Aukett Swanke Regulatory News (AUK)

8 Mar 2005 18:28

Aukett Group PLC08 March 2005 Aukett Group PLC 2004 PRELIMINARY RESULTS ANNOUNCEMENT New growth strategy progressed. Aukett Group Plc ("Aukett"), the international group of architects, designersand engineers announces its Preliminary Results for the 12 months ended 30September 2004. Aukett provides creative design consultancy in a diverse rangeof sectors including: commercial property, hotels, retail, interior design,urban regeneration, residential, healthcare, leisure, transportation andtechnical support facilities. The Group's network has been revised and it now has offices situated in Berlin,Frankfurt, Glasgow, London, Prague, Rotterdam and Warsaw. Financial HighlightsYear ended 30 September 2004 2004 2003 Turnover £11.82m £14.03mGroup work done £12.08m £13.55m Operating (loss)/profit before exceptionaloperating charges (£406,000) £530,000Operating (loss)/profit (£1,052,000) £530,000(Loss)/profit before tax (£1,156,000) (£157,000) Basic and diluted loss per share (1.40p) (0.13p) Dividends per share £Nil £Nil Net assets £0.52m £1.49mNet borrowings (£1.46m) (£1.91m)Gearing 281% 128% In line with the strategy to grow the business and subject to shareholderapproval, Aukett is to acquire the London-based architectural group, FitzroyRobinson. In the UK a number of new projects have been secured during the year including:design and fit-out of the Radisson SAS hotel at Stansted airport; the creationof a regeneration framework for Gateshead as part of the City's redevelopment;major refurbishment of the headquarters of Norwich Union; an award-winning HQcomplex for South Cambridge District Council; commercial offices in London'sDocklands; and a Mercedes-Benz Heritage and Technology Centre forDaimlerChrysler. New overseas projects include: a major hotel, retail and commercial complex nearMoscow; a new European Head Office for Petrochemical giant, SABIC EPC in theNetherlands; a commercial development at Winiowy, one of Warsaw's major businessparks; the design of the Rocco Forte Grand Hotel de Rome for HochtiefDevelopments in Berlin; refurbishment projects for Credit Suisse First Bostonand Sheraton Hotels in Frankfurt and a hotel, residential and commercial complexin Prague. Key Points of Statement. • The Group made a loss of £1,156,000; the UK trading operation generated a profit of £573,000; net borrowings have been reduced by £441,000. • Corporate overheads associated with the Group's review of strategy impacted on profit. • Chairman's commitment to shareholders to develop growth strategy progressed with negotiations to acquire architectural group Fitzroy Robinson. • Critical management issues resolved. • Professional standards maintained and improved. Four industry awards won in the year including the Design Week Award for the best workplace environment Chairman Jose Luis Ripoll said:"The Board has concentrated significant effort on re-structuring the managementof the Group and taking action to address the immediate and long-term future,both in the United Kingdom and in continental Europe. "The Board believe that there is now a clear way forward and, whilst we remaincautious about the pace of development in the coming year, the Company islooking ahead to the opportunity to develop a more stable and prosperousbusiness as part of an enlarged group." AUKETT GROUP PLC Results for the twelve months ended 30 September 2004 Introduction We have experienced a difficult year, but one in which I believe that strongfoundations have been laid down for the future financial prosperity of theGroup. This includes the proposed merger with Fitzroy Robinson Limited, a Londonbased architectural practice, which I believe will both strengthen our balancesheet and enhance our service to clients. The Group's net assets andshareholders' funds over the period have been adversely affected byunsatisfactory trading results, the Extraordinary General Meeting ('EGM') inMarch 2004 and the subsequent management reorganisation, and the write-off ofpart of the goodwill held on the balance sheet. The UK trading operation has generated a profit of £0.57m (2003: £1.27m profit)despite significantly reduced levels of work done. The European subsidiaryoperations have recorded a net loss of £0.39m (2003: £0.34m loss) on whichmanagement attention is being focused to reverse the disappointing performance.Corporate overheads excluding exceptional items have increased to £0.72m (2003:£0.62m) reflecting increased costs of advisers following changes to the Boardand strategy of the Company. Loss before taxation for the Group was £1.16m (2003: £0.16m loss) on work doneof £12.07m (2003: £13.56m). Net assets have reduced accordingly to £0.52m (2003:£1.49m). The Business has generated a positive cash inflow of £0.45m (2003: £0.54m)before financing. This has been applied to reduce bank debt and lease creditorsresulting in net debt reducing to £1.464m (2003: £1.911) although gearing hasrisen to 281% (2003: 128%) on the back of a reduced net asset base. Review of Operations When I took up the position of chairman eleven months ago, it was with a clearmandate: to look at the available opportunities to grow the company and tore-focus Aukett's strategy to take full advantage of its European network andexperience. The Board has therefore concentrated significant effort on re-structuring themanagement of the Group and taking action to address the immediate and long-termfuture, both in the United Kingdom and in continental Europe, including throughthe proposed acquisition of Fitzroy Robinson referred to in the notice of anExtraordinary General Meeting and Circular dated 8 March 2005 which shareholdersshould now have received (the 'Acquisition' or 'Merger'). Throughout this year, we have maintained our high reputation for creativity andprofessionalism and the Group has been responsible for some high profileprojects. In the UK, these include the design and fit-out of the Radisson SAShotel adjacent to Stansted airport and refurbishing a number of Hilton andRezidor SAS hotels; the creation of a regeneration framework for Gateshead aspart of the city's redevelopment programme and ongoing redesign of the MillbayDocks area of Plymouth; we are undertaking a major refurbishment of theheadquarters of Norwich Union and have delivered an award-winning HQ complex forSouth Cambridge District Council and 227,000 sq. ft of offices at the RoyalsBusiness Park in London's Docklands. The UK company has also designed DaimlerChrysler's state-of-the art Mercedes-Benz Heritage and Technology Centre,located at the historic Brooklands race track, and its electrical engineeringdepartment is building a reputation in the data centre sector having completed anumber of projects for key technology clients. The Group won four UK industryawards during the year including the Design Week Award for best workplaceenvironment. European projects have included a major hotel, retail and commercial complex inNovorossiysk, Russia, including a Novotel; the design of a new European HeadOffice for Petrochemical giant, SABIC EPC in Sittard in the Netherlands; anoffice development at Wisniowy, one of Warsaw's major business parks; the designof the Rocco Forte Grand Hotel de Rome for Hochtief Developments in centralBerlin; refurbishment projects for Credit Suisse First Boston Bank and SheratonHotels in Frankfurt as well as Cisco Systems in Athens; and a hotel, residentialand commercial complex known as Churchill Square in Prague. Corporate strategy My prime task has been to develop and achieve a strategy for growth. We recentlyannounced details of the Acquisition to the London Stock Exchange andshareholders have been sent documents relating to the approval of the same at anEGM to be held on 30 March 2005. Fitzroy Robinson is a well-respected,London-based architectural practice that has strong similarities to ourorganisation in terms of culture, disciplines and sectors of operation. Inaddition, Fitzroy Robinson offers a number of different areas of expertise,including heritage architecture and experience in working in the City and WestEnd of London to complement our own focus. It also has offices in Bristol, UKand in Moscow, currently an active construction market in Eastern Europe. If theAcquisition is approved at the EGM and completes, I anticipate that the combinedGroup will be in the top 10 UK architectural practices by fee income (based onthe 2004 annual review conducted by the Architect's Journal) and the Board isencouraged by the prospect of being able to offer our clients a