Interim Results

RNS Number : 2323Q
Aukett Swanke Group PLC
16 June 2015
 

 

Aukett Swanke Group Plc

Interim Results

For the six months ended 31 March 2015

 

Aukett Swanke Group Plc, the international practice of architects and interior design specialists, is pleased to announce its interim results for the six month period ended 31 March 2015.

 

Highlights

 

·      Revenues up 21% at £9.2m (2014: £7.6m)

·      Profit before tax up 9% at £815,000 (2014: £750,000)

·      Earnings per share up 39% at 0.43p (2014: 0.31p)

·      Net funds up at £2.5m at 31 March 2015 (£1.8m at 30 September 2014)

·      Interim dividend 0.11 pence per share (2014: 0.10 pence per share)

·      Third LEED Gold Award in Germany

·      Best Office Building at the Commercial Real Estate Awards in Moscow

·      Best City of London development at the Office Agents' Society awards

 

Commenting on today's interim results announcement, CEO Nicholas Thompson said;

 

"I am delighted to report on this set of interim results which shows a continuous improvement in performance when compared to the six month periods to 31 March and 30 September 2014, respectively. In the light of these results, our financial position and the Board's outlook, we are pleased to announce the payment of an increased interim dividend.

 

The Group's performance in the first half has been achieved despite a number of external factors which we have had to contend with.  The run up to the General Election in the UK caused some softening in the UK market in the first half whilst Russia and Turkey were impacted by, variously, currency volatility and political uncertainty which deferred local client decision-making.

 

We continue to invest in the Middle East which we believe has good growth prospects."

 

 

Enquiries

 

Aukett Swanke Group Plc - 020 7843 3000

Nicholas Thompson, Chief Executive Officer

Beverley Wright, Group Finance Director

 

finnCap - 020 7220 0500

Corporate Finance: Julian Blunt/James Thompson

Corporate Broking:  Stephen Norcross

 

Hermes Financial PR

Trevor Phillips - 07889 153628

Chris Steele - 07979 604687



Interim statement

 

 

Overview

 

We are pleased to report an increase in our first half profits to £815,000 (2014: £750,000).

 

Our half year revenues rose to £9.2m (2014: £7.6m) with revenues less subcontractors also increasing to £8.2m (2014: £6.6m). Profit before tax rose 9% to £815,000 (2014: £750,000), whilst EPS increased 39% to 0.43p (2014: 0.31p) reflecting a much reduced tax rate which benefitted from unprovided tax losses in Russia.  We outperformed our cash generation target with funds increasing to £2.5m (30 September 2014: net funds £1.8m) after taking account of investments, taxation and dividend payments.

 

Operations

 

UK revenues lifted to £7.5m (2014: £6.1m) with profits being slightly lower at £927,000 (2014: £945,000). Some 15 projects account for 73% of these revenues across offices, residential, retail, hotels, interior design and education sectors with no one sector accounting for more than 25% of revenues.

 

Whilst the first half benefited from a full half year's contribution from the Swanke business (acquired in December 2013), the period under review takes account of salary increases and headcount additions.  Both of these had become necessary as the general construction market strengthened and the level of work in hand and enquiry levels increased.  The UK construction market also quietened in the period leading up to the General Election which had an impact in the first half, though with a more stable political environment we now expect the pre-election slowdown to unwind and for the market to recover its former momentum. The regional phenomenon, which we highlighted in our last statement, continues apace with far more activity in the green-field business space market.

 

At present, the UK operation has over 2m square feet of construction work in hand with a follow-on order book being maintained. We are currently working with Blackstone, Fenwick, Grosvenor, Candy & Candy, Goodman, Land Securities, Richemont, Derwent London, Sir Robert McAlpine, M&G, Zurich Re, BNP Paribas, Development Securities, Orchard Street, Urban & Civic, Sheraton hotels and many others. Our office development at 125 Wood Street for Orchard Street Investment Management won the Best Office Development in the City of London at the recent Office Agents' Society awards.

 

Our Marks and Spencer (2012) store at Cheshire Oaks continues to win awards with the 2015 Building Award - Test of Time. In the AJ120 rankings of qualified staff our London Studio ranks No.20 (2014: No. 22). We continue to rank in the top 5 based on qualified staff in the Group for a UK based practice.

 

Russia almost broke even, tabling a small loss of £11,000 (2014: Loss £299,000) - arguably our best operational performance of the year given the results from 2014. Revenue was up at £692,000 (2014: £638,000).

