Interim Results

Aukett Group PLC 24 June 2004 AUKETT GROUP PLC 2004 INTERIM RESULTS ANNOUNCEMENT Aukett Group Plc ('Aukett'), the international group of architects, designers and engineers, announces its Interim Results for the six months ended 31 March 2004. Aukett provides creative design consultancy in offices, workplaces, business parks, retail services and outlets, hotels, education, transport, IT, industry, urban regeneration, healthcare and technical support facilities. Significant new projects include the design of a new Headquarters for Norwich Union, new phases of facilities for the National Air Traffic Service, new offices and studio facilities for British Sky Broadcasting, a 150 bed hotel in Russia and a major mixed use development in Berlin, incorporating residential, offices and retail. Financial Highlights Six months ended 31 March 2004 2003 unaudited unaudited Group work done £5.93m £7.40m Operating (loss)/profit • UK £0.02m £0.44m • European Subsidiaries (£0.12m) (£0.17m) • Exceptional items (£0.45m) - Total (£0.55m) £0.27m Contribution from Joint Ventures (£0.03m) (£0.07m) (Loss)/profit before tax: - UK (£0.50m) £0.35m - Rest of Europe (£0.15m) (£0.24m) - Total (£0.65m) £0.11m Basic and diluted (loss)/earnings per share (0.85p) 0.11p Dividends per share Nil Nil Net assets(compared with 30 September 2002) £0.88m £1.49m Key Points of Statement * Board and management restructure following Extraordinary General Meeting * Strategy to increase size of business by capital injection or merger and acquisition * Business prospects looking more favourable * Thirty-one new commissions since end of March 2004 * Two commendations for projects from the Civic Trust Chairman & CEO Jose Luis Ripoll said: 'The new Board are committed to increasing the value of the business and payment of dividends to shareholders as soon as appropriate. The Board are concentrating on restoring financial security to the Group whilst ensuring that the Company continues to deliver high quality design services to its clients. I believe the major new commissions won since the EGM together with other options being explored by the Board will help deliver that.' Enquiries: Aukett Group Plc www.aukett.com Jose Luis Ripoll, Chairman & CEO Tel: 020 7924 4949 Lesley Daley, Torworth Ltd Tel: 01304 239488 AUKETT GROUP PLC Interim Statement for the six months ended 31 March 2004 Summary of results The unaudited results for the first half of the current financial year reflect a difficult first six months with an operating loss before exceptional charges and interest of £100,000 (2003: profit £270,000). Exceptional charges relating to EGM related costs and goodwill write offs amounted to £446,000. The losses from joint ventures have been reduced to £34,000 (2003: loss £68,000) giving a loss on ordinary activities before interest and tax of £580,000 (2002: profit £202,000). After net interest charges of £75,000 and a tax credit of £42,000 (2002: £93,000 and tax charge of £26,000 respectively) the Group has produced a loss after tax of £613,000 (2002: profit £83,000). Board and Management changes Following the Extraordinary General Meeting, held on 26 March 2004, Messrs Ripoll, Beckers and Deighton have been appointed to the Board. Messrs Mavor, McQuattie, Harwood and McLarty have ceased to be directors. The following Board and management changes have subsequently been put in place: • Mr Jose Luis Ripoll has been appointed Executive Chairman and Chief Executive Officer; • Mr Steven Beckers has been appointed Managing Director of European Operations; • Mr Paul Newman has been appointed Managing Director of UK Operations; • Mr Gerry Deighton has been appointed senior non-executive director and will chair the audit, nominations and remuneration committees; • Mr Lutz Heese and Mr Jose Antonio Navarro have been appointed non-executive directors. Strategy The Board is committed to increasing the value of the business and payment of dividends to shareholders as soon as appropriate. To achieve this and take full advantage of business opportunities that exist in the UK and across Europe, the Board consider that it is necessary to increase the size and capability of the Company, either by injection of further capital or by acquisition or merger. The Group is making progress in the differentiation between the trading operations and the corporate activities of the PLC. This will allow the core operations to focus on winning and delivering new business whilst the PLC concentrates on developing the corporate strategy required to build a successful Group. The Board believe that the Company's unique organisation of European offices is an important asset to the Group, the benefit of which has not been fully realised. The Board are reviewing ways in which greater cross border co-operation can be encouraged between Group