Interim Results
Aukett Group PLC
28 June 2005
AUKETT GROUP PLC
2005 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
2005. 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 Highlights
Six 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 commercial
architectural market has been well received by our clients and peers with
increased levels of enquiries, and the Board believes that the merger puts the
Enlarged Group in a more competitive position to win a greater share of its
target markets. Our short term focus is to improve financial performance. The
Board are confident that the longer term prospects for the Enlarged Group are
positive although the benefits may take some time to feed their way through to
shareholders.'
Enquiries:
Aukett Group Plc www.aukett.com
Nicholas Thompson, CEO Tel: 020 7467 7602
Peter 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 (2004
interim: £175,000 loss as restated) and is therefore an improvement on the prior
year.
An exceptional operating charge relating to the proposed relocation of our
Battersea office together with a tax charge results in an overall loss and
reduces shareholder funds to £313,000 (2004 final: £478,000 as restated).
The acquisition of Fitzroy Robinson Limited (the 'Acquisition') was completed
shortly after the period end and has a material impact on the Group Balance
Sheet both in terms of net assets and debt structure. The unaudited proforma
balance 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 increased
post Acquisition. However, whilst the majority of the pre-Acquisition prospects
have converted into real projects within the Fitzroy Robinson business, this has
not been the case on the Aukett side. This has had an adverse impact on earnings
and cash flow in the period since the 31 March 2005. Current Group trading is
below expectations and showing an overall monthly loss. The Board has agreed an
action plan to reduce costs and bring them in line with the expected income on
the 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 reflect
an eventful first six months with an operating profit before exceptional
operating charges and interest of £103,000 (2004: loss £66,000 as restated).
Exceptional operating charges amounted to £230,000 (2004: £446,000). The losses
from joint ventures have been reduced to £6,000 (2004: loss £34,000) offset by a
profit on the disposal of Aukett & Garretti of £22,000 giving a loss on ordinary
activities before interest and tax of £111,000 (2004: loss £546,000 as
restated). 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 a
loss after tax of £188,000 (2004: loss £579,000 as restated).
Group work done for the six months ended 31 March 2005 amounted to £5.54
million, 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 new
accounting policy, as explained below and set out in note 6. The effect on the
balance sheet at 30 September 2004 was £243,000 and this has been accounted for
though reserves as a prior year adjustment.
Our European subsidiaries have made an operating profit in the six-month period
of £16,000 after management charges (2004: loss £119,000).
The exceptional operating charge of £230,000 relates to an exit penalty on early
termination of the lease of the Group's Battersea offices.
The Group disposed of its non-strategic interest in Aukett & Garretti Srl in
December 2004, recording a small profit on disposal. The Group continues to work
with our partners in Italy on a project by project basis.
Post completion of the Acquisition, the Company has restructured its banking
facilities into a £1.35 million committed 10 year facility and a £1.25 million
overdraft facility. Net debt has increased over six month period to 31 March
2005 to £1.56 million (Sept 2004: £1.46 million). The Company has also accounted
for the costs of issuing shares in accordance with s130(2) of the Companies Act
1985 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 not
recommending the payment of a dividend (2004: £nil).
Aukett Fitzroy Robinson
The Board is pleased to have delivered its promise on the first part of its
strategy for growth and stability by means of a merger with Fitzroy Robinson, a
well respected London based architectural practice. The announcement of the
proposed merger of the two companies was very well received by clients at the
annual industry trade fair, MIPIM. The two companies are now trading under the
banner of Aukett Fitzroy Robinson and as a combined firm we are now ranked as
the 11th largest in the UK according to the Architects' Journal 2005 survey. The
combined size of the merged practice appears to have led to an increase in the
number of project enquiries in the period post completion.
Aukett shareholders approved the acquisition of Fitzroy Robinson Limited on 14
April 2005. Although the acquisition was not effective for the period under
review in this interim report, to assist shareholders' understanding of the
impact of the transaction, a pro forma balance sheet has been provided detailing
the net assets of the Enlarged Group.
Accordingly a number of initiatives are currently being pursued on the back of
the resultant restructured bank finance, combined client portfolio, wider skills
base and more focused management disciplines.
