Final Results

Aukett Group PLC 08 March 2005 Aukett Group PLC 2004 PRELIMINARY RESULTS ANNOUNCEMENT New growth strategy progressed. Aukett Group Plc ('Aukett'), the international group of architects, designers and engineers announces its Preliminary Results for the 12 months ended 30 September 2004. Aukett provides creative design consultancy in a diverse range of sectors including: commercial property, hotels, retail, interior design, urban regeneration, residential, healthcare, leisure, transportation and technical 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 Highlights Year ended 30 September 2004 2004 2003 Turnover £11.82m £14.03m Group work done £12.08m £13.55m Operating (loss)/profit before exceptional operating charges (£406,000) £530,000 Operating (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 £1.49m Net borrowings (£1.46m) (£1.91m) Gearing 281% 128% In line with the strategy to grow the business and subject to shareholder approval, Aukett is to acquire the London-based architectural group, Fitzroy Robinson. 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 creation of a regeneration framework for Gateshead as part of the City's redevelopment; major refurbishment of the headquarters of Norwich Union; an award-winning HQ complex for South Cambridge District Council; commercial offices in London's Docklands; and a Mercedes-Benz Heritage and Technology Centre for DaimlerChrysler. New overseas projects include: a major hotel, retail and commercial complex near Moscow; a new European Head Office for Petrochemical giant, SABIC EPC in the Netherlands; a commercial development at Winiowy, one of Warsaw's major business parks; the design of the Rocco Forte Grand Hotel de Rome for Hochtief Developments in Berlin; refurbishment projects for Credit Suisse First Boston and Sheraton Hotels in Frankfurt and a hotel, residential and commercial complex in 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 management of 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 remain cautious about the pace of development in the coming year, the Company is looking ahead to the opportunity to develop a more stable and prosperous business 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 strong foundations have been laid down for the future financial prosperity of the Group. This includes the proposed merger with Fitzroy Robinson Limited, a London based architectural practice, which I believe will both strengthen our balance sheet and enhance our service to clients. The Group's net assets and shareholders' funds over the period have been adversely affected by unsatisfactory trading results, the Extraordinary General Meeting ('EGM') in March 2004 and the subsequent management reorganisation, and the write-off of part 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 subsidiary operations have recorded a net loss of £0.39m (2003: £0.34m loss) on which management 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 Board and strategy of the Company. Loss before taxation for the Group was £1.16m (2003: £0.16m loss) on work done of £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 creditors resulting in net debt reducing to £1.464m (2003: £1.911) although gearing has risen 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 clear mandate: to look at the available opportunities to grow the company and to re-focus Aukett's strategy to take full advantage of its European network and experience. The Board has therefore concentrated significant effort on re-structuring the management of the Group and taking action to address the immediate and long-term future, both in the United Kingdom and in continental Europe, including through the proposed acquisition of Fitzroy Robinson referred to in the notice of an Extraordinary General Meeting and Circular dated 8 March 2005 which shareholders should now have received (the 'Acquisition' or 'Merger'). Throughout this year, we have maintained our high reputation for creativity and professionalism and the Group has been responsible for some high profile projects. In the UK, these include the design and fit-out of the Radisson SAS hotel adjacent to Stansted airport and refurbishing a number of Hilton and Rezidor SAS hotels; the creation of a regeneration framework for Gateshead as part of the city's redevelopment programme and ongoing redesign of the Millbay Docks area of Plymouth; we are undertaking a major refurbishment of the headquarters of Norwich Union and have delivered an award-winning HQ complex for South Cambridge District Council and 227,000 sq. ft of offices at the Royals Business Park in London's Docklands. The UK company has also designed Daimler Chrysler's state-of-the art Mercedes-Benz Heritage and Technology Centre, located at the historic Brooklands race track, and its electrical engineering department is building a reputation in the data centre sector having completed a number of projects for key technology clients. The Group won four UK industry awards during the year including the Design Week Award for best workplace environment. European projects have included a major hotel, retail and commercial complex in Novorossiysk, Russia, including a Novotel; the design of a new European Head Office for Petrochemical giant, SABIC EPC in Sittard in the Netherlands; an office development at Wisniowy, one of Warsaw's major business parks; the design of the Rocco Forte Grand Hotel de Rome for Hochtief Developments in central Berlin; refurbishment