LONDON (Alliance News) - Aukett Swanke Group PLC on Tuesday said the UK referendum on European Union membership had "clearly impacted" its first half, with its pretax profit coming in much lower for the six months to March 31, and said it approaches the second half with "a degree of caution".
Shares in Aukett Swanke were down 12% at 5.50 pence on Tuesday morning.
The architecture and interior design firm posted a pretax profit of GBP417,000 from GBP815,000 a year earlier, as "equivalent cost reductions were difficult to achieve in the short term".
Operating expenses rose to GBP1.1 million from GBP907,000 a year earlier, whilst personnel costs increased to GBP6.7 million from GBP5.6 million. This offset a rise in revenue to GBP10.0 million from GBP9.2 million.
As such, Aukett Swanke said it was lowering its interim dividend to 0.07p per share, compared to the 0.11p per share offered a year earlier.
Aukett Swanke said its results "reflect the early impact of the EU referendum in June 2016, which is typified by two negative characteristics".
Firstly there is an "apprehension at committing to significant post planning services", Aukett Swanke said, noting that it has 2.0 million square feet of developments with planning consents outside London in this category. The second characteristic is that there is an "anomaly with Heads of (leasing) Terms including 'Brexit' clauses".
Such clauses have reportedly been written into a number of contracts which give the buyers the right to walk away from a deal if Britain votes to leave the European Union.
"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," the company said in a statement.
However, Aukett Swanke also noted that it had made a second acquisition in the United Arab Emirates during the first half, purchasing Shankland Cox Ltd for a maximum of AED16.0 million, or around GBP3.0 million in February. The "enlarged size of our organisation continues to improve our service offer in the region," the company said.
Aukett Swanke said it was approaching its second half with a "degree of caution" as the post planning order book in the UK may take "longer to unwind following the European Union referendum than expected". The company noted it also has yet to eliminate the losses in Russia, but said it anticipates continued progress in the United Arab Emirates.
"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 benefited from its recent investment in the UAE. In addition we anticipate improved performance in both Germany and Turkey in the second half," said Chief Executive Nicholas Thompson.
By Hannah Boland; hannahboland@alliancenews.com; @Hannaheboland
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Aukett Swanke (AUK)