Interim Results
27/06/2023 07:00
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RNS Number : 9625D Aukett Swanke Group PLC 27 June 2023
Aukett Swanke Group Plc
("Aukett Swanke", the "Company", or, together with its subsidiaries, the
"Group")
Interim results
For the six months ended 31 March 2023
Aukett Swanke (AIM: AUK), the group providing Smart Buildings, Architectural
and Design Services, is pleased to announce its interim results for the
six-month period ended 31 March 2023.
Highlights
- Revenue from continuing operations increases to £4.56m (2022:
£4.53m)
- Revenue less sub consultant costs increases to £4.40m (2022:
£3.38m)
- United Kingdom increases profit before group costs to £130k
(2022: £40k)
- Continental Europe increases profit before group costs to £257k
(2022: £123k)
- Loss for the period £0.48m, impacted by one-off Torpedo Factory
Group ("TFG") acquisition costs
- Improving markets & strengthening order book
- Ranked 48(th) largest firm by number of UK architects (up from
70(th)) in the AJ100
- Acquisition of TFG just before period end to expand Smart
Buildings strategy and broaden asset base and revenue streams
- Appointment, today, of Freddie Jenner to the board as Chief
Operating Officer
Commenting, Chief Executive Nick Clark said, "I am thrilled to have been
appointed as Chief Executive, and excited by our mission creating a UK-listed
Smart Buildings group. Against a backdrop of improving trading performance, I
look forward to reporting on our progress in the coming months."
Contacts
Aukett Swanke Group Plc
+44 (0) 20 7843 3000
Clive Carver,
Chairman
Nick Clark, Chief
Executive
Strand Hanson Limited, Financial and Nominated Adviser
+44 (0) 20 7409 3494
Richard Johnson, James
Bellman
Zeus Capital Limited,
Broker
+44 (0) 20 3829 5000
Simon Johnson, Louisa Waddell
Investor/Media
+ 44 (0) 7979
604 687
Chris Steele
An electronic version of the Interim Report will be available on the Group's
website (www.aukettswankeplc.com).
Chairman's Statement
Introduction
I am pleased to present the interim results for the six months ended 31 March
2023.
At the end of the reporting period, we acquired Torpedo Factory Group ("TFG"),
and welcomed Nick Clark as Chief Executive. Further below he introduces the
TFG businesses and describes in more detail the concept of Smart Buildings,
and how this is being incorporated into the Group's strategy.
The evolution of architecture
We acquired TFG in March 2023, principally as a means of embracing the
increasing use of technology in the design, construction and management of
buildings. We believe we are one of the first in our profession to make such a
move and look forward to developing a leading presence in the Smart Buildings
space, while continuing to develop our long established architecture
businesses.
The TFG acquisition also gave us access to further funding and has allowed us
to transition key senior management positions to the next generation, bringing
the Board more into line with our staff and clients generally.
Restructuring the architecture business completed
Restructuring work to improve the core profitability of our traditional
architecture businesses is now complete. The UAE business has been sold and
the international offices, other than those in Germany, have either been
closed or are moving onto a licence basis with local management being
responsible for profitability.
Our core architecture businesses now comprise our design and executive
architecture businesses in the UK and our direct investments in the Berlin and
Frankfurt practices.
As set out in greater detail in the report from the Chief Executive, we have
experienced growth in each of the core architecture markets necessitating the
recruitment of 13 full time equivalent additional architects in our UK
operations since the beginning of the financial year, which places the Group
48(th) largest by number of UK employed architects, based on AJ100 compiled
by Architects' Journal. This is a rise from 70(th) place last year.
Smart Buildings
The Group's approach to Smart Buildings is set out in detail in the
accompanying Chief Executive's report.
Board update
During the period under review and subsequently we have welcomed a number of
new members to the Board to help deliver the growth we seek in both the
traditional architecture and the new Smart Buildings businesses.
Nick Clark - Chief Executive
Nick, who was the founder and Chief Executive of TFG, became Group Chief
Executive on completion of the deal in April 2023. At the same time, Robert
Fry, who had acted as interim chief executive from December 2022 to April
2023, became Deputy Chairman on a part time basis, with principal
responsibility for the Group's international offices and the expansion of the
architecture businesses.
Freddie Jenner - Chief Operating Officer
Freddie has today been appointed to the Board as Chief Operating Officer.
Freddie was previously Chief Financial Officer at TFG, which he joined in
2007. Further details on his appointment are being separately announced today.
Tandeep Minhas - Non-executive director
Tandeep Minhas, a leading corporate lawyer and head of the London corporate
finance department at international lawyers Taylor Wessing LLP, joined the
Board as a non-executive director on 24 April 2023.
