Member Info for bear17

aukett s****e

june 2023

turnover: 15m pa [after full merger]

half year loss: 0.5m – yes another one!

net debt: 2.3m

cash: two weeks supply

the group consists of aukett s****e: architecture [25%] 3.6m pa; veretec: back end services [30%] 4.6m pa; torpedo meetings environment [25%] 3.8m pa & torpedo stage technology [20%] 2.8m pa + small dividends from german investments

aukett s****e: architecture

aukett s****e

june 2023

turnover: 15m pa [after full merger]

half year loss: 0.5m – yes another one!

net debt: 2.3m - yikes

cash: two weeks supply

the group now consists of aukett s****e: architecture [25%] 3.6m pa; veretec: back end services [30%] 4.6m pa; torpedo meetings environment [25%] 3.8m pa & torpedo stage technology [20%] 2.8m pa + small dividends from german investments

aukett s****e: architecture

hi Semantic

I only venture on here periodically with an assessment of the latest AUK piece.

I have followed the company since the reverse takeover over by Fitzroy Robinson. Dug a bit deeper into the past to understand the dynamics.

I guess all I can say now is that 'Aukett has been Torpedoed'.

Worryingly, Nick Clark [Torpedo Factory Group] will become the CEO of an architectural practice – he has never designed a building in his life. Clark is a former director of a UK company that was placed into administration, with £225k shortfall to unsecured creditors.
Three major concerns I see:
1. How will the traditional architectural clients view this outcome? How do you appoint a practice to design your building when the CEO has zero skill at achieving that goal?
2. How do you attract and maintain the highest quality architectural design staff, when the CEO sells audio visual and stage technology ‘stuff’ for a living?
3. How do the traditional engineers, that AUK have worked with for decades, respond to Torpedo Factory Group venturing into their design space?
AUK Results continue to bump along poorly, with yet another loss posted – signing off a miserable exit for the previous CEO & Chairman. [ex Fitzroy Robinson]
History has shown that growth by acquisition has proved unsuccessful to this company for over 20 years. 1+1=1 for AUK.
Despite amalgamation of Aukett Associates, Fitzroy Robinson, S****e and others, the Group’s turnover is less than Fitzroy Robinson achieved 20 years ago, when Fitzroy Robinson flourished with significant profitability when under architectural leadership.
There seems next to zero alignment between architectural services and the new non-architectural skill set of audio visual and stage technology directors and shareholders.
In the end, the former directors of Fitzroy Robinson have exited the business, leaving what appears to be a potential rudderless ship. They have tried for 20 years to gain financial gain from selling the business to others, but failed to attract a buyer. In the end, they hope by some magic, this ‘marriage of convenience’ might give them a future exit, one that has alluded them for 20 years.
My concern is that the architectural side of the business could easily implode if a few key architectural fee earners that are non-shareholders decide ‘enough is enough’ and exit the Group. If this happens, all ‘Torpedo’ will get is a smaller amalgamated revenue outcome, with added costs, added PII liabilities, and a group of retired Fitzroy Robinson directors owning half of their original Torpedo business!
The Chairman has stated: “The younger generation of architects seem now less inclined or less able to take on the large financial commitments required to become owners”. It is not unsurprising that the younger generation of architects in this business would wish to remain, if their fee winning activities and hard work simply gets distributed to retired directors from the past.

Nicholas Thompson retires in the coming weeks as CEO. Raul Curiel standing down as Chairman.

An extremely poor performance by both.

After 20 years as CEO, Nicholas Thompson and Chairman Raul Curiel have left the company with significantly less revenue than the company had 20 years ago. Poor management decisions have littered the results in recent years, resulting in a substantial 3m worth of cumulative losses since 2017. Net Assets have crumbled over 60% in the last four years from 7.1m to 2.6m. Total Liabilities at 8.0m is supported by ever decreasing Current Assets at only 3.2m, plus a few desks and computers!

Thompson & Curiel has been selling fee earning assets this year, to provide cash to survive.

AUK are now a very small 6m turnover practice, with half of the small revenue coming from services completing the 'back end' on other architects designs.