companies. The Group has no plans at this time to open any new offices. Overview of trading Following the Extraordinary General Meeting held on 26 March 2004, steps have been taken to ensure that client and staff confidence is strengthened such that the business can move forwards as quickly as possible. No clients have been lost in the transition to the new management team and the Group remains committed to maintaining the very highest level of design and service associated with the Company. Strategies for winning new business have not been as successful as management hoped and steps are being taken to improve this. Getting the right marketing strategy is essential in the competitive market in which we operate. During the 12 weeks following the EGM, the Group has secured 24 UK projects and 7 European projects of note and these are expected to have a positive impact in the second half. Our European subsidiaries have made an operating loss in the six-month period of £119,000 after management charges (2003: loss £174,000) due to poor performance. This is after taking account of the settlement of a major debt in the Netherlands resulting in the release of the corresponding bad debt provision. The joint ventures are showing mixed results, with German operations suffering from the effects of the recession in that country. Issues are being addressed through a greater focus on the overseas entities through the appointment to the Board of a managing director of European operations. He has been tasked with a review of the European structure with a view to identifying beneficial changes. Financial Summary The Group operating loss before exceptional items was £100,000 for the first six months compared to a profit of £270,000 in the corresponding period last year. A sum of £210,000, shown as an exceptional item, was spent on matters connected with the Extraordinary General Meeting by the previous Board. The performance of Aukett BV has continued to disappoint and structural changes are being made to that entity. Whilst the Board believes that the Group has good prospects going forward, the Board has decided that the goodwill of £236,000 relating to this entity should be written off. Consequently, the annual amortisation charge will decrease from £92,000 per annum to £46,000 per annum. Net debt has increased over the last six months to £1.94m (Sept 2003: £1.91 million) due to the general trading and the EGM costs mentioned above offset by a decrease in finance lease creditors. The Group has continued to trade within the bank facilities agreed in November 2003 and management expect this to remain the case. The loss per share is 0.85p (2003: earnings 0.11p). The Board is not recommending the payment of a dividend (2003: £nil). The Company's bankers are aware of the basis of preparation of this interim statement and continue to provide support with the facilities that are already in place. The Board anticipates a satisfactory renewal of these facilities at the end of the financial year and has therefore prepared these interim financial statements on a going concern basis. Significant projects and developments The Group retains its excellent reputation in architecture and facilities design and continues to provide high quality design and consultancy services to a wide range of clients. The Group is building upon its reputation in the more diverse sectors within which it operates and is, for example, gaining increasing recognition in the urban regeneration market, including a commission to provide master planning services for a major city centre regeneration programme. Other major contracts secured after the end of the period include a new Headquarters for Norwich Union, further office and studio commissions for British Sky Broadcasting, continuing projects under the Royal Bank of Scotland framework for refurbishment of their offices in both the UK and Europe, and a further architectural phase and fit out work for the new centre for the National Air Traffic Service. We have also been given commendations by the Civic Trust for the work on the Lower Precinct shopping centre in Coventry and the Lakeshore office complex at Bedfont Lakes, Middlesex. In Europe recent project wins include a 150 bed hotel in Russia and a major mixed use development project, including offices, residential and hotels, in central Berlin. Prospects The Board believe that prospects for the business are starting to look more favourable. The order book has improved since the EGM and the new commissions are expected to have a positive impact in the second half. The Company is committed to providing the highest quality design and services to its clients and would like to thank both its clients and staff for their continuing support. 