Further details of your full Board can be found at
https://aukettswankeplc.com/people/ (https://aukettswankeplc.com/people/) .
Long term incentives
To attract and retain the team required to deliver success we plan to
introduce a new long term incentive package. This will seek to better align
the interests of shareholders generally and those individuals on whose efforts
the Group's future depends. A further announcement in this regard will be made
in due course.
Outlook
With the team in place and the strategy honed we look forward to reporting
continued progress in both our existing and acquired businesses.
Clive Carver
Chairman
26 June 2023
Chief Executive's report
Introduction
I am delighted to have been appointed as your new Chief Executive, and excited
about the opportunities ahead of us.
Following the acquisition of TFG, our mission is to develop our award-winning
architecture businesses and become a leading force in the provision of Smart
building systems, which we firmly believe to be a major growth area using
technology to enhance the experience of buildings owners and users.
Architects are the trusted advisors who are best placed to convince an
inherently conservative property industry that change is not only desirable,
but essential. Our Group is therefore well-positioned to exploit the
opportunities in this transformative industry.
Architecture
Through architecture, we forge a profound connection between people and their
surroundings. It evokes a sense of place and fosters a sense of belonging. It
pushes boundaries, challenging us to envision a better future and to explore
new possibilities for a more sustainable way of living.
Architecture also brings change with a spirit of optimism and renewal, which
is at the heart of what the Group needs to deliver.
Aukett Swanke Limited - UK architecture and interior design
Employed an average 35 full time equivalent ("FTE") technical staff in the 6
month period, with revenue of £1.89 million (£1.81 million, net of sub
consultant costs).
Aukett Swanke Limited is the Group's award-winning full design service
architecture business, which can trace its roots back over a century, and
offers leading design services across a wide range of sectors.
I am pleased to report progress with new contract wins during the period for a
major masterplanning project with Network Rail and a residential project for
Ardmore at 8 Eaton Lane in London.
Completions in the period include the St. Andrew's House apartments for Anglo
American De Beers, and new starts include the refurbishment of The
Underwriting Room in the iconic Lloyd's of London building.
Veretec - UK executive architecture
Employed an average 44 FTE technical staff in the 6 month period, with revenue
of £2.30 million (£2.28 million, net of sub consultant costs).
Veretec is our executive architecture business, which uses the division's
technical and delivery skills to translate the designs of others into high
quality buildings.
This business also made strong progress in the period under review completing
several projects and winning others requiring a significant increase in
staffing.
Following the period end, continued recruitment required to service new and
existing contracts increased FTE technical staff to 57 in May 2023.
New projects commenced in the period include the Town Hall and extension of
the West King Street Renewal project master planned by Rogers Stirk &
Harbour and the Nine Elms School with the IBI Group for Morgan Sindall.
Completions have included the n2Nova commercial office building designed by
Patrick Lynch Architects for Landsec and executed by Mace.
German investments
The Group owns a 25% investment in the Berlin practice Aukett + Heese GmbH,
employing an average 106 FTE technical staff in the 6 month period, with
revenue of £8.62 million (£5.5 million, net of sub consultant costs). The
studio offers a full range of architectural design services and holds a
leading position in the regional market it serves.
The Group also owns a 50% investment in the Frankfurt practice Aukett + Heese
Frankfurt GmbH employing an average 10 FTE technical staff in the 6 month
period, with revenue of £0.77 million (£0.46 million, net of sub consultant
costs). The studio is renowned for its architecture and interior design
expertise in the financial, corporate and high-rise building sectors in the
local market.
The revenues of these investments are not consolidated in the Group's revenues
as we do not own a majority of either business.
Completions in Berlin included the opening of the Deutsche Bahn restaurant in
the Sony Center, renamed the Potsdamer Platz Center, and the commencement
ceremony to break ground for the 42,000 sqm Siemensstadt Square project
comprising two buildings, one high-rise, and 20,000 sqm of open space with
public amenities.
Torpedo Factory Group
As set out in more detail in the financial commentary below, the results from
the TFG audio visual businesses are only included in these financial
statements for the final 10 trading days in March 2023. However, to give
shareholders a better understanding of the what the Group now enlarged by the
TFG acquisition offers we include the following information, which is based on
a full 6 month period to 31 March 2023.
Meeting Environments
Employed an average 29 FTE staff in the 6 month period, with revenue of £1.93
million.