The company could have taken the opportunity at this time for a complete renewal of the poorly performing Board, by appointing the younger fee earning architectural directors – however they have simply rejigged the deck chairs. The company retains a very high cost/non fee earning Board, that have added zero shareholder value in recent years.

Thompson, Curiel, Fry, Carver & Barkwith should have all resigned.

Nicholas Thompson career low must have been when a High Court judge found the company, [Nicholas Thompson as CEO of the company], guilty of fraudulent misrepresentation and deceit, the most serious judgement handed down in the civil courts. Mr Justice Coulson, presiding over the case, said it was Nicholas Thompson’s “wholly unreliable” testimonial statement that had persuaded him that the misrepresentation was intentional, and therefore fraudulent. The judge said the details of the statement were “incorrect, misleading, inaccurate, unfair, and, in at least one case, knowingly untrue.”. A legal source said the seriousness of the judge’s ruling could not be underestimated. He said: “Nicholas Thompson really went out on a limb with this one, and it’s not as if he’s a junior employee – he’s the chief executive. The reputational impact of this individual could be enormous. This is as serious a finding as you get in a civil court.”

Raul Curiel took no action to dismiss Thompson at the time - as low as it gets - but 1p a share was pretty low too.

Toot Toot - the Fat Controller is finally waving goodbye!!

HALF YEAR RESULTS: looks terrible

o Revenue 3377k [less sub-consultant costs]
o Comprehensive Loss 436k
o Cash now completely gone
o AUK currently burning through Cash at a rate exceeding 1m pa. [530k in the half year]
o Selling off Middle East to provide cash injection
o Further Sell Offs being planned: assume all non-UK operations
o Balance Sheet shot to bits: Total Liabilities @ 8.0m v Trade Assets @ 2.6m
o Share Consolidation to improve Share Register: anything to keep the share value above zero!

Outcome:

o AUK is a small 6m pa business, ongoing significant losses due to a large unproductive non fee earning Board, with a business that offers low fee levels to win the work, and a poor strategy of buying third rate businesses to increase revenue

Actions outstanding:

1. Sack the complete Board to significantly reduce the cost base, and to be replaced by Fee Earning Architects, and junior non-exec account team
2. Sell all non-UK Assets
3. Management Buy Out and revert to a private company structure, owned by the main fee earners or risk the main fee earners [who are not the main shareholders] exiting and taking the clients and revenue with them.

Any architectural practice has a long 7+ year tail of potential PI claims - so not a great 'shelf' to buy into?
AUK has excessive commercial office space that also is a burden for a new entrant.
If you took five of the leading fee earners out of the business, the company would only have massive liabilities, and little to no revenue. The leading five fee earners have little to no shareholding, so would have no ambition to simply sell their futures to fund the retirement of the past or future owners.
By all accounts, the Fat Controller has tried to sell this 'pup' for 20 years, but has failed.
When all else has failed, the Fat Controller is now having to sell the family silver to pay its debts.
Buying an architectural practice at, what might be the start of a recession, is not a great prospect. Further staff redundancies may emerge in the next 12 months, as the UK market begins to contract, adding more restructuring costs to a business already on its knees.
CMH also has aged directors looking to exit [a 77 year old.....] - perhaps a common thread to AUK?

hey Dartron

Perhaps Mr Brown is lining up to buy the shares of the retired/retiring Directors....but will they sell for 1.3p?

The real worry is that the main fee earners winning the work are not the shareholders - they have next to no share holding, even the two MD in London - next to nothing.... ..The majority of shares are held by 65- 70-75 year olds, that had their day 20 years ago. Most [if not all] have resigned....some big bust ups along the way!..and now the Fat Controller is hanging up his calculator.

So a question without notice to Mr Brown:

"what happens if the main fee earners in the UK businesses simply say, 'we are out of here', and set up their own practices - AUK [& Mr Brown] will be left with nothing, as Clients will follow the fee earners. These fee earners are not shareholders - so why should they pay The Fat Controller [or Mr Brown] for earnings that they created."

AUK sold off the only worthwhile piece of the 3rd Rate Actors out in UAE - so the Middle East has basically imploded. Zip value there....

AUK simply pick up dividends from the EU operation - so that will always small beer. Zip value there.

What do you think D?

Dartron......lost you on Trevor Brown?

