168k/FTE.
AUK is half of this amount. That is a pretty appalling KPI.
F+P pay their Architectural Directors 1m pa - AUK pay them 50k! You get what you pay for.....!
AUK often refer to the ‘staff’ in the German offices within their headcount. That looks great for clients looking for a ‘large‘ practice. In reality these ‘staff ‘are not under AUK control, as AUK simply pick up a dividend from these practices, they do not control or contract these staff members.
The reason for the poor KPI in UK & UAE is that AUK most probably can only attract work with poor fees compared with Fosters + Partners. The ‘executive architect’ services company Versetec would also be on very low margins, as it is not highly rewarded work.
As our cities become more crowded we are turning to high rise solutions to deal with the density. There are 100’s of towers planned for London and other cities of the world: AUK is not on any of those projects, as that is not a specialism that they have. That is a huge impediment for growth.
Clients appoint an individual architect for their skill and not simply an Architectural Company. Unfortunately the main fee earners with that skill are not the main 'ageing' shareholders. Why would the limited number of main fee earners wish to have their future profitability sold off by departing ageing shareholders?
Unfortunately AUK do not have quality professional staff. They are poorly paid, compared to competitors.
In the UK, the design led commissions for AUK have crashed alarmingly, and that is due to the lack of skill compared to other competitors.
In the UAE, AUK have purchased a run of third rate practices, and that level of design is not want is expected in Dubai. Revenues there are tumbling too.
Great architectural practices are run by Architects. AUK has been run by accountants for 15 years and unfortunately it shows.
AUK will be sold: but after reading this how much do you think a new owner would pay
I'm known for my typing errors! Corrected para below:
"Aukett (over the same 3 year average) implies a value of GBP 21.5k per staff member which is understandable given the smaller business and more lumpy trading / thinner margins etc. BUT, currently at GBP 2.9m mcap the value per staff member is around GBP 8.5k, way below the sector average".
This is a great debate and I appreciate your bearish stance.
One other way of looking at the value of Aukett (related to juicing sales) is the value the market assigns to each staff member.
From a review of Waterman, RPS, WYG and DRV (none of which are Architectural business I admit but are the only 'plc' comparatives we can use), the value per staff (on average over 3 years) was as follows:
WTM - GBP 34k
WYG - GBP 23.5k
DRV - GBP 74k
RPS - GBP 93k
Aukett (over the same 3 year average) implies a value of GBP 21.5m per staff member which is understandable given the smaller business and more lumpy trading / thinner margins etc. BUT, currently at GBP 2.9m mcap the value per staff member is around GBP 8.5m, way below the sector average.
If someone acquired AUK for lets say GBP 5m, they could strip out around GBP 1.2m of Plc costs from day 1 including the listing, broker, auditor and Board etc. 2018 final results were kitchen sinked and included lots of one-off bid costs, property costs etc. The 2017 results of a GBP 325k loss could have been a GBP 875k profit as part of a larger entity without plc costs.
6-8 x GBP 875k = GBP 5-7m mcap / valuation.
I agree they have branding / positioning issues and should focus on a core offering rather than spreading themselves thinly in order to diversify. Your points are all generally valid BUT lots of people said nobody would want WYG as the balance sheet was shot to bits (GBP 10m debt) + covenant issues etc.
Irrespective of many of the salient points you raise, professional staff have a value and Aukett's valuation of GBP 2.9m is anomalous. With the Board owning 50% of the stock this business will be sold - its just a matter of when.
Usually people consider purchasing a professional services practice:
• to buy an industry leader [BDP or Watermans]
• to buy a ‘springboard’ into a major market [Quad]
• to expand into a niche like say healthcare [Devereux]
• to buy design skills in key market areas [Perkins + Wills]
Considering AUK, I cannot assess why someone would buy them?
They are not an industry leader, they are no longer a springboard say to the EU after Brexit, they are certainly not a niche, nor do they have any particular design skill. They are predominately in London and Dubai, despite all the blurb in annual reports...