TFG's Meeting Environments business has been renamed Intelligent Environments
to reflect our broader work beyond meeting spaces as we reposition the
business as a Master Systems Integrator looking at workplace technologies more
broadly.
Stage Technology
Employed an average 23 FTE staff in the 6 month period, with revenue of £1.38
million.
The Stage Technology business has an extensive client base in the UK's leading
theatres, universities, and schools in the private and state sectors. The
current year is dominated by the delivery of a major project, a landmark new
venue in Manchester, which is due to complete by the end of June.
Live Events
Employed an average 10 FTE staff in the 6 month period, with revenue of £0.55
million.
The Live Events business did not form part of the Group's Smart Buildings
plans and was sold with effect from 31 March 2023.
Smart Buildings
Why Smart Buildings
Smart Buildings enhance efficiency, sustainability, and occupant experience.
Smart Buildings integrate advanced technologies, data analytics, and
automation to create vibrant ecosystems. They optimise energy consumption,
streamline operations, and personalise experiences for occupants. By
leveraging the Internet of Things (IoT) and artificial intelligence (AI),
Smart Buildings offer real-time monitoring, energy savings, improved comfort,
proactive maintenance, and cost reduction.
In contrast to a traditional architecture business, which has high fixed costs
and where once the project is completed there is no further income, under a
Smart Buildings business model, revenues are generated monthly throughout the
lifetime of a building. Technology is used to its utmost; rapid growth is
achievable without the often time consuming and expensive recruitment of
additional staff; and short term fluctuations in economic activity do not
dictate customer buying decisions.
Market drivers
Regulation is likely to be a key driver in the growth of Smart Buildings.
For example, since April 2023, almost all commercial buildings in the UK are
required to have an Energy Performance Certificate (EPC) rating of E or
better. Without such a rating they cannot be rented to tenants. From 2027,
this requirement rises to C, and by 2030, a rating of B or better will be
needed. Knight Frank recently estimated that 70% of the UK's commercial
building stock fails to comply with EPC B and landlords of such properties
will need to invest in upgrading their buildings.
Our Smart Buildings strategy
Our plan is to become a leading provider of Smart Building services. Breaking
this down we need to become:
· Smart Building Systems Designers
· Smart Building Systems Integrators
· Smart Building Systems Operators
We intend to grow at pace; only a buy and build strategy can deliver the speed
of change that we intend to deliver.
Smart Building Systems Designers
I am pleased to report we have already made our first appointment in this new
division and expect to make further progress before the end of the current
financial year.
Smart Building Systems Operators & Smart Building Systems Integrators
We are actively considering specific acquisition opportunities in the sector
and we look forward to updating shareholders on these and other potential
acquisitions in due course.
Group Financial results
Basis of preparation
These interim statements, which cover the six months ended 31 March 2023, are
unaudited and include the full six months trading of the Aukett Swanke Group
architecture businesses and the final 10 trading days of the period from TFG.
The balance sheet as at 31 March 2023 includes both the Aukett Swanke Group
architecture businesses and the TFG businesses.
Overall assessment
While the performance across the architecture businesses as set out below is
improving as the result of new contract wins and the restructuring of the
Group in previous periods, we are still a long way from the level of
profitability required to justify a meaningful Group valuation.
This demonstrates why the previous Aukett Swanke Group board recognised that a
new approach is needed.
Revenue
We consider revenue after subconsultant costs to be the most relevant
performance indicator in assessing the progress of the Group's architecture
businesses.
In the six months under review, revenue after subconsultants costs grew by
approximately 30% to approximately £4.40 million, reflecting a general
increase in activity.
Operating costs
To be able to service this increased activity and in preparation for work won
but yet to start, personnel costs increased by approximately 29% to
approximately £3.78 million, with the addition of 13 FTE fee earning
technical staff in the UK operations during the 6 month period, and the
average FTE technical staff 14 higher than the comparable 6 month period in
the period year.
Property related costs increased by 8% to approximately £0.57 million while
other operating costs more than doubled to approximately £0.61 million
reflecting the greater level of activity.
Included in these costs are approximately £0.56 million group costs,
excluding those relating to the TFG acquisition.
Associates and joint ventures
The share of associates included in these interim financial statements grew
from approximately £0.07 million to approximately £0.21 million, reflecting
their increased profitability.
Trading loss
The additional contribution from associates and joint ventures offset the
additional personnel and group costs to leave the trading loss at
approximately £0.29m. This is slightly higher than in the corresponding
period last year, but also includes £0.09m of one-off costs relating to the
settlement of TFG employees company share option costs and the loss on assets
disposed of as part of the Live Events disposal.