24 June 2004 Aukett Group Plc 2 Great Eastern Wharf Parkgate Road London SW11 4TT Consolidated profit and loss account for the six months ended 31 March 2004 Six months Six months Year ended ended ended 30 September 31 March 2004 31 March 2003 2003 unaudited unaudited audited £000 £000 £000 Group turnover 5,320 7,870 14,032 Movement in amounts recoverable on contracts 609 (469) (477) --------- ------------ ------------ Group work done 5,929 7,401 13,555 --------- ------------ ------------ Group operating (loss)/profit before exceptional items (note 2) (100) 270 530 Exceptional charges: Impairment of goodwill in subsidiaries (236) - - Costs relating to extraordinary general meeting (210) - - --------- ------------ ------------ Group operating (loss)/profit (546) 270 530 Share of operating loss in joint ventures and associate (34) (68) (3) Loss on disposal of joint ventures - - (465) -------- ----------- ------------ (Loss)/profit on ordinary activities before interest (580) 202 62 Net interest payable by Group (75) (93) (219) --------- ------------ ------------ (Loss)/profit on ordinary activities before tax (note 3) (655) 109 (157) Tax on (loss)/profit on ordinary activities (note 4) 42 (26) 62 --------- ------------ ------------ Retained (loss)/profit of the Group and its share (613) 83 (95) of joint ventures and associate ===== ======= ======= (Loss)/earnings per share (note 5): Basic and diluted (0.85)p 0.11p (0.13)p Summarised consolidated balance sheet at 31 March 2004 31 March 2004 30 September 2003 unaudited unaudited audited audited £000 £000 £000 £000 Fixed assets Intangible assets 221 503 Tangible assets 518 679 Investments in joint ventures: Share of gross 345 349 assets Share of gross (305) (311) liabilities ------------- ------------- 40 38 Investment in 6 28 associate ------------- ------------ 785 1,248 Current assets Debtors 5,272 6,239 Cash at bank and 291 246 in hand ------------- ------------- 5,563 6,485 Creditors falling due within one (5,381) (6,092) year ------------- ------------- Net current 182 393 assets ------------- ------------ Total assets less current 967 1,641 liabilities Creditors falling due after one (87) (148) year ------------- ------------ Net assets 880 1,493 ======= ======= Capital and reserves Share capital 724 724 Share premium 1,794 1,794 account Profit and loss (1,638) (1,025) account ------------- ------------ Equity 880 1,493 shareholders' funds ======= ======= Summarised consolidated cash flow statement for the six months ended 31 March 2004 Six months Six months Year ended ended ended 30 September 31 March 2004 31 March 2003 2003 unaudited unaudited audited £000 £000 £000 Net cash flow from operating activities 125 165 746 Returns on investments and servicing of finance (75) (116) (218) Tax paid (56) (22) (9) Capital expenditure (19) (20) (9) Acquisitions - - 28 _______ _______ _______ Net cash (outflow)/inflow before financing (25) 7 538 Net cash outflow from financing (129) (203) (448) _______ _______ _______ (Decrease)/increase in cash during the period (154) (196) 90 _______ _______ _______ Reconciliation of operating (loss)/profit to net cash flow from operating activities Group operating (loss)/profit (546) 270 530 Depreciation and amortisation of fixed assets 463 314 601 Decrease/(increase) in debtors 1,089 (239) 389 Decrease in creditors (881) (180) (774) _______ _______ _______ Net cash flow from operating activities 125 165 746 _______ _______ _______ Statement of total recognised gains and losses for the six months ended 31 March 2004 Six months Six months Year ended ended ended 31 March 2004 31 March 2003 30 September 2003 unaudited unaudited audited £000 £000 £000 (Loss)/profit for the financial period (613) 83 (95) Currency translation differences - 35 69 _______ _______ _______ Total recognised gains and losses since last annual report (613) 118 (26) _______ _______ _______ Reconciliation of movements in shareholders' funds for six months ended 31 March 2004 31 March 2004 30 September 2003 unaudited audited £000 £000 Opening shareholders' funds 1,493 1,102 Foreign exchange gain - 69 Reinstatement of goodwill written off to reserves - 417 Loss attributable to shareholders (613) (95) Closing shareholders' funds _______ _______ 880 1,493 _______ _______ Notes 1 Turnover and work done An analysis of turnover and work done of the Group, including its share of joint ventures, by geographical area of destination is as follows: Six months Six months Year ended ended ended 30 September 31 March 2004 31 March 2003 2003 unaudited unaudited audited £000 £000 £000 Turnover United Kingdom 4,487 6,838 12,152 Rest of Europe 833 1,032 1,880 _______ _______ _______ Total 5,320 7,870 14,032 _______ _______ _______ Movements in amounts recoverable on contracts United Kingdom 692 (592) (535) Rest of Europe (83) 123 58 _______ _______ _______ Total 609 (469) (477) _______ _______ _______ Work done United Kingdom 