Interim Results

Aukett Group PLC 17 May 2002 AUKETT GROUP PLC 2002 INTERIM RESULTS ANNOUNCEMENT Aukett Group Plc ('Aukett'), one of Europe's leading architecture, design and engineering groups, with offices in 14 cities in eleven countries, announces Interim Results for the six months ended 31 March 2002. Financial Highlights Six months ended 31 March 2002 2001 change (as re-stated) Turnover, including share of JV's £6.76m £11.54m -41% Group work done £6.58m £9.48m -31% (Loss)/profit before tax: - UK (£1.16m) £0.22m - Rest of Europe (£0.48m) £0.28m - Total (£1.64m) £0.50m (Loss)/earnings per share (2.03p) 0.42p Dividends per share nil 0.15p Net assets (compared with 30 September 2001) £2.01m £3.47m Gearing (compared with 30 September 2001) 147% 38% Key Points of Statement * Disappointing first half * Key Management changes * Operational re-structuring and cost savings in place * New accounting policy on pre-contract costs * Aukett brand remains strong Chairman Ian Mavor said: 'The first half results are extremely disappointing. However, your Board remains confident that the quality of the Aukett brand will continue to meet the exacting demands of the marketplace. The actions taken will position the Group at a more competitive level with no diminution in excellence of service and quality. Furthermore, these actions provide the Group with a strong platform on which our corporate strategy and additional growth can be developed.' Enquiries: Aukett Group Plc www.aukett.com Ian Mavor, Chairman Andrew Lett, Deputy chairman Robert Warner, Finance director Tel: 020 7924 4949 Binns & Co PR Ltd Peter Binns, Simon Ellis Tel: 020 7786 9600 AUKETT GROUP PLC Interim Statement for the six months ended 31 March 2002 Overview The results for the first half of the current financial year are poor, showing an operating loss before exceptional charge of £833,000. The exceptional charge and the results from joint ventures and the associate increased this loss by a further £713,000. The Company's trading statement dated 7 March 2002 referred to tough trading conditions. These have continued during the period under review with no immediate sign of the anticipated market recovery. Many funders have proved unwilling to commit and the generally slow rate of new project commissions has affected business in both the UK and in mainland Europe. As a result group work done has reduced by 31% compared with the second half of 2000/01. The exceptional charge reflected the performance of one of the European joint ventures and the Board has decided to provide against the carrying value of the goodwill. A change in accounting policy for pre-contractual expenditure has impacted both the operating results and the balance sheet, by reducing the value of work in progress. These results are extremely disappointing. It became imperative that a fundamental review of the way in which Aukett manages and controls its business be carried out. This has been done and implemented, together with a major cost cutting programme. The cost reduction programme will produce savings of some £600,000 by the end of our financial year. The Company's bankers are aware of the basis of preparation of this interim statement (see note 9) and projected cash flow information for the next twelve months 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. Results Group work done for the six months ended 31 March 2002 amounted to £6.578 million compared with £9.475 million (as re-stated) in the same period last year, a decrease of 31%. The Group operating loss, before exceptional charge, of £833,000 compared with a profit of £501,000 (as re-stated) in the same period last year. 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 2001, after adjusting for tax, was £588,000 and this has been accounted for through reserves as a prior year adjustment. The reported loss before tax was £1.636 million (2001: profit of £499,000, as re-stated). The loss included provisions of some £432,000 against two of the European joint ventures, of which £332,000 relates to the impairment of goodwill and is shown as an exceptional charge. The geographical split of the loss was £1.161 million from the UK, including the above provisions, and £475,000 from mainland Europe. Net interest of £90,000 was paid during the period compared with £86,000 during the comparable period last year, reflecting the higher level of borrowings, partly offset by lower interest rates. The loss per share was 2.03p (2001: earnings per share of 0.42p, as re-stated). The Board has not recommended the payment of any dividend. Change in accounting policy The change in accounting policy has been introduced in anticipation of the new Abstract relating to pre-contract costs, which is