The equity fee owners are ‘very aged’, but as they retired so did the Group’s fee income.
This time last year Aukett were not forecasting a massive loss – yet that is what unfolded. All 2.5m of it. I therefore take whatever is stated in quarterly statements with a pinch of salt.
What we do know is that the massive uncertainty of Brexit continues, RIBA workload figures remain negative, AUK’s secondary market in UAE is less than buoyant, and 2.5m of cash is all but gone.
Someone may 'parachute in' to buy them at some point [perhaps as a white knight], but I find it difficult to understand the rationale for someone to lay out 5m to do so.
'Revenue less sub consultants' is at 13.1m, with Costs at 15.7m. Earnings per Staff is horrendous, and architectural directors paid a pittance. Revenue collapsing, Unforecasted Losses, Millions of Cash drained, Chairman & CFO walk, just surving in rent free digs......
'Juicing Sales' might be a reason to buy AUK, but at what cost? Will the fee earners want to work under new management....or will they all walk too...? You might be buying a complete lemon [without the juice].
You might be correct longer term Vodka, but not for me.....
There has been no buyers in the market for AUK, and I would expect the above reasons is why AUK stay a 'lobster pot': easy to put your money in but very difficult to get it out?
Good luck with it Vodka...
I cant argue with a lot of the points you raise. My rationale for investment is quite simple namely that if you look at the majority of M&A in this sector (all the various possible multiples in particular) its clear that juicing sales is a key driver.
Lots of deals have been done where the acquired business is loss making, has debt or turns a tiny profit (or all 3!).
Lets assume revenues have now stabilised at around GBP 14m (although some of that is sub-con related) and that Group turns a profit which seems likely given recent newsflow ("we are confident to repeat the guidance provided in January, namely that we expect the Group overall to be in profit for the 2019 financial year"....) then it would not be unreasonable to see Aukett worth 0.5 x sales or GBP 7m.
Lets be super conservative and lop GBP 2m off that as a contingency. We have a GBP 5m valuation. Current mcap is just GBP 2.9m offering some 70-100% upside.
If the Board were in their 40-50's this situation wouldn't interest me as much but we have a Board (and major holders) at a time in their life when they want to exit. The impetus for a trade sale is there, the business (despite the valid points you raise) is undervalued.
Its just a matter of time before some form of Corporate Action occurs. Until then its dead money but for those willing to wait the returns should be very decent.
I hold circa 1% of the business.
Unfortunately AUK provides a poor target for most suitors.
AUK has a declining market share in their home base in London, with revenue halving in recent years.
AUK’s management is not ‘design driven’ and therefore lack any sense of being 'niche': they are run by accountants.
Cash has crashed from 2.5m to next to zip in recent years, and there has been a spinning turntable of board members.
AUK has small businesses in London and in UAE – everything else is simply taking a dividend from other smaller practices that AUK have invested in.
Perkins + Wills would not be interested: P+W already have superior architectural practices in London & UAE.
BDP were bought by NK for being industry leaders: AUK are 'midgets'
Quad were bought as a springboard for BDP onto North America: AUK have no springboard to anywhere
Devereux was a niche purchase of a healthcare specialist: AUK are certainly not niche.
Coupled with this you have a 'second rung' of fee earners failing to win work in both London & UAE.
I am not sure what you are buying at AUK - and why you would want it? As I said, I am not sure who would want to buy a small architectural practice with no particular niche, not design driven, and who is declining in their own market? They might find a 'white knight': but that might be all they get?
WYG steady 150m of revenue is interesting, but they have their problems.....
Waterman Group sold for 43m with a 91m turnover, but they had a reasonable profit @ 4%, cash @ 7%, and net funds @ 6%. WG was/is a very well run engineering group.
WYG might be worth 70m, if management had resolved the issues....so what discount would a purchaser consider to resolve the mess, and bring the company back into sustainable profit?