There are now over 1,000 Companies that have left Russia – many permanently, taking the ethical view that it is not a country that they wish to link their brand with in the future.

Despite a complete cavalcade of UK Companies exiting, Aukett remain, and the CEO’s only comment was not on ethics, but on gaining a financial advantage.

UK Companies that have made a ‘Clean Break’:

Allen & Overy, Asda, BP, BAT, Centrica, Chapman Freeborn, Clarivate, Clifford Chance, Compass, Currency, Dentsu, Esri, Eurovision, Eversheds, Freshfields, Hogan Lovells, ITF, John Wood, Linklaters, Lloyds, LSE, Mondi, Morgan, Morrisons, Norton Rose, Reckitt, Savills, Shell
Willis

UK Companies that are ‘Suspending Operations’:

Abrdn, ACCA, Asos, Aston Martin, Boohoo, Edrington, Knight Frank, Kodak, M&G, Mothercare, QS, Rolls Royce, Shiseido, Wise

Aukett! ...happy to continue earning the roubles, whilst Ukraine burns

CEO STARTS SELLING THE FAMILY SILVER
THE 'FAT CONTROLLER' IS WAVING GOODBYE

After announcing that he is leaving his sinking ship, the CEO now announces that the only marginal quality part of the UAE business is being sold, to extract some cash to stay liquid.

Bank meeting this month - I guess the Bank gave him an ultimatum. You owe us money, you owe Boris money, and you are making a 1.5m loss, on a collapsing revenue base.

This then collapses the UAE 6m pa turnover business, down to 1m pA, with massive losses - and that has happened in two to three years. It was always going to happen - buying third rate actors does not work out all that well in a professional business. What a disaster!

Aukett S****e Group PLC - London-based architect - Says it is to sell John R Harris & Partners, which operates out of the Middle East, to its local management team for a maximum consideration for maximum of GBP1.1 million. Says the sale is part of a series of intended actions to restructure the group's operations and to allow the John R Harris business to fulfil its potential without the burden of a central overhead

".....without the burden of a central overhead!!"....ouch!!

Yeap, that is the CEO himself and his band of non-fee earning board members.

The CEO - just a Central Overhead that has never earnt a penny in his life. He does look like he has eaten a sheep, in his latest photograph.

What's next?

Sell off all Non-UK Assets - not much left to go now. [CEO does love Putin - he is about the only one still in Moscow - no shame]
Sell off UK Assets, perhaps selling off Veretec & UK Design Business separately - they are different businesses, but of insignificant size. However, what happens if the main fee earners in those UK businesses simply say, 'we are out of here', and set up their own practices - AUK will be left with nothing, as Clients will follow the fee earners. These fee earners are not shareholders - so why should they pay The Fat Controller for earnings that they created.

Finally sack the entire Board - perhaps do that first?

So, after that, there will be not enough cash to pay off the liabilities. Shares zip?

I am not sure why the shares are at such a dizzy height of 1.3p!

WORSE RESULT EVER! CEO THROWING IN THE TOWEL

AUKETT collapses once again with another MASSIVE £1.53 LOSS Before Tax

NET FUNDS now at £15k, a total collapse from £837k 12 months ago.

Report states:
In February 2022 the Group received a 3-month covenant waiver to avoid the risk of a breach on the net gearing covenant from February to April 2022. The Group will then attend the scheduled 6 monthly review with Coutts & Co in May 2022 to discuss the Groups’ financing needs. The Group is therefore currently reliant on the ongoing support of Coutts & Co
Cash is now simply based on the 500k overdraft from Coutts

Revenue decreased 22% to £8.8m: a massive 50% reduction over 5 years

AUKETT DEBT now extends to cover £500k CBILS debt, £250k Overdraft Debt, Rent Debt, and a range of other Deferred Debt.

NET ASSETS collapses to £2.3m, however the more concerning matter is that CURRENT LIABILITIES at £5.2m now is approaching Current Assets £5.4m.