Acquisition costs
The costs associated with acquiring TFG were approximately £0.26 million and
increased the loss before tax to approximately £0.55 million.
Balance sheet
While the trading impact of the TFG acquisition in these interim financial
statements was minimal, its impact on the closing balance sheet was more
significant.
Plant, property and equipment increased from approximately £0.07 million to
approximately £3.22 million, almost all of which related to TFG assets,
principally the main operating TFG site, a freehold building valued at £3.02
million.
Similarly, trade and other receivables and stock increased from approximately
£2.61 million to approximately £4.84 million, again with most of the
increase due to TFG.
Cash at bank at 31 March 2023 was approximately £0.81 million compared to
just £0.04m at the end of the corresponding prior period.
Borrowings increased from £0.58 million in the prior period to £3.12 million
consolidating the TFG CBILS loan of £1.17 million and £1.45 million mortgage
on the freehold property.
TFG trading
Although largely excluded from these interim financial statements, we set out
below a brief assessment of TFG's trading in that period.
TFG's revenue for October 2022 to March 2023 was £3.86 million, 9.6% higher
than in the corresponding period in 2022. The underlying performance of the
TFG businesses was just below breakeven at EBITDA level, due in part to delays
in a large project with more of the work on it delivered in the current (April
to June) quarter.
Live Events disposal
On 4 April 2023, two weeks after the purchase of TFG, the Group announced the
disposal of TFG's Live Events business. It was the part of the business most
dramatically damaged by the Government's pandemic restrictions. While it has
been recovering well, it was non-core to the Smart Buildings plan, and its
need for investment will be better met outside of our Group. It was personally
painful to part ways with several colleagues I had worked with for many years,
but it is undoubtedly the right way forward for all concerned and I wish them
well.
Current Trading & Outlook
Architecture
With a good stock of committed work and a growing team of chargeable staff
across both principal business areas, we expect the second half of the year to
show an improvement on the first half.
Torpedo Factory Group
Similarly, with strong project delivery, we expect the second half to be
better than the first half. The mortgage on TFG's freehold is due to be repaid
in February 2024 and we are carefully reviewing our options to refinance this
facility.
Smart Buildings
As we are already almost 9 months into the current financial year, it is
expected that it will be into the 2023 / 24 financial year before we see
material contributions from our Smart Buildings businesses.
Our team
I am hugely appreciative to all our staff who have coped admirably with a
period of significant change.
We are committed to shaping a sustainable, exciting, and rewarding future for
our clients and our shareholders, and our staff and I look forward to sharing
news our progress with you.
Nick Clark
Chief Executive
26 June 2023
Consolidated income statement
For the six months ended 31 March 2023
Note Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
£'000 £'000 £'000
Continuing Operations
Revenue 4 4,562 4,529 8,645
Sub consultant costs (164) (1,152) (1,518)
Revenue less sub consultant costs 4,398 3,377 7,127
Personnel related costs (3,781) (2,921) (6,237)
Property related costs (573) (531) (1,037)
Other operating expenses (610) (240) (483)
Other operating income 5 129 144 326
Operating loss (437) (171) (304)
Finance costs (55) (46) (95)
Loss after finance costs (492) (217) (399)
Share of results of associate and joint ventures 205 65 327
Trading loss from continuing operations (287) (152) (72)
Acquisition costs (258) - -
Goodwill impairment - - (1,752)
Loss before tax from continuing operations 4 (545) (152) (1,824)
Tax credit 54 26 45
Loss from continuing operations (491) (126) (1,779)
Profit/(loss) from discontinued operations 6 7 (261) (503)
Loss for the period (484) (387) (2,282)
Loss attributable to:
Owners of Aukett Swanke Group Plc (484) (387) (2,282)
Non-controlling interests - - -
Loss for the period (484) (387) (2,282)
Basic and diluted earnings per share for (loss)/profit attributable to the
ordinary equity holders of the Company:
From continuing operations (0.29p) (0.07p) (1.08p)
From discontinued operations 0.00p (0.16p) (0.30p)
Total loss per share 7 (0.29p) (0.23p) (1.38p)
Consolidated statement of comprehensive income
