www.aukettswanke.com
ANNUAL REPORT
&ACCOUNTS
2016
AUKETT SWANKE GROUP PLC
Aukett Swanke provides design services, focusing on
architecture, master planning, and interior design with
specialisms in executive architecture and associated
engineering services
The practice designs and delivers commercial projects
throughout the United Kingdom, Continental Europe
and the Middle East
Aukett Swanke is an award-winning architecture and interior
design practice. Its talented and international teams act as
custodians for a sustainable built environment, working on
grand heritage projects as well as bold new additions to urban
and rural landscapes.
Encompassing over 60 years of professional experience,
Aukett Swanke has a network of more than 400 staff in 14
offices across 6 countries: UK, Germany, Russia, Turkey, UAE
and Czech Republic.
The studios' expertise includes work in mixed-use, commercial
office, hotel, retail, residential, education and healthcare
sectors as well as workplace consulting.
FRONT COVER:
TOP: MOLECULAR SCIENCES RESEARCH HUB, IMPERIAL WEST, LONDON W12
BOTTOM LEFT: BOTANICA RESIDENTIAL DEVELOPMENT, DUBAI
BOTTOM RIGHT: MONET APARTMENTS, MOSCOW
OUR CLIENTS
INCLUDE . . .
AB Development / ABN Amro Bank / Absolut Development / Abu Dhabi Tourism and Culture Authority / Acred / ADNH (Abu
Dhabi National Hotels) / ADNOC (Abu Dhabi National Oil Corporation) / ADWEA / AEG Europe / Ahred Real Estate / Alarko Real Estate /
ALDAR / Al-Futtaim Group Real Estate / Al Hamra Real Estate Development / Allen & Overy / Allianz Insurance / Allied World Assurance
/ Arup / Ascot Underwriting / Avgur Estate / Aviva Baker McKenzie / Bank of America Merrill Lynch / Bank of Moscow /
BAT-Russia C+T Group / Batıkent Yapi Sanayi ve Ticaret / Bautek A.S / BCM McAlpine / Bell Hammer / BioIstanbul / BioMed Realty /
Blackstone Group / Bloomberg / BNP Paribas Fortis / BNY Mellon / Bovis Lendlease / Bristows / Bundesdruckerei / Buro Happold
/ Buwog Cambridge University Hospitals NHS Trust / Canadian Embassy, Moscow / Candy & Candy / CAPCO / Carillion
/ CBRE / Cedar Capital / Cengiz Holding / Central Properties / CIN LaSalle / Cisco / City of London Academy / Cofunds / Comstrin /
Commercial Estates / Commerzbank / Corinthia Hotel Group / Corporation of London / Cornerstone Investment & Real Estate / Costain
/ Countryside Properties / CPI / CR City / CR Office / Credit Suisse / Crest Nicholson / Crowne Plaza Hotels Dacorum Borough
Council / Daimler Chrysler / Damac / DB Schenker / Decathlon / Deloitte / Deutsche Bank / Development Securities / Diageo / DGV
Consulting / Doğuş GYO / Donstroy / DTC de Beers / du / Dunhill Eastman Group / E C Harris / Ede & Ravenscroft / Eli Lilly /
Emaar Hospitality Group LLC / Emlak Konut / Endurance Estates / EO Engineers Office (Dubai) / Equa Bank / Ernst & Young / Er Yatırım /
Etisalat / Eurofinance Bank / European Medicines Agency / Extensa / Exxon Mobil F&C Reit / Fenwick / Fiba Gayrimenkul / FIM
Group / Firoka / First Bank Gazprom / Gazpromstroyinvest / GD Investments / GE Capital / Gertler / GLAV UPDK / Glavstroy
/ GSK / GMO Group / Goldman Sachs / Goodman / Google / Great Portland Estates / GroupM / Grosvenor Estates / GTN Global
Properties / GUM / Güneri Insaat A.S Halk GYO / Hammer AG / Helical Bar / Henderson Global Investors / Hexal / Hilton
International / Hochtief / Homerton University Hospital / Honeywell / Horus Capital / HSBC ICAP / ICKM / ICT Istroconti / IFFCO
/ IKEA / Imperial College / Ince & Co / Infosys / ING Real Estate / Intellectcom / Intercontinental Hotels
Group / Investa / Irausa UK / ISG / IşGYO / Italian Embassy, Czech Republic / ITAR TASS News Agency
J&T Global / Jarrold & Son / John Martin Gallery / Johnson Controls / Jones Lang LaSalle / JP Morgan /
JTI Russia Kalinka Realty / KfW Bank / Khansaheb / Kier Build / Kiler Holding / Knight Dragon
/ Knight Frank / Knight Harwood / Koray Inşaat / Korine Property Partners / KORTROS / KPMG / KR
Properties / Kuznetsky Most Development Laing O’Rourke Middle East Holdings / Lakhta
Centre St.Petersburg / La Meridien / Lambert Smith Hampton / Land Securities / LaSalle Investment / Lawyers Enterprise / Legion
Development / Lendlease / Lenovo / L’Oréal / Loughborough University M&G Investments / Macquarie Bank / MAN Group
/ Marks & Spencer / Mars, Wrigley, Royal Canin / Marsan AS / Marriott / McLaren / Mercury / Merkur Development / MFI / MICEX /
Microsoft / Millhouse Capital / Miral / Mirax Group / Mobile TeleSystems (MTS) / Moodys Eastern Europe / Moody’s Investor Services
/ Molson Coors / Morgans Hotel Group / Mott Macdonald / Mouchel / MR Group Napp Pharmaceuticals / National Grid
/ Nations Bank / NATS / NDA / Network Rail / Nextra / Nicholson Estates / NIDA Insaat / Nike / Nurol GYO Oceanic Estates
/ Open University / Opin Group / Optima Corporation / Oracle / Orchard Homes / Orchard Street Investments / Oxford Properties
Palestra / Park City / Pera Gayrimenkul / Peresvet Region Kuban / Pfizer / Phillips / Phoenix Development / Pilsner Urquel / PIK /
Premier Inn / Procter & Gamble / PSN / Princeton Holdings / Prologis / Protos / PwC Quantum Homes / Qatar Foundation
/ Quintain RAK Properties / R&R Industrial SAS / Radisson Edwardian / Radisson Blu / Ralph Trustees / Railway Pension
Nominees / Ramboll / Red Engineering / Redevco / Reignwood Investment UK / Renaissance Capital / Renova Stroy Group / Reuters /
Rezidor / Richemont / Rio Tinto / Robin Oil / Rocco Forte Hotels / Rodrigo Hidalgo / Rönesans Gayrimenkul Yatırım / Rovner Investment
Group / Royal Bank of Scotland / Royal Exchange / Rublevo-Arkhangelskoye / Rushydro / RWE npower SAB Miller / SAP
/ Savills / Sberbank / Second Watch Factory Slava / Servotel / Scarborough Borough Council / Schlumberger / Scottish Development
Agency / Scottish Widows / Segro / Sellar Group / Seniats / Severn Trent Water / Shell / Sibneft / Sibneftegaz / Siemens / Sir Robert
McAlpine / Sistema Hals / Skanska / Skype / SMBC Nikko Capital Markets / Sminex / Southampton City Council / Southampton Solent
University / Soyak Inşaat / Standard Life Investments / St Martin’s Property / Staropramen Breweries / Stephenson Harwood / Stolny
Grad Development / Stone Brewing / South Cambridgeshire District Council / Sumitomo Mitsui Banking Corporation (SMBC) / Sun
Microsystems / Suse Linux / Swan Operations / Symantec / Syngenta International Tahincioğlu Gayrimenkul / Talan / TAT
Immobilen / Taylor Wimpey / TDIC (Tourism Development and Investment Company) / TechInvest / Tekar / Tekfen Emlak / Tenkhoff
Properties / The London Clinic / The Mercers’ Company / The Royal College of Surgeons of England / Tiffany s.r.o. / Tishman Speyer /
Tonstate / Transport for London / Trinity Hall / Türkiye Finans Katılım Bankasi UGMK Holding / University of Cambridge
/ University of Sheffield Vesper / Vestas / Vinci Construction / VMWare / Vodafone / Voreda / VTB Capital Bank / Vysota
Wates / Welbeck Land / Westminster City Council / White & Case / Willis Group Zurich Insurance Group
Chairman’s statement and corporate governance
Five year summary
Corporate information
Strategic report
Directors’ report
Statement of directors’ responsibilities
Independent auditor’s report
FINANCIAL STATEMENTS
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Company statement of financial position
Consolidated statement of cash flows
Company statement of cash flows
Consolidated statement of changes in equity
Company statement of changes in equity
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40
41 - 49
50 - 53
54
55
56
57
58
59
60
61
62
63
Notes to the financial statements
64 - 99
SHAREHOLDER INFORMATION
100
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016 OUR STUDIOS
AND LOCATIONS
135
UNITED
KINGDOM
425
TOTAL
175
CONTINENTAL
EUROPE
115
MIDDLE
EAST
425 people
14 studios
6 countries
london
istanbul
moscow
abu dhabi
al ain
dubai
ras al khaimah
berlin
frankfurt
prague
bristol
36-40 York Way
LONDON N1 9AB
United Kingdom
T +44 (0)20 7843 3000
london@aukettswanke.com
25 Christopher Street
LONDON EC2A 2BS
United Kingdom
T +44 (0)20 7454 8200
london@aukettswanke.com
18 Prospekt Andropova
bld. 7, Floor 11, Office 5
MOSCOW 115432
Russia
T +7 (499) 683 0145
moscow@aukettswanke.com
Kore Sehitleri 34/2
Deniz Is Hani
34394 Zincirlikuyu
ISTANBUL
Turkey
T +90 212 318 0400
istanbul@aukettswanke.com
Al Goze Building
Office 2, 1st Floor
Sheik Zayed Road
Al Quoz
DUBAI
United Arab Emirates
T +971 (0)4 338 0144
info@shanklandcox.com
PO Box 31043
Humaid Bin Drai Building
Office 103, 13th Street
Umm Ramool
DUBAI
United Arab Emirates
T +971 (0)4 286 2831
dubai@johnrharris.com
1st Floor
Mohd Hasan Abdulla Omran Bldg
PO Box 36800
RAS AL KHAIMAH
United Arab Emirates
T +971 (0)4 338 0144
Budapester Strasse 43
10787 BERLIN
Germany
T +49 30 230994 0
mail@aukett-heese.de
Gutleutstrasse 163
60327 FRANKFURT AM MAIN
Germany
T +49 (0)69 76806 0
mail@aukett-heese-frankfurt.de
Janackovo Nabrezi 471/49
150 00 PRAGUE 5
Czech Republic
T +420 224 220 025
aukett@aukett.cz
LICENSED OFFICE
Queen Charlotte Studio
53 Queen Charlotte Street
BRISTOL BS1 5HQ
United Kingdom
T +44 (0)117 929 9285
info@coda-architects.co.uk
MOLECULAR SCIENCES RESEARCH HUB
IMPERIAL WEST, LONDON W12
Bin Arar Tower, Building 168
Najda Street (6th Street)
ABU DHABI
United Arab Emirates
T +971 (0)2 495 2731
abudhabi@aukettswanke.com
Sheikh Hamdan Bin Mohammed
Street
ABU DHABI
United Arab Emirates
T +971 (0)2 671 5411
info@shanklandcox.com
Main Street
AL AIN
United Arab Emirates
T +971 (0)3 766 9334
info@shanklandcox.com
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
HIGHLIGHTS AND
AWARDS
We are delighted that Veretec, our Executive Architect
arm, was named as the AJ100 Executive Architect of the
Year in 2016. The (cid:77)udges commented:
Veretec is an independent arm of Aukett Swanke, dedicated
to project delivery. It has worked on high-profile projects with
award-winning practices, and is the epitome of a professional
executive architect.
Its members understand and respect the original design, and
work to resolve and deliver it to the satisfaction of client and
architect. They also respect the intention of the design, and
work to produce details in a manner that is visually in keeping.
They build excellent relationships with manufacturers and
understand every part of the construction process. The judges
were impressed that they brought a brick to the interview.
KEITH MORGAN
Managing Director - Veretec
JAMES ATHA
Director - Veretec
Two of our recently completed UK projects have
been shortlisted for BCO (British Council for Offices)
Awards in their respective regions: One Forbury
Place in Reading and the Joseph Priestley Building
at Eastside Locks, Birmingham
Our UK awards this year include the Office Agents Society Award for Adelphi, winner of the Best
West End Development category and also for One Forbury Place, Reading which was winner of
the Award for Best Office Development outside of Central London.
Internationally, our interior design for (cid:45)TI, Moscow was winner of the 2016 Best Office Award at the
Office Next Awards, and Bomonti Modern Palas residential pro(cid:77)ect in Istanbul was winner of the
2016 Best Architectural Design in the Completed Buildings category in the Sign of the City Awards
Tom Alexander discusses his recent
research into the future workplace
. . . see page 24
p24
Aukett Swanke is ranked 48th in
Building Design's 2017 World Architecture 100.
The practice is the 5th largest practice in the UK
by international measurement and in the top 50
in the world for the first time
Our recent acquisition of Shankland Cox Ltd which, added to
our previous acquisition of John R Harris & Partners, increased
our UAE presence. Bob Fry has developed a strategy to assess
talent recognition . . . see page 30
p30
Marcus Dietzsch talks
about the Frankfurt
studio and how he
thinks Brexit may
in(cid:565)uence the local
market . . .
see page 12
p20
Aukett Swanke were one of five international design studios
invited to design and build a concept hotel room at the 2016
Sleep Event hotel show in London.
