a matter of urgency7 Apr 2020 00:41
Aukett:
“…….we expect to be able to continue to operate within current banking facilities. UK state support schemes are being looked into as a matter of urgency and will be implemented shortly, as required.”
With both UK & the Middle East delivering further losses in 2019 [after an extremely poor $3m loss in 2018], a year living with Covid 19 will be a huge challenge for Aukett.
One can only assume that 2020 revenues in both major centres are falling fast, and cash will be under enormous pressure.
The ‘matter of urgency’ entry by the CEO, seeking government assistance is not surprising, but telling.
The overdraft facility is only 500k, less than 2 weeks supply of cash. That facility is reviewed by the bank in May 2020, only weeks away.
Of significant concern is that Middle East will need to replace the 1m of fee earning work from the large shed project earnt from one client in 2019, and maintain the 6.0m revenue stream to support the cash requirement. Failure to do that will present an immediate risk to cash flow.
UK will need to maintain the 7.4m revenue to support the cash requirement, whilst dealing with an increase cash requirement of the end of the rent-free period on their London HQ, along with repayments on the bank loans of 260k.
If these two main revenue streams falter in 2020, then cash will be under immediate pressure.
Other Loans might need to be sort, but with year on year losses over the past two years, it would be a brave bank that lends Aukett more, particularly when Net Assets are entirely propped up by Non Current Assets.
With 75% of the cost base being staff salaries or directors fees, it will require an immediate 'cull' of both, to enable Aukett to get through.
In the past Aukett CEO has shown a reluctance to act, as 2018 showed, raking up a $3m loss.
In 2019 they failed to cut their cloth to get below the revenue line.
If they do not take quicker and more direct action to reduce their cost base in 2020, things will look bleak, very quickly.