 

Our current projects include schemes at Vernadskogo, Yamskoye Pole, Panavto, and Itar Tass, with clients such as AB Developments, JTI and PSN. Our office building, Arcus III, for AB Developments, has won the Golden Brick award at the CBRE awards. Also we won a Best Lobby award at the Best Office Awards 2015.

 

During the period we have downsized the operation to match market activity but had to contend with a major Rouble devaluation which in turn triggered a short period of higher internal costs before we could manage these down again.  A number of costs were contracted in a US dollar equivalent in the Russian market. The position has now stabilised and we expect to remain at or near break-even for the remainder of the year. Since the currency crisis abated we have seen some market improvement in enquiries giving some comfort to our shorter term prospects.

 

The Turkish operation remains in profit at £4,000 (2014: £82,000) on revenues of £555,000 (2014: £441,000). In the previous year, the quarter two revenue was well above expectations due to a windfall gain. We are currently working on two hotels at Eminuno and Atasehir, a residential scheme in Eston 7 and a fit out for Cengiz. With the recent election result and a quieter economy we are reliant on new project conversions in the second half to avoid a loss at the year end.

 

The Middle East is the current focus of our expansion plans as evidenced by our announcement yesterday of the acquisition of John R Harris & Partners Limited. The loss of £91,000 (2014: profit £4,000) in our continuing operation partially reflects a fall-off in work-load as our major project reaches the final phases of construction. Additionally we increased our staffing levels in order to improve our chances of winning new work.  Revenue remains substantially unchanged at £432,000 (2014: £419,000).

 

In respect of Continental Europe, Berlin maintained its performance at prior year levels with a raft of commissions including KfW bank, Berlin airport, Berlin Entertainment District, Siemens, Stone Brewing and is likely to continue in this mode for some time. Frankfurt posted a small profit but is expected to improve in the second half. The office won its third LEED Gold Award for the Bank of New York Melon's office fit out.  The Czech market is dogged by a lack of work and low pricing, however, break-even for the full year is the target.

 

The overall net result for our European operations (comprising JV and associate interests) is marginally down on the previous year at £159,000 (2014: £176,000) following a decline in the Euro.

 

Prospects

 

The final outturn for 2015 will be primarily dependent on the UK's second half performance which we expect to pick up in the aftermath of the General Election.  The operations in Russia, Turkey and the Middle East are expected to remain loss-making in the short term and subsequently return to profits. Continental European operations are expected to improve their profit performance based on current order books.

 

Overall the Board remains confident in the Group's performance as we progress through the second half, indeed with a period of less political uncertainty in the UK there should be more stability engendering a stronger market. With a maintained profit performance and strong cashflow we are pleased to announce the payment of an interim dividend of 0.11 per share on Monday 27 July 2015 to shareholders on the register at close of business on Friday 10 July 2015.

 

Nicholas Thompson

Chief Executive Officer

15 June 2015



Consolidated income statement

 

For the six months ended 31 March 2015

 


Note

Unaudited

six months

 to 31 March

2015

£'000

 

Unaudited

six months

 to 31 March

2014

£'000

 

Audited

year to

30 September

2014

£'000

Revenue

2

9,164

7,575

17,326






Sub consultant costs


(933)

(1,015)

(2,594)

Revenue less sub consultant costs


8,231

6,560

14,732






Personnel related costs


(5,641)

(4,270)

(9,868)

Property related costs


(1,357)

(997)

(2,343)

Other operating expenses


(907)

(842)

(1,861)

Other operating income


338

132

404

Operating profit


664

583

1,064






Finance income


-

-

-

Finance costs


(8)

(9)

(18)

Profit after finance costs


656

574

1,046






Share of results of associate and joint ventures


159

176

354

Profit before tax

2

815

750

1,400






Taxation


(107)

(255)

(354)

Profit for the period attributable

to equity holders of the company


 

708

 

495

 

1,046






Earnings per share





Basic

3

0.43

0.31p

0.65p

Diluted

3

0.43

0.31p

0.65p

 

 

Consolidated statement of comprehensive income

 

For the six months ended 31 March 2015

 



Unaudited

six months

 to 31 March

2015

£'000

 

Unaudited

six months

 to 31 March

2014

£'000

 

Audited

year to

30 September

2014

£'000

Profit for the period


708

495

1,046






Other comprehensive income:





Currency translation differences


(101)

(42)

(103)

Other comprehensive income for the period


(101)

(42)

(103)






Total comprehensive income for the period

attributable to equity holders of the company


 

607

 

453

 

943

 


Consolidated statement of financial position

 

At 31 March 2015

 


Note

Unaudited

at 31

March

 2015

£'000

 