Nicholas de Klerk explains the ideas behind our entry, and
how we created it . . . see page 20
p12
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
RECENT AND CURRENT
PROJECTS IN THE UK
STAINES CENTRAL DEVELOPMENT
JOHN BRADFIELD CENTRE, CAMBRIDGE SCIENCE PARK
FENWICK DEPARTMENT STORE, COLCHESTER
INCE & CO, LONDON
GRANTA PARK, CAMBRIDGE
(cid:45)OSEPH PRIESTLEY BUILDING, EASTSIDE LOCKS, BIRMINGHAM
VERDE SW1, LONDON SW1
UXBRIDGE BUSINESS PARK
BOUTIQUE HOTEL, CENTRAL LONDON
ONE WELBECK STREET, LONDON W1
ONE FORBURY PLACE, READING
TEN TRINITY S(cid:52)UARE, LONDON EC3
HIGH PROFILE OFFICE DE(cid:57)ELOPMENT, WEMBLEY
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
9
TEN TRINITY SQUARE
LONDON EC3
The first part of our sensitive restoration and redevelopment
of the former Port of London Authority building, opposite
the Tower of London, has been completed.
The landmark Grade II* listed building has now opened as
the Four Seasons Hotel London at Ten Trinity Square.
We have taken a considered,
sensitively detailed response
to bringing this listed building
back into use.
While it was important that
the original design intent of
the building was respected, we
were careful to avoid a pastiche
replication of elements
Suzette Vela Burkett
Managing Director - UK
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
11
FRANKFURT -
FOCUS ON AN INTERNATIONAL PLACE
by MARCUS DIETZSCH
Marcus Dietzsch,
Office Director - Aukett + Heese
Frankfurt studio, describes how
the Frankfurt (cid:77)oint venture office
applies international experience
and awareness locally and abroad
- and to what extent Brexit may
in(cid:565)uence the Frankfurt market
over the next few years
AUKETT + HEESE Frankfurt GmbH is a lean and flexible office allowing it
to adapt quickly to market conditions and challenges.
We work regionally and internationally in the heart of Frankfurt, one of
the most international cities in Germany. Despite the constant change
and dynamic growth, Frankfurt remains a compact and manageable city.
The implementation of Brexit, however, will be a test for the entire
EU but in particular for Frankfurt. It is yet to be seen just how many of
Britain's banks will relocate operations from London to the German
financial capital city. Now that Prime Minister May has announced a
'hard' Brexit, the preparations for a major move have become apparent,
and rumors have been circulating...
In this climate, Frankfurt becomes increasingly attractive for a number of reasons: stability and
strength of the German economy, the headquarter of the ECB is located here, the international
airport as a major transportation node, relatively low lease rates for office space, and a high
quality of living. However, Paris, Dublin, Luxemburg, and Amsterdam are all serious contenders in
this regard.
In light of Frankfurt's prominent position in the European financial structure, chances are good
that a significant portion of the jobs in the financial sector will be relocated from the Thames to the
Main river in the course of the upcoming restructuring.
Frankfurt is now faced with the challenge of providing the proper preconditions to allow for such a
major migration (for example, the housing market). Conservatively estimated, there will be roughly
8000 long-term jobs coming to Frankfurt in the next several years. However, the industry will not
wait for the finalisation of negotiations and legislation. Therefore, it is expected that more than
2000 jobs will be relocated to Frankfurt by the end of 2018.
On the other hand, the consolidation within the local banking industry will, to a greater degree,
counteract the Brexit induced influx of jobs, such that the net variation in jobs within the financial
sector will be relatively minor. It is estimated that there will be approximately 62,000 bankers
in the German financial capital at the end of 2018. Employees of the major banks in Frankfurt
(Commerzbank, Deutsche Bank, etc.) unemployed due to down-scaling can be hopeful about
finding other work within the financial sector.
The current international and local media reports that the financial market is in motion:
For example, the American investment bank Goldman Sachs has denied that they will reduce the
London operation by half and will establish a European bank in Frankfurt. “We have not yet made a
decision and we continue to monitor the situation.”
At the world economic forum in Davos, the president of HSBC Stuart Gulliver, said that about 20
percent of commercial transactions will be relocated to Paris, and that about 1,000 employees will
most likely have to be relocated from London.
The president of the board of directors at UBS, Axel Weber, announced that roughly 1,000 jobs will
have to be relocated if Great Britain were to lose access to the EU domestic market. At the moment
we will have await the results of the Brexit deal, but one must plan for all eventualities.
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
Also Barclays CEO Jes Staley announced that his bank would be able
to do some of its business from Germany or Ireland. “We will have to
relocate certain activities” said Staley in a BBC interview. The majority of
the activities will remain in Great Britain but Germany and Ireland are
“the options we're looking at”.
Commerzbank has dramatically reduced investment banking in London
and CitiGroup is looking to relocate hundreds of jobs to Dublin.
Aside from Frankfurt and Paris, Madrid and Amsterdam are being
considered as possible locations for banks within the EU.
“As Brexit gains clarity, companies are increasingly reviewing and
calculating where there is enough suitable office space within Germany”,
said Michael Voigtländer, real-estate expert at the German Economic
Institute (IW). “Downstream there will be an increased demand for
housing in the second half of the year”. The focus was primarily on
Frankfurt “the demand for prime real-estate in Frankfurt will probably
increase and drive pricing”.
If that’s the case Frankfurt says “Willkommen” - and we would like to
help everyone who's interested to help guide them through this dynamic
change.
As noted, the real estate and construction industry in Frankfurt is a
closely knit group of players, and we are a part of this group that know
and trust one another. We have often been referred to clients looking
for a local partner with international experience.
DATA CENTRE CONVERTED TO BANK OFFICE
> page 14
< page 13
We have found our particular niche within the market. We are the
locally connected and internationally networked architectural practice,
with qualifications and experience in developing and delivering trend
setting, innovative and communicative workplace concepts. We are also
familiar with the specific constraints and advantages of working within
Frankfurt’s high-rise buildings, an uncommon building type in Germany.
Our office has been successfully creating exiting projects in Frankfurt
and throughout Germany, and internationally for over 16 years.
This has been made possible by our qualified employees, who not only
have the necessary technical skills and knowledge, but are also able
to communicate and interact multi-culturally. The many repeat clients
and framework agreements with international banks, insurance and IT
companies is proof of customer satisfaction.
Besides delivering typical architects work in best quality, our clients
appreciate that we are also able to deliver comprehensive services to
international standards such as LEED certification. Thus we were glad to
support Bank of New York Mellon achieving LEED Gold for their Frankfurt
headquarter as well as for two follow-up projects the bank carried out in
Poland. For that our LEED AP being qualified in the US could act jointly
with our polish colleague, together forming a successful team.
I also bring my personal experience and skillset to the table. I took
over responsibility for the Frankfurt office over 7 years ago, after
serving for many years in another award winning design practice with
uncompromising design and quality standards. I have adopted the same
high standard and couple this with our desire to prioritise the client’s
requirements, and to successfully and economically run the office in the
face of myriad challenges.
Working from this point we have been able to expand our expertise to
additional areas. We have taken on the detailed design and construction
documentation for complex and large scale projects. For example, we
were contracted by Hochtief for the 27,000sqm office and laboratory
building for Agilent, which is now nearing completion.
IT GROUP, GENEVA
AGILENT TECHNOLOGIES, WALDBRONN
We have also branched out into the areas of renovation and
refurbishment in regards to fire protection, energy efficiency and
defensive maintenance. We are currently working on such projects
in high-rise buildings in Duisburg and within the Frankfurt
metropolitan area.
At the same time we have expanded our expertise in project
management and consulting, acting on behalf of a developer for
tenant improvements; taking projects from inception to execution
and hand-over.
We have also taken on the role of coordinating and constructive
implementation of CI-Design for a large insurance group for their
new headquarters.
INSURANCE GROUP, COLOGNE
Our office has become known for quality,
design, economy and client satisfaction.
And, we are well positioned to take on the
new challenges arising out of a fast-paced
and ever-changing market
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
15
RECENT AND CURRENT
INTERNATIONAL PROJECTS
ALLIANZ OPERATIONS CENTRE, IZMIR
MONET APARTMENTS, MOSCOW
PERM RESIDENTIAL TOWERS, SIBERIA
MANAR MALL, RAS AL KHAIMAH
BAKER MCKENZIE, PRAGUE
MIRDIF COMMUNITY MALL, DUBAI
NEW HOTEL PROJECT, ABU DHABI
AB DEVELOPMENT, ARCUS III, MOSCOW
VODAFONE, ISTANBUL
CUBUKLU RESIDENTIAL PRO(cid:45)ECT, TURKEY
IT GROUP, BERLIN
KURSO(cid:57)OY APARTMENTS, MOSCOW
FONTENAY HOTEL, HAMBURG
STONE BREWING, BERLIN
NIDAKULE KU(cid:61)EY, ISTANBUL
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
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JTI
MERCURY CITY TOWER, MOSCOW
JTI’s new, modern headquarters in Moscow has extensive
client hospitality amenities and a progressive workplace.
The design is tailored to strengthen their corporate brand
expression and culture. Concept design was by SOM.
Our close collaboration through the client engagement
process and technical compliance within Russian regulations,
developed the design through subsequent work stages
and through construction to completion.
The project was Winner of Best Office Award 2016
at the Office Next Awards, Moscow and winner of the
Best Office of 5,000 - 10,000sqm Award 2016 at the MCFO
(Moscow Construction and Fit-Out Association) Awards.
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
19
EXPERIENCING
TOMORROW
by Nicholas de Klerk
Our concept hotel room – named ‘Bivouac’ – was designed and built
for the 2016 Sleep Event hotel design show, which took place at the
Business Design Centre in Islington, London.
We were one of five international design studios invited to take part.
This was an opportunity for the Aukett Swanke Hotels team to test ideas
in a full scale mock-up which responded to an unusual brief without the
usual constraints that designing an actual hotel room brings.
This gave us the freedom to experiment with concepts, materials and
processes, challenging the very idea of what a hotel room could be.
Nicholas de Klerk,
Associate - Aukett Swanke,
explains the design,
construction and possible
future applications
of Aukett Swanke’s
‘Sensation-Oriented’
concept hotel room, built
for the 2016 London-based
Sleep Hotel Design Event
The brief we were given was based on new market segmentation research by German research
company, the Sinus Institute, which examines market segments, defined as ‘tribes’, based on
lifestyle and values as opposed to age and income alone. Five of the so-called tribes were chosen
and allocated to a designer to conceptualise a hotel room for that particular group.
Alongside the Established, Performer, Digital Avant-garde and the Intellectual groups, Aukett Swanke
was asked to design a room for the ‘Sensation-Oriented’ Tribe. This is a largely youth-oriented
segment, a group of people who consider their life on holiday to be their real life, in contrast to
their everyday life.
They also travel in groups, with friends and peers, to festivals and event-based experiences and
often identify with social subcultures.
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
Our Concept
As a consequence, we felt that the room we designed had to
embrace both a social element and somehow match the intensity
with which our tribe experienced their stay. Our departure point
was to consider how people come together in public places for
both formal and informal events and how they adapt landscapes
for the purpose, creating stepped theatres, spaces for play,
entertainment and performance.
In addition to the sleeping area and bathroom set out in the
brief, the ‘third space’ within our room is a social space where
the sensation-oriented guest can gather with friends and peers.
A series of steps creates a transition between the social space
and the more intimate sleeping area behind. The desk was
designed as an extension of this landscape, creating a false
perspective within the room.
A range of surface types and depths, from deep, soft and diffuse,
to flat, hard and reflective modulated the visual, tactile and
acoustic character of the room. All of the elements play with your
spatial and sensory perception of the space, making you hyper
aware of your experience in it.
> page 20
< page 21
Innovations and Future Applications
Our approach to the brief, as well as the time and space constraints that
we were presented with, prompted a series of conceptual, material and
process-driven innovations.
Conceptually, within hotel design, architecture and interior design are
often quite separate processes. We fused the architecture and interior
design of the room, using the structure as a spatial device and the
depth of the wall surface to integrate lighting and modulate the acoustic
qualities of the space. This turned the experience of the room into a
constantly changing and responsive one as you move around within it.
The incorporation of a social space within a standard sized individual
room, using both furniture and level changes, is a fairly radical
reimagining of the type. It opens up the room to a far wider user group
and makes its use much more flexible as both a leisure and work space.
This is something we will explore further in future projects.
Given that this was designed for a temporary installation, we used
relatively cost-effective and readily available materials to generate an
immersive effect. The white fibreglass mesh both reflected and let light
through it and created a visually and acoustically soft interior. Having
prototyped the effect, we can now explore it further with other materials
perhaps more suited to hotel use.
The room had to be built under challenging time constraints and in
a relatively difficult-to-access area within the larger exhibition area,
so we designed it as a series of demountable cassette units that were
preassembled off-site. This was then disassembled and rebuilt on-
site, allowing us to build a very complex space relatively quickly, while
leaving time for commissioning and sequencing of the integrated lighting
system which made use of new and as yet untested technology. This also
required a great deal of iterative design documentation to be produced
very quickly which we achieved using an automated three dimensional
design software.
These are all processes which we can take forward into guestroom
design and construction – from the use of prefabrication to produce
complex surfaces with integrated technology, which would otherwise
be cost and time prohibitive to build using traditional methods, to the
potential to rethink the whole idea of soft-refurbishment of hotel rooms.
Hotel rooms need to be updated on a regular basis, to keep the offer
fresh and maintain the quality of the interior, but also to keep pace with
rapidly changing technology.
The process we have developed imagines a high-
concept, componentised room which can be updated
in whole or in part, with as much off-site fabrication as
possible. This will improve build quality and minimise
site based works and programme.
It also allows for a much more sustainable approach
to guestroom design and fitout, in which elements can
potentially be reused, refurbished or repurposed and
then recycled at the end of their useful life.
Finally, we speculated on how multiples of this room
might be brought together to create a community of
social spaces. These would be on a spectrum varying
from emergency housing and disaster relief, through
to festivals and camps, and indeed a new kind of
‘sensation-oriented’ hotel.
The flexibility of the process and the
design approach is such that we think it
can be adapted for all of these situations,
offering some fresh, innovative thinking
which is firmly grounded in the history
and culture of hospitality itself
22
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
23
The concept is simple and agile, being a
structural and services chassis composed as
a tower, mid or low rise design, and either
as a new build or inside an existing form
VISUALISING
TOMORROW
by TOM ALEXANDER
We are living in a digital data storm fed by disruptive technology.