projects for Credit Suisse First Boston Bank and Sheraton Hotels in Frankfurt as well as Cisco Systems in Athens; and a hotel, residential and commercial complex known as Churchill Square in Prague. Corporate strategy My prime task has been to develop and achieve a strategy for growth. We recently announced details of the Acquisition to the London Stock Exchange and shareholders have been sent documents relating to the approval of the same at an EGM to be held on 30 March 2005. Fitzroy Robinson is a well-respected, London-based architectural practice that has strong similarities to our organisation in terms of culture, disciplines and sectors of operation. In addition, Fitzroy Robinson offers a number of different areas of expertise, including heritage architecture and experience in working in the City and West End of London to complement our own focus. It also has offices in Bristol, UK and in Moscow, currently an active construction market in Eastern Europe. If the Acquisition is approved at the EGM and completes, I anticipate that the combined Group will be in the top 10 UK architectural practices by fee income (based on the 2004 annual review conducted by the Architect's Journal) and the Board is encouraged by the prospect of being able to offer our clients a strengthened portfolio of services and talent. A considerable amount of time has been spent in discussions with our European offices, with a view to improving our overseas operations. Our partner in Milan decided to leave the group in December 2004, although we have an agreement for future co-operation between our two companies on a project-by-project basis. We have also changed the way we manage our Netherlands operation and are working in association with a talented team of Dutch designers. The office has been relocated 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 intention to work towards realising the commercial potential of each location in the coming 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 have given their support. Summary Aukett remains a highly respected creative architectural, design and engineering group and I am confident that the Board has addressed critical management issues that previously existed. The Board believes that it has a strategy to achieve growth by means of capitalising on synergies and market opportunities arising from the Acquisition, especially in its core UK markets. The European operations remain fragile and close management attention is required to stem losses and regain the focus on sustainable growth overseas. The Board believe that there is now a clear way forward and, whilst we remain cautious about the pace of development in the coming year, the Company is looking ahead to the opportunity to develop a more stable and prosperous business as part of an enlarged group. Prior to the EGM in March 2004, which resulted in my taking office, I had contact with many of our shareholders. If any investor requires further information or details of our activities then I would invite them to contact me directly. Finally, I would like to thank our clients and shareholders for their continuing support and my colleagues for their dedication and hard work during the past year. J L Ripoll Chairman 8 March 2005 Consolidated profit and loss account For the year ended 30 September 2004 2004 2003 £000 £000 Group 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 exceptional operating charges (note 2) (406) 530 Exceptional operating charges (note 3): (236) - Impairment of goodwill in subsidiaries (200) - Costs relating to Acquisition (210) - Costs relating to EGM Group operating (loss)/profit (1,052) 530 Share of operating profit/(loss) in joint ventures and associate 31 (3) -------- -------- Exceptional charges: Loss on disposal of joint ventures (note 3) - (465) -------- -------- (Loss)/profit on ordinary activities before tax (1,021) 62 Net 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 £000 Fixed assets Intangible assets 204 503 Tangible assets 363 679 Investments in joint ventures: Share of gross assets 357 349 Share of gross liabilities (308) (311) ------- ------- 49 38 Investment in associate 29 28 ------- ------- 645 1,248 Current assets Debtors 5,514 6,239 Cash at bank and in hand 404 246 ------- 5,918 6,485 Creditors falling due within one (5,989) (6,092) year ------- Net current (liabilities)/assets (71) 393 ------- ------- Total assets less current 574 1,641 liabilities Creditors falling due after one year (53) (148) ------- ------- Net assets 521 1,493 ------- ------- Capital and reserves Called up share capital 724 724 Share premium account 1,794 1,794 Profit and loss account (1,997) (1,025) ------- ------- Equity shareholders' funds 521 1,493 ------- ------- Statement of total recognised gains and losses For the year ended 30 September 2004 2004 2003 £000 £000 Loss 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' funds For the year ended 30 September 2004 2004 2003 £000 £000 Opening shareholders' funds 1,493 1,102 Exchange movement 41 69 Reinstatement of goodwill written off to reserves - 417 Loss 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 £000 Net cash inflow from operating activities 523 746 Returns on investments and servicing of (135) (218) finance Tax paid 73 (9) Capital expenditure Purchase of tangible fixed assets (14) (9) Acquisitions and disposals - 28 -------- ------ Net cash inflow before financing 447 538 Financing Repayment of loans (40) (120) Principal repayments