If AUK can build back to a sustainable 10m turnover in the UK at a reasonable sustained profitability @ 10-20%, then someone might buy them for a PE of 6-8 at some point. It is a long way off....
Interesting to read your observations.
I would actually argue that Tetra Tech have put forward a low-ball offer given the potential for WYG. If you assumed industry standard margins applied to WYG's average annual sales and then applied a multiple to that it would be a lot more than the GBP 43m offered despite the agreed 'mess'. The P/S ratio for the deal (despite WYG's debt) is also very low.
I'm expecting a counter offer.
If you track M&A in this sector you will be aware that in fact there are many tens of M&A deals over the last few years in the Architectural space - these include lots by Perkins+Will, BDP acquired by Nippon Koei, Ryder acquired Devereux, BDP acquired Quadrangle, Scott Brownrigg buys Acanthus etc etc - its a long (and growing) list.
Andrew Murdoch (to whom you partly refer) who was based in the UAE for 12 months is now retired and has left the Aukett business I believe.
Can't argue that WYG has better (more diverse) prospects than AUK and that fact that nobody has tried to acquire the AUK business tells you something but with an ageing Board (and major shareholders) there is increasing impetus for such a transaction to occur.
It certainly shows people will pay over the odds if they want something.
WYG looks like a mess to me:
Revenue steady at 154.4m
Net Debt 6.3m
Net Assets 25m propped up by a very fragile 21m of Goodwill & Intangibles
Marginal Profitability even in a good year
The only positive is their revenue line has been steady, so I would assume someone might believe they can improve the profitability position over time, with better management?
Unfortunately Aukett has a collapsing revenue stream, with the UK HQ halving their modest revenue in recent years, and the UAE revenue stream posting loss after loss. Nothing stable about an architectural practice!
Buying small architectural practices is not a normal past time in the M&A sector. If the main 'Fee Earners' walk, you have nothing.
A ‘Dad’s Army’ of Directors are now deployed to salvage the position, with +70 year old former retired Directors re-employed in UK & UAE to see whether they can stem the carnage. So much for the ‘next generation’ taking control of the future! ‘Captain Mainwaring’ & ‘Sergeant Wilson’ back in the breach! [I have a picture in my mind of ‘George’ & ‘Arthur’ on their ‘zimmer frames’ trying to win new business?]
WYG looks a superior buy than AUK: at least they have a steady revenue base.
Very pleased to see one of my other holdings in this sector (WYG) acquired for a 200%+ premium today. Like AUK it has suffered from poor trading and a weak balance sheet including GBP 10m debt, however, the takeover is validation that despite such factors these consultancy businesses are always in the sights of potential acquirers at a premium.
Aukett is worth around GBP 5-6m or 3.5p
Driver Group around GBP 45m or 85-100p
RPS also probably has around 30%+ upside.
Just my opinion but based on many years of M&A in this sector that shows no sign of slowing up.
“Brexit malaise fuels slowdown in London and the south, according to RIBA’s latest Future Trends survey.”
Second Half UK Revenue must be under some pressure.
Rent Free Period in UK HQ suggests a May 2019 start, but earlier comments referred to a start in 2018? ......not sure which is true?
UK Revenue has halved in recent years, so Aukett had no other choice than to downsize the UK HQ.
With losses forecast from the Middle East, and little GDP growth in Europe, it seems another tough year for this lot!
Dividends will not feature until they have a Net Cash position back above £1.5m [10% of revenue] - that sounds a long, long way off.
Remember when they had £2.5m Net Cash!.....all gone in the Middle East dust.
Your posts are amusing.
Yes cash is tight but mgt are at least transparent enough to state that
it’s improving from a low base.
2 year rent free period commenced next month (May 2019) and runs for 2 years providing a much needed respite from lease costs and even when costs recommence in May 2021 they will be saving £400k year (ish).
And no I’m not an ex-Director and I’ve never worked for the Group.
Net cash: £200k as at 31 March 2019 [just announced]
Aukett have 4 days supply of Net Cash!! Whoppee!!