This phenomenon, combined with a greater focus on people’s needs
and choices, has to have a major impact on space and its architectural
enclosures - prompting debate and ideas that are challenging the
traditions of how we design for learning and working.
The traditional office floor plate is highly efficient and can be an
exemplary place to work, stacked up to create ever higher towers
in urban centres but, in the increasing war for talent, employee
attraction and retention, progressive organisations are recognising
that this talent has new spatial demands to enable and balance their
productivity and wellbeing.
Tom Alexander,
Director - Design,
discusses our recent
explorations into the
offices of the future . . .
The traditional office floorplate often echoes the rigidity of a factory production floor and is
measured in square feet or square metres, considering only the space around our shoes. This
valuation of a property forgets the whole person, yet when we think about the space we actually
individually occupy it is liberating. It considers the light, air, height, views, health, movement and
acoustics around them, as well as its fiscal value which could then be considered in cubic feet or
cubic metres (see below). Our R+D propositions have initiated a market debate around this notion
of designing for people’s spatial needs and choices in balance with the commercial models for
workplace development.
There is also a critical relationship between education spaces and the workplace. Over the last
20 years or so education institutions have been learning from tech workplaces like Google and
Facebook, and more recently from a wave of smaller urban start up habitats, introducing choices
for teaching and learning spaces that enabled students to in part self-learn, more like adult
workers with responsibilities for their own timetables and subject plans.
> page 26
24
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
The property agents are actually saying our design
propositions need to be developed out now to meet this
spatial demand, either in new or existing buildings, so
we’re looking forward to an adventurous evolution with
our Work / Learn / Live / Play chassis
< page 24
Looser fit, higher ceilings, fresh air, breakout spaces and shared atriums are some of the
physical benefits students and tutors enjoy for greater creativity and productivity. This is evident
in schools and universities, inspiring a generation that is now taking a hold in the workplace. It
is this generation that demands something more healthy, spatially agile and enjoyable to drive
their working lives, but the current cohort of workplace tenants are now also sitting up from
their desks and saying I want some of that. All generations want interesting places to meet and
work, and of course this is then not limited to the tech sector, as all professions and workplace
industries want and deserve something that will inevitably benefit their employers.
The workplace is changing as a result, popular existing character buildings changing from say
industrial to agile workplace is the norm but also limited in number, so new buildings have to
re-think the rigid stacked floorplate approach whilst questioning the leasing models so as to
match evolving and sometimes volatile business behaviours. This is true of SMEs but also of the
larger corporates who are aware of the evolution and starting to drive some of these spatial,
Value by Volume changes in their own spaces as they compete with the tech giants for the global
talent pool.
Amongst other ideas, we are looking at industrial type portfolio leases, hotel operating models
and even renting by volume for the spatial variety illustrated in our designs on these pages.
For example a tenant could take a volume lease in a building of 150,000cuft at say £5/cuft,
equivalent to two typical floors at £50-60/sqft.
This would secure them a variety of spaces in the building from a meeting box in the ground
floor Big Lounge, a couple of quiet zone floor plates and say two of the unique double height
volumes in which they have the freedom to add and remove platforms as well as walls. These
spaces have elastic adjacencies to each other meaning they can fit into an existing building or in
the new sustainable chassis we have created that allows for a singular use, different cohabiting
uses and change of use.
We have been invited to present and discuss the research and ideas at conferences in London,
Moscow and at the World Architecture Festival in Berlin. Developers, agents, specialist
consultants and tenants have all been highly supportive and keen to explore the possibilities of
providing workplace choice and spatial variety for start-ups and established businesses within
the same building.
The traditional and digital media outlets have also been interested with articles and interviews
on Reuters TV, Blueprint, Architect’s Journal, New London Architecture, Estates Gazette, OnOffice
and Property Week.
26
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
MOLECULAR SCIENCES RESEARCH HUB
IMPERIAL WEST, LONDON W12
Our shell and core design for the new Molecular Sciences
Research Hub for Imperial College is now complete, and
the fitout is in progress. The building forms a centrepiece
to the northern half of the Imperial West campus.
The project was won following a design competition, and
has evolved to include high specification laboratory and
technical areas clustered around a full height atrium.
The main façade incorporates an elegant composition
of stone and perforated bronze cladding which creates
a dynamic frontage to the new Imperial Square. The
building establishes a positive transparency, revealing
its inner workings and encouraging the physical and
visual connectivity fundamental to innovative research.
Flexibility, adaptability and sustainability are core
features of the design, which also incorporates an
Energy Centre with links to future development phases
of the campus.
28
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
29
EVALUATING TALENT -
UNLOCKING OPPORTUNITY
by ROBERT FRY
The acquisition of the John R Harris & Partners Limited and Shankland
Cox Limited in June 2015 and February 2016, respectively, expanded
the Aukett Swanke talent pool in the Middle East region tenfold in
just 8 months as a part of longer term strategy to create a significant
service offer and presence in the region.
Having participated in the due diligence process during the
acquisition stage and as a UK based architect with some
experience of the Middle East in the past, Bob was ideally placed
to independently assess the operational capability and creative
potential of the overall organisation from an architectural and
engineering services viewpoint.
Robert Fry,
Managing Director –
International, discusses
how Aukett Swanke have
capitalised upon two
Middle East acquisitions
by developing a strategy to
assess talent recognition
to secure future growth
and presence in the region
during the stagnation of the
UK economy and ongoing
political uncertainty in Europe.
3 Entities, 6 Offices, Operating In 4 Locations
During September 2015 as a part of the Shankland Cox Limited due diligence process a series
of risk assessments, reviews of project agreements and team resources were undertaken across
what was to be the largest addition to the Group’s capability since the Aukett Fitzroy Robinson and
Swanke Hayden Connell merger in 2013.
This process facilitated a greater understanding of the nature of the combined architectural and
engineering capabilities available, the geographic spread of workload and the nature of the talent
pool, enabling some fine tuning of the organisation ahead of the completion of the acquisition.
A strategy was developed following this last acquisition in February 2016 to undertake an
independent review of all the key technical staff below the current Director level within the three
entities forming the operation.
John R Harris & Partners
DUBAI
Shankland Cox
RAS AL KHAIMAH
Shankland Cox
DUBAI
Aukett Fitzroy Robinson International
ABU DHABI
Shankland Cox
AL AIN
Shankland Cox
ABU DHABI
Operational Review
The review was undertaken between May and September 2016 and assessed the skills and talents
of all key personnel and identified those capable of further development, alongside which a form
of organisational diagram was developed to facilitate integration, succession and growth of the
business in the longer term. The process involved the development of a tailored questionnaire
aimed at each key staff member to capture skill sets, qualifications, personal ambitions, attitudes
towards succession and promotion together with other observations or topics relevant to the
exercise.
This was undertaken ahead of one to one interviews that followed and explored each individual’s
competencies in relation to client relationships, business development, commercial awareness,
design talent, quality management, knowledge transfer, teamwork, mentoring, creativity,
innovation and technical skills. The various capabilities of each employee were then mapped
onto a series of charts to show comparative strengths of skills sets relative to four key areas of
experience within the business including sectors, projects, disciplines and commercial attributes.
Qualitative Skills Mapping and Gap Analysis
This qualitative mapping of skills and attributes on a firm wide basis revealed a rich tapestry of
highly valuable skills and talents within the group, but it also revealed some hitherto suspected
gaps which the process brought into significant sharp focus and requiring attention.
A series of key recommendations accompanied by other observations were made in a presentation
to the Directors in July 2016. These covered an overall assessment of the firm’s capabilities
including the gap analysis, succession planning and the identification of which staff might evolve
into key role holders within a proposed organisational diagram for the future.
This significant first step of the review was wholly and positively endorsed by the Directors.
Emerging from it came a desire to explore how the ‘qualitative’ nature of these outcomes could be
developed into a ‘quantitative’ assessment of the skills and potential roles available with a more
SUCCESSION
specific idea of what type of organisational model might best exploit these assets.
P E O P L E
ASPIRATION
K
L
L
S
S
I
E
L
P
O
E
P
S
S
E
N
K
A
E
W
S
S
E
N
K
A
E
W
H
T
G
N
E
R
T
S
S
S
E
N
K
A
E
W
30
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
POTENTIAL HIGH ACHIEVER
S K I L L S
POTENTIAL HIGH PERFORMER
NON SUCCESSION
> page 32
31
< page 31
Quantitative Analysis
Two overall goals were defined. These were to ‘quantitatively’ identify which individuals could
become key role holders, and to formalise an optimum organisational structure for the group. This
would then be developed to create a timeline for execution.
All of the participants interviewed and evaluated independently by Bob allowed for the detailed
analysis that followed to be carried out as a relative assessment across the group and not an
absolute one that focussed solely on particular individuals. The scoring mechanism that he
developed placed the relative talents of individuals quantitatively in relation to their roles,
disciplines, years of experience and other competencies.
The comparative values of individuals and groups that were established then gave us flexibility
to consider how potential key role holders and groups of individuals could form business units
intended to optimise geographical and market priorities operationally.
A most fascinating aspect of this process was observing how individuals from the three previously
separate entities could be complimentarily matched into teams and groupings that were not
visible at the outset, providing us with a much clearer definition of the potential business unit
arrangements that we were seeking.
D E S I G N A N D T E C H N I C A L
271
387
554
394
101
S U P P O R T S E R V I C E S
ORGANISATION STRUCTURE SCORING CHART
As this transformation of our organisation continues to evolve
we are improving the implementation of our ongoing workload
and crucially securing more significant bid opportunities.
We look forward to developing our capability and service offer
to support existing and new clientele in the region
during 2017 and beyond.
Strategy
Succession Planning
3 0 j a n u a ry 2 0 1 7
&
GROUP
MANAGEMENT
UNITED
KINGDOM
LUKE SCHUBERTH
Managing Director -
UK ‡
SUZETTE VELA BURKETT
Managing Director -
UK ‡
STEPHEN EMBLEY
Managing Director -
Middle East ‡
ROBERT FRY
Managing Director -
International ‡
DAVID HUGHES
Director ‡
JAMES ATHA
Director - Veretec
KEITH MORGAN
Managing Director - Veretec
OUR
KEY PEOPLE
NICK BIRCHALL
Director
MIDDLE EAST
PETER EATON
Director
TOM ALEXANDER
Director
STEPHEN ATKINSON
Director
PHILIP LOGAN
Chairman - Middle East
Shankland Cox Ltd
PAULA MCKEON
Finance Director -
Middle East
FRANK NOWACKI
Director
John R Harris & Partners
BOB PUNCHARD
Director
John R Harris & Partners
STAN TURKINGTON
Director
Shankland Cox Ltd
CONTINENTAL EUROPE
JV
PARTNERS
LARISA LIGAY
Director
Moscow
TOM NUGENT
Director
Moscow
BURÇU SENPARLAK
General Manager
Istanbul
LUTZ HEESE
Managing Director
Aukett + Heese
ANDREW HENNING JONES
Director
Aukett + Heese
MARCUS DIETZSCH
Director
Aukett + Heese
JANA LEHOTSKA
Director
Aukett sro
TOMAS VOREL
Director
Aukett sro
32
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
‡ Group Management Board
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
33
BOARD OF
DIRECTORS
ANTHONY SIMMONDS
Non Executive Chairman *+ #^
MA FCA FCCA Aged 72
JOHN BULLOUGH
Non Executive Director +*#
FRICS Aged 66
Anthony joined Aukett Swanke as a non executive director in 2009 and was appointed Non Executive
Chairman in March 2012. He is a qualified chartered accountant and former senior partner of a top
50 accountancy practice. He has had many years’ experience in dealing with quoted public companies
on a professional basis including advising on corporate finance, M(cid:9)A, due diligence, as well as initial
introductions to the market. He has held a number of executive and non executive positions and is
experienced in the strategic development of businesses and the management of financial risk.
(cid:45)ohn (cid:77)oined(cid:98)Aukett(cid:98)Swanke(cid:98)as a non executive director in (cid:45)une 2014. He has over 40 years of international
experience in property development and investment. Following 18 years with Grosvenor, John joined
ALDAR Properties PJSC in Abu Dhabi and was their Chief Executive until November 2010. He is a Fellow
of the Royal Institution of Chartered Surveyors and is a Past President of the British Council of Shopping
Centres.
NICHOLAS THOMPSON
Chief Executive Officer (cid:6)(cid:65)
BSc(Hons) MBA Aged 62
ANDREW MURDOCH
Executive Director
MA RIBA Aged 67
Nicholas is Aukett Swanke’s CEO and has over 30 years of experience in the property and consulting sector.
He originally joined Fitzroy Robinson as its Finance Director in 1994 and was promoted to Managing
Director in 2002. In 2005 he became CEO of the newly merged ‘Aukett Fitzroy Robinson’ following a reverse
takeover. He holds a Master’s Degree in Business Administration from City University and currently sits on
the Cass MBA Advisory Board. He is also a qualified accountant and has a degree from Bath University. In
2015 he became a non executive director of the Wren Insurance Association Limited, a mutual insurer for
architectural practices, which is regulated by the Financial Conduct Authority and Prudential Regulation
Authority. Nicholas is responsible for the Group’s strategic growth plans.
Andrew is a qualified architect who (cid:77)oined Fit(cid:93)roy Robinson in 1984. He was Chairman of Fit(cid:93)roy Robinson
in the 1990s, and was appointed to the board in December 2013. He is architect to a number of significant
buildings in central London and the UK regions, and has a strong and enduring client following. His
work includes the (cid:565)agship Fenwick store in Bond Street, the Home of Alfred Dunhill in Mayfair, and the
refurbishment of the Royal Exchange in the City, and he is currently working on a number of prestigious
pro(cid:77)ects in the West End. Andrew sat on the board of management of the British Council of Offices for
12 years.
