Aukett Swanke Regulatory News (AUK)

28 Jun 2005 16:43

Aukett Group PLC28 June 2005 AUKETT GROUP PLC 2005 INTERIM RESULTS ANNOUNCEMENT Aukett Group Plc ("Aukett"), the international group of architects, designersand engineers, announces its Interim Results for the six months ended 31 March2005. Aukett provides creative facility design consultancy in offices,workplaces, business parks, retail services and outlets, hotels, transport, IT,industry, urban regeneration, healthcare, and technical support facilities. Financial HighlightsSix months ended 31 March 2005 2004 unaudited Unaudited (as restated) • Group work done £5.54m £5.96m • Operating profit before exceptionals £103k (Loss £66k) • Profit before tax and exceptionals £43k (Loss £175k) • Acquisition of London based architect Fitzroy Robinson Ltd completed after reporting period hence no contribution to results. • Post merger shareholder funds expected to be circa £2.2m • Post-completion of acquisition of Fitzroy Robinson, bank facilities restructured into 10 year facility and £1.25m overdraft facility • Loss per share (0.26p) (0.80p) • No dividend Key Points of Statement: * Fitzroy Robinson merger creates leading UK and European architectural practice* Group now trading as "Aukett Fitzroy Robinson" * Merger provides enhanced client portfolio, wider skills base, more focussed management disciplines* Joint venture disposal in Italy * Nicholas Thompson, Fitzroy Robinson CE, becomes Group CEO; Raul Curiel, Managing Director of European operations CEO Nicholas Thompson said: "The coming together of two well known brand names in the commercialarchitectural market has been well received by our clients and peers withincreased levels of enquiries, and the Board believes that the merger puts theEnlarged Group in a more competitive position to win a greater share of itstarget markets. Our short term focus is to improve financial performance. TheBoard are confident that the longer term prospects for the Enlarged Group arepositive although the benefits may take some time to feed their way through toshareholders." Enquiries:Aukett Group Plc www.aukett.comNicholas Thompson, CEO Tel: 020 7467 7602Peter Binns, Binns & Co. Tel: 020 7786 9600 AUKETT GROUP PLC Interim Statement for the six months ended 31 March 2005 Overview The six months profit before tax and exceptionals show a profit of £43,000 (2004interim: £175,000 loss as restated) and is therefore an improvement on the prioryear. An exceptional operating charge relating to the proposed relocation of ourBattersea office together with a tax charge results in an overall loss andreduces shareholder funds to £313,000 (2004 final: £478,000 as restated). The acquisition of Fitzroy Robinson Limited (the 'Acquisition') was completedshortly after the period end and has a material impact on the Group BalanceSheet both in terms of net assets and debt structure. The unaudited proformabalance sheet indicates that the post merger shareholder funds will increase to£2,180,000 under acquisition accounting rules. The overall number of project enquiries across the Enlarged Group has increasedpost Acquisition. However, whilst the majority of the pre-Acquisition prospectshave converted into real projects within the Fitzroy Robinson business, this hasnot been the case on the Aukett side. This has had an adverse impact on earningsand cash flow in the period since the 31 March 2005. Current Group trading isbelow expectations and showing an overall monthly loss. The Board has agreed anaction plan to reduce costs and bring them in line with the expected income onthe Aukett side of the business. This is in the process of being implemented. Summary of results The unaudited results for the first half of the current financial year reflectan eventful first six months with an operating profit before exceptionaloperating charges and interest of £103,000 (2004: loss £66,000 as restated).Exceptional operating charges amounted to £230,000 (2004: £446,000). The lossesfrom joint ventures have been reduced to £6,000 (2004: loss £34,000) offset by aprofit on the disposal of Aukett & Garretti of £22,000 giving a loss on ordinaryactivities before interest and tax of £111,000 (2004: loss £546,000 asrestated). After net interest charges of £54,000 and a tax charge of £23,000(2004: £75,000 and tax credit of £42,000 respectively) the Group has produced aloss after tax of £188,000 (2004: loss £579,000 as restated). Group work done for the six months ended 31 March 2005 amounted to £5.54million, a reduction of 7% on the prior year total of £5.96 million as restated.Both Group work done and operating profit include adjustments made under the newaccounting policy, as explained below and set out in note 6. The effect on thebalance sheet at 30 September 2004 was £243,000 and this has been accounted forthough reserves as a prior year adjustment. Our European subsidiaries have made an operating profit in the six-month periodof £16,000 after management charges (2004: loss £119,000). The exceptional operating charge of £230,000 relates to an