The two companies have made significant progress in merging their respective
operations to provide a seamless service to clients. The structured integration
of both staff and services of the two London based studios is being progressed
as a matter of priority. As part of this process, it is the intention of the
Board to co-locate the two London operations and, to this end, we have given
notice on our London Battersea premises. Similarly, the management of European
operations is being focused into a cohesive team drawn from the overseas
entities under the strategic direction of the Board.
The short-term focus will be on improving the financial performance of the
Enlarged Group which has suffered as a result of the prolonged period taken to
complete the transaction.
We expect to be able to report more fully on progress as part of the full year's
report.
Change in Accounting Policy
The change in accounting policy has been introduced in response to the
accounting Abstract relating to revenue recognition and service contracts which
was issued in March 2005 and is applicable to all accounting periods ending
after 22 June 2005. The abstract, inter alia, restricts the recognition of
income when the consideration is conditional on a specified future event. As a
result the work in progress valuation at 31 March 2005 was £302,000 lower than
it would have been under the previous policy. Of this, £59,000 relates to the
current year, reducing both work done and profit accordingly and £243,000
relates to prior years and has therefore been taken as an adjustment to
reserves.
Following the completion of the Acquisition, management have decided to take
advantage of s130(2) of the Companies Act 1985. As a result, a total of £409,000
of costs relating to the issue of shares will be written off against the share
premium account, £200,000 of which had previously been expensed through the 2004
accounts. At the balance sheet date, the accounts have been restated to show
such costs as were incurred prior to the completion of the Acquisition within
other debtors.
Board changes
Following the acquisition of Fitzroy Robinson Limited, the Board is pleased to
welcome Nicholas Thompson as Chief Executive Officer and Raul Curiel as Managing
Director of European Operations. Paul Newman and Stephen Embley have stepped
down from the Board to take up positions as Chairman of the UK Operational Board
and Joint Managing Director of UK Operations respectively, key roles within the
enlarged Group. The Board would like to thank them for their significant
contribution at corporate level over the last few years. Mr John Vincent has
also been appointed to the UK Operational Board as the other Joint UK Managing
Director. Mr Jose Luis Ripoll, Executive Chairman, will assume the role of
Non-Executive Chairman as from 1 July 2005.
Prospects
The coming together of two well known brand names in the commercial
architectural market has been well received by our clients and peers and the
Board believe the merger puts the Enlarged Group in a more competitive position
to win a greater share of its target markets. Furthermore, the Enlarged Group
now has a strong platform from which its strategic plans for growth can be
launched. The Board are confident that the longer term prospects for the
Enlarged Group are positive although the benefits may take some time to feed
their way through to shareholders.
28 June 2005
Aukett Group Plc
2 Great Eastern Wharf
Parkgate Road
London SW11 4TT
Unaudited Combined Proforma Balance Sheet
Aukett Fitzroy Robinson
For the six months ended 31 March 2005
31 March 2005
Unaudited Unaudited
£000 £000
Fixed assets
Intangible assets 1,603
Tangible assets 439
Investments in associate 30
----------
2,072
Current assets
Debtors 6,402
Cash at bank and in hand 809
----------
7,211
Creditors falling due within one year (5,523)
----------
Net current assets 1,688
----------
Net assets before long term liabilities 3,760
Creditors falling due after one year (1,580)
----------
Net assets 2,180
====
Capital and reserves
Share capital 1,448
Share premium account 1,385
Merger reserve 1,542
Profit and loss account (2,195)
----------
Equity shareholders' funds 2,180
----------
Notes:
On 14 April 2005 shareholders of Aukett plc approved the acquisition of Fitzroy
Robinson Limited. The directors consider that it would be of assistance to
shareholders to show, for illustrative purposes only, the unaudited proforma
balance sheet of the Enlarged Group as if the acquisition been made at 31 March
2005. For practical reasons, the balance sheet of the Fitzroy Robinson group of
companies has been taken as at 30 April 2005. The directors have assumed, for
the purposes of this proforma, that any adjustments to restate the balance sheet
as at 31 March 2005 would be immaterial and no fair value adjustments are
required under FRS 6.