due to be issued by the Urgent Issues Task Force, following the draft issued on 6 December 2001. Although this is not anticipated to be in force until later this year, the Board considered it prudent to adopt this standard for the interim statement. The new accounting standard is based on a 'virtual certainty' principle for carrying forward pre-contractual work. As a result, the work in progress valuation at 31 March 2002, including the share of joint ventures and the associate, was £970,000 lower than would have been the case under the previous policy. Of this, £128,000 relates to the current year, reducing both work done and profit accordingly, and £842,000 relates to prior years and has therefore been taken as an adjustment to reserves. It remains the management's commercial judgement that the projects to which these adjustments relate will materialise in due course and therefore the resultant revenue and profit will be recognised in future periods. Management changes Following the fundamental review of the Company's Executive Management the following changes have been put in place: - Andrew Lett, formerly Chief Executive, is appointed Deputy Chairman with responsibility for Client Relations and professional and product matters. He will also play a leading role in Corporate Planning as the principal Executive on the Group's Corporate Planning Committee. - Geoff Harwood, formerly Group Operations Director, is appointed Managing Director, UK Operations, responsible for delivering the Group's business performance in the UK. - John Thake, formerly Group Managing Director, is appointed Managing Director, European Operations, responsible for delivering the business results from each of the Group's overseas offices. These Executives report to the Chairman, Ian Mavor, and comprise the newly formed Group Executive Committee. This Committee, chaired by Ian Mavor, will direct the Group's business and ensure the achievement of the set objectives. Management has also been reorganised below the executive level to align key sector and geographic responsibilities. These changes along with improved monitoring, control and forecasting arrangements are designed to provide the integrated business and professional focus responsive to Aukett's wide range of clients. Group operations Despite the results across the Group, due in the main to the slow down in project start-ups, there have been successes. New commissions in the UK during the period include projects from existing clients such as Akeler, Development Securities, Asda and Skanska in addition to projects from new clients including Shell, Syngenta, Marriott, Taylor Woodrow and Tritax Europoint. New commissions received overseas during the period include Arnhem Business Park in the Netherlands; Deutsche Bahn archive building in Berlin; the next phase of Via Bodio for Doughty Hanson in Milan; Offices at Val d'Europe outside Paris for Arlington; and Jinonice shopping centre for TK Developments in Prague. The business unit performance targets, sector and geographic, now in place are designed to improve business results over the second half of this financial year and build towards growth and profitability. Board changes Robert Warner, who has been Finance Director since 1992 and Company Secretary since 1988, has indicated his intention to leave the Company in order to devote more time in pursuit of his other wider interests. However, he has agreed to stay on until 19 July 2002, in order to assist in the implementation of the programme of change referred to above. Prospects Your Board remains confident that the quality of the Aukett brand will continue to meet the exacting demands of the marketplace. The actions taken will position the Group at a more competitive level with no diminution in excellence of service and quality. Furthermore, these actions provide the Group with a strong platform on which our corporate strategy and additional growth can be developed. 17 May 2002 Aukett Group Plc 2 Great Eastern Wharf Parkgate Road London SW11 4TT Consolidated profit and loss account for the six months ended 31 March 2002 Six months ended Six months ended Year ended 31 March 2002 31 March 2001 30 September 2001 unaudited unaudited audited (as re-stated) (as re-stated) £000 £000 £000 Turnover: Group and share of joint ventures (note 1) 6,762 11,542 21,518 Less: share of joint ventures' turnover (843) (1,727) (2,739) --------- ------------ ------------ Group turnover 5,919 9,815 18,779 Movement in amounts recoverable on contracts 659 (340) 220 --------- ------------ ------------ Group work done 6,578 9,475 18,999 --------- ------------ ------------ Group operating (loss)/profit before exceptional charges (833) 501 773 Exceptional charge