Enough 'Net Cash' to get them through to the end of the week……....sorry, make that Friday morning.
12 months to go before cash demands in London increase by 440k pa, as deferred UK rent kicks in.
UAE continuing to make losses and a drain on cash.
Germany narrowly missing a technical recession in March 2019, so cash from the German outposts will be under stress in 2019 & 2020.
Bank reviews facility in May.
AJ100 big hitter Purcell set to lay off staff
Purcell is understood to be on the verge of making up to 15 per cent of its workforce redundant
The concern is that if other UK practices are laying off staff, with a substantial declining revenue base, it is difficult to see how Aukett expect a profit in the 2nd Half.
Last year Aukett obviously put a higher conversion rate on potential workload and new instructions, that ultimately failed to arrive. There was a substantial revenue miss, with Aukett holding staff without revenue to support them. That cost them 2.5m. Might this repeat?
Latest Trading Updates
“we continue to expect the first half to be loss-making, though with such losses much reduced from the prior year figure……we expect the Group overall to be in profit for the 2019 financial year.”
Well, that is exactly what they said last year, and continued saying it March, June & October 2018, before dumping a massive 2.5m loss on the market in January 2019.
Nothing on the ‘Net Funds’ position, that 6 months ago was hovering just above zero. Cash is the major worry, and Aukett has failed to tell us how much they have got.
With another half year loss, it cannot be pretty!
More losses out of Middle East it seems – what a complete disaster that has been!!
Summary of 2018 Trading Updates:
29.3.18 “We expect a larger loss in the first half compared to last year, followed by a profit in the second half.” [ye. 2018]…
28.6.18 “a Group loss for the full year despite a better second half. [ye. 2018]
5.10.18 “In our Interim Statement in June we referred to the Group expecting to make a loss for the year ended 30 September 2018. This continues to be our expectation.” [ye. 2018]
4 months: no revenue or profit warning, then……..
30.1.19 First mention 22% fall in revenue, and the 2.54m loss, with a substantial second half loss, contrary to three 2018 statements.
Shares collapsed to <1p.
Net Funds: must be under significant pressure to be positive after another loss?
Revenue: must be down significantly once again from 2018?
You sound like a current or past Director with shares that you HODL, so I will tread carefully.
3m share parcels have been sold recently: big shareholders are exiting.
I simply look at the Accounts that are presented, and consider the decisions that Aukett have made.
I sold at the top years ago, but with past experience in professional practices, I have always thought this company was poorly constructed, in that the 60-80 year olds wanted the profit of future generation fee earners.
It was a model doomed to failure, in my mind, as it is impossible to retain and attract the best architectural talent when they can see that their future has already been sold off. In the end you don’t, and the outcome is that you do not win the work as you do not have the best architects. They run off to Fosters et al.
The only solution is to buy other failing businesses in the hope that 1+1= 3, but unfortunately for Aukett 1+1 = 1 [or less]
I make my observations always with an eye on what a High Court Judge stated about the CEO. CEO Nicholas Thompson had made representations to the High Court that were 'made knowingly and deliberately, without belief in its truth, and therefore fraudulent." Google it!
Turning to your considerations:
“I believe the CEO (Accountant not Architect) manages their finances well, all things considered.”
I must say I am at a loss to see how you can make the above statement, when CEO Nicholas Thompson announcement to the market on 28 June 2018 that the market relies upon was so inaccurate. He stated that “a Group loss for the full year despite a better second half". The final result was a massive fist half and second half loss, that ran to $2.5m!! Blind Freddie surely would have done better! Do you think that was a well-crafted statement to the market, or was a meeting with Coutts due?
CEO Nicholas Thompson embarked on a Middle East buying spree buying 3rd rate businesses just prior to the Brexit vote. The first rule in running a multi focal professional business is to ‘protect your base and your cash’. CEO Nicholas Thompson should have bunkered down and protected the cash position and ‘the UK base’. He bought businesses that had 3m bad debt provisions that have collapsed the net cash position from nearly 2000k to 150k. These companies are still making losses. Where was the due diligence? Do you think that was a great idea by the CEO?