UK DESIGN BUSINESS [AS Ltd] has collapsed from a c.£10m pa position in 2016, to a c.£2m pa in 2021. The UK Design Business is plagued by fee competition, delays in projects, lack of ability to win work in the City pitched against leading London practices on design skill, and high costs holding unproductive staff. The UK Design Business is not skilled enough to compete with other London based architectural practices. The CEO has failed to cut the staff numbers to respond to the down turn – hence the substantial loss. Churning out the back-end services on other architect’s projects with low margin services of VERETEC is all that the company seem to be able to do in London at c £4m - at significant discounted fee levels. Another MASSIVE £848k LOSS

MIDDLE EAST DESIGN BUSINESS has also collapsed by over 60% in two years, to £2.5m pa. The CEO has again failed to adequately cut the cost base to reflect the downturn that started two years ago – hence the substantial loss. What a complete nightmare the Middle East has been, with loss after loss, draining cash. Buying a THIRD RATE set of local practices was doomed from the start. Throwing shareholders cash away in the desert. Another MASSIVE £936k LOSS

The UK DESIGN BUSINESS and the MIDDLE EAST DESIGN BUSINESS, are in TERMINAL DECLINE.

Any project 'wins' are on VERY LOW FEES, and so any future profit, is highly unlikely.

How AUKETT will produce a profit, to free cash, to pay back the MOUNTING DEBT PILE is the considerable concern. Dividends are a pipe dream.

We are reaching the end of the road I fear: the CEO departing after 25 years seems to signal the inevitable end. Cash is King: and he has none left!

At the current cash rate decline, the banks cash will run out sometime in 2022, so what is left for the AIM listed company:

Liquidation?

Clients will begin to run when they see this set of accounts - it might come quicker than we think......

6 months to verify the Middle East positions sounds ominous!

The Middle East has been one poor performance after the next, with a 280k loss at the half year, on top of a cumulative 1m loss over the past few years.

Revenue had collapsed by 50% over the course of 24 months, and the CEO had failed to cut the cost base to account for the massive downturn.

Lots of cash being thrown away in the desert.....disaster!

Aukett may be about to release the worst set of figures ever, with plummeting revenue and a substantial loss .....waiting 6 months for that news, without any prior announcement is a real concern, but not uncommon from this bunch.

Shares might be back to 1p - but let's see what unfolds.

The CEO states today:

The Company has experienced minor delays with the 2021 Audit, due to the effects of COVID-19 in the Middle East. The fieldwork has, however, now been completed and the Annual Report and Accounts for the year ended 30 September 2021, will be published on or before 31 March 2022.

The Demise of Auketts: Updated Half Year Results

• 1.0m Half Year Loss – adding to the already 2.6m from prior years!
• UK 2.5m revenue, with 0.8m loss – two highly paid accountants [CEO & CFO] need to go, sack the board, let the young 40yo architects run the architectural company. It is a 5m pa business at best. Team of 30-40: run by Architects is the solution. Unfortunately, most of the fee income is driven by Veretec, producing low profit, back-end documentation for other architect’s front-end design work. If those Veretec business winners go – UK business is over!
• Middle East 1.3m revenue, with 0.3m loss: Disaster, draining cash – needs to be shutdown, sell it off
• Europe 0.2m dividend – hugely over exaggerated, and costs more in management time to run, sell it off
• 200k cash, but propped up by 1.0m of loans and VAT & Rent not paid
• CBILS 500k loan + Overdraft loan 500k propping them up
• VAT, Rent, CBILS yet to be repaid!
• 9.2m to 4.1m, the business is half what it was in 2016, and shrinking fast
• Current Assets v Total Liabilities = Negative 3.4m
• Old Shareholders just want to sell – but who would want to buy this lot?
• Old CEO just wants to continue to extract an overly inflated annual fee, whilst making poor decisions! Middle East a disaster!
• WFH: who cares!
• ‘Penny Dreadful’

• 1m Half Year Loss
• Half Year Turnover Collapses to 5.3m
• 300k VAT Bill unpaid
• 140k Rent Bill unpaid
• 500k Gov Loan Scheme propping them up
• Cash must be gone
• 2016 18.4m v 2021 10.6m: Massive Decline in Revenue
• Four Year Cumulative Loss 3.6m: Massive Losses