strengthenedportfolio of services and talent. A considerable amount of time has been spent in discussions with our Europeanoffices, with a view to improving our overseas operations. Our partner in Milandecided to leave the group in December 2004, although we have an agreement forfuture co-operation between our two companies on a project-by-project basis. Wehave also changed the way we manage our Netherlands operation and are working inassociation with a talented team of Dutch designers. The office has beenrelocated to Rotterdam as part of this change. As a result, we now have a network of offices situated in Berlin, Frankfurt,Glasgow, London, Prague, Rotterdam, Bratislava and Warsaw. It is our intentionto work towards realising the commercial potential of each location in thecoming year. We have kept our bankers informed of our plans to strengthen the Group,including the Acquisition and re-focusing of our strategy, to which they havegiven their support. Summary Aukett remains a highly respected creative architectural, design and engineeringgroup and I am confident that the Board has addressed critical management issuesthat previously existed. The Board believes that it has a strategy to achievegrowth by means of capitalising on synergies and market opportunities arisingfrom the Acquisition, especially in its core UK markets. The European operationsremain fragile and close management attention is required to stem losses andregain the focus on sustainable growth overseas. The Board believe that there is now a clear way forward and, whilst we remaincautious about the pace of development in the coming year, the Company islooking ahead to the opportunity to develop a more stable and prosperousbusiness as part of an enlarged group. Prior to the EGM in March 2004, which resulted in my taking office, I hadcontact with many of our shareholders. If any investor requires furtherinformation or details of our activities then I would invite them to contact medirectly. Finally, I would like to thank our clients and shareholders for their continuingsupport and my colleagues for their dedication and hard work during the pastyear. J L RipollChairman8 March 2005 Consolidated profit and loss account For the year ended 30 September 2004 2004 2003 £000 £000Group turnover (note 1) 11,818 14,032 Movement in amounts Recoverable on contracts 257 (477) -------- --------Group work done (note 1) 12,075 13,555 -------- --------Group operating (loss)/profit before exceptionaloperating charges (note 2) (406) 530Exceptional operating charges (note 3): (236) -Impairment of goodwill in subsidiaries (200) -Costs relating to Acquisition (210) -Costs relating to EGMGroup operating (loss)/profit (1,052) 530 Share of operating profit/(loss) in joint venturesand associate 31 (3) -------- --------Exceptional charges: Loss on disposal of joint ventures (note 3) - (465) -------- --------(Loss)/profit on ordinary activities before tax (1,021) 62Net interest payable by Group (135) (219) -------- --------Loss on ordinary activities before tax (note 4) (1,156) (157)Tax credit on loss on ordinary activities 143 62 -------- --------Loss on ordinary activities after tax (1,013) (95)Dividends - - -------- --------Retained loss for the year (1,013) (95) -------- --------Basic and diluted loss per share (note 5) (1.40p) (0.13p) Consolidated Balance Sheet At 30 September 2004 2004 2003 £000 £000 £000 £000Fixed assetsIntangible assets 204 503Tangible assets 363 679Investments in joint ventures:Share of gross assets 357 349Share of gross liabilities (308) (311) ------- ------- 49 38Investment in associate 29 28 ------- ------- 645 1,248Current assetsDebtors 5,514 6,239Cash at bank and in hand 404 246 ------- 5,918 6,485Creditors falling due within one (5,989) (6,092)year -------Net current (liabilities)/assets (71) 393 ------- -------Total assets less current 574 1,641liabilitiesCreditors falling due after one year (53) (148) ------- -------Net assets 521 1,493 ------- -------Capital and reservesCalled up share capital 724 724Share premium account 1,794 1,794Profit and loss account (1,997) (1,025) ------- -------Equity shareholders' funds 521 1,493 ------- ------- Statement of total recognised gains and lossesFor the year ended 30 September 2004 2004 2003 £000 £000Loss for