exit penalty on earlytermination of the lease of the Group's Battersea offices. The Group disposed of its non-strategic interest in Aukett & Garretti Srl inDecember 2004, recording a small profit on disposal. The Group continues to workwith our partners in Italy on a project by project basis. Post completion of the Acquisition, the Company has restructured its bankingfacilities into a £1.35 million committed 10 year facility and a £1.25 millionoverdraft facility. Net debt has increased over six month period to 31 March2005 to £1.56 million (Sept 2004: £1.46 million). The Company has also accountedfor the costs of issuing shares in accordance with s130(2) of the Companies Act1985 resulting in a prior period adjustment as set out in note 6. The loss per share is 0.26p (2004: loss 0.80p as restated). The Board is notrecommending the payment of a dividend (2004: £nil). Aukett Fitzroy Robinson The Board is pleased to have delivered its promise on the first part of itsstrategy for growth and stability by means of a merger with Fitzroy Robinson, awell respected London based architectural practice. The announcement of theproposed merger of the two companies was very well received by clients at theannual industry trade fair, MIPIM. The two companies are now trading under thebanner of Aukett Fitzroy Robinson and as a combined firm we are now ranked asthe 11th largest in the UK according to the Architects' Journal 2005 survey. Thecombined size of the merged practice appears to have led to an increase in thenumber of project enquiries in the period post completion. Aukett shareholders approved the acquisition of Fitzroy Robinson Limited on 14April 2005. Although the acquisition was not effective for the period underreview in this interim report, to assist shareholders' understanding of theimpact of the transaction, a pro forma balance sheet has been provided detailingthe net assets of the Enlarged Group. Accordingly a number of initiatives are currently being pursued on the back ofthe resultant restructured bank finance, combined client portfolio, wider skillsbase and more focused management disciplines. The two companies have made significant progress in merging their respectiveoperations to provide a seamless service to clients. The structured integrationof both staff and services of the two London based studios is being progressedas a matter of priority. As part of this process, it is the intention of theBoard to co-locate the two London operations and, to this end, we have givennotice on our London Battersea premises. Similarly, the management of Europeanoperations is being focused into a cohesive team drawn from the overseasentities under the strategic direction of the Board. The short-term focus will be on improving the financial performance of theEnlarged Group which has suffered as a result of the prolonged period taken tocomplete the transaction. We expect to be able to report more fully on progress as part of the full year'sreport. Change in Accounting Policy The change in accounting policy has been introduced in response to theaccounting Abstract relating to revenue recognition and service contracts whichwas issued in March 2005 and is applicable to all accounting periods endingafter 22 June 2005. The abstract, inter alia, restricts the recognition ofincome when the consideration is conditional on a specified future event. As aresult the work in progress valuation at 31 March 2005 was £302,000 lower thanit would have been under the previous policy. Of this, £59,000 relates to thecurrent year, reducing both work done and profit accordingly and £243,000relates to prior years and has therefore been taken as an adjustment toreserves. Following the completion of the Acquisition, management have decided to takeadvantage of s130(2) of the Companies Act 1985. As a result, a total of £409,000of costs relating to the issue of shares will be written off against the sharepremium account, £200,000 of which had previously been expensed through the 2004accounts. At the balance sheet date, the accounts have been restated to showsuch costs as were incurred prior to the completion of the Acquisition withinother debtors. Board changes Following the acquisition of Fitzroy Robinson Limited, the Board is pleased towelcome Nicholas Thompson as Chief Executive Officer and Raul Curiel as ManagingDirector of European Operations. Paul Newman and Stephen Embley have steppeddown from the Board to take up positions as Chairman of the UK Operational Boardand Joint Managing Director of UK Operations respectively, key roles within theenlarged Group. The Board would like to thank them for their significantcontribution at corporate level over the last few years. Mr John Vincent hasalso been appointed to the UK Operational Board as the other Joint UK ManagingDirector. Mr Jose Luis Ripoll, Executive Chairman, will assume the role ofNon-Executive Chairman as from 1 July 2005. Prospects The coming together of two well known brand names in the commercialarchitectural market has been well received by our clients and peers and theBoard believe the merger puts the Enlarged Group in a more competitive positionto win a greater share of its target markets. Furthermore, the Enlarged Groupnow has a strong platform from which its strategic plans for growth can belaunched. The Board are confident that the longer term prospects for theEnlarged Group are positive although the benefits may take some time to feedtheir way through to shareholders. 