For the six months ended 31 March 2023
Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
£'000 £'000 £'000
Loss for the period (484) (387) (2,282)
Other comprehensive income:
Currency translation differences of foreign operations (1) (42) (7)
Currency translation differences on disposal recycled to gain on disposal of - - (209)
discontinued operation
Currency translation differences on translation of discontinued operations 34 (7) (168)
Other comprehensive gain/(loss) for the period 33 (49) (384)
Total comprehensive loss for the period (451) (436) (2,666)
Total comprehensive loss is attributable to:
Owners of Aukett Swanke Group Plc (451) (436) (2,666)
Non-controlling interests - - -
Total comprehensive loss for the period (451) (436) (2,666)
Total comprehensive profit/(loss) attributable to the owners of Aukett Swanke
Group Plc arises from:
Continuing operations (492) (168) (1,786)
Discontinued operations 41 (268) (880)
(451) (436) (2,666)
Consolidated statement of financial position
At 31 March 2023
Note Unaudited Unaudited Audited
at 31 at 31 at 30
March March September
2023 2022 2022
£'000 £'000 £'000
Non current assets
Goodwill 3 1,381 1,753 -
Other intangible assets 273 217 210
Property, plant and equipment 3,218 74 69
Right-of-use assets 2,335 2,354 2,184
Investment in associate and joint ventures 1,081 802 1,007
Loans and other financial assets 162 - -
Deferred tax 332 265 281
Total non current assets 8,782 5,465 3,751
Current assets
Trade and other receivables 4,843 2,605 3,293
Inventories 336 - -
Contract assets 744 599 1,119
Cash at bank and in hand 10 805 38 28
6,728 3,242 4,440
Assets in disposal groups classified as held for sale - 1,868 -
Total current assets 6,728 5,110 4,440
Total assets 15,510 10,575 8,191
Current liabilities
Trade and other payables (4,978) (2,497) (3,169)
Contract liabilities (1,720) (802) (1,227)
Borrowings 9, 10 (2,258) (289) (482)
Lease liabilities (537) (539) (457)
(9,493) (4,127) (5,335)
Liabilities directly associated with assets in disposal groups classified as - (1,006) -
held for sale
Total current liabilities (9,493) (5,133) (5,335)
Non current liabilities
Trade and other payables - - (44)
Borrowings 9, 10 (858) (292) (167)
Lease liabilities (1,961) (2,118) (1,962)
Deferred tax (183) (37) (33)
Provisions (256) (364) (249)
Total non current liabilities (3,258) (2,811) (2,455)
Total liabilities (12,751) (7,944) (7,790)
Net assets 2,759 2,631 401
Capital and reserves
Share capital 2,753 1,652 1,652
Merger reserve 2,884 1,176 1,176
Foreign currency translation reserve (524) (222) (557)
Retained earnings (3,848) (1,469) (3,364)
Other distributable reserve 1,494 1,494 1,494
Total equity attributable to 2,759 2,631 401
equity holders of the Company
Non-controlling interests - - -
Total equity 2,759 2,631 401
Consolidated statement of cash flows
For the six months ended 31 March 2023
Note Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
£'000 £'000 £'000
Cash flows from operating activities
Cash generated from / (expended) by operations 8 328 (303) (1,104)
Income tax credits received - 99 99
Net cash inflow/(outflow) from operating activities 328 (204) (1,005)
Cash flows from investing activities
Purchase of property, plant and equipment (73) (13) (48)
Acquisition of subsidiary, net cash acquired 790 - -
Sale of investments - - 927
Dividends received 131 46 140
Net cash received from investing activities 848 33 1,019
Net cash inflow/(outflow) before financing activities 1,176 (171) 14
Cash flows from financing activities
Principal paid on lease liabilities (241) (232) (470)
Interest paid on lease liabilities (33) (40) (76)
Repayment of bank loans (125) - (83)
Interest paid (22) (6) (19)
Net cash outflow from financing activities (421) (278) (648)
Net change in cash and cash equivalents 755 (449) (634)
Cash and cash equivalents at start of period (204) 515 515
Currency translation differences 41 (81) (85)
Cash and cash equivalents at end of period 10 592 (15) (204)
Cash and cash equivalents are comprised of:
Cash at bank and in hand 805 38 28
Cash held within assets classified as held for sale - 28 -
Secured bank overdrafts (213) (81) (232)
Cash and cash equivalents at end of year 592 (15) (204)
Consolidated statement of changes in equity
For the six months ended 31 March 2023
Share capital Foreign Retained Other Merger reserve Total Non controlling Total
currency earnings distributable interests equity
translation reserve
£'000 reserve £'000 £'000
£'000 £'000 £'000 £'000 £'000
At 1 October 2022 1,652 (557) (3,364) 1,494 1,176 401 - 401
Loss for the period - - (484) - - (484) - (484)