the financial year (1,013) (95)Foreign exchange differences 41 69 ------- -------Total gains and losses recognised in the year (972) (26) ------- ------- Reconciliation of movements in shareholders' fundsFor the year ended 30 September 2004 2004 2003 £000 £000Opening shareholders' funds 1,493 1,102Exchange movement 41 69Reinstatement of goodwill written off to reserves - 417Loss attributable to shareholders (1,013) (95) ------- -------Shareholders' funds at 30 September 521 1,493 ------- ------- Consolidated Cash Flow Statement For the year ended 30 September 2004 2004 2003 £000 £000 £000 £000Net cash inflow from operating activities 523 746Returns on investments and servicing of (135) (218)financeTax paid 73 (9)Capital expenditurePurchase of tangible fixed assets (14) (9)Acquisitions and disposals - 28 -------- ------Net cash inflow before financing 447 538FinancingRepayment of loans (40) (120)Principal repayments under hirepurchase (147) (328)contracts and finance leases ------- ------Net cash outflow from financing (187) (448) -------- ------Increase in cash 260 90 ======== ======Reconciliation of net cash flow to movementin net debtIncrease in cash for the year 260 90Cash outflow from decrease in debt 187 448New finance leases - (59) -------- ------Movement in net debt during the year 447 479Net debt at 1 October 2003 (1,911) (2,390) -------- ------Net debt at 30 September 2004 (1,464) (1,911) ======== ====== NOTES 1 Turnover and work done An analysis of turnover and work done by geographical area of destination is asfollows: 2004 2003 United Rest of Total United Rest of Total Kingdom Europe £000 Kingdom Europe £000 £000 £000 £000 £000TurnoverGross turnover 9,918 2,655 12,573 12,152 3,484 15,636Less: Share of jointventures - (498) (498) - (1,204) (1,204)Share of associate - (257) (257) - (400) (400) ------- ------ ------ -------- ------- -------Group turnover 9,918 1,900 11,818 12,152 1,880 14,032 ------- ------ ------ -------- ------- -------Movement in amountsrecoverable oncontractsGross movement 325 (138) 187 (535) 27 (508)Less: Share of jointventures - 63 63 - 37 37Share of associate - 7 7 - (6) (6) ------- ------ ------ -------- ------- -------Group movement inamounts 325 (68) 257 (535) 58 (477)recoverable on contracts ------- ------ ------ -------- ------- -------Work doneGross work done 10,243 2,517 12,760 11,617 3,511 15,128Less: Share of jointventures - (435) (435) - (1,167) (1,167)Share of associate - (250) (250) - (406) (406) ------- ------ ------ -------- ------- -------Group work done 10,243 1,832 12,075 11,617 1,938 13,555 ------- ------ ------ -------- ------- ------- 2 Group operating (loss)/profit before exceptional operating charges 2004 2003 £000 £000Group work done 12,075 13,555Other operating income 172 -Staff costs (6,927) (7,342)Amortisation of goodwill (63) (92)Depreciation (336) (509)Other operating charges (5,327) (5,082) ------ -------Group operating (loss)/profit before exceptionaloperating charges (406) 530 ====== ======= 3 Exceptional charges The Directors having performed a review of goodwill in accordance with FRS 10,Accounting for Goodwill, have determined that the goodwill carried on thebalance sheet in respect to Aukett BV should be fully amortised and haveaccordingly made a provision for impairment of £236,000. The Costs relating to the Acquisition of £200,000 comprise professional adviserfees incurred to the balance sheet date. The Costs relating to EGM of £210,000 mainly comprise professional adviser feesin respect to issuing the circulars to shareholders and holding the subsequentEGM in March 2004. The prior year loss on disposal of joint ventures comprises a £417,000 loss fromthe disposal of the Group's interest in the share capital of Aukett Imagina SLand a loss of £48,000 arising on the effective disposal of Aukett Art & BuildSELARL. 