under hire purchase (147) (328) contracts and finance leases ------- ------ Net cash outflow from financing (187) (448) -------- ------ Increase in cash 260 90 ======== ====== Reconciliation of net cash flow to movement in net debt Increase in cash for the year 260 90 Cash outflow from decrease in debt 187 448 New finance leases - (59) -------- ------ Movement in net debt during the year 447 479 Net 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 as follows: 2004 2003 United Rest of Total United Rest of Total Kingdom Europe £000 Kingdom Europe £000 £000 £000 £000 £000 Turnover Gross turnover 9,918 2,655 12,573 12,152 3,484 15,636 Less: Share of joint ventures - (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 amounts recoverable on contracts Gross movement 325 (138) 187 (535) 27 (508) Less: Share of joint ventures - 63 63 - 37 37 Share of associate - 7 7 - (6) (6) ------- ------ ------ -------- ------- ------- Group movement in amounts 325 (68) 257 (535) 58 (477) recoverable on contracts ------- ------ ------ -------- ------- ------- Work done Gross work done 10,243 2,517 12,760 11,617 3,511 15,128 Less: Share of joint ventures - (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 £000 Group work done 12,075 13,555 Other 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 exceptional operating 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 the balance sheet in respect to Aukett BV should be fully amortised and have accordingly made a provision for impairment of £236,000. The Costs relating to the Acquisition of £200,000 comprise professional adviser fees incurred to the balance sheet date. The Costs relating to EGM of £210,000 mainly comprise professional adviser fees in respect to issuing the circulars to shareholders and holding the subsequent EGM in March 2004. The prior year loss on disposal of joint ventures comprises a £417,000 loss from the disposal of the Group's interest in the share capital of Aukett Imagina SL and a loss of £48,000 arising on the effective disposal of Aukett Art & Build SELARL. 4 (Loss)/profit on ordinary activities before taxation An analysis of (loss)/profit on ordinary activities before taxation by geographical area is as follows: 2004 2003 United Rest of Total United Kingdom Rest of Total Kingdom Europe £000 £000 Europe £000 £000 £000 £000 Company and subsidiaries 573 (392) 181 1,271 (337) 934 Share of joint ventures - 28 28 - (4) (4) Share of associate - 1 1 - 1 1 Corporate costs - - (720) - - (623) Impairment of goodwill - - (236) - - - Other exceptional items - - (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 on 72,421,394 (2003: 72,421,394) ordinary shares, being the weighted average number of shares in issue during the year. There is no additional dilution to the report 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 on contracts, 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 £000 Value of work done 18,692 8,097 18,090 5,006 Fees rendered (18,235) (9,308) (17,655) (6,452) on account ----------- ----------- ----------- ----------- 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 all liabilities. At the date of disposal, the share of cumulative profits of the undertaking recorded in the Group's books amounted to £37,000. On 17 December 2004, the Group gave twelve months notice to vacate its London premises at Great Eastern Wharf in accordance with its lease contracts. This gave 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 the entire issued share capital of Fitzroy Robinson Limited ('FRL') for an aggregate consideration of £2,277,663, payable on completion, to be satisfied by the allotment to the vendors of FRL of 72,392,431 fully paid ordinary shares in the Company and the issue of £200,000 of loan stock by the Company. Completion of the agreement is conditional, amongst other things, on finalising of the new bank facilities and the approval of the Company's shareholders being obtained at the EGM of the Company to be held on 30 March 2005. Further details of the Acquisition 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's statutory accounts for the years ended 30 September 2004 or 2003 but is derived from those accounts. Statutory accounts for 2003 have been delivered to the Registrar of Companies and those for 2004 will be delivered following the Company'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 in respect of their basis of preparation: 'The Group meets its day to day working capital requirements through an overdraft facility which is repayable on demand. The directors have prepared projected cash flow information for the next twelve months and have negotiated conditional overdraft and loan facilities with its bankers adequate to accommodate 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 the proposed facilities. On this basis, the directors believe it appropriate to prepare the financial statements on a going concern basis. The financial statements do not include any adjustments that would be required if the Acquisition does not proceed.' 9 Annual Report The Annual Report and Accounts is expected to be mailed to shareholders on or before 22 March 2005. Further copies will be available from the registered office of the Company, 2 Great Eastern Wharf, Parkgate Road, London SW11 4TT, or will be accessible via the Company's website at www.aukett.com. This information is provided by RNS The company news service from the London Stock Exchange

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