The financial information underlying the pro forma balance sheet has been
prepared in accordance with applicable UK accounting standards using the
acquisition accounting method of consolidation and on a consistent basis to the
accounting policies of Aukett Group plc.
The pro forma balance sheet presented above is for illustrative purposes only
and, because of its nature, may not give a true picture of the financial
position of the Group after the transaction. Furthermore, it does not constitute
the information required in respect of interim financial information issued
under the Listing Rules of the Financial Services Authority.
Consolidated profit and loss account
For 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 11,818
Movement in
amounts
recoverable on
contracts 403 643 86
--------- --------- ---------
Group work
done 5,543 5,963 11,904
--------- --------- ---------
Group
operating
profit/(loss)
before
exceptional
items (note 2) 103 (66) (577)
Exceptional operating charges:
Impairment of
goodwill in
subsidiaries - (236) (236)
Costs arising
from 2004 EGM - (210) (210)
Penalty on
early
termination of
lease (230) - -
--------- --------- ---------
Group
operating loss (127) (512) (1,023)
Share of
operating loss
in joint
ventures and
associate (6) (34) 31
Exceptional
charge: 22 - -
--------- --------- --------
Profit on disposal of joint
ventures
Loss on
ordinary
activities
before
interest (111) (546) (992)
Net interest
payable by
Group (54) (75) (135)
--------- --------- ---------
Loss on
ordinary
activities
before tax
(note 3) (165) (621) (1,127)
Tax
(charge)/credit on loss on
ordinary
activities
(note 4) (23) 42 143
--------- --------- ---------
Retained loss
of the Group
and its share (188) (579) (984)
of joint ventures and associate
===== ===== =====
Loss per share (note 5):
Basic and
diluted (0.26)p (0.80)p (1.36)p
Summarised consolidated
balance sheet
At 31 March 2004
31 March 2004 30 September 2004
unaudited unaudited audited audited
(as (as
restated) restated)
£000 £000 £000 £000
Fixed assets
Intangible
assets 179 204
Tangible
assets 282 363
Investments in joint
ventures:
Share of gross
assets - 357
Share of gross
liabilities - (308)
---------- ----------
- 49
Investment in
associate 30 29
---------- ----------
491 645
Current assets
Debtors 5,213 5,471
Cash at bank
and in hand 303 404
---------- ----------
5,516 5,875
Creditors
falling due
within one
year (5,665) (5,989)
---------- ----------
Net current
liabilities (149) (114)
---------- ----------
Total assets
less current
liabilities 342 531
Creditors
falling due
after one year (29) (53)
---------- ----------
Net assets 313 478
====== ======
Capital and reserves
Share capital 724 724
Share premium
account 1,794 1,794
Profit and
loss account (2,205) (2,040)
---------- ----------
Equity
shareholders'
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 from
operating activities (78) 125 523
Returns on investments and
servicing of finance (54) (75) (135)
Tax paid (10) (56) 73
Capital expenditure - (19) (14)
Acquisitions 44 - -
---------- ---------- ----------
Net cash (outflow)/inflow
before financing (98) (25) 447
Net cash outflow from
financing (52) (129) (187)
---------- ---------- ----------
(Decrease)/increase in
cash during the period (150) (154) 260
====== ====== ======
Reconciliation of operating loss to
net cash flow from operating
activities
Group operating loss (127) (512) (1,023)
Depreciation and
amortisation of fixed
assets 106 463 635
(Increase)/decrease in
debtors (688) 1,055 723
Decrease/(increase) in
creditors 631 (881) 188
---------- ---------- ----------
Net cash flow from
operating activities (78) 125 523
====== ====== ======
Statement of total recognised gains and losses
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
£000 (as restated) (as restated)
£000 £000
Loss for the financial
period (188) (579) (984)
Currency translation
differences 23 - 41
---------- ---------- ----------
Total gains and losses
relating to the period (165) (579) (943)
Prior period adjustments
(note 6) (43) (72) (72)
---------- ---------- ----------
Total recognised gains and
losses since last annual
report (208) (651) (1,015)
====== ====== ======
Reconciliation of movements in shareholders' funds
for six months ended 31 March 2004
31 March 2005 30 September
2004
unaudited audited
£000 (as restated)
£000
Opening shareholders' funds as originally
presented 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 joint
ventures, 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 £000
Turnover
United Kingdom 4,235 4,487 9,918
Rest of Europe 905 833 1,900
---------- ---------- ----------
Total 5,140 5,320 11,818
====== ====== ======
Movements in amounts recoverable on