28 June 2005 Aukett Group Plc2 Great Eastern WharfParkgate RoadLondon SW11 4TT Unaudited Combined Proforma Balance SheetAukett Fitzroy RobinsonFor the six months ended 31 March 2005 31 March 2005 Unaudited Unaudited £000 £000Fixed assetsIntangible assets 1,603Tangible assets 439 Investments in associate 30 ---------- 2,072 Current assetsDebtors 6,402Cash at bank and in hand 809 ---------- 7,211Creditors falling due within one year (5,523) ----------Net current assets 1,688 ----------Net assets before long term liabilities 3,760Creditors falling due after one year (1,580) ----------Net assets 2,180 ====Capital and reservesShare capital 1,448Share premium account 1,385Merger reserve 1,542Profit and loss account (2,195) ----------Equity shareholders' funds 2,180 ---------- Notes: On 14 April 2005 shareholders of Aukett plc approved the acquisition of FitzroyRobinson Limited. The directors consider that it would be of assistance toshareholders to show, for illustrative purposes only, the unaudited proformabalance sheet of the Enlarged Group as if the acquisition been made at 31 March2005. For practical reasons, the balance sheet of the Fitzroy Robinson group ofcompanies has been taken as at 30 April 2005. The directors have assumed, forthe purposes of this proforma, that any adjustments to restate the balance sheetas at 31 March 2005 would be immaterial and no fair value adjustments arerequired under FRS 6. The financial information underlying the pro forma balance sheet has beenprepared in accordance with applicable UK accounting standards using theacquisition accounting method of consolidation and on a consistent basis to theaccounting policies of Aukett Group plc. The pro forma balance sheet presented above is for illustrative purposes onlyand, because of its nature, may not give a true picture of the financialposition of the Group after the transaction. Furthermore, it does not constitutethe information required in respect of interim financial information issuedunder the Listing Rules of the Financial Services Authority. Consolidated profit and loss accountFor the six months ended 31 March 2005 Six months Six months Year ended ended ended 31 March 2005 31 March 2004 30 September 2004 unaudited unaudited audited (as (as restated) restated) £000 £000 £000 Group turnover 5,140 5,320 11,818Movement inamountsrecoverable oncontracts 403 643 86 --------- --------- ---------Group workdone 5,543 5,963 11,904 --------- --------- --------- Groupoperatingprofit/(loss)beforeexceptionalitems (note 2) 103 (66) (577) Exceptional operating charges:Impairment ofgoodwill insubsidiaries - (236) (236)Costs arisingfrom 2004 EGM - (210) (210)Penalty onearlytermination oflease (230) - - --------- --------- ---------Groupoperating loss (127) (512) (1,023) Share ofoperating lossin jointventures andassociate (6) (34) 31Exceptionalcharge: 22 - - --------- --------- --------Profit on disposal of joint venturesLoss onordinaryactivitiesbeforeinterest (111) (546) (992)Net interestpayable byGroup (54) (75) (135) --------- --------- ---------Loss onordinaryactivitiesbefore tax(note 3) (165) (621) (1,127)Tax(charge)/credit on loss onordinaryactivities(note 4) (23) 42 143 --------- --------- ---------Retained lossof the Groupand its share (188) (579) (984)of joint ventures and associate ===== ===== =====Loss per share (note 5):Basic anddiluted (0.26)p (0.80)p (1.36)p Summarised consolidatedbalance sheet At 31 March 2004 31 March 2004 30 September 2004 unaudited unaudited audited audited (as (as restated) restated) £000 £000 £000 £000 Fixed assetsIntangibleassets 179 204Tangibleassets 282 363 Investments in jointventures:Share of grossassets - 357Share of grossliabilities - (308) ---------- ---------- - 49Investment inassociate 30 29 ---------- ---------- 491 645Current assetsDebtors 5,213 5,471Cash at bankand in hand 303 404 ---------- ---------- 5,516 5,875Creditorsfalling duewithin oneyear (5,665) (5,989) ---------- ----------Net currentliabilities (149) (114) ---------- ----------Total assetsless currentliabilities 342 531Creditorsfalling dueafter one year (29) (53) ---------- ----------Net assets 313 478 ====== ======Capital and reservesShare capital 724 724Share premiumaccount 1,794 1,794Profit andloss account (2,205) (2,040) ---------- ----------Equityshareholders'funds 313 478 ====== ====== Summarised consolidated cash flow statement For the six months ended 31 March 2005 Six months Six months Year ended ended ended 30 September 31 March 2005 31 March 2004 2004 unaudited unaudited audited (as restated) (as restated) £000 £000 £000 Net cash flow fromoperating activities (78) 125 523 Returns