BEVERLEY WRIGHT
Chief Financial Officer (cid:9) Company Secretary (cid:65)
BA(Hons) FCA Aged 58
NICK PELL
Executive Director
BA(Hons) Aged 55
Beverley (cid:77)oined Aukett Swanke in September 2014. She is a qualified Chartered Accountant and has over
25 years of experience with construction and engineering firms including significant experience in senior
financial roles for international companies. She spent 16 years with Mowlem Plc in a variety of roles, then
in 2006 she took over as Commercial and Financial Director Europe and Middle East at CH2M, becoming
International Commercial Director in 2012. Her roles have covered a very broad spectrum including tax,
treasury, corporate finance, M(cid:9)A and structuring, as well as commercial and financial management,
analysis, control and governance. Since joining Aukett Swanke, in addition to ensuring good day to day
financial management, Beverley has worked on both commercial and strategic matters. Much of her focus
has been on the future shape of the Group and on the integration of the recent acquisitions.
Nick was appointed to the Board in December 2013 upon the acquisition of Swanke Hayden Connell
Europe Limited and is International Interior Design Director. He has over 20 years of experience designing
interiors projects across Europe having graduated from Kingston Polytechnic. Nick has established a
reputation for designing creative interior solutions for a wide range of project types; hotels, restaurants,
retail banks, residential, leisure facilities and commercial office space and he has led the design direction
of several award winning pro(cid:77)ects. His pro(cid:77)ects are wide ranging, including the British Council for Offices
award winning (cid:57)ISA H(cid:52) fit out, and an experimental hotel pilot pro(cid:77)ect.
BOARD COMMITTEES
* Member of the Audit Committee chaired by Anthony Simmonds
+ Member of the Remuneration Committee chaired by John Bullough
# Member of the Nomination Committee chaired by Anthony Simmonds
^ Member of the Internal Controls and Risk Committee chaired by
Anthony Simmonds
34
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
35
CHAIRMAN'S STATEMENT AND
CORPORATE GOVERNANCE
Anthony Simmonds
Non Executive Chairman
11 January 2017
I am responsible for overseeing the effectiveness and composition of your Board
and report on the overall performance of the Company.
Financial highlights
Encouragingly this year revenues have continued to climb and now stand at £20.8m (2015: £18.7m) achieving our
stated strategy. This improvement re(cid:565)ects new earnings (cid:565)owing through from the recent acquisitions in the Middle
East o(cid:909)setting a slowdown in the United Kingdom and Russian operations. This growth in our revenue has enabled
us to enlarge our business footprint.
The year turned out to be more difficult in achieving our profit target. Profit before tax at (cid:101)0.93m (2015: (cid:101)1.87m)
was the result of a number of matters that are more specifically described in the Strategic Report on page 41.
After tax, our EPS was 0.47p (2015: 1.00p) and our cash funds were equivalent to the prior year at £1.84m
(2015: £1.87m).
During the year the Company recorded two dividends totalling 0.18 pence per share. We declared a slightly lower
interim dividend at 0.07 pence per share as a re(cid:565)ection of market conditions.
Corporate Governance
In addition to being non executive Chairman of the Company, I chair the Nomination, Audit and Risk Committees.
The Nomination Committee is responsible for reviewing the e(cid:909)ectiveness and composition of your Board. The
Audit Committee is responsible for ensuring that the Company operates with appropriate corporate governance
and financial controls(cid:30) and the Risk Committee which is a sub committee of the Audit Committee, is charged with
identifying and assessing strategic and other Company risks and in so doing to provide ways of mitigating, avoiding
or eliminating such risks. All Committees report to the Board.
Your Board comprises six members. Nicholas Thompson is the CEO and the CFO is Beverley Wright. Both have
considerable experience in managing a services and construction orientated business. John Bullough, my fellow
non executive Director together with myself, provide an independent oversight drawn from both professional
and support services industries along with client side and development activities. Andrew Murdoch and Nick Pell
represent the skills of architecture and interior design. At this stage in our development we are able to use our
collective skills to oversee the Group’s activities.
However, our business activities are becoming broader and more diverse and in the longer term your Board will
consider whether changes are required to better re(cid:565)ect the enhanced activities that we undertake. As part of this
process the Board Committees, covering remuneration and nominations, are meeting on a more regular basis with
a full agenda of matters to be reviewed and debated under our current strategy. John Bullough and I will expand
on these areas in future reports.
As always I wish to acknowledge the contribution of the sta(cid:909) in our business as well as my colleagues on the Board
who continually respond positively to the challenges and opportunities that our organisation presents.
To them, I o(cid:909)er my personal thanks for their individual contributions.
1906
Walker &
Gillette
1949
John R
Harris
1955
Fitzroy
Robinson
1972
Aukett
1975
Swanke Hayden
Connell
2005
Aukett
Fitzroy Robinson
1962
Shankland
Cox
2013
Aukett
Swanke
2015
Aukett
Swanke
2016
Aukett
Swanke
We have made considerable progress with our strategic growth plans
for the Group by making a further acquisition in the Middle East.
2017 will see a period of consolidation of our recent additions in order
to benefit the Group over the longer term.
Nicholas Thompson
Chief Executive Officer
36
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
37
OPERATIONAL
HIGHLIGHTS
ONE FORBURY PLACE
READING
•
•
Successfully completed the acquisition of a major
second business in the Middle East to further diversify
revenue streams and increase resource capability
A difficult year in the UK as uncertainties around Brexit
led to a substantial weakness in the market requiring
some downsizing
• Middle East integration progressing well with our
larger operation attracting a higher level of enquiries
•
Continental Europe making good progress, strong
performance in Germany and Turkey where we see
scope for growth; Russia continues to be very weak
• Won six Industry Awards in the UK, Russia and Turkey
38
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
FIVE YEAR
SUMMARY
Years ending 30 September
Continuing operations
2016
£’000
2015
£’000
2014
£’000
Revenue
20,841
18,668
17,326
Revenue less sub consultant costs
18,410
16,886
14,732
Profit (cid:18) (loss) before tax
Basic earnings (cid:18) (losses) per share (p)
Dividends per share (p)
Net assets
Cash and cash equivalents
Net funds(cid:13)
927
0.47
0.18
7,189
1,839
790
1,870
1,400
1.00
0.22
6,251
1,873
1,873
0.65
0.18
5,053
1,891
1,778
(cid:13)Net funds include cash and cash equivalents less bank loans and overdrafts (see note 22)
2013
£’000
8,406
7,116
550
0.26
-
3,029
1,343
1,080
2012
£’000
9,150
6,744
210
0.08
-
2,652
739
326
CORPORATE
INFORMATION
Company secretary
Beverley Wright
cosec@aukettswanke.com
Registered number
England & Wales 2155571
Share registrars
Equiniti
www.equiniti.com
0121 415 7047
Auditors
BDO LLP
www.bdo.co.uk
Investor (cid:18) Media enquiries
Ben Alexander 07926 054 111
Registered office
36-40 York Way
London N1 9AB
Website
www.aukettswanke.com
Nominated adviser and broker
finnCap
www.finncap.com
Bankers
Coutts & Co
www.coutts.com
Solicitors
Fox Williams
www.foxwilliams.com
STRATEGIC
REPORT
The Directors present their Strategic Report on the Group for the year ended 30 September 2016.
STRATEGY
We are a professional services group that principally provides architectural design services along with specialisms in master planning, interior
design, executive architecture and associated engineering services. Our business operations are focused in the United Kingdom (“UK”), Germany
and the Middle East along with smaller operations in Russia, Turkey and the Czech Republic.
Our strategic objective is to provide a range of high quality design orientated solutions to our clients that allow us to create shareholder value over
the longer term and at the same time create a pleasant and rewarding working environment for our sta(cid:909). The cyclical nature of the markets in which
we operate gives rise to peaks and troughs in our financial performance, and management is cognisant that our business model needs to re(cid:565)ect
this variable factor in both its decision making and expectation of future performance.
In order to create a more resilient operating trading platform we embarked on an acquisition strategy to strengthen our UK and Middle East
operations in 2013. The objective being to mitigate as far as possible reliance on any one geographical market and at the same time to balance
the economic and political risks that property development activity faces in cyclical markets. A further beneficial aspect of this strategy has been to
spread our currency exposure which has been particularly beneficial in the post Brexit period where our primary currency, the pound Sterling, was
heavily devalued.
Our recent acquisitions have enabled us to establish three similarly si(cid:93)ed operations when measured by sta(cid:909) numbers. They are: the United
Kingdom with 135 sta(cid:909) (including licensees)(cid:30) the Middle East with 115 sta(cid:909)(cid:30) and, our wider Continental European operation, which includes
Germany, Russia, Turkey and the C(cid:93)ech Republic, encompassing a variety of business structures, totalling 175 sta(cid:909). This structure now creates an
organisation with some 425 sta(cid:909).
The enlarged qualified sta(cid:909) contingent has lifted the Group to 48th in the 2017 Building Design World Architecture 100 rankings. We were 51st in
2016.
With this more robust services platform now in place our aim is to reinforce our position in the three regional operations through local investment
into our skills and service o(cid:909)er to the extent that each of the local markets allow. The immediate ob(cid:77)ectives are to provide a high quality design
service and, at the same time, create a sustainable business model.
Beyond this we will continue to grow organically or by specific acquisition if deemed appropriate, although our longer term growth strategy will be
to focus more on diversifying our services o(cid:909)er to areas with a less transactional revenue profile.
Shankland Cox Limited (“SCL”)
In February 2016 we acquired 100(cid:8) of the equity in SCL, an architecture and engineering practice comprising 100 sta(cid:909) and operating across four
offices in the United Arab Emirates ((cid:522)UAE(cid:523)). The practice was acquired to provide a greater resource and skill base for our growing activities in the
region. In the immediate post acquisition period we significantly reduced the si(cid:93)e of one office (cid:514) rather more than originally planned, and right
sized another due to falling revenues. This resulted in excess costs in the second half. However, the overall result of the acquisition should be
beneficial to the Group in the longer term as the Middle East market and particularly the UAE continues to develop and presents more commercial
property development opportunities.
BUSINESS MODEL, SER(cid:57)ICES OFFERED AND MANAGEMENT
Our business model is founded on the creation of three regional operations (or Hubs) and for which we have developed a reporting structure that
allows for individual accountability at local office level based upon a series of Key Performance Indicators ((cid:522)KPIs(cid:523)) and common reporting formats.
This format is derived from the three Hubs having a di(cid:909)erent make-up in terms of service o(cid:909)er structure and type of operating entities.
In the United Kingdom there are specialist architectural and interior design skills that combine into a single reporting entity. In the Middle East
we have a number of offices that are separately licensed profit centres but come together as a single operating segment. Continental Europe is a
collection of individual business entities in di(cid:909)erent countries that are accounted for separately due to their divergent ownership structures but are
reported within a single operating segment.
We often act as Lead Consultant or General Planner, in which case we engage the wider design team directly. The financial e(cid:909)ect of this is to
increase our reported revenues and introduce a sub consultant line prior to reporting the net revenues attributable to our own services. This is the
preferred contractual route outside of the UK. Internally we describe revenue less sub consultant costs as ‘net earnings’.
40
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
41
The services o(cid:909)ered by the Group are covered by commercial architecture and interior design with some limited site orientated engineering services.
The sectors and skills covered by the operations are: Office headquarters and business parks, Hospitality and mixed use leisure, Retail shopping
malls and bespoke retail, Education and healthcare, Residential including individual houses or villas and apartments, Industrial warehousing and
Telecoms industry. Most offices work in their home markets but do work with other offices on pro(cid:77)ects where skills are transferrable.
Our senior management structure below Plc board level follows this regional format with four managing directors along with the CEO and CFO
forming a Group Management Board ((cid:522)GMB(cid:523)) where oversight of the whole business entity takes place. The GMB reviews and compares KPI
performance, agrees operating strategies, considers cross border investment such as IT and communications. Accounting, HR and PR are all dealt
with at local office level. All offices have a lead director plus support directors within their Hub.
GROUP ACTI(cid:57)ITIES
With the enlarged regional format, and following the recent acquisitions, our revenues have risen above £20m and they rise to over £30m if we
include 100(cid:8) of the gross revenues of our (cid:77)oint ventures, associates and licensee. It is against the latter number that we report our sta(cid:909) numbers
in the World Architecture top 100 ranking tables and which totalled 239 qualified fee earning professionals for 2017.
Our profitability has fallen during the year to around half of the result in 2015. Three main factors have contributed to this result. Firstly, the United
Kingdom continued to see lower volumes as we entered the current financial year and immediately before the EU referendum(cid:30) then in the post
Brexit period there has been a marked delay in decision making and new enquiries have fallen. We encountered more restructuring cost and less
revenue in one of the two Middle East acquisitions than had been anticipated in our original valuation although reduced through the release of
negative goodwill arising on acquisition(cid:30) and finally, Russia continued to incur losses despite a significant and progressive reduction in its cost base.
The management team is now focused on eliminating, reversing or ad(cid:77)usting for these factors in the new financial period in order to balance our
business model.
Bradfield Centre for Cambridge University, the (cid:101)20m Biomed
Realty building at Granta Park pre let to Heptares and a further
phase on the iconic Adelphi building o(cid:909) the Strand. One of
our largest projects was in the City with a major new hotel and
apartments at Ten Trinity Square opposite the Tower of London
for a Chinese developer.
(cid:57)eretec was also very active on a variety of pro(cid:77)ects in Beak Street,
Bishopsgate, Chelsea, Hanover Terrace, a school in Wimbledon
and a high quality residential scheme for Sir Robert McAlpine in
Lillie Square.
This year Aukett Swanke are placed at 19th in the A100 survey,
which ranks of the largest architectural practices in the UK,
measured by the number of qualified architects employed
However, slightly fewer pro(cid:77)ects were in the planning phase (cid:514) a (cid:101)39m H(cid:52) in Bristol, two sites in Birmingham for Goodman, Radio House in
Cambridge, the Flowers building at Granta Park, and a (cid:101)72m residential and office scheme in Staines.
We completed a range of interiors pro(cid:77)ects for (cid:45)PMorgan Chase, Schlumberger, SMBC Nikko, Ince (cid:9) Co, Lutron, KPMG, and various private
residences in Moscow.
