Aukett Swanke Regulatory News (AUK)

Aukett Swanke Group Plc

Interim results

For the six months ended 31 March 2022

Aukett Swanke Group Plc ("the Group"), a company that principally provides architectural and interior design services, is pleased to announce its interim results for the six-month period ended 31 March 2022.

Highlights

Total revenue* increases to £5.78m (2021: £5.28m)

Revenue from continuing operations increases to £4.53m (2021: £3.70m)

United Kingdom returns to profit before group costs of £40k (2021: loss £567K)

Group costs reduced by 30% to £419k (2021: £598k)

Post period disposal of interest in Middle East operation for AED 5.0m (£1.1m)

Improving order book

*Continuing and discontinued operation revenue combined

Commenting on the interim results, CEO Nicholas Thompson said:

" The period under review highlights a return to growth, particularly in the UK and a significant reduction in the running costs of the Group as we progress our recovery strategy."

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Interim statement

Overview

In the half year under review and subsequently there has been a marked improvement in the Group's trading and financial position.

The result for the six months ended 31 March 2022, shows revenues (from continuing and discontinued operations combined) increasing by £500k to £5.78m (2021: £5.28m) and with this our losses before tax substantially reduced to £413k (2021: £1,017k).

Continuing operations' revenues increased by 22% to £4.53m (2021: £3.70m) and the loss before tax fell significantly to £152k (2021: £737k) evidencing the progress being made in restoring the group's underlying profitability. Revenues from discontinued operations fell by 21% to £1.25m (2021: £1.58m) and the loss before tax showed a small reduction at £261k (2021: £280k).

The post-period disposal of John R Harris & Partners Limited ("John R Harris") to the local management team has also significantly improved the Group's cash position.

Group Results

Within the overall result, the United Kingdom increased revenues to £4.43m (2021: £3.44m) and net of consultants, revenues rose by £714k to £3.31m (2021: £2.59m). As a result, the prior year loss before management charges of £567k moved into a profit of £40k for the reporting six months. In effect 85% of the growth dropped straight to the bottom line.

Continental European revenues were down 64% (locally 42%) as the Turkish lira depreciated by c.80% such that revenues were only £94k (2021: £258k). Profits before management charges for Continental Europe, as a whole, also reduced to £123k (2021: £227k). Both German operations continue to perform well in a post covid market.

Elsewhere the operating results were not so favourable. The Middle East continued to lose revenues with a fall of 21% to £1.25m (2021: £1.58m), resulting in an increased loss of £157k (2021: £79k) before management charges. This was further impacted by the closure costs related to the numerous licences that were previously required in the region. However, since the period end, we have disposed of our interest in the main operation, John R Harris, and we continue to downsize our residual operations.

A pleasing upturn in new business wins (see below) in both the United Kingdom and Continental Europe, leads us to expect further improvement in the second half.

Having commented on the disproportionate cost of the Group compared to the operations we are pleased to report a reduction in Group costs in the period of 30% to £419k (2021: £598k). This was mainly due to a reduction in executive salary costs as part of retirement planning processes.

Projects

Across the Group there have been significant new wins and project completions. In the UK preliminary stages on a range of Hybrid mixed use projects have begun for Related Argent, Segro, LaSalle, Freshwater, Regal London, Joseph Homes, Royal London Asset Management and Network Rail. The Eastside Locks project for Birmingham City University was completed earlier in the year with the fit-out now under way. Planning consent has been secured for the 30,000 sqm St. George's House East project in Wimbledon.

Executive Architecture project wins include Project Apple, the 19ha redevelopment in Surrey for biopharmaceutical giant UCB Celltech with the Heatherwick Studio and No's 74 & 84 Moorgate for the City of London and Osborne with Ben Adam Architects. Completions in London include the 21,000 sqm Featherstone building for Derwent with architect Morris + Company and the topping out of the 15,000 sqm n2 Nova Evolved workplace building for Landsec with Lynch Architects.

In Germany completions include the IHK Business Welcome Center and the refurbishment of the central areas of KaDeWe department store in Berlin, and new wins include the fit-out planning of 14,000 sqm in the Am Tacheles building for tenant Autodoc. In Frankfurt further refurbished floors of the iconic MesseTurm have been completed for landlord Blackstone together with fit-outs for international banking, legal and IT sector clients. In Turkey new concept designs were won and completed for the 10,000 sqm Mercedes Benz Office HQ, the 25,000 sqm Cengiz Altunizade Campus in Istanbul and their 4,000 sqm Ankara HQ building.

Disposal

Shortly after the half year the Group concluded the disposal of its interest in John R Harris to the local management team operating out of the Middle East.