on investments andservicing of finance (54) (75) (135) Tax paid (10) (56) 73 Capital expenditure - (19) (14)Acquisitions 44 - - ---------- ---------- ----------Net cash (outflow)/inflowbefore financing (98) (25) 447Net cash outflow fromfinancing (52) (129) (187) ---------- ---------- ----------(Decrease)/increase incash during the period (150) (154) 260 ====== ====== ====== Reconciliation of operating loss tonet cash flow from operatingactivitiesGroup operating loss (127) (512) (1,023)Depreciation andamortisation of fixedassets 106 463 635(Increase)/decrease indebtors (688) 1,055 723Decrease/(increase) increditors 631 (881) 188 ---------- ---------- ----------Net cash flow fromoperating activities (78) 125 523 ====== ====== ====== Statement of total recognised gains and lossesfor the six months ended 31 March 2005 Six months Six months Year ended ended ended 30 September 31 March 2005 31 March 2004 2004 unaudited unaudited audited £000 (as restated) (as restated) £000 £000Loss for the financialperiod (188) (579) (984) Currency translationdifferences 23 - 41 ---------- ---------- ----------Total gains and lossesrelating to the period (165) (579) (943) Prior period adjustments(note 6) (43) (72) (72) ---------- ---------- ---------- Total recognised gains andlosses since last annualreport (208) (651) (1,015) ====== ====== ====== Reconciliation of movements in shareholders' fundsfor six months ended 31 March 2004 31 March 2005 30 September 2004 unaudited audited £000 (as restated) £000Opening shareholders' funds as originallypresented 521 1,493 Prior period adjustments (note 6) (43) (72) ---------- ---------- Opening shareholders' funds as restated 478 1,421 Foreign exchange gain 23 41 Loss attributable to shareholders (188) (984) ---------- ---------- Closing shareholders' funds 313 478 ====== ====== Notes 1 Turnover and work done An analysis of turnover and work done of the Group, including its share of jointventures, by geographical area of destination is as follows: Six months Six months Year ended ended ended 30 September 31 March 2005 31 March 2004 2005 unaudited unaudited audited £000 (as restated) (as restated) £000 £000TurnoverUnited Kingdom 4,235 4,487 9,918Rest of Europe 905 833 1,900 ---------- ---------- ---------- Total 5,140 5,320 11,818 ====== ====== ======Movements in amounts recoverable oncontractsUnited Kingdom 299 726 154 Rest of Europe 104 (83) (68) ---------- ---------- ---------- Total 403 643 86 ====== ====== ====== Work doneUnited Kingdom 4,534 5,213 10,072 Rest of Europe 1,009 750 1,832 ---------- ---------- ---------- Total 5,543 5,963 11,904 ====== ====== ====== 2 Group operating profit/(loss) Six months Six months Year before exceptional operating ended ended endeditems 31 March 2005 31 March 2004 30 September 2004 unaudited unaudited audited (as (as restated) restated) £000 £000 £000Group work done 5,543 5,963 11,904 Other income 13 141 172 Staff costs (2,825) (3,309) (6,927) Provision forcompensation forloss of office bydirectors - (200) - Amortisation ofgoodwill (25) (46) (63) Depreciation (81) (181) (336) Other operatingcharges (2,522) (2,434) (5,327) ---------- ---------- ---------- Group operatingprofit/(loss)before exceptionaloperating items 103 (66) (577) ====== ====== ====== 3 Loss on ordinary activities before tax An analysis of loss on ordinary activities before tax by geographical area isset out below. Corporate charges and consolidation adjustments are includedunder the United Kingdom. Six months Six months Year ended ended ended 31 March 2005 31 March 2004 30 September 2004 unaudited unaudited audited £000 (as restated) (as restated) £000 £000 United Kingdom 33 (22) (318) Rest of Europe 10 (153) (363) Exceptional charges (208) (446) (446) ---------- ---------- ---------- Total (165) (621) (1,127) ====== ====== ====== 4 Tax (charge)/credit on loss on ordinary activities Six months Six months Year ended ended ended 30 September 31 March 2005 31 March 2004 2004 unaudited unaudited audited (as (as £000 restated) restated) £000 £000 United Kingdom corporation tax at - - -30% Overseas tax (21) 17 118 Share of taxfrom jointventures andassociate (2) (1) (1) ---------- ---------- ---------- Tax(charge)/credit on loss forperiod (23) 16 117 Deferred tax - 26 26 ---------- ---------- ---------- (23) 42 143 5 Loss per share The loss per share is calculated on the loss attributable to shareholders of£188,000 for the six months ended 31 March 2005 (2004 interim: loss £579,000 asrestated; 2004 final: loss £984,000 as restated) and on 72,421,394 (2004 interimand final: 72,421,394) ordinary shares, being the weighted average number ofshares in issue during the period. There is no additional dilution to the lossper share for any of the periods reported as a result of taking account ofdilutive potential ordinary shares in accordance with FRS 14, Earnings perShare. 