Awards (cid:514) the UK had a number of successes this year. During the year (cid:57)eretec won the 2016 inaugural (cid:518)Executive Architect of the Year’ as awarded
by the Architects (cid:45)ournal. At the Office Agents Society Awards the Adelphi won the Best West End Development category and Forbury Place, Reading
won the award for Best Office Development outside of Central London.
The next year will prove challenging in the first half as we seek to generate revenue from current enquiries rather than from existing pro(cid:77)ects.
Encouragingly since the end of the year the enquiry level has stabilised with 24 new project registrations which compares with 30 for the same
period last year.
United Kingdom
As we highlighted in the Interim Announcement, the operation was impacted by a
general slowdown in construction activity in the first half but more so in the second
half as a result of Brexit. Whilst we saw new enquiries in the second half these did
not result in any material increase in short term revenues other than in our executive
delivery group, (cid:57)eretec. As a result net revenues for the year are 16(cid:8) down on prior
year and 22% in the second half alone, compared to the same period in the prior
year.
After the year end we reduced our staffing levels consistent with anticipated income
but are cognisant that we need to maintain our core skill base which carries with it
an excess cost in the short term.
In terms of projects a number of schemes were at or nearing completion by the year
end: two office pro(cid:77)ects in Uxbridge for Goodman, the PS(cid:52) H(cid:52) in Hemel Hempstead,
Pro(cid:77)ect (cid:57)erde for Tishman Speyer in (cid:57)ictoria, a (cid:101)104m science building for Imperial
College, a new store for Fenwick in Colchester, and a number of projects where our
specialist group (cid:57)eretec delivered pro(cid:77)ects designed by other architects.
We continued to deliver a number of projects during the site phase in London,
Cambridge and Reading. This included phase 2 at Forbury Place for M(cid:9)G, the
(cid:57)ERDE SW1
MIRDIF COMMUNITY SHOPPING MALL, DUBAI
Middle East
Net earnings in the region more than quadrupled to over (cid:101)5m following the acquisition
of SCL and with a full year’s contribution from John R Harris (acquired in June 2015).
The three companies in this region are gradually being integrated. We anticipate this
process being completed during the next twelve months. In the year a sta(cid:909) succession
exercise was undertaken by the GMB to review all senior sta(cid:909) below director level.
This project will form the basis for future promotions and development of the region’s
management structure.
The local companies undertake work for a wide range of clients including: a three year
du (telecoms) framework, ADNEC, Etisalat retail stores and data centres, Etihad, a new
Mall hotel for ALDAR, a private villa for a Sheikh, Abu Dhabi National Hotels, the new
Manar Mall retail shopping centre and Mirdif Community shopping mall, projects for
contractors Khansaheb and international consultants WSP, villas on the Palm (cid:45)umeirah,
the Bvlgari hotel and a residential site in Al Barari. Refurbishment of the Address Dubai
Mall hotel for Emaar, the guestrooms of an iconic 5(cid:13) hotel on the Palm (cid:45)umeirah and the
5(cid:13) Kempinski Mall of the Emirates hotel on the Sheikh (cid:61)ayed Road for MAF, along with a
large number of smaller projects.
We believe that our enhanced scale will provide more opportunities for us to bid on
ma(cid:77)or pro(cid:77)ects (cid:514) and this is now being evidenced in new enquiries. As such management
attention is now focused on strengthening the succession structure through existing design
and delivery skills along with achieving operating efficiencies across the businesses.
Continental Europe
Our reported net earnings, for the wholly owned businesses in this Hub, are under £1m,
whilst this sum is (cid:101)8.4m if 100(cid:8) of the associate and (cid:77)oint venture revenue is included.
This creates an undertaking similar in size to the other two Hubs.
The wholly owned Turkish operation returned to profit and eliminated its prior year
deficit. This performance is credible given the Coup attempt in (cid:45)une and the continuing
State of Emergency in the country. The office’s Bomonti Modern Palas pro(cid:77)ect (for
Extensa) was awarded the 2016 Best Architectural Design under the Completed Buildings
category in Sign of the City Awards (held by the national real estate organisation). The
office is a little under the optimal si(cid:93)e at the moment and we shall be seeking to grow
our market share.
U(cid:59)BRIDGE BUSINESS PARK
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
43
BOMONTI MODERN PALAS RESIDENTIAL TOWER, ISTANBUL
The headline financial results of the Group were:
Revenue
Revenue less sub consultant
Net operating expenses
Net finance costs
Share of results of associates and joint ventures
Profit before tax
Tax charge
Profit for the year
FINANCIAL
REVIEW
2016
£’000
20,841
18,410
2015
£’000
18,668
16,886
(17,730)
(15,283)
(20)
267
927
(106)
821
(10)
277
1,870
(215)
1,655
Revenues for the year were (cid:101)20.8m, an increase of 11.2(cid:8) on the previous year (2015: (cid:101)18.7m). Revenues less sub consultants also rose to (cid:101)18.4m
(2015: (cid:101)16.9m), a 8.9(cid:8) increase.
However our profitability has fallen during the year with profit before tax at (cid:101)0.9m compared to (cid:101)1.9m in 2015. Whilst lower than the previous
year, the result re(cid:565)ects a solid performance after taking account of the challenges which the Group has faced including volatility in the UK market,
particularly in the light of Brexit(cid:30) the geopolitical challenges in Russia(cid:30) and integration in the Middle East following our second acquisition there in
eight months.
The results for the second half show a slightly improved position when compared with the first half. Revenues, including SCL, improved by 8(cid:8) whilst
profit before tax at (cid:101)510k was 22(cid:8) higher compared to (cid:101)417k at March 2016.
Our tax charge for the year is (cid:101)106k (2015: (cid:101)215k), representing an e(cid:909)ective tax rate of 11(cid:8) (2015: 11(cid:8)). This is fully explained in note 11 but is
due to zero taxes in the Middle East combined with the use of tax losses in other jurisdictions, whilst the joint venture income is reported net of tax
within the trading results.
Re(cid:565)ecting this low e(cid:909)ective tax rate, our profit after tax at (cid:101)0.8m gives an EPS of 0.47 pence per share (2015: 1.00 pence per share).
United Kingdom
The general slowdown in construction activity in the first half continued in the second half following the Brexit vote. As a result net earnings for the
year at (cid:101)12.1m are 16(cid:8) down on prior year (2015: (cid:101)14.4m). Profits are down by half as fixed costs and sta(cid:909) reductions do not immediately follow
in tandem. The second half profit was similar to the first half. Looking forward the UK is likely to see a further reduction in revenues in the first part
of the new year before the position stabilises. Therefore we do not expect any contribution in profit terms from the UK until the second half. We
also anticipate reducing our space requirements by the half year in order that the operation can perform at a new staffing level.
Middle East
In terms of delivering our strategy of growing this Hub, to complement and counter balance the UK and Continental Europe, we have had a
successful year in the Middle East.
Our revenues at (cid:101)7.4m, compare well with (cid:101)2.1m last year, and re(cid:565)ect a full year’s trading in (cid:45)ohn R Harris and Partners (2015: 3 months), and (cid:77)ust
over seven months of Shankland Cox Limited, which was acquired in February 2016. Due to planned integration initiatives, intangible amortisation
of (cid:101)112k and also right si(cid:93)ing of the cost base, we have reported a modest profit before tax for the twelve months to September 2016 of (cid:101)41k (2015:
£47k) after release of negative goodwill arising on acquisition totalling £160k.
JTI, MOSCOW
The Russian operation, also wholly owned, has now been reduced to a minimum operating level and works on a limited number of projects
re(cid:565)ecting its current scale. We expect this operation to remain at this level for the foreseeable future and until the local market improves. This office
continues to be a successful design studio with our interior design for (cid:45)apan Tobacco International winning the Best Office Award at the Office Next
Awards and for the second consecutive year our Arcus III project has been recognised.
Berlin, in which we have a 25(cid:8) stake, continues to be significant contributor to the Group’s result. After a slow first half a series of ma(cid:77)or wins in the
second half lifted its performance to prior year levels. The office and its team continue to expand and reached 125 sta(cid:909) by the year end. Pro(cid:77)ects
include site work at Berlin’s new airport, a new facility in Berlin for Stone Brewing of the USA, Phase 2 Gropius Passagen for mfi-Unibail-Rodamco,
a 5(cid:13) hotel, The Fontenay, in Hamburg, an office tower in Frankfurt, a new development in Berlin for Hines, and the Anschut(cid:93) Mercedes Plat(cid:93) with
Hochtief. The office is a significant player in the local market and has a strong repeat client following.
Frankfurt has continued to improve its year on year performance with a longer term order book including an office relocation of 3,600 sta(cid:909) for an
international insurance company and regular work for Microsoft. We are also Tishman Speyer’s retained architect for Blackstone’s (cid:522)MesseTurm(cid:523)
office tower in the city of Frankfurt. Interestingly we have not seen any early evidence of financial services’ relocation to the city in the aftermath of
Brexit. This may in part be a function of German office regulations that adversely impact occupancy densities when compared to the City of London.
We are 50% owners.
Prague, where we also own 50(cid:8), has achieved a small profit this year based on the provision of drawing services to both the London and Berlin
offices. Local commissions have been at low ebb over the past few years but with the recent rise in GDP we have already seen a marked increase in
both architectural and fit out commissions. The office may soon start to grow again. Work during the year included office fit outs for Allen (cid:9) Overy,
Tieto, warehouse extensions for Semily and Schenker along with further work at Riverside School.
SUMMARY, GROUP PROSPECTS AND SHAREHOLDER (cid:57)ALUE
Whilst we had hoped for a better outcome in 2016, we remain encouraged by the progress that we have made in developing our business model
and that this will ultimately generate both the results and cash (cid:565)ow that we have anticipated. In the short term we expect the United Kingdom to
experience a further downturn in revenues against which we are rebasing our fixed costs through a reduced property requirement(cid:30) which will be
o(cid:909)set in part by a rapidly improving Middle East contribution. Our ob(cid:77)ective is to provide shareholders with a sustainable business model that can
positively respond to business cycles and deliver long term returns in both cash and profits generation and dividend (cid:565)ow.
On behalf of the Board
Nicholas Thompson
Chief Executive Officer
11 January 2017
44
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
45
Continental Europe
Consolidated revenues, as represented by Russia and Turkey, at (cid:101)1.3m are an 38(cid:8) lower than the prior year ((cid:101)2.1m)(cid:30) whilst profit before tax, also
including the (cid:77)oint venture and associate in Germany and the (cid:77)oint venture in the C(cid:93)ech Republic, was maintained at (cid:101)95k (2015: (cid:101)88k).
Continental Europe’s result is a mix of performances across the businesses where the greatest challenge within its portfolio during the year was
Russia. As previously reported, we have progressively restructured and downsized this business to what is now its minimum level.
Despite reporting a negative result in the Interim results, Turkey has had a strong second half and reported full year profits before tax. This is a
successful performance particularly as Turkey was under a State of Emergency during a large part of the second half.
Our Berlin (cid:77)oint venture, of which we own 25(cid:8), remains the best performer. It has maintained its previous strong performance which is particularly
pleasing as its result is after investment for growth.
Frankfurt has improved on its prior year performance with our 50(cid:8) share of its profit after tax increasing compared to 2015. During the year this
business has consolidated its market position and strengthened its order book.
The Prague (cid:77)oint venture made a small contribution to the overall result ((cid:101)8k being our 50(cid:8) share (2015: breakeven)) despite a lack of activity in
the local market.
Financing
Our total equity is now (cid:101)7.2m, an increase of (cid:101)0.9m over the prior year (2015: (cid:101)6.3m) and re(cid:565)ects the net trading results for the year, together with
£0.4m of foreign currency translation gains recognised through the consolidated statement of comprehensive income.
Net funds (see note 22) at year end were (cid:101)0.8m, comprising cash of (cid:101)1.8m and the loan taken out in respect of the acquisition of Shankland Cox
Limited, which now stands at (cid:101)1.0m. Excluding any balances and financing costs in respect of Shankland Cox Limited our net funds have been
maintained at the same level of the previous year (£1.9m). However, given the increased footprint in the Middle East and the need for regulatory
and banking collateral, in the short term there is less available free cash than previously.
As set out in in note 21 the loan to acquire Shankland Cox Limited was taken out in February 2016 for the principal sum of USD 1.6m representing
AED 6m. It is being repaid in equal quarterly instalments of USD 80k over five years. Other than this loan there were no other borrowings at year
end, although the Group has the benefit of a net (cid:93)ero overdraft facility from its bankers Coutts (cid:9) Co. This facility is used by the Group to hedge
foreign exchange exposures.
The Group has a strong focus on cash management and visibility of its liquidity position as well as future (cid:565)ows. The Plc acts as the Group’s central
banker, and whilst it may, subject to formal approval, advance short term working capital support, all businesses are required to be cash generative
or as a minimum cash neutral.
Future work
Tracking and keeping an accurate record of the pipeline of future work is key to understanding the business and its future shape and portfolio. It is
also essential in order to a(cid:909)ord the directors time to manage and react to any changes.
With the distribution of the business across the three Hubs, there are now di(cid:909)ering workload profiles:
(cid:527)
(cid:527)
(cid:527)
The UK has a lower level of assured work than previously, but has the benefit of a growing order book within the (cid:57)eretec business(cid:30)
The Middle East is building strength with many larger, longer term pro(cid:77)ects underpinning the growth strategy(cid:30) and
Continental Europe is mixed across the portfolio, led by the strength of Berlin, with Frankfurt, the C(cid:93)ech Republic and Turkey gaining greater
long term visibility and only Russia having intermittent instructions as a consequence of its local market.
Key Performance Indicators ((cid:522)KPIs(cid:523))
The key performance indicators used within the Group for assessing financial performance are:
(cid:527)
(cid:527)
(cid:527)
revenue less sub consultant costs which re(cid:565)ects the revenue generated by our own technical sta(cid:909) but excludes the revenue attributable to sub
consultants(cid:30)
the revenue less sub consultant costs being generated per full time equivalent (FTE) technical member of sta(cid:909). For our larger operations this
provides a barometer of near term efficiency and financial health. This figure when compared to the movement in total costs provides an
insight into the likely direction of profitability(cid:30) and
profit before taxation.