The disposal provided an initial inflow of cash consideration along with a deferred consideration sum payable over 5 years, for a total £1.1m. The Group has also entered into a Marketing Agreement, covering the use of the Group's project portfolio and associated materials, over the deferred consideration period for an additional sum in order to maintain the Group's interest in this important market. The Group continues to operate in the Middle East but on a much-reduced basis.

Prospects

The Group continues to focus on enhancing shareholder value. This, inter alia, includes opportunities for further disposals and funding to support our new growth strategy; consideration of a share consolidation to improve the share register and allow many small investors to realise their investment on an economic basis whilst significantly reducing the cost to the Group of servicing a register with many hundreds of very small shareholdings; and, following my retirement, the appointment of a successor CEO to lead the business in the next phase of its operations.

Overall, we see the performance of the Group improving in the second half. 

Nicholas Thompson

Chief Executive Officer

28 June 2022

Consolidated income statement

For the six months ended 31 March 2022

Consolidated statement of comprehensive income

For the six months ended 31 March 2022

Consolidated statement of financial position

At 31 March 2022

Consolidated statement of cash flows

For the six months ended 31 March 2022

Consolidated statement of changes in equity

For the six months ended 31 March 2022

For the six months ended 31 March 2021

Consolidated statement of changes in equity (continued)

For the year ended 30 September 2021

Notes to the Interim Report

1 Basis of preparation

The financial information presented in this Interim Report has been prepared in accordance with the recognition and measurement principles of international accounting standards in conformity with the requirements of the Companies Act 2006 that are expected to be applicable to the financial statements for the year ending 30 September 2022 and on the basis of the accounting policies expected to be used in those financial statements.

2 New accounting standards, amendments and interpretations applied

A number of new or amended standards and interpretations to existing standards became applicable for the current reporting period. The Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards.

3 Operating segments

The Group comprises a single business segment and separately reportable geographical segments (together with a Group costs segment). Geographical segments are based on the location of the operation undertaking each project. Turkey is included within Continental Europe together with Germany and the Czech Republic (in the comparative periods). The Middle East segment has been re-presented as a discontinued operation in note 5, and accordingly is no longer included in this operating segments note.

4 Other operating income

5 Discontinued operations

5 (a) Description

In April 2022, the Group sold assets, as part of the Group's disposal of its John R Harris & Partners Limited (Cyprus) subsidiary and John R Harris & Partners (Dubai) entity. This marked the sale of the main trading operations in the Group's Middle East segment. With closure costs incurred in the period relating to the planned termination of a number of trading licenses in the Middle East operations, the Middle East segment is presented as a discontinued operation in the current period, and the comparative periods represented accordingly.

5 (b) Financial performance and cash flow information

Result of discontinued operations

Earnings per share from discontinued operations

Statement of cash flows

The statement of cash flows includes the following amounts relating to discontinued operations:

6 Earnings per share

The calculations of basic and diluted earnings per share are based on the following data:

7 Reconciliation of profit before tax to net cash from operations

8 Analysis of net funds

9 Events occurring after the reporting period

On 28 April 2022 Aukett Swanke Group Plc disposed of its 100% interest in the share capital of John R Harris & Partners Limited (registered in Cyprus), the beneficial owner of John R Harris & Partners (Dubai) for a cash consideration of AED 5,000,000, comprising AED 4,250,000 cash upfront and a further AED 750,000 deferred consideration paid over a 5 year period.

The assets and liabilities directly associated with both John R Harris & Partners Limited and John R Harris & Partners (Dubai) have been classified as held for sale for the reporting period ended 31 March 2022

The operating results of these entities have been included within discontinued operations for the 6 month period to 31 March 2022, and re-presented accordingly for comparative periods.

10 Status of Interim Report

The Interim Report covers the six months ended 31 March 2022 and was approved by the Board of Directors on 28 June 2022. The Interim Report is unaudited.

The interim condensed set of consolidated financial statements in the Interim Report are not statutory accounts as defined by Section 434 of the Companies Act 2006.

Comparative figures for the year ended 30 September 2021 have been extracted from the statutory accounts of the Group for that period.

The statutory accounts for the year ended 30 September 2021 have been reported on by the Group's auditors and delivered to the Registrar of Companies. The audit report thereon was unqualified, did not include references to matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain a statement under Section 498 of the Companies Act 2006. The audit report did draw attention to the Directors' assessment of going concern, indicating that a material uncertainty exists that may cast significant doubt on the Group's and parent company's ability to continue as a going concern. The audit report was not modified in respect of this matter.

11 Further information

An electronic version of the Interim Report will be available on the Group's website (www.aukettswankeplc.com).