Unaudited

at 31

March

 2014

£'000

 

Audited

at 30

September

2014

£'000

Non current assets





Goodwill


1,825

1,890

1,835

Other intangibles


550

599

594

Property, plant and equipment


630

355

648

Investment in associate and joint ventures


394

297

375

Deferred tax


254

411

290

Total non current assets


3,653

3,552

3,742






Current assets





Trade and other receivables


5,578

5,620

6,379

Current tax


15

15

-

Cash and cash equivalents

5

2,540

1,522

1,891

Total current assets


8,133

7,157

8,270






Total assets


11,786

10,709

12,012






Current liabilities





Trade and other payables


(5,970)

(5,320)

(6,540)

Short term borrowings

5

-

(150)

(113)

Provisions


-

(260)

(104)

Current tax


(156)

(25)

(131)

Total current liabilities


(6,126)

(5,755)

(6,888)






Non current liabilities





Long term borrowings

5

-

(38)

-

Provisions


(112)

(136)

-

Deferred tax


(66)

(72)

(71)

Total non current liabilities


(178)

(246)

(71)






Total liabilities


(6,304)

(6,001)

(6,959)






Net assets


5,482

4,708

5,053











Capital and reserves





Share capital


1,652

1,652

1,652

Merger reserve


1,176

1,176

1,176

Foreign currency translation reserve


(175)

(13)

(74)

Retained earnings


856

(403)

148

Other distributable reserve


1,973

2,296

2,151

Total equity attributable to

equity holders of the Company


 

5,482

 

4,708

 

5,053

 

 

 


Consolidated statement of cash flows

 

For the six months ended 31 March 2015

 


Note

Unaudited

six months

 to 31 March

2015

£'000

 

Unaudited

six months

 to 31 March

2014

£'000

 

Audited

year to

30 September

2014

£'000

Cash flows from operating activities





Cash from operations

4

1,032

367

1,360

Interest paid


(8)

(9)

(18)

Taxation (paid) / received


(58)

94

70

Net cash from operating activities


966

452

1,412






Cash flows from investing activities





Purchase of property, plant and equipment


(125)

(70)

(523)

Sale of property, plant and equipment


-

-

4

Acquisition of subsidiary, net of cash acquired


-

(57)

(57)

Interest received


-

-

-

Dividends received from associate


115

104

184

Net cash used in investing activities


(10)

(23)

(392)






Net cash flow before financing activities


956

429

1,020






Cash flows from financing activities





Repayment of bank loan


(113)

(75)

(150)

Payment of asset finance liabilities


-

(2)

-

Dividends paid


(178)

(146)

(291)

Net cash used in financing activities


(291)

(223)

(441)






Net change in cash, cash equivalents

and bank overdraft


 

665

 

206

 

579






Cash, cash equivalents and bank

overdraft at start of period


 

1,891

 

1,343

 

1,343

Currency translation differences


(16)

(27)

(31)

Cash, cash equivalents and bank

overdraft at end of period

 

5

 

2,540

 

1,522

 

1,891

 

 



Consolidated statement of changes in equity

 

 

For the six months ended 31 March 2015

 


 

 

Share

capital

£'000

 

 

Merger

reserve

£'000

Foreign

currency

translation

reserve

£'000

 

 

 

Retained

earnings

£'000

 

Other

distributable

reserve

£'000

 

 

Unaudited

Total

£'000

At 1 October 2014

1,652

1,176

(74)

148

2,151

5,053

Profit for the period

-

-

-

708

-

708

Other comprehensive income

 

-

 

-

 

(101)

 

-

 

-

 

(101)

Dividends

-

-

-

-

(178)

(178)

Issue of ordinary shares in relation to business combination

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

 

 

-

At 31 March 2015

1,652

1,176

(175)

856

1,973

5,482

 

 

For the six months ended 31 March 2014

 


 

 

Share

capital

£'000

 

 

Merger

reserve

£'000

Foreign

currency

translation

reserve

£'000

 

 

 

Retained

earnings

£'000

 

Other

distributable

reserve

£'000

 

 

Unaudited

Total

£'000

At 1 October 2013

1,456

-

29

(898)

2,442

3,029

Profit for the period

-

-

-

495

-

495

Other comprehensive income

 

-

 

-

 

(42)

 

-

 

-

 

(42)

Dividends

-

-

-

-

(146)

(146)

Issue of ordinary shares in relation to business combination

 

 

196

 

 

1,176

 

 

-

 

 

-

 

 

-

 

 

1,372

At 31 March 2014

1,652

1,176

(13)