Other comprehensive income - 33 - - - 33 - 33
Total comprehensive profit/(loss) - 33 (484) - - (451) - (451)
Issue of ordinary shares in relation to business combination 1,101 - - - 1,708 2,809 - 2,809
At 31 March 2023 2,753 (524) (3,848) 1,494 2,884 2,759 - 2,759
For the six months ended 31 March 2022
Share capital Foreign Retained Other Merger reserve Total Non controlling Total
currency earnings distributable interests equity
translation reserve
£'000 reserve £'000 £'000
£'000 £'000 £'000 £'000 £'000
At 1 October 2021 1,652 (173) (1,082) 1,494 1,176 3,067 - 3,067
Loss for the period - - (387) - - (387) - (387)
Other comprehensive income - (49) - - - (49) - (49)
Total comprehensive loss - (49) (387) - - (436) - (436)
At 31 March 2022 1,652 (222) (1,469) 1,494 1,176 2,631 - 2,631
For the year ended 30 September 2022
Share capital Foreign Retained Other Merger reserve Total Non controlling Total
currency earnings distributable interests equity
translation reserve
£'000 reserve £'000 £'000
£'000 £'000 £'000 £'000 £'000
At 1 October 2021 1,652 (173) (1,082) 1,494 1,176 3,067 - 3,067
Loss for the period - - (2,282) - - (2,282) - (2,282)
Other comprehensive income - (384) - - - (384) - (384)
Total comprehensive loss - (384) (2,282) - - (2,666) - (2,666)
At 30 September 2022 1,652 (557) (3,364) 1,494 1,176 401 - 401
Notes to the Interim Report
1 Basis of preparation
The financial information presented in this Interim Report has been prepared
in accordance with the recognition and measurement principles of international
accounting standards in conformity with the requirements of the Companies Act
2006 that are expected to be applicable to the financial statements for the
year ending 30 September 2023 and on the basis of the accounting policies
expected to be used in those financial statements.
2 New accounting standards, amendments and interpretations
applied
A number of new or amended standards and interpretations to existing standards
became applicable for the current reporting period. The Group did not have to
change its accounting policies or make retrospective adjustments as a result
of adopting these standards.
3 Business combination
On the 20 March 2023 the Group acquired 100% of the voting equity instruments
in Torpedo Factory Group Limited, an audio visual and stage technology
provider to organisations in the UK and Europe.
Consideration for the acquisition comprised:
i) 110,142,286 Ordinary Shares in Aukett Swanke Group Plc at an
issue price of 2.55p based on the closing price of Aukett Swanke Group Plc
shares on 1 March 2023.
ii) Up to 3,631,124 additional consideration shares proposed to
be issued to participating TFG Option Holders, at an issue price of 2.55p.
iii) 8,400,000 share options in Aukett Swanke Group Plc
exercisable at 1p. Fair value calculated at 1.55p per share based on the
closing price of Aukett Swanke Group Plc shares on 1 March 2023.
£'000
Shares in Aukett Swanke Group Plc 2,809
Maximum number of additional consideration shares to be issued to the 92
participating option holders
Share options in Aukett Swanke Group Plc 130
Total acquisition cost 3,031
The fair values of the identifiable assets and liabilities acquired have only
been provisionally determined and are subject to adjustment during the
measurement period.
Provisional
20 Mar-23
£'000
Goodwill 1,381
Property, plant and equipment 3,122
Right-of-use assets 324
Other intangible assets 75
Loans and other financial assets 162
Inventories 336
Contract assets 10
Trade and other receivables 1,526
Net cash 790
Assets 7,726
Trade and other payables 1,180
Contract liabilities 654
Interest bearing loans and borrowings 2,611
Lease liabilities 320
Deferred tax liability 152
Liabilities 4,917
Total net assets 2,809
Property, Plant and Equipment includes £3,020k net book value of freehold
property, being the Old Torpedo Factory building in London, last revalued in
July 2021.
Acquisition related costs of £258k are disclosed as acquisition costs in the
consolidated income statement.
4 Operating segments
The Group historically comprised a single business segment with separately
reportable geographical segments (together with a Group costs segment).
Geographical segments being based on the location of the operation undertaking
each project.
The Group's operating geographical segments consist of the United Kingdom, the
Middle East and Continental Europe. Turkey is included within Continental
Europe together with Germany. The Middle East segment has been re-presented as
a discontinued operation and is set out in note 5.