4 (Loss)/profit on ordinary activities before taxation An analysis of (loss)/profit on ordinary activities before taxation bygeographical area is as follows: 2004 2003 United Rest of Total United Kingdom Rest of Total Kingdom Europe £000 £000 Europe £000 £000 £000 £000Company andsubsidiaries 573 (392) 181 1,271 (337) 934Share of jointventures - 28 28 - (4) (4)Share ofassociate - 1 1 - 1 1Corporate costs - - (720) - - (623)Impairment ofgoodwill - - (236) - - -Otherexceptionalitems - - (410) - - (465) -------- ------- ------- ------- ------- -------Group total 573 (363) (1,156) 1,271 (340) (157) ======== ======= ======= ======= ======= ======= 5 Loss per share The loss per share is calculated on the loss attributable to shareholders of£1,013,,000 for the year ended 30 September 2004 (2003: loss £95,000) and on72,421,394 (2003: 72,421,394) ordinary shares, being the weighted average numberof shares in issue during the year. There is no additional dilution to thereport in either year in accordance with FRS 14, Earnings per Share. 6 Amounts recoverable on contracts Payments on account, as included in creditors, exceeded amounts recoverable oncontracts, as included in debtors £754,000 at 30 September 2004 (2003:£1,011,000). These amounts comprise: 2004 2003 Amounts recoverable Payments on Amounts recoverable Payments on on contracts account on contracts account £000 £000 £000 £000Value ofwork done 18,692 8,097 18,090 5,006Feesrendered (18,235) (9,308) (17,655) (6,452)onaccount ----------- ----------- ----------- ----------- 457 (1,211) 435 (1,446) =========== =========== =========== =========== 7 Post Balance Sheet Events On 2 December 2004 the Group disposed of 49% of its 50% holding in Aukett &Garretti Srl to the JV partner DIGIT & Associati Architettura Ingegneria('DIGIT') in consideration for €220,000 cash and the assumption by DIGIT of allliabilities. At the date of disposal, the share of cumulative profits of theundertaking recorded in the Group's books amounted to £37,000. On 17 December 2004, the Group gave twelve months notice to vacate its Londonpremises at Great Eastern Wharf in accordance with its lease contracts. Thisgave rise to an obligation to pay a penalty of six months rent amounting to£230,000 on exit from the property. On 8 March 2005, the Company entered into a conditional agreement to acquire theentire issued share capital of Fitzroy Robinson Limited ('FRL') for an aggregateconsideration of £2,277,663, payable on completion, to be satisfied by theallotment to the vendors of FRL of 72,392,431 fully paid ordinary shares in theCompany and the issue of £200,000 of loan stock by the Company. Completion ofthe agreement is conditional, amongst other things, on finalising of the newbank facilities and the approval of the Company's shareholders being obtained atthe EGM of the Company to be held on 30 March 2005. Further details of theAcquisition are contained in the Circular to shareholders dated 8 March 2005 8 Statutory accounts The financial information set out above does not constitute the Company'sstatutory accounts for the years ended 30 September 2004 or 2003 but is derivedfrom those accounts. Statutory accounts for 2003 have been delivered to theRegistrar of Companies and those for 2004 will be delivered following theCompany's annual general meeting. The auditors have reported on those accounts;their reports were unqualified and did not contain statements under section 237(2) or (3) of the Companies Act 1985. The Company's statutory accounts for 2004 will include the following note inrespect of their basis of preparation: "The Group meets its day to day working capital requirements through anoverdraft facility which is repayable on demand. The directors have preparedprojected cash flow information for the next twelve months and have negotiatedconditional overdraft and loan facilities with its bankers adequate toaccommodate the current and anticipated future working capital requirements.Subject to approval by shareholders of the Acquisition at the forthcoming EGM,the directors consider that the Group will continue to operate within theproposed facilities. On this basis, the directors believe it appropriate toprepare the financial statements on a going concern basis. The financialstatements do not include any adjustments that would be required if theAcquisition does not proceed." 9 Annual Report The Annual Report and Accounts is expected to be mailed to shareholders on orbefore 22 March 2005. Further copies will be available from the registeredoffice of the Company, 2 Great Eastern Wharf, Parkgate Road, London SW11 4TT, orwill be accessible via the Company's website at www.aukett.com. 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