(403)

2,296

4,708

 

 

For the year ended 30 September 2014

 


 

 

Share

capital

£'000

 

 

Merger

reserve

£'000

Foreign

currency

translation

reserve

£'000

 

 

 

Retained

earnings

£'000

 

Other

distributable

reserve

£'000

 

 

Audited

Total

£'000

At 1 October 2013

1,456

-

29

(898)

2,442

3,029

Profit for the period

-

-

-

1,046

-

1,046

Other comprehensive income

 

-

 

-

 

(103)

 

-

 

-

 

(103)

Dividends

-

-

-

-

(291)

(291)

Issue of ordinary shares in relation to business combination

 

 

196

 

 

1,176

 

 

-

 

 

-

 

 

-

 

 

1,372

At 30 September 2014

1,652

1,176

(74)

148

2,151

5,053

 

 



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 Financial Reporting Standards ('IFRS') as adopted by the EU that are expected to be applicable to the financial statements for the year ending 30 September 2015 and on the basis of the accounting policies expected to be used in those financial statements.

 

 

2          Operating segments

 

The Group comprises a single business segment and five separately reportable geographical segments (together with a group costs segment). Geographical segments are based on the location of the operation undertaking each project.

 

 

Segment revenue


Unaudited six months to 31 March 2015

£'000

 

Unaudited six months to 31 March 2014

£'000

 

Audited year to 30 September 2014

£'000

United Kingdom


7,485

6,077

13,882

Russia


692

638

1,598

Turkey


555

441

853

Middle East


432

419

993

Continental Europe


-

-

-

Total


9,164

7,575

17,326






 

Segment result before tax


Unaudited six months to 31 March 2015

£'000

Unaudited six months to 31 March 2014

£'000

Audited year to 30 September 2014

£'000






United Kingdom


927

945

1,815

Russia


(11)

(299)

(475)

Turkey


4

82

90

Middle East


(91)

4

14

Continental Europe


159

176

354

Group costs


(173)

(158)

(398)

Total


815

750

1,400






 

 

 

3          Earnings per share

 

The calculations of basic and diluted earnings per share are based on the following data:

 

Earnings


Unaudited

six months

 to 31 March

2015

£'000

 

Unaudited

six months

 to 31 March

2014

£'000

 

Audited

year to

30 September

2014

£'000

Profit for the period


708

495

1,046

 

 

Number of shares


Unaudited

six months

 to 31 March

2015

'000

 

Unaudited

six months

 to 31 March

2014

'000

 

Audited

year to

30 September

2014

'000

Weighted average number of shares


165,213

157,616

161,026

Effect of dilutive options


321

394

464

Diluted weighted average number of shares


165,534

158,010

161,490

 

4          Reconciliation of profit before tax to net cash from operations

 



Unaudited

six months

 to 31 March

2015

£'000

 

Unaudited

six months

 to 31 March

2014

£'000

 

Audited

year to

30 September

2014

£'000

Profit before tax


815

750

1,400

Finance income


-

-

-

Finance costs


8

9

18

Share of results of associate and joint ventures


(159)

(176)

(354)

Goodwill written off


-

125

125

Depreciation


176

106

259

Amortisation


25

36

82

Profit on disposal of property, plant and equipment


-

-

(4)

Change in trade and other receivables


636

70

(604)

Change in trade and other payables


(481)

(506)

676

Change in provisions


12

(47)

(238)

Net cash from operations


1,032

367

1,360

 

 

5          Analysis of net funds

 



Unaudited

at 31

March

 2015

£'000

 

Unaudited

at 31

March

 2014

£'000

 

Audited

at 30

September

2014

£'000

Cash and cash equivalents


2,540

1,522

1.891

Secured bank overdraft


-

-

-

Cash, cash equivalents and bank overdraft


2,540

1,522

1,891






Secured bank loan


-

(188)

(113)

Net funds


2,540

1,334

1,778











Cash and cash equivalents


2,540

1,522

1,891

Short term borrowings


-

(150)

(113)

Long term borrowings


-

(38)

-

Net funds


2,540

1,334

1,778

 

 

6          Status of interim report

 

The interim report covers the six months ended 31 March 2015 and was approved by the Board of Directors on 15 June 2015. 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 2014 have been extracted from the statutory accounts of the group for that period.

 

The statutory accounts for the year ended 30 September 2014 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 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.

 



7          Further information

 

Copies of the interim report will be dispatched by post to holders of 50,000 or more shares in due course. An electronic version will be available on the Group's website (www.aukettswanke.com).

 


This information is provided by RNS
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