Segmental analysis of revenue less sub consultant costs and profit before taxation is given in note 3 (page 70).
Pro(cid:77)ect Working Capital
Pro(cid:77)ect working capital comprises net trade receivables(cid:30) amounts due from customers for contract work and advances received from customers for
contract work. The pro(cid:77)ect payment arrangements under which the Group operates vary significantly by geographical location:
•
•
•
(cid:527)
in the United Kingdom it is usual to agree in advance with the client at the start of a project a monthly billing schedule which generally leads
to relatively low levels of amounts due from customers for contract work(cid:30)
in Russia it is usual for the project to be divided into contractual work stages. At the start of each stage a deposit is received from the client but
no further amounts are received until the stage, or sub stage, is fully completed(cid:30)
in Turkey it is usual to either agree in advance with the client a monthly billing schedule or to agree a billing schedule based on deliverable
work stages(cid:30) and
in the Middle East it is usual to bill clients monthly, but the value of the monthly invoices raised is dependent upon demonstrating specific
progress from the work performed, which generally leads to higher levels of amounts due from customers for contract work. Payment also
tends to take longer in the Middle East.
PRINCIPAL RISKS AND UNCERTAINTIES
The directors consider the principal risks and uncertainties facing the business are as follows:
Levels of property development activity
Changes in development activity levels have a direct impact on the number of pro(cid:77)ects that are available. These changes can be identified by rises
and falls in overall GDP, construction output, planning application submissions, construction tenders and starts, and investment into the property
sector. Not all of this information is available in each market place and so we have to adapt to the information (cid:565)ow that is available.
In addressing this risk the Group considers which markets and which clients to focus upon based on the strength of their financial covenant so that
there is clear ability to provide both project seed capital and geared funding to complete the delivery process. This avoids the dual risk of delays
between stages during projects and deferrals of projects.
Geo political factors
Political events and decisions, or lack thereof, can seriously a(cid:909)ect the markets in which the Group operates, leading to a lack of decisions by
government bodies and also by clients. In turn this directly impacts workload and can even delay committed projects.
Diversification of operations in multiple unrelated geographies provides the Group greater resilience in respect of this risk. Maintaining a (cid:565)exible
workforce, sub(cid:77)ect to working practices in local markets, additionally a(cid:909)ords greater ability to react quickly to such events.
Share price volatility
A strong share price and higher market capitalisation attract new investors and provide the Group with greater (cid:565)exibility when considering how to
fund and pay for acquisitions.
Operational gearing and funding
In common with other professional services businesses, the Group has a relatively high level of operational gearing, through staffing and property
costs, which makes it difficult to reduce costs sufficiently quickly to immediately avoid losses and associated cash out(cid:565)ows when faced with sharp
and unpredicted falls in revenue.
Approximately one third of the Group’s operations are now based in the Middle East where payment terms are usually longer than in the UK. This
introduces additional liquidity risk as some corresponding costs may be required to be paid before the collection of trade receivables.
The directors seek to ensure that the Group retains appropriate funding arrangements and regularly monitors expected future requirements
through the Group’s annual budgeting, quarterly forecasting and monthly cash (cid:565)ow reporting processes in order to react to a required change with
maximum (cid:565)exibility.
The Group’s principal bankers remain supportive and in (cid:45)anuary 2017 renewed the Group’s overdraft facility until November 2017. In February
2016 a USD 1.6m loan was also o(cid:909)ered and drawn down with respect to the acquisition of Shankland Cox Limited.
Where possible, the Group deploys three strategies to help reduce operational gearing:
First, the Group has a well developed staffing plan which (cid:565)exes the total number of sta(cid:909) using a combination of permanent employees, temporary
employees, agency sta(cid:909), and freelance sta(cid:909) as applicable to each legal (cid:77)urisdiction(cid:30) and in doing so matches resources to fee paying work as closely
as possible, sometimes linking sta(cid:909) retention directly to specific pro(cid:77)ects.
46
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
47
•
(cid:527)
•
•
(cid:527)
the overseas operations are managed by nationals, or highly experienced expatriates, with oversight from senior Group management. All
offices are regularly visited by senior Group management, to monitor and review the businesses. There is regular, comprehensive reporting
and KPIs are used extensively(cid:30)
the Group seeks to work for multinational or the larger and more established domestic clients who themselves often have significant
international experience(cid:30)
when acting as general designer for projects located outside the UK the Group always seeks to appoint sub consultants with an established
and successful track record on similar pro(cid:77)ects(cid:30)
within the boundaries imposed by local laws and commercial constraints, the Group seeks to structure contractual arrangements with clients
and sub consultants to minimise the significant contractual risks which can arise(cid:30) and
As far as possible foreign currency (cid:565)ows are matched to minimise any impact of exchange rate movements and significant exposures are
hedged.
On behalf of the Board
Beverley Wright
Chief Financial Officer
11 January 2017
Second, the Group can sublet or licence occupation of part of its property space to other professional services businesses to o(cid:909)set some of the total
occupancy cost.
Lastly the Group seeks (cid:565)exible contract terms with ma(cid:77)or suppliers such that certain costs can be suspended during times of economic difficulty.
Sta(cid:909) skills and retention
Our business model relies upon a certain standard and number of skilled individuals based on qualifications and pro(cid:77)ect track record. Failure to
retain such skills makes the strategies of the Group difficult to achieve.
The Group aims to ensure that knowledge is shared and that particular skills are not unique to just one individual.
The Group conducts external surveys to ensure that salaries and benefits are appropriate and comparable to market levels and endeavours to
provide a pleasant working environment for sta(cid:909).
Sta(cid:909) training programmes, career appraisals and education assistance are provided, including helping our professionally qualified sta(cid:909) comply with
their continuing professional development obligations. Training programmes take various forms including external courses and external speakers.
(cid:52)uality of technical delivery
In common with other firms providing professional services, the Group is sub(cid:77)ect to the risk of claims of professional negligence from clients.
The Group seeks to minimise these risks by retaining skilled professionals at all levels and operating quality assurance systems which have many
facets. These systems include identifying specific individuals whose roles include focusing on maintaining quality assurance standards and spreading
best practice.
The Group’s principal UK operation is registered under ISO 9001 which re(cid:565)ects the quality of the internal systems under which we work. As part of
these registrations an external assessor undertakes regular compliance reviews. In addition, as part of its service to members, the Mutual, which
provides professional indemnity insurance to the UK and part of the Middle East operations, undertakes annual quality control assessments.
The Group maintains professional indemnity insurance in respect of professional negligence claims but is exposed to the cost of excess deductibles
on any successful claims.
Contract pricing
All mature markets are subject to downward pricing pressures as a result of the wide spectrum of available suppliers to each project. This pressure
is increased if activity levels are low such as in the recent economic downturn and global recession. Additionally architects may be under pressure
to work without fees (for a time) in order to win a pro(cid:77)ect or retain sufficient qualified sta(cid:909) to complete the pro(cid:77)ect if won. The Group mitigates this
risk by focusing on markets where it has clear skills that are well above average, or avoids it by not lowering prices, thus risking the loss of such work.
All fee proposals to clients are prepared by experienced practice directors who will be responsible for the delivery of the projects. Fee proposals
are based on appropriate due diligence regarding the scope and nature of the project, knowledge of similar projects previously undertaken by
the Group, and estimates of the resources necessary to deliver the project. Fee proposals for larger projects are subject to review and approval by
senior Group management and caveats are included where appropriate.
When acting as general designer for projects located outside the UK, the Group is usually exposed to the risk of actual sub consultant costs varying
from those anticipated when the overall fee was agreed with the client. To mitigate this risk, fee proposals are usually sought from sub consultants
covering the major design disciplines as part of the process of preparing the overall fee proposal.
Poor acquisitions
The acquisition of businesses for too high a price or which do not trade as expected can have a material negative impact on the Group, a(cid:909)ecting
results and cash, as well as absorbing excessive management time.
The Group invests senior management time and Group resources into both pre and post acquisition work. Pre acquisition there is a due diligence
process and price modelling based on several criteria. Agreements entered into are sub(cid:77)ect to commercial and legal review. Post acquisition there
is structured implementation planning and ongoing monitoring and review.
Overseas diversification
The Group continues to derive a proportion of its revenues from pro(cid:77)ects located outside the UK. This o(cid:909)ers some protection for the Group by
providing diversification but in turn exposes the Group to the economic environments and currencies of those locations. Building regulations,
working practices and contractual arrangements often di(cid:909)er in these overseas businesses when compared to the UK and these may significantly
increase the risks to the Group. To mitigate these risks:
48
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
MONET APARTMENTS, MOSCOW
49
DIRECTORS’
REPORT
The directors present their report for the year ended 30 September 2016.
Corporate governance
The UK Corporate Governance Code issued in April 2016 by the Financial Reporting Council sets out standards of good practice in relation to board
leadership and e(cid:909)ectiveness, remuneration, accountability and relations with shareholders.
Although under the rules of the Alternative Investment Market, the Company is not required to comply with the Code nor state any areas with
which it does not comply, the Board has sought to take into account the provisions of the Code in so far as it considers them to be appropriate and
practicable for a company of this si(cid:93)e. In doing this the Board has considered the Corporate Governance Guidelines for Small and Mid-Si(cid:93)e (cid:52)uoted
Companies published in 2013 by the (cid:52)uoted Companies Alliance.
Board of Directors
The Group is headed by a Board of Directors which leads and controls the Group and which is accountable to shareholders for good corporate
governance of the Group.
The Board currently comprises four executive directors and two non executive directors who bring a wide range of experience and skills to the
Company.
The Board considers Anthony Simmonds and (cid:45)ohn Bullough to be independent non executive directors.
The Board meets regularly to determine the policy and business strategy of the Group and has adopted a schedule of matters that are reserved as
responsibilities of the Board. The Board has delegated certain authorities to Board committees, each with formal terms of reference.
Audit Committee
The main role and responsibility of the Audit Committee is to monitor the integrity of the information published by the Group about its financial
performance and position. It does this keeping under review the adequacy and e(cid:909)ectiveness of the internal financial controls and by reviewing
and challenging the selection and application of important accounting policies, the key judgements and estimates made in the preparation of the
financial information and the adequacy of the accompanying narrative reporting.
The Audit Committee is also responsible for overseeing the relationship with the external auditor which includes considering its selection,
independence, terms of engagement, remuneration and performance. A formal statement of independence is received from the external auditor
each year.
It meets at least twice a year with the external auditor to discuss audit planning and the audit findings, with certain executive directors attending by
invitation. If appropriate, the external auditor attends part of each committee meeting without the presence of any executive directors.
The Audit Committee currently comprises Anthony Simmonds, as Chairman, and (cid:45)ohn Bullough and they report to the Board on matters discussed
at the Committee meetings.
Remuneration Committee
The Remuneration Committee meets as and when appropriate during the year and is responsible for determining all aspects of the executive
directors’ remuneration, including share options and the terms and conditions of their service contracts. Where appropriate the committee consults
the Chief Executive Officer about its proposals.
The Remuneration Committee comprises Anthony Simmonds and (cid:45)ohn Bullough, with (cid:45)ohn Bullough as Chairman. No director plays a part in any
discussion about their own remuneration.
Nomination Committee
The Nomination Committee is responsible for keeping under regular review the si(cid:93)e, structure and composition (including the skills, knowledge,
experience and diversity) of the Board. This includes considering succession planning for the senior management of the Group, taking into account
the skills and expertise expected to be needed in the future.
It is responsible for nominating new candidates for the Board, for which selection criteria are agreed in advance of any new appointment.
The Nomination Committee is chaired by Anthony Simmonds with the other members being Nicholas Thompson and (cid:45)ohn Bullough.
Internal Controls and Risk Committee
The Directors acknowledge that they are responsible for the Group’s system of internal controls and for reviewing its e(cid:909)ectiveness (excluding
joint ventures and associate). The Directors, supported by the Risk Committee, review all controls including operational, compliance and risk
management, as well as financial controls. Risk management and internal control are considered by the Directors at Board meetings. Any such
system of control is designed to manage risk and can only provide reasonable and not absolute assurance against material misstatement or loss.
The Internal Controls and Risk Committee is chaired by Anthony Simmonds. Nicholas Thompson and Beverley Wright are also members.
Directors
Anthony Simmonds, (cid:45)ohn Bullough, Nicholas Thompson, Andrew Murdoch, Nick Pell and Beverley Wright served as directors of the Company
throughout the year ended 30 September 2016.
David Hughes resigned as director on 22 December 2015.
Biographical details of the current directors are set out on pages 34 and 35.
The Company maintains directors’ and officers’ liability insurance.
Directors’ interests
Directors’ interests in the shares of the Company were as follows:
Number of ordinary shares
Anthony Simmonds
Nicholas Thompson
Beverley Wright
(cid:45)ohn Bullough
Andrew Murdoch
Nick Pell
David Hughes (resigned 22 December 2015)
30 September
2016
30 September
2015
1,000,000
16,702,411
100,000
500,000
12,478,486
1,826,700
2,753,967
1,000,000
16,602,411
-
500,000
12,478,486
1,826,700
2,963,446
Directors’ service contracts
The Company’s policy is to o(cid:909)er service agreements to executive directors with notice periods of not more than twelve months. Nicholas Thompson
and Andrew Murdoch have rolling service contracts with the Company which are subject to twelve months’ notice of termination by either party.
Nick Pell and Beverley Wright have rolling service contracts with the Company which are sub(cid:77)ect to six months’ notice of termination by either party.
The remuneration packages of executive directors comprise basic salary, contributions to defined contribution pension arrangements, discretionary
annual bonus, discretionary share options and benefits in kind such as medical expenses insurance.
Non executive directors do not have service contracts with the Company, but the appointment of each is recorded in writing. Their remuneration is
determined by the Board. Non executive directors do not receive any benefits in kind and are not eligible for bonuses or participation in either the
share option schemes or pension arrangements.
50
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
51
Substantial shareholdings
At 11 (cid:45)anuary 2017 the Company had been informed of the following notifiable interests of three per cent or more in its share capital.