5,179 6,246 11,617 Rest of Europe 750 1,155 1,938 _______ _______ _______ Total 5,929 7,401 13,555 _______ _______ _______ 2 Group operating (loss)/profit Six months Six months Year ended ended ended 31 March 2004 31 March 2003 30 September 2003 unaudited unaudited audited £000 £000 £000 Group work done 5,929 7,401 13,555 Other income 141 - - Staff costs (3,309) (3,759) (7,342) Provision for compensation for loss of office of directors (200) - - Amortisation of goodwill (46) (46) (92) Depreciation (181) (268) (509) Other operating charges (2,434) (3,058) (5,082) _______ _______ _______ Group operating (loss)/profit before exceptional items (100) 270 530 _______ _______ _______ 3 (Loss)/profit on ordinary activities before tax An analysis of (loss)/profit on ordinary activities before tax by geographical area is set out below. Exceptional items have been included within the UK results. Six months Six months Year ended ended ended 30 September 31 March 2004 31 March 2003 2003 unaudited unaudited audited £000 £000 £000 United Kingdom (502) 351 183 Rest of Europe (153) (242) (340) _______ _______ _______ Total (655) 109 (157) _______ _______ _______ 4 Tax credit/(charge) on (loss)/profit on ordinary activities Six months Six months Year ended ended ended 30 September 31 March 2004 31 March 2003 2003 unaudited unaudited audited £000 £000 £000 United Kingdom corporation tax at - - - 30% Overseas tax 17 17 118 Share of tax from joint ventures and associate (1) (6) (19) _______ _______ _______ Tax credit on (loss)/profit for period 16 11 99 Deferred tax 26 (37) (37) _______ _______ _______ 42 (26) 62 5 (Loss)/earnings per share The (loss)/earnings per share are calculated on the loss attributable to shareholders of £613,000 for the six months ended 31 March 2004 (2003 interim: profit £83,000; 2003 final: loss £95,000) and on 72,421,394 (2002 interim and final:72,421,394) ordinary shares, being the weighted average number of shares in issue during the period. There is no additional dilution to the loss per share for any of the periods reported as a result of taking account of dilutive potential ordinary shares in accordance with FRS 14, Earnings per Share. 6 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 2003 movements 2004 £000 £000 £000 £000 Cash at bank and in hand 246 45 - 291 Overdrafts repayable on demand (1,831) (199) - (2,030) _____ _____ _____ _____ (1,585) (154) - (1,739) _____ _____ _____ _____ Bank and other loans repayable in: Less than one year (40) 40 - - Hire purchase and finance (286) 89 - (197) lease creditors _____ _____ _____ _____ (326) 129 - (197) _____ _____ _____ _____ Net debt (1,911) (25) - (1,936) _____ _____ _____ _____ 7 Statutory accounts The comparative figures for the year ended 30 September 2003 are not the Company's statutory accounts for that financial year. Statutory accounts for that financial year have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. 8 Basis of preparation The Company meets its day to day working capital requirements through an overdraft facility, which is repayable on demand. The nature of the Company's business is such that there can be considerable uncertainty over the timing of major projects and the commencement of cash flows arising therefrom. The directors consider that the Company will continue to operate within the existing overdraft facilities, which expire on 30 November 2004 when it is anticipated that suitable facilities will be renewed or replaced. On this basis, the directors consider it appropriate to prepare the financial statements on the going concern basis. However, the margin of facilities over requirements is not large and inherently there can be no certainty as to these matters. In the event that projects are delayed or expectations included in the directors' projections are otherwise not met, the Group may need to renegotiate its banking facilities. The financial statements do not include any adjustments that would result from a failure by the Group to obtain adequate future funding. 9 Further information Further information about the Group, including copies of the 2003 annual report, additional copies of this interim report and recent press releases sent to the London Stock Exchange, may be obtained from the Company's registered office at 2 Great Eastern Wharf, Parkgate Road, London SW11 4TT. Such information may also be obtained through the Company's website at www.aukett.com. Details of our Healthcare alliance are available through our dedicated website at www.aukett-tro.com. In addition, the Company Secretary may be contacted by email at cosec@aukett.com. The interim report is expected to be mailed to shareholders on or before 15 July 2004. This information is provided by RNS The company news service from the London Stock Exchange

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