relating to impairment of goodwill in joint venture (332) - - -------- ----------- ------------ Group operating (loss)/profit (note 2) (1,165) 501 773 Share of operating (loss)/profit in joint ventures and associate (381) 84 (113) Net interest payable by Group (90) (86) (180) --------- ------------ ------------ (Loss)/profit on ordinary activities before tax (1,636) 499 480 (note 3) Tax on (loss)/profit on ordinary activities (note 4) 168 (198) (322) --------- ------------ ------------ (Loss)/profit on ordinary activities after tax (1,468) 301 158 Dividends - (109) (109) --------- ------------ ------------ Retained (loss)/profit of the Group and its share of joint ventures and associate (1,468) 192 49 ===== ======= ======= (Loss)/earnings per share (note 5): Basic (2.03)p 0.42p 0.22p Diluted (1.99)p 0.41p 0.21p --------- ------------ ------------ Summarised consolidated balance sheet at 31 March 2002 31 March 2002 30 September 2001 unaudited unaudited audited audited (as re-stated) (as re-stated) £000 £000 £000 £000 Fixed assets Intangible assets 630 957 Tangible assets 1,417 1,438 Investments in joint ventures: Share of gross assets 349 2,900 Share of gross liabilities (301) (2,872) ------------- ------------- 48 28 Investment in associate 59 74 ------------- ------------ 2,154 2,497 Current assets Debtors 6,312 6,800 Cash at bank and in hand 182 488 ------------- ------------- 6,494 7,288 Creditors falling due within one year (6,277) (5,882) ------------- ------------- Net current assets 217 1,406 ------------- ------------ Total assets less current liabilities 2,371 3,903 Creditors falling due after one year (366) (431) Provisions for liabilities and charges - - ------------- ------------ Net assets 2,005 3,472 ======= ======= Capital and reserves Share capital 724 724 Share premium account 1,794 1,794 Profit and loss account (513) 954 ------------- ------------ Equity shareholders' funds 2,005 3,472 ======= ======= Summarised consolidated cash flow statement for the six months ended 31 March 2002 Six months ended Six months ended Year ended 31 March 2002 31 March 2001 30 September 2001 unaudited unaudited audited (as re-stated) (as re-stated) £000 £000 £000 Net cash flow from operating activities (857) 434 1,379 Returns on investments and servicing of finance (90) (86) (180) Tax paid (353) (262) (427) Capital expenditure (59) (164) (216) Acquisitions - (2) (21) Equity dividends paid - (181) (290) _______ _______ _______ Net cash (outflow)/inflow before financing (1,359) (261) 245 Net cash outflow from financing (291) (279) (595) _______ _______ _______ Decrease in cash during the period (1,650) (540) (350) _______ _______ _______ Reconciliation of operating (loss)/profit to net cash flow from operating activities Group operating (loss)/profit (1,165) 501 773 Depreciation and amortisation of fixed assets - Exceptional write off of goodwill 332 - - - Other 346 315 724 Decrease/(increase) in debtors 809 (21) 146 Decrease in creditors (1,179) (361) (264) _______ _______ _______ Net cash flow from operating activities (857) 434 1,379 _______ _______ _______ Statement of total recognised gains and losses Six months ended Six months ended Year ended 31 March 2002 31 March 2001 30 September 2001 unaudited unaudited audited (as re-stated) (as re-stated) £000 £000 £000 (Loss)/profit for the financial period (1,468) 301 158 Currency translation differences 1 4 31 _______ _______ _______ Total recognised gains and losses relating to the period (1,467) 305 189 Prior period adjustments (note 6) (588) (283) (283) _______ _______ _______ Total recognised gains and losses since last annual report (2,055) 22 (94) _______ _______ _______ Reconciliation of movements in shareholders' funds 31 March 2002 30 September 2001 unaudited audited (as re-stated) £000 £000 Opening shareholders' funds as originally presented 4,060 3,666 Prior period adjustments (note 6) (588) (283) _______ _______ Opening shareholders' funds (as re-stated) 3,472 3,383 Exercise of share options - 38 Capitalisation of ESOT contributions - (29) Foreign exchange gain 1 31 (Loss)/profit attributable to shareholders (1,468) 158 Dividends proposed or declared - (109) _______ _______ Closing shareholders' funds 2,005 3,472 _______ _______ 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 ended Six months ended Year ended 31 March 2002 31 March 2001 30 September 2001 unaudited unaudited audited Turnover (as re-stated) (as re-stated) £000 £000 £000 United Kingdom 4,884 8,242 14,476 Rest of Europe 1,878 3,300 7,042 _______ ______ _______ Total 6,762 11,542 21,518 _______ _______ _______ Movements in amounts recoverable on contracts United Kingdom 114 (262) 777 Rest of Europe 348 (66) (302) _______ _______ _______ Total 462 (328) 475 _______ _______ _______ Work done United Kingdom 4,998 7,980 15,253 Rest of Europe 2,226 3,234 6,740 _______ _______ _______ Total 7,224 11,214 21,993 _______ _______ _______ 2 Group operating (loss)/profit Group work done 6,578 9,475 18,999 Staff costs (4,205) (5,145) (9,816) Amortisation of goodwill (27) (27) (54) Exceptional write-down of goodwill (332) - - Depreciation (352) (288) (670) Other operating charges (2,827) (3,514) (7,686) _______ _______ _______ Group operating (loss)/profit (1,165) 501 773 _______ _______ _______ 3 (Loss)/profit on ordinary activities before tax An analysis of (loss)/profit on ordinary activities before tax by geographical area is as follows: Six months ended Six months ended Year ended 31 March 2002 31 March 2001 30 September 2001 unaudited unaudited audited (as re-stated) (as re-stated) £000 £000 £000 United Kingdom (1,161) 216 260 Rest of Europe (475) 283 220 _______ _______ _______ Total (1,636) 499 480 _______ _______ _______ 4 Tax (credit)/charge on (loss)/profit on ordinary activities Six months ended Six months ended Year ended 31 March 2002 31 March 2001 30 September 2001 unaudited unaudited audited (as re-stated) (as re-stated) £000 £000 £000 United Kingdom corporation tax at 30% (185) 48 205 Overseas tax 7 111 195 Adjustments in respect of change in accounting policy (note 6) - 12 (132) Deferred tax - - - Share of tax from joint ventures and associate 10 27 54 _______ _______ _______ Total (168) 198 322 _______ _______ _______ 5 (Loss)/earnings per share The (loss)/earnings per share are calculated on the loss attributable to shareholders of £1,468,000 for the six months ended 31 March 2002 and on 72,421,394 (2001: 72,294,554) ordinary shares, being the weighted average number of shares in issue during the period. Diluted (loss)/earnings per share are calculated on 73,826,844 (2001: 73,886,036) ordinary shares. 6 Summary of effects of change in accounting policy Effect on operating profit Six months ended Six months ended Year ended 31 March 2002 31 March 2001 30 September 2001 unaudited unaudited audited (as re-stated) (as re-stated) £000 £000 £000 Operating (loss)/profit, before exceptional charge, under previous accounting policy (710) 461 1,200 Adjustments to work in progress under new accounting policy: (123) 40 (427) _______ _______ _______ Operating (loss)/profit, before exceptional charge, as now reported (833) 501 773 _______ _______ _______ In addition to the above, adjustments to the share of results from joint ventures and the associate under the new accounting policy have reduced the reported results by £5,000 for the six months ended 31 March 2002 (2001: £2,000; year ended 30 September 2001: £10,000). Effect on net assets 31 March 2002 31 March 2001 30 September 2001 unaudited unaudited audited (as re-stated) (as re-stated) £000 £000 £000 Net assets under previous accounting policy 2,684 3,845 4,060 Adjustments to work in progress under new accounting policy: Current period (128) 38 (437) Prior periods (842) (405) (405) Tax relating to above adjustments: Current period 37 (12) 132 Prior periods 254 122 122 _______ _______ _______ Net assets as now reported 2,005 3,588 3,472 _______ _______ _______ 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 2001 movements 2002 £000 £000 £000 £000 Cash at bank and in hand 488 (306) - 182 Overdrafts repayable on demand (838) (1,344) - (2,182) _____ _____ _____ _____ (350) (1,650) - (2,000) Bank and other loans repayable in: Less than one year (120) 40 (80) (160) More than one year (120) - 80 (40) Hire purchase and finance lease creditors (732) 250 (272) (754) _____ _____ _____ _____ (972) 290 (272) (954) _____ _____ _____ _____ Net debt (1,322) (1,360) (272) (2,954) ===== ===== ===== ===== 8 Statutory accounts The comparative figures for the year ended 30 September 2001 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 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 have prepared projected cash flow information for the next twelve months. They consider that the Company will continue to operate within the existing overdraft facilities, as agreed in January 2002, until the end of the Company's financial year when it is anticipated that suitable facilities will be made available prior to the commencement of the new financial year. 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. 10 Further information Further information about the Group, including copies of the 2001 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. 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 14 June 2002. END This information is provided by RNS The company news service from the London Stock Exchange

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