With the acquisition of Torpedo Factory Group during the period, Torpedo
Factory Group operations have been disclosed as an additional separate
business segment.
Segment revenue Unaudited six months to 31 March 2023 Unaudited six months to 31 March 2022 Audited year to 30 September 2022
£'000 £'000 £'000
United Kingdom 4,191 4,435 8,465
Torpedo Factory Group 212 - -
Continental Europe 159 94 180
Revenue from continuing operations 4,562 4,529 8,645
Discontinued operations - 1,249 1,543
Revenue 4,562 5,778 10,188
Segment revenue less sub consultant costs Unaudited six months to 31 March 2023 Unaudited six months to 31 March 2022 Audited year to 30 September 2022
£'000 £'000 £'000
United Kingdom 4,094 3,305 6,975
Torpedo Factory Group 212 - -
Continental Europe 92 72 152
Revenue less sub consultant costs from continuing operations 4.398 3,377 7,127
Discontinued operations - 1,060 1,256
Revenue less sub consultant costs 4,398 4,437 8,383
Segment result before tax Unaudited six months to 31 March 2023 Unaudited six months to 31 March 2022 Audited year to 30 September 2022
£'000 £'000 £'000
United Kingdom (140) (230) (329)
Continental Europe 183 49 275
Torpedo Factory Group*^ (166) - -
Group costs* (422) 29 (18)
Goodwill impairment - - (1,752)
Loss before tax from continuing operations (545) (152) (1,824)
Profit/(loss) from discontinued operations 7 (261) (503)
Total loss (538) (413) (2,327)
Segment result before tax Unaudited six months to 31 March 2023 Unaudited six months to 31 March 2022 Audited year to 30 September 2022
(before reallocation of group management charges) £'000 £'000 £'000
United Kingdom 130 40 211
Continental Europe 257 123 422
Torpedo Factory Group*^ (166) - -
Group costs* (766) (419) (809)
Goodwill impairment - - (1,752)
Subtotal (545) (256) (1,928)
Group management charges charged to the - 104 104
Middle East discontinued operation
Loss before tax from continuing operations (545) (152) (1,824)
Profit/(loss) from discontinued operations 7 (261) (503)
Total (loss) (538) (413) (2,327)
* Segmental results before tax include £258k of exceptional costs being
transactional costs for the acquisition of Torpedo Factory Group allocated as
£208k within Group costs, and £50k within Torpedo Factory Group.
^ TFG segmental result before tax includes £0.09m of one-off costs relating
to the settlement of TFG employees company share option costs and the loss on
assets disposed of as part of the Live Events disposal.
5 Other operating income
Continuing operations Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
£'000 £'000 £'000
Property rental income 44 74 147
Management charges to associate and joint ventures 68 63 131
Licence fee income - 7 -
Other sundry income 17 - 48
Total other operating income 129 144 326
6 Discontinued operations
6 (a) Description
In April 2022, the Group sold assets, as part of the Group's disposal of JRHP
constituting its John R Harris & Partners Limited (Cyprus) subsidiary and
John R Harris & Partners (Dubai) entity, for a cash consideration of AED
5,000,000, comprising AED 4,250,000 cash upfront and a further AED 750,000
deferred consideration paid over a 5 year period. This marked the sale of the
main trading operations in the Group's Middle East segment. With closure costs
incurred in the period relating to the planned termination of a number of
trading licenses in the Middle East operations, the Middle East segment is
presented as a discontinued operation in the current period, and the
comparative period represented accordingly.