• 2016 18.4m v 2020 11.3m: 40% Decline in Revenue, when AUK promised 100% growth
• Four Year Cumulative Loss 2.6m: Massive Losses
• Total Current Liabilities 4.6m < Total Current Assets 5.1m: Minimum coverage
• Minimal One Month of Cash in Hand: not much to rely upon
• 30% Collapse of Middle East Revenue in the year @ 4.1m: lost a fortune in the desert
• 50% Collapse of Europe Revenue in the year @ 0.2m: is this really worth the hype
• Further decline in UK Revenue @ 6.9m: despite multiple mergers, back to a #100 London small size practice
• 101k/FTE in UK; 50% of main competitors: Key Indicator Poor Result
• 79k/FTE in UK; 40% of main competitors: Key Indicator Very Poor Result

With the three year [2017-2019] losses standing at 2.58m, Aukett is now suggesting more losses in 2020 to add to the previous pile.

'Revenue less sub consultant cost' has dived 34% in recent years.

There is no indication whether revenue has crashed further, but with further losses in 2020, inevitably it most probably has. Revenue has most probably been also propped up by government hand-outs.

The concern that this is all set against leading competitors reporting massive shareholder returns.

With the 2nd UK Lockdown in full swing, no deal Brexit straight ahead, and a collapse in Aukett’s main offshore Middle East sector, things look decidedly bleak once again.

Three weeks worth of ‘net cash’, leaves the company exposed to any further down turn.

Shares at 1p – major institutional investor selling up.

Grim

Why did Aukett S****e CEO Nicholas Thompson take four years to tell the market this!!

‘Incorrect, misleading, inaccurate, unfair, and, in at least one case, knowingly untrue’ rings to mind……fraudulent!

Just released:

“Nicholas Thompson, chief executive officer of the Company, has informed the Company that Thompson & Newman Limited, of which he was director, was dissolved by Members Voluntary Liquidation in November 2016 with a shortfall to creditors of approximately £219,000.”

Fills you with zero confidence in this guy!

High Court Judge said of CEO Thompson in an earlier High Court Case regarding Thompson’s statement, “the details of his statement were incorrect, misleading, inaccurate, unfair, and, in at least one case, knowingly untrue.” Mr Justice Coulson, presiding over the case, said it was Thompson’s “wholly unreliable” testimonial statement that had persuaded him that the misrepresentation was intentional, and therefore fraudulent.

Ouch!

You would not want to be a creditor of Aukett – the CEO has ‘form’.

Major institutional investor ‘Broadwalk Fund’ now selling 5.3m shares – no wonder the price has crashed.

Broadwalk Select Services Fund Ltd looks to be the seller?

Broadwalk Asset Management: Cottam/Shepperd/Bastow 'bailing' on Aukett S****e

AUK finally hit the Penny Dreadful mark

Post Period End Trading Results must be due soon.

Perhaps the guy flogging large chunks of shares at low 1p prices, knows the answer already!?

Minimal 2% Profit
New Instructions 'sparse' in UK in H2
Much Lower Level of Income in UAE in H2

".....it is impractical to predict with any certainty how the year will end" CEO

UK $4.09m H1 turnover
“…new instructions with new clients will be sparse for a while and it is that factor that will influence our H2 result”

Middle East $3.14m H1 turnover
“..there is a dearth of new and larger instructions. Given the steep fall in the oil price, little or no tourism and a potential exodus of labour once travel restrictions are lifted, we see this geography taking some time to recover and as such we have re-structured our three operations to assume a much lower level of income in the aftermath of Covid-19.”

A major concern in the comments out of the Middle East....
New Instructions Sparse in the UK....

Almost three-quarters expect profits to fall, as more staff are furloughed

Nearly 10% of practices do not believe they will survive the fallout of the covid-19 pandemic, according to the latest RIBA Future Trends survey.

The May update has revealed that 73% of architects expected profits to fall over the next 12 months and that of those 8% think their practice is unlikely to remain viable.

The findings from this month’s survey also show that current workloads remain at significantly reduced levels – down 33% compared to May 2019.

According to the update 22% of architectural staff have been furloughed – an increase of 8% from April, while 1% have been made redundant and 1% have been released from a ”zero hours”, temporary or fixed-term contract.

It also said that 38% of projects had been put on hold since the start of March and that 23% of projects which remain active are at stages 5 or 6 of the RIBA Plan of Work.