Shareholder
Notes
Number of ordinary
shares
Percentage of ordinary
shares
Nicholas Thompson
Director of the Company
(cid:45)eremy Blake
Former employee of the Group
Andrew Murdoch
Director of the Company
Begonia 365 SL
Raul Curiel
Controlled by a former director of the Company
Former director of the Company
River & Mercantile Long Term
Recovery Fund
Stephen Atkinson
Employee of the Group
(cid:45)ohn (cid:57)incent
Former director of the Company
Broadwalk Asset Management
16,702,411
13,030,638
12,478,486
9,515,192
9,240,018
8,150,000
7,649,436
5,791,394
5,317,000
10.11%
7.89(cid:8)
7.56%
5.76%
5.59%
4.93%
4.63%
3.51%
3.22%
Share price
The mid market closing price of the shares of the Company at 30 September 2016 was 4.00 pence and the range of mid market closing prices of the
shares during the year was between 3.88 pence and 7.25 pence.
Share capital
The Board is seeking from shareholders at the Annual General Meeting renewal of its authority to allot equity securities. The authority would allow
the Board to allot securities up to a maximum aggregate nominal value of (cid:101)826,068 representing 50(cid:8) of the issued share capital of the Company.
A resolution will also be put to the Annual General Meeting in respect of the issue of equity securities for cash up to an aggregate nominal amount
of (cid:101)165,214 representing 10(cid:8) of the issued share capital, without first o(cid:909)ering such shares to shareholders. The directors consider this authority
desirable as it will give them the (cid:565)exibility to make small issues of ordinary shares for cash if suitable opportunities arise without the necessity of
first seeking shareholders’ approval.
The renewed authorities will expire at the conclusion of the subsequent Annual General Meeting of the Company when it is intended that the
Directors will again seek their renewal.
Environmental policy
The Group promotes wherever possible a ‘green’ and ecologically sound policy in all its work, but always takes into account the considerable
pressures of budget, commercial constraints and client preferences. Sustainability is essential to our design philosophy and studio ethos. It is an
attitude of mind that is embedded within our thinking from the start of any pro(cid:77)ect. We design innovative solutions and focus on:
(cid:527)
(cid:527)
(cid:527)
(cid:527)
•
incorporating passive design principles that mitigate solar gain and heat loss from the outset(cid:30)
reducing energy demand through active and passive renewable energy sources(cid:30)
the use of energy and resource efficient materials, methods, and forms(cid:30)
the re use of existing buildings and materials and (cid:565)exibility for future change(cid:30)
and importantly the careful consideration of the experience and wellbeing of the end user in our buildings.
We believe ourselves to be at the forefront of sustainability amongst our peers which is demonstrated by our track record in achieving 65 ‘Excellent’
or (cid:518)(cid:57)ery Good’ BREEAM (Building Research Establishment Environmental Assessment Method) ratings awarded to buildings designed by the Group.
We have also achieved 1 Ska ‘Gold’ and 2 Ska ‘Silver’ environmental assessment ratings and 3 LEED (Leadership in Energy and Environmental
Design) ‘Gold’ award and 5 ‘Silver’ awards.
Employees
As a professional services business, the Group’s ability to achieve its commercial ob(cid:77)ectives and to service the needs of its clients in a profitable and
e(cid:909)ective manner depends upon the contribution of its employees. The Group seeks to keep its employees informed on all material aspects of the
business a(cid:909)ecting them through the operation of a structured management system, sta(cid:909) presentations and an intranet site.
The Group’s employment policies do not discriminate between employees, or potential employees, on the grounds of age, gender, sexual
orientation, ethnic origin or religious belief. The sole criterion for selection or promotion is the suitability of any applicant for the job.
It is the policy of the Group to encourage and facilitate the continuing professional development of our employees to ensure that they are equipped
to undertake the tasks for which they are employed, and to provide the opportunity for career development equally and without discrimination.
Training and development is provided and is available to all levels and categories of sta(cid:909).
It is the Group’s policy to give fair consideration to application for employment for disabled persons wherever practicable and, where existing
employees become disabled, e(cid:909)orts are made to find suitable positions for them.
Health and safety
The Group seeks to promote all aspects of health and safety at work throughout its operations in the interests of employees and visitors.
The Group has established a health and safety steering committee, chaired by Robert Fry (a member of the Group Management Board), to guide
the Group’s health and safety policies and activities. Health and safety is included on the agenda of each board meeting.
Group policies on health and safety are regularly reviewed and revised, and are made available on the intranet site. Appropriate training for
employees is provided on a periodic basis.
Disclosure of information to auditor
Each of the directors who were in office at the date of approval of these financial statements has confirmed that:
(cid:527)
•
so far as they are aware, there is no relevant audit information of which the auditor is unaware(cid:30) and
they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information
and to establish that the Company’s auditor is aware of that information.
Future developments
An indication of likely future developments in the business of the Group is contained in the Strategic Report.
Financial instruments
Information concerning the use of financial instruments by the Group is given in notes 28 to 32 of the financial statements.
Dividends
Whilst the Group is still confident of its long term position, given the slowdown in the UK and the funding requirements in the UAE, the Board has
resolved to defer the decision regarding a dividend until the AGM which will take place in March 2017.
Annual General Meeting
Notice of the annual general meeting will be issued in due course and no later than 21 days before the Meeting is due to be held.
By order of the Board
Beverley Wright
Company Secretary
Aukett Swanke Group Plc
Registered number 2155571
11 January 2017
52
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
53
STATEMENT OF
DIRECTORS’ RESPONSIBILITIES
INDEPENDENT AUDITOR’S REPORT TO THE
MEMBERS OF AUKETT SWANKE GROUP PLC
Directors’ responsibilities
The Directors are responsible for preparing the strategic report, the Directors’ report, and the financial statements in accordance with applicable
law and regulations.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare
the Group and Company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European
Union. Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the
state of a(cid:909)airs of the Group and Company and of the profit or loss of the Group for that period. The Directors are also required to prepare financial
statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.
In preparing these financial statements, the Directors are required to:
(cid:527)
select suitable accounting policies and then apply them consistently(cid:30)
(cid:527) make (cid:77)udgments and accounting estimates that are reasonable and prudent(cid:30)
•
state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures
disclosed and explained in the financial statements(cid:30)
(cid:527)
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and
disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements comply
with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are
published on the Company’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial
statements, which may vary from legislation in other jurisdictions. The maintenance and integrity of the Company’s website is the responsibility of
the directors. The Directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.
We have audited the financial statements of Aukett Swanke Group Plc for the year ended 30 September 2016 which comprise the consolidated
income statement, the consolidated and company statements of comprehensive income, the consolidated and company statements of financial
position, the consolidated and company statements of cash (cid:565)ows, the consolidated and company statements of changes in equity and the related
notes. The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union. The financial reporting framework that has been applied
in preparation of the parent company financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by
the European Union, as applied in accordance with the provisions of the Companies Act 2006.
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit
work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report
and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and
the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the financial statements
and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in
accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial
Reporting Council’s (FRC’s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the FRC’s website at www.frc.org.uk(cid:18)auditscopeukprivate.
Opinion on financial statements
In our opinion:
(cid:527)
the financial statements give a true and fair view of the state of the group’s and the parent company’s a(cid:909)airs as at 30 September 2016 and of
the group’s profit for the year then ended(cid:30)
the group financial statements have been properly prepared in accordance with International Financial Reporting Standards as adopted by
the European Union(cid:30)
the parent company’s financial statements have been properly prepared in accordance with International Financial Reporting Standards as
adopted by the European Union and as applied in accordance with the provisions of the Companies Act 2006(cid:30) and
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
(cid:527)
(cid:527)
(cid:527)
Opinion on other matters prescribed by the Companies Act 2006
In our opinion the information given in the strategic report and directors’ report for the financial year for which the financial statements are
prepared is consistent with the financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
•
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from
branches not visited by us(cid:30) or
the parent company financial statements are not in agreement with the accounting records and returns(cid:30) or
certain disclosures of directors’ remuneration specified by law are not made(cid:30) or
we have not received all the information and explanations we require for our audit.
(cid:527)
(cid:527)
•
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
55
Tim Neathercoat (senior statutory auditor)
For and on behalf of BDO LLP, statutory auditor
London, United Kingdom
11 January 2017
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
STAINES CENTRAL MASTERPLAN
54
For the year ended 30 September 2016
Profit for the year
Other comprehensive income:
Currency translation di(cid:909)erences
Other comprehensive income for the year
Total comprehensive income for the year
Total comprehensive income for the year is attributable to:
Owners of Aukett Swanke Group Plc
Non controlling interests
CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME
2016
£’000
821
424
424
1,245
1,158
87
1,245
2015
£’000
1,655
(201)
(201)
1,454
1,451
3
1,454
CONSOLIDATED INCOME
STATEMENT
For the year ended 30 September 2016
Revenue
Sub consultant costs
Revenue less sub consultant costs
Personnel related costs
Property related costs
Other operating expenses
Other operating income
Operating profit
Finance income
Finance costs
Profit after finance costs
Share of results of associate and joint ventures
Profit before tax
Tax charge
Profit from continuing operations
Profit for the year
Profit attributable to:
Owners of Aukett Swanke Group Plc
Non controlling interests
Basic and diluted earnings per share for profit attributable to
the ordinary equity holders of the Company:
From continuing operations
Total earnings per share
Note
3
3
4
5
6
11
12
2016
£’000
20,841
(2,431)
18,410
(13,929)
(2,632)
(1,901)
732
680
8
(28)
660
267
927
(106)
821
821
772
49
821
0.47p
0.47p
2015
£’000
18,668
(1,782)
16,886
(11,464)
(2,730)
(1,715)
626
1,603
3
(13)
1,593
277
1,870
(215)
1,655
1,655
1,653
2
1,655
1.00p
1.00p
56
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
U(cid:59)BRIDGE BUSINESS PARK
57
CONSOLIDATED STATEMENT OF
FINANCIAL POSITION
COMPANY STATEMENT OF
FINANCIAL POSITION
At 30 September 2016
Non current assets
Goodwill
Other intangible assets
Property, plant and equipment
Investment in associate
Investments in joint ventures
Deferred tax
Total non current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Current liabilities
Trade and other payables
Current tax
Short term borrowings
Provisions
Total current liabilities
Non current liabilities
Long term borrowings
Deferred tax
Provisions
Total non current liabilities
Total liabilities
Net assets
Capital and reserves
Share capital
Merger reserve
Foreign currency translation reserve
Retained earnings
Other distributable reserve
Total equity attributable to equity holders of the Company
Non controlling interests
Total equity
Note
13
14
15
17
18
23
19
20
21
24
21
23
24
25
2016
£’000
2,409
1,056
506
529
181
219
4,900
9,227
1,839
11,066
15,966
(6,553)
(12)
(247)
(90)
(6,902)
(802)
(100)
(973)
(1,875)
(8,777)
7,189
1,652
1,176
110
2,573
1,494
7,005
184
7,189
2015
£’000
2,283
818
563
254
100
288
4,306
6,430
1,873
8,303
12,609
(5,833)
(117)
-
-
(5,950)
-
(54)
(354)
(408)
(6,358)
6,251
1,652
1,176
(276)
1,801
1,791
6,144
107
6,251
At 30 September 2016
Non current assets
Investments
Trade and other receivables
Total non current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Deferred tax
Total current assets
Total assets
Current liabilities
Trade and other payables
Short term borrowings
Total current liabilities
Non current liabilities
Long term borrowings
Total non current liabilities
Total liabilities
Net assets
Capital and reserves
Share capital
Retained earnings
Merger reserve
Other distributable reserve
Total equity attributable to equity holders of the Company
Note
16
19
19
23
20
21
21
25
2016
£’000
6,463
49
6,512
1,311
596
-
1,907
8,419
(3,619)
(247)
(3,866)
(802)
(802)
(4,668)
3,751
1,652
(571)
1,176
1,494
3,751
2015
£’000
4,321
48
4,369
432
1,007
2
1,441
5,810
(2,300)
-
(2,300)
-
-
(2,300)
3,510
1,652
(1,109)
1,176
1,791
3,510
The financial statements on pages 56 to 99 were approved and authorised for issue by the Board of Directors on 11 (cid:45)anuary 2017 and were signed
on its behalf by:
Nicholas Thompson
Chief Executive Officer
Beverley Wright
Chief Financial Officer
The financial statements on pages 56 to 99 were approved and authorised for issue by the Board of Directors on 11 (cid:45)anuary 2017 and were signed
on its behalf by:
Nicholas Thompson
Chief Executive Officer
58
Beverley Wright
Chief Financial Officer
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
59
CONSOLIDATED STATEMENT OF
CASH FLOWS
COMPANY STATEMENT OF
CASH FLOWS
For the year ended 30 September 2016
For the year ended 30 September 2016
Note
27
Cash (cid:565)ows from operating activities
Cash generated from operations
Interest paid
Income taxes paid
Net cash (out(cid:565)ow) (cid:18) in(cid:565)ow from operating activities
Cash (cid:565)ows from investing activities
Purchase of property, plant and equipment
Sale of property, plant and equipment
Acquisition of subsidiary, net of cash acquired
Interest received
Dividends received
Net cash used in investing activities
Net cash (out(cid:565)ow) (cid:18) in(cid:565)ow before financing activities
Cash (cid:565)ows from financing activities
Proceeds from bank loans
Repayment of bank loans
Dividends paid
Net cash in(cid:565)ow (cid:18) (out(cid:565)ow) from financing activities
Net change in cash, cash equivalents and bank overdraft
Cash and cash equivalents and bank overdraft at start of year
Currency translation di(cid:909)erences
Cash, cash equivalents and bank overdraft at end of year
22
2016
£’000
104
(29)
(99)
(24)
(147)
4
(761)
8
-
(896)
(920)
1,123
(175)
(181)
767
(153)
1,873
119
1,839
2015
£’000
1,443
(13)
(238)
1,192
(163)
2
(824)
3
278
(704)
488
-
(113)
(360)
(473)
15
1,891
(33)
1,873
Cash (cid:565)ows from operating activities
Cash (used by) (cid:18) generated from operations
Interest paid
Income taxes paid
Net cash (out(cid:565)ow) (cid:18) in(cid:565)ow from operating activities
Cash (cid:565)ows from investing activities
Purchase of subsidiaries
Dividends received
Net cash (used in) (cid:18) generated from investing activities
Net cash (out(cid:565)ow) (cid:18) in(cid:565)ow before financing activities
Cash (cid:565)ows from financing activities
Proceeds from bank loans
Repayment of bank loans
Dividends paid
Net cash in(cid:565)ow (cid:18) (out(cid:565)ow) from financing activities
Net change in cash, cash equivalents and bank overdraft
Cash, cash equivalents and bank overdraft at start of year
Currency translation di(cid:909)erences
Cash, cash equivalents and bank overdraft at end of year
Note
27
2016
£’000
(846)
(23)
(3)
(872)
(1,126)
820
(306)
(1,178)
1,123
(175)
(181)
767
(411)
1,007
-
596
2015
£’000
70
-
(1)
69
(897)
1,279
382
451
-
-
(360)
(360)
91
916
-
1,007
AL SERKAL, DUBAI
60
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
61
CONSOLIDATED STATEMENT OF
CHANGES IN EQUITY
COMPANY STATEMENT OF
CHANGES IN EQUITY
For the year ended 30 September 2016
For the year ended 30 September 2016
Foreign
currency
translation
reserve
Retained
earnings
Other
distributable
reserve
Share
capital
£’000
1,652
-
-
-
-
At 30 September 2014
Profit for the year
Other comprehensive
income
Non controlling
interest arising on
business combination
Dividends paid
£’000
(74)
-
(202)
-
-
£’000
148
1,653
-
-
-
At 30 September 2015
1,652
(276)
1,801
Profit for the year
Other comprehensive
income
Other adjustments
Dividends paid
-
-
-
-
-
386
-
-
772
-
-
-
At 30 September 2016
1,652
110
2,573
Merger
reserve
£’000
1,176
-
-
-
-
1,176
-
-
-
-
1,176
Non
controlling
interests
£’000
-
2
1
104
-
107
49
38
(10)
-
184
Total
£’000
5,053
1,653
(202)
-
(360)
6,144
772
386
-
(297)
7,005
Total
Equity
£’000
5,053
1,655
(201)
104
(360)
6,251
821
424
(10)
(297)
7,189
Share capital
£’000
1,652
-
-
Retained
earnings
£’000
(1,866)
757
-
At 30 September 2014
Profit for the year
Dividends paid
At 30 September 2015
1,652
(1,109)
Profit for the year
Dividends paid
At 30 September 2016
-
-
1,652
538
-
(571)
Other
distributable
reserve
Merger reserve
£’000
2,151
-
(360)
1,791
-
(297)
1,494
£’000
1,176
-
-
1,176
-
-
1,176
Total
£’000
3,113
757
(360)
3,510
538
(297)
3,751
The other distributable reserve was created in September 2007 during a court and shareholder approved process to reduce the capital of the
Company.