6 (b) Financial performance and cash flow information
Result of discontinued operations
Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
£'000 £'000 £'000
Revenue - 1,249 1,543
Sub consultant costs - (189) (287)
Revenue less sub consultant costs - 1,060 1,256
Expenses 7 (1,217) (2,012)
Group management charges - (104) (104)
Gain on disposal of subsidiary - - 357
Profit/(loss) before tax 7 (261) (503)
Tax credit / (charge) - - -
Profit/(loss) from discontinued operations 7 (261) (503)
Exchange differences on disposal recycled to gain on disposal of subsidiary - - (209)
Exchange differences on translation of discontinued operation 34 (7) (168)
Other comprehensive gain/(loss) from discontinued operations 41 (268) (880)
Earnings per share from discontinued operations
Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
£'000 £'000 £'000
Basic and diluted gain/(loss) per share 0.00p (0.16p) (0.30p)
Statement of cash flows
The statement of cash flows includes the following amounts relating to
discontinued operations:
Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
£'000 £'000 £'000
Net cash outflow from operating activities - (174) (53)
Net cash inflow from investing activities - - 35
Foreign exchange movements - 2 (204)
Net cash outflow from discontinued operations - (172) (222)
7 Earnings per share
The calculations of basic and diluted earnings per share are based on the
following data:
Earnings Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
£'000 £'000 £'000
Continuing operations (491) (126) (1,779)
Discontinued operations 7 (261) (503)
Loss for the period (484) (387) (2,282)
Number of shares Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
'000 '000 '000
Weighted average number of shares 171,907 165,214 165,214
Effect of dilutive options 221 - -
Diluted weighted average number of shares 171,128 165,214 165,214
8 Reconciliation of profit before tax to net cash from
operations
Unaudited Unaudited Audited
six months six months year to
to 31 March to 31 March 30 September
2023 2022 2022
£'000 £'000 £'000
Loss for the period (484) (387) (2,282)
Tax credit (54) (26) (45)
Finance costs 55 46 95
Share of results of associate and joint ventures (205) (65) (327)
Intangible amortisation 6 19 28
Depreciation 24 56 97
Goodwill impairment - - 1,752
Amortisation of right-of-use assets 193 192 385
Decrease in trade and other receivables 161 565 594
Increase / (decrease) in trade and other payables 625 (635) (815)
Change in provisions 7 (68) (586)
Net cash generated from / (expended) by operations 328 (303) (1,104)
9 Borrowings
Unaudited at 31 March Unaudited at 31 March Audited at
2023 2022 30 September
£'000 £'000 2022
£'000
Secured bank overdrafts (213) (81) (232)
Mortgage (1,445) - -
Secured bank loan (NatWest) (1,166) - -
Secured bank loan (Coutts) (292) (500) (417)
Total borrowings (3,116) (581) (649)
Amounts due for settlement within 12 months (2,258) (289) (482)
Current liability (2,258) (289) (482)
Amounts due for settlement between one and two years (392) (250) (167)
Amounts due for settlement between two and five years (466) (42) -
Non current liability (858) (292) (167)
Total borrowings (3,116) (581) (649)
The bank loan (Coutts) and overdrafts are secured by debentures over all the
assets of the Company and certain of its United Kingdom subsidiaries. The bank
loan and overdrafts carry interest at 4.05% (loan) and 3% (overdrafts) above
the Coutts Base rate for the relevant currency.
The mortgage and the bank loan (NatWest) are secured by way of a first legal
charge over freehold property, a debenture and cross guarantee from Torpedo
Factory Group Limited, Torpedo Factory Limited and TFG Stage Technology
Limited. The bank loan (NatWest) initially drawn at £1.75m is being repaid at
£29k per month. The loan is at a fixed rate of interest of 3.66%.
The mortgage initially drawn in 2018 at £1.73m with a duration of 5 years has
been extended for a year and is due to expire in February 2024, and is
therefore wholly shown due for settlement within 12 months. The mortgage
carries interest at base rate + 1.93%.
10 Analysis of net funds
Unaudited at 31 March Unaudited at 31 March Audited at
2023 2022 30 September
£'000 £'000 2022
£'000
Cash at bank and in hand 805 38 28
Cash held within assets classified as held for sale - 28 -
Secured bank overdrafts (213) (81) (232)
Cash and cash equivalents 592 (15) (204)
Mortgage (1,445) - -
Secured bank loans (1.458) (500) (417)
Net debt (2,311) (515) (621)
11 Status of Interim Report
The Interim Report covers the six months ended 31 March 2023 and was approved
by the Board of Directors on 26 June 2023. The Interim Report is unaudited.
The interim condensed set of consolidated financial statements in the Interim
Report are not statutory accounts as defined by Section 434 of the Companies
Act 2006.
Comparative figures for the year ended 30 September 2022 have been extracted
from the statutory accounts of the Group for that period.
The statutory accounts for the year ended 30 September 2022 have been reported
on by the Group's auditors and delivered to the Registrar of Companies. The
audit report thereon was unqualified, did not include references to matters to
which the auditors drew attention by way of emphasis without qualifying the
report, and did not contain a statement under Section 498 of the Companies Act
2006. The audit report did draw attention to the Directors' assessment of
going concern, indicating that a material uncertainty exists that may cast
significant doubt on the Group's and parent company's ability to continue as a
going concern. The audit report was not modified in respect of this matter.
12 Further information
An electronic version of the Interim Report will be available on the Group's
website (www.aukettswankeplc.com).
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. END IR FLFVDRTIRFIV
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