6 Summary of effects of change in accounting policy Effect on operating profit Six Six months Year ended months ended 30 September ended 31 March 2004 31 2004 audited March 2005 unaudited (as restated) unaudited (as restated) £000 £000 £000 Operating lossunder previousaccountingpolicy (277) (546) (1,052)Adjustment towork inprogress undernew accountingpolicy (59) 34 (171)Adjustment forshare issuecosts unders130 Company'sAct 1985 209 - 200 ---------- ---------- ----------Operating lossas nowreported (127) (512) (1,023) ====== ====== ====== Effect on net assets 31 March 2005 31 March 30 September unaudited 2004 2004 unaudited audited £000 (as restated) (as restated) £000 £000Net assetsunder previousaccountingpolicy 206 880 521Adjustment to work in progress undernew accounting policy:Current period (59) 34 (171)Prior periods (243) (72) (72)Adjustment to other debtors unders130 Company's Act 1985:Current period 209 - 200Prior periods 200 - - -------- -------- --------Net assets asnow reported 313 842 478 ===== ===== ===== 7 Analysis of net debt An analysis of the movement in net debt during the period is as follows: At 1 October Cashflow Non-cash At 31 March 2004 movements 2005 £000 £000 £000 £000Cash at bank and in hand 404 (101) - 303Overdrafts repayable ondemand (1,729) (49) - (1,778) ---------- ---------- ---------- ---------- (1,325) (150) - (1,475) ---------- ---------- ---------- ----------Hire purchase and finance lease creditors (139) 52 - (87) ---------- ---------- ---------- ----------Net debt (1,464) (98) - (1,562) ====== ====== ====== ====== 8 Statutory accounts The comparative figures for the year ended 30 September 2003 are not theCompany's statutory accounts for that financial year. Statutory accounts forthat financial year have been reported on by the Company's auditors anddelivered to the Registrar of Companies. The report of the auditors wasunqualified and did not contain a statement under section 237(2) or (3) of theCompanies Act 1985. 9 Basis of preparation The financial statements comply with relevant accounting standards and theCompanies Act 1985 and have been prepared on a consistent basis using the sameaccounting policies as set out in the 2004 Annual Report with the exception ofthe policy on income recognition. UITF Abstract 40, Revenue Recognition andService Contracts, has been adopted in the interim statement and thecomparatives have been restated accordingly. The effect of the adoption of UTIFAbstract 40, which represents a change is accounting policy, is explained innote 6. The revised accounting policy is set out below: Turnover represents invoices (excluding value added tax) raised in the periodwhich are adjusted for movements in the level of amounts recoverable oncontracts and classified as work done. Contracts are assessed on a contract by contract basis and reflected in theprofit and loss account by recording turnover and related costs as contractactivity progresses. Work done is ascertained in a manner appropriate to thestage of completion of the contract, and credit taken for profit earned to datewhen the outcome of the contract can be assessed with reasonable certainty. Theamount by which turnover exceeds payments on account is classified as "amountsrecoverable on contracts" and included in debtors; to the extent fees renderedon account exceed relevant turnover, the excess is included in creditors aspayments on account. Work done is only recognised in the financial statementswhen there is a contractual right to consideration. The Company meets its day to day working capital requirements through anoverdraft facility, which is repayable on demand, and longer term finance bymeans of loans. The nature of the Company's business is such that there can beconsiderable uncertainty over the timing of major new projects and thecommencement of cash flows arising therefrom. The directors consider that theCompany will continue to operate within its existing facilities until the expiryof the overdraft facility when it is anticipated that suitable facilities willbe renewed or replaced. On this basis, the directors consider it appropriate toprepare the financial statements on the going concern basis. However, the marginof facilities over requirements is not large and inherently there can be nocertainty as to these matters. In the event that projects are delayed orexpectations included within the directors' projections are otherwise not met,the Group may need to renegotiate its banking facilities. 10 Further information Further information about the Group, including copies of the 2004 annual report,additional copies of this interim report and recent press releases sent to theLondon Stock Exchange, may be obtained from the Company's registered office at2 Great Eastern Wharf, Parkgate Road, London SW11 4TT. Such information may alsobe obtained through the Company's website at www.aukettfitzroyrobinson.com.Details of our healthcare alliance are available through our dedicated websiteat www.aukett-tro.com. In addition, the Company Secretary may be contacted byemail at cosec@aukett.com. The interim report is expected to be mailed toshareholders on or before 15 July 2005. This information is provided by RNS The company news service from the London Stock Exchange