contracts
United Kingdom 299 726 154
Rest of Europe 104 (83) (68)
---------- ---------- ----------
Total 403 643 86
====== ====== ======
Work done
United 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 ended
items 31 March 2005 31 March 2004 30 September
2004
unaudited unaudited audited
(as (as
restated) restated)
£000 £000 £000
Group work done 5,543 5,963 11,904
Other income 13 141 172
Staff costs (2,825) (3,309) (6,927)
Provision for
compensation for
loss of office by
directors - (200) -
Amortisation of
goodwill (25) (46) (63)
Depreciation (81) (181) (336)
Other operating
charges (2,522) (2,434) (5,327)
---------- ---------- ----------
Group operating
profit/(loss)
before exceptional
operating items 103 (66) (577)
====== ====== ======
3 Loss on ordinary activities before tax
An analysis of loss on ordinary activities before tax by geographical area is
set out below. Corporate charges and consolidation adjustments are included
under 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 tax
from joint
ventures and
associate (2) (1) (1)
---------- ---------- ----------
Tax
(charge)/credit on loss for
period (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 as
restated; 2004 final: loss £984,000 as restated) and on 72,421,394 (2004 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 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 loss
under previous
accounting
policy (277) (546) (1,052)
Adjustment to
work in
progress under
new accounting
policy (59) 34 (171)
Adjustment for
share issue
costs under
s130 Company's
Act 1985 209 - 200
---------- ---------- ----------
Operating loss
as now
reported (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 £000
Net assets
under previous
accounting
policy 206 880 521
Adjustment to work in progress under
new accounting policy:
Current period (59) 34 (171)
Prior periods (243) (72) (72)
Adjustment to other debtors under
s130 Company's Act 1985:
Current period 209 - 200
Prior periods 200 - -
-------- -------- --------
Net assets as
now 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 £000
Cash at bank and in hand 404 (101) - 303
Overdrafts repayable on
demand (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 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.
9 Basis of preparation
The financial statements comply with relevant accounting standards and the
Companies Act 1985 and have been prepared on a consistent basis using the same
accounting policies as set out in the 2004 Annual Report with the exception of
the policy on income recognition. UITF Abstract 40, Revenue Recognition and
Service Contracts, has been adopted in the interim statement and the
comparatives have been restated accordingly. The effect of the adoption of UTIF
Abstract 40, which represents a change is accounting policy, is explained in
note 6. The revised accounting policy is set out below:
Turnover represents invoices (excluding value added tax) raised in the period
which are adjusted for movements in the level of amounts recoverable on
contracts and classified as work done.
Contracts are assessed on a contract by contract basis and reflected in the
profit and loss account by recording turnover and related costs as contract
activity progresses. Work done is ascertained in a manner appropriate to the
stage of completion of the contract, and credit taken for profit earned to date
when the outcome of the contract can be assessed with reasonable certainty. The
amount by which turnover exceeds payments on account is classified as 'amounts
recoverable on contracts' and included in debtors; to the extent fees rendered
on account exceed relevant turnover, the excess is included in creditors as
payments on account. Work done is only recognised in the financial statements
when there is a contractual right to consideration.
The Company meets its day to day working capital requirements through an
overdraft facility, which is repayable on demand, and longer term finance by
means of loans. The nature of the Company's business is such that there can be
considerable uncertainty over the timing of major new projects and the
commencement of cash flows arising therefrom. The directors consider that the
Company will continue to operate within its existing facilities until the expiry
of the overdraft facility 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 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 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.aukettfitzroyrobinson.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 2005.
This information is provided by RNS
The company news service from the London Stock Exchange
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