Whilst the revenue was plummeting CEO Nicholas Thompson was not reducing the cost base, preferring to erode cash, and post massive losses. Do you think that was a ‘well managed’ outcome?
Everything the CEO has touched has turned to ****.
Architectural practices must be run by Architects. Law Firms by Lawyers. Accountants by Accountants: it was since God was a boy!
I don't disagree with a lot of what you say although the Group have been with Coutts for years and I cant seen any reason why they would suddenly want to pull the plug unless trading continued to be as poor as last year etc.
I believe the CEO (Accountant not Architect) manages their finances well, all things considered.
Your credibility as an informed poster is, however, crushed by statements such as the 9 major shareholders selling. This is untrue and unfounded (unless you can demonstrate to the contrary?) and hence why should people reading this Board believe anything else? I am not being rude but you get my point?
I think its great that you have presented a bear case and I believe there is often a dire lack of bear cases put forward so I admire you for that, BUT, can you please refrain from lowering the quality of the posts but making such sweeping factually incorrect statements.
Have you met with the management team? Have you spoken to any of the major shareholder The AGM is this week?
Like most people businesses, the value is the people. Other players in the same sector such as WYG and RPS have equally tiny net tangible assets. Most of their balance sheets are goodwill as typically most have been on an acquisition spree over many years. I am not in any way saying this is a healthy business, nor is it in a hot sector, nor does have any strong financial metrics......BUT.......it is only worth GBP 2.6m. I think not.
Strip out the PLC costs and its a different story.
My concern primarily is Aukett’s cash position.
Coutt's are reviewing the facility in May: and this is what they will be looking at........
What we know is that the Current Assets plunged last year from 9.1m to 6.7m, whilst their Total Liabilities stayed flat at 6.8m, and now exceed Current Assets. That is a huge 'red flag'!
Net Cash has collapsed from close to $2m to 150k in recent years, and still falling. That is a massive worry.
Provisions against bad debts have been running at close to 1m pa. primarily from their poorly conceived Middle East acquisitions, which deleted their cash pile of 2m. 1m bad debts year on year is horrendous.
Net Assets are propped up by 3.2m of goodwill and intangibles, making the only worthy asset being, oddly enough, their stated value of their shareholding in the private architectural companies in Germany.
The very experience Wright [CFO] is leaving this week, and replaced by Barkwith. He appears to have no experience with a listed company, nor a professional practice. He comes from a small, 2.4m turnover company, with 7 people. The difference between the skill set is vast! The highly experienced Simmons [Chair], with a lifetime of experience in running professional practices, is also departing this week too. Stating this, running a small architectural practice is not 'rocket science' from an accountancy point of view. Accountants cannot win architectural work.
With a collapsing Net Cash position, collapsing Revenue, collapsing Current Assets, Bad Debts running at 1m pa, a dearth of new work, and with delays and cancellations occurring across their two main revenue bases: it looks as bad as you can get.
The Balance Sheet is shot to bits, with the only asset left being the valuation of their long term German investments. Germany Manufacturing PMI plunged this month to 44.7, which has sent a shiver to all markets.
Last year Aukett seriously under forecast their loss position on their 28.6.18 statement, stating, “a Group loss for the full year despite a better second half". Aukett’s ‘better second half’ ended with another 1.2m loss. How the CEO could get it so wrong 3 months from a year end, is a considerable worry.
If Coutt's pulls the plug in May, or if Aukett run out of overdraft facility, then Aukett will need to start selling shares at 1p if they find buyers, diluting the valuation.
'Value Realisation' only happens when you have something to sell. If the cash runs out they have nothing to sell.
I have been presenting the 'bear case' for many years on this stock: I have been proven unfortunately correct. They may hang on, but they will be in a fragile state for years to come.