All amounts are attributable to the equity holders of the Company.
£’000
2,151
-
-
-
(360)
1,791
-
-
-
(297)
1,494
The other distributable reserve was created in September 2007 during a court and shareholder approved process to reduce the capital of the
Company.
GRANTA PARK, CAMBRIDGE
62
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
GRANTA PARK, CAMBRIDGE
63
NOTES TO THE
FINANCIAL STATEMENTS
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently
applied to all years presented unless otherwise stated.
Basis of preparation
The financial statements for the Group and parent have been prepared in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union and the Companies Act 2006 as applicable to companies reporting under IFRSs.
The financial statements have been prepared under the historical cost convention and on a going concern basis.
New accounting standards, amendments and interpretations applied
There were no new accounting standards which required additional disclosures to this year’s financial statements.
New accounting standards, amendments and interpretations not yet applied
A review has been undertaken of new accounting standards, amendments and interpretations to existing standards which have been issued
but have an e(cid:909)ective date making them applicable to future financial statements. The following standards are e(cid:909)ective for accounting periods
beginning on or after 1 (cid:45)anuary 2018 and have not yet been adopted by the Group:
i)
ii)
iii)
IFRS 15 (cid:518)Revenues from contracts with customers’. The standard provides a single, principles based five-step model to be applied to all
contracts with customers. The Group has yet to assess the full impact of this accounting standard. This standard is e(cid:909)ective for accounting
periods beginning on or after 1 (cid:45)anuary 2018.
IFRS 9 (cid:518)Financial instruments’. The standard provides a single classification and measurement model for financial assets and replaces the
existing IAS 39. The Group has yet to assess the full impact of this accounting standard. This standard is e(cid:909)ective for accounting periods
beginning on or after 1 (cid:45)anuary 2018.
IFRS 16 ‘Leases’. The standard will require almost all leases to be on the balance sheet of lessees and introduces a single income statement
model which e(cid:909)ectively brings the ma(cid:77)ority leases onto the balance sheet. The full impact of this accounting standard is currently unknown
because the most significant leases are due to expire before the standard is e(cid:909)ective. This standard is e(cid:909)ective for accounting periods
beginning on or after 1 January 2019.
There are no other IFRSs or International Financial Reporting Interpretations Committee interpretations that are not yet e(cid:909)ective that would be
expected to have a material impact on the Group.
Going concern
The Group’s business activities, the principal risks and uncertainties facing the Group, and the financial position of the Group are described in the
Strategic Report. The liquidity risks faced by the Group are further described in note 32.
The Group currently meets its day to day working capital requirements through its cash balances. It maintains its net overdraft facility for additional
financial (cid:565)exibility and foreign currency hedging purposes. This overdraft facility was renewed for a further ten months in (cid:45)anuary 2017.
The processes the directors have undertaken, and the reasons for the conclusions they have reached, regarding the applicability of a going concern
basis are explained below. In undertaking their assessment the directors have followed the guidance issued in 2016 by the Financial Reporting
Council entitled ‘Guidance on the going concern basis of accounting and reporting on solvency and liquidity risks’.
Forecasts for the Group have been prepared on a monthly basis which comprise detailed income statements, statements of financial position and
cash (cid:565)ow statements for each of the Group’s operations.
The forecasts and projections show the Group should be able to operate within its currently available facilities and the directors believe this to be
the case.
The Group’s principal banker is Coutts & Co, with whom the Group has an excellent long term relationship extending through previous business
cycles. Coutts & Co have again renewed the Group’s facility as described in note 32 and above.
All of the directors, and most members of the Group’s senior management, have experience of managing businesses through challenging economic
circumstances, in most cases over a number of business cycles.
The Board, after making the enquiries described above, has a reasonable expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future. For this reason the Board considers it appropriate to prepare the financial statements on a going
concern basis.
Basis of consolidation and equity accounting
The consolidated financial statements incorporate those of the Company and its subsidiaries. Subsidiaries are all entities over which the Group has
control. The Group controls an entity when it is exposed to variable returns from the investee, in addition to the ability to direct the investee and
a(cid:909)ect those returns through exercising its power. Intra group transactions, balances and any unrealised gains and losses on transactions between
Group companies are eliminated on consolidation.
Non controlling interests in the results and equity of subsidiaries are shown separately in the consolidated income statement, statement of
comprehensive income, statement of changes in equity and balance sheet respectively.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as
the fair value of the assets given and equity instruments issued. Identifiable assets acquired and liabilities assumed in an acquisition are measured
initially at their fair values at the acquisition date, irrespective of any non controlling interest. The excess of the cost of acquisition over the fair value
of the Group’s share of the identifiable net assets acquired is recorded as goodwill.
The consolidated financial statements also include the Group’s share of the results and reserves of its associate and (cid:77)oint ventures.
Associates
Associates are entities for which the Group has significant in(cid:565)uence but not control or (cid:77)oint control. This is the case where the Group holds between
20% and 50% of the voting rights. Investments in associates are accounted for under the equity method.
Joint ventures
Under IFRS 11 (cid:518)(cid:45)oint arrangements’ investments in (cid:77)oint arrangements are classified as either (cid:77)oint operations or (cid:77)oint ventures. This classification
depends on the contractual rights and obligations of the investor rather than the legal structure. The Group has joint ventures in Frankfurt and the
Czech Republic where ownership is contractual and the agreements require unanimous consent from all parties for relevant activities. The entities
are considered joint ventures.
Joint ventures are accounted for under the equity method.
Borrowings
Borrowings are initially recognised at fair value, net of any transaction costs incurred. Borrowings are subsequently stated at amortised cost. Any
di(cid:909)erence between the proceeds (net of any transaction costs) and the redemption value is recognised in the income statement over the period of
the borrowings using the e(cid:909)ective interest method.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, bank current accounts held at call, bank deposits with very short maturity terms and bank
overdrafts. Any bank overdrafts are shown within borrowings in current liabilities in the statement of financial position.
Company income statement
The Company has taken advantage of the exemption provided by section 408 of the Companies Act 2006 not to present its income statement for the
year. The profit of the Company for the year was (cid:101)538,000 (2015: (cid:101)757,000).
Deferred taxation
Deferred income tax is provided in full, using the statement of financial position liability method, on temporary di(cid:909)erences arising between the tax
bases of assets and liabilities and their carrying amount in the financial statements.
Deferred income tax is determined using tax rates (and laws) that have been enacted or substantively enacted by the date of the statement of
financial position and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred income tax liabilities are recognised in respect of the unremitted earnings of overseas operations where they are expected to be remitted
to the United Kingdom in the foreseeable future.
Deferred income tax assets are recognised to the extent that it is probable that future taxable profits will be generated against which the temporary
di(cid:909)erences can be utilised.
64
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
65
Dividends
Dividend payments are recognised as liabilities once they are no longer at the discretion of the Company.
Dividend income from investments is recognised in the income statement when the shareholders’ rights to receive payment have been established.
Investments
Investments in subsidiaries, associates and (cid:77)oint ventures are held in the statement of financial position of the Company at historic cost less any
allowance for impairment.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.
Financial instruments
Financial assets and financial liabilities are recognised in the statement of financial position when the Group or Company has become a party to the
contractual provisions of the instrument. Financial instruments are initially recognised at fair value.
Foreign currency
Transactions in currencies other than the functional currency of each operation are recorded at the rates of exchange prevailing on the dates of
the transactions. At the date of each statement of financial position, monetary assets and liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing at the date of the statement of financial position. Gains and losses arising on retranslation are included in the
income statement for the year.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated from their functional currencies at exchange rates
prevailing at the date of the statement of financial position. Income and expense items are translated from their functional currencies at the
average exchange rates for the year. Exchange di(cid:909)erences arising are recognised directly in equity and transferred to the Group’s foreign currency
translation reserve. If an overseas operation is disposed of then the cumulative translation di(cid:909)erences are recognised as realised income or an
expense in the year disposal occurs.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and
translated at the closing exchange rate. The Group has elected to treat goodwill and fair value adjustments arising on acquisitions before the date
of transition to IFRS as sterling denominated assets and liabilities.
Goodwill
Goodwill arising on acquisitions represents the excess of the fair value of the consideration given over the fair value of the identifiable assets and
liabilities acquired. Where the net fair value of the identifiable assets and liabilities of the acquiree is in excess of the consideration paid, negative
goodwill is recognised immediately in the income statement.
Goodwill is tested annually for impairment and an impairment loss would be recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount.
Impairment
At the date of each statement of financial position, a review of property, plant and equipment and intangible assets (excluding goodwill) is carried
out to determine whether there is any indication that those assets have su(cid:909)ered any impairment. If any such indications exist, the recoverable
amount of the asset is estimated in order to determine the extent of any impairment.
Where the asset does not generate cash (cid:565)ows that are independent from other assets, the recoverable amount of the cash generating unit to which
the asset belongs is estimated.
Other intangible assets
Intangible assets acquired in a business combination are recognised at fair value at the acquisition date. Subsequently the intangible assets
are carried at cost less accumulated amortisation and accumulated impairment. Amortisation is charged on a straight line basis with the useful
economic lives attributed as follows:
Trade name (cid:514) 25 years
Trade licence (cid:514) 10 years
Customer relationships (cid:514) 7 to 10 years
Order book (cid:514) Over the life of the contracts
Amortisation is charged to other operating expenses within the consolidated income statement.
Leases and asset finance arrangements
Where asset finance arrangements result in substantially all the risks and rewards of ownership resting with the Group, the arrangement is treated
as a finance lease with the assets included in the statement of financial position.
Such assets are initially measured at the present value of the minimum asset finance payments and the present value of future payments is shown
as a liability. The interest element of these arrangements is charged to the income statement over the period of the arrangement in proportion to
the balance of capital payments outstanding.
All other lease arrangements are treated as operating leases and the annual rentals are charged to the income statement on a straight line basis
over the lease term.
Where a rent free period is received in respect of a property lease the incentive is considered an integral part of the agreement, and the cost of the
lease net of the incentive is charged to the income statement on a straight line basis over the lease term.
Operating segments
The Group’s reportable operating segments are based on the geographical areas in which its studios are located. Internally the Group prepares
discrete financial information for each of its geographical segments.
Each reportable operating segment provides the same type of service to clients, namely integrated professional design services for the built
environment and internally the Group does not sub divide its business by type of service.
Other operating expenses
Other operating expenses include legal and professional costs, professional indemnity insurance premiums, marketing expenses and other general
expenses.
Property, plant and equipment
All property, plant and equipment is stated at historical cost of acquisition less depreciation and any impairment provisions. Historical cost of
acquisition includes expenditure that is directly attributable to the acquisition of the items.
Depreciation of property, plant and equipment is calculated to write o(cid:909) the cost of acquisition over the expected useful economic lives using the
straight line method and over the following number of years:
Leasehold improvements (cid:514) Unexpired term of lease
Office furniture (cid:514) 4 years
Office equipment (cid:514) 4 years
Computer equipment (cid:514) 2 years
Ownership of property, plant and equipment held under an asset finance arrangement reverts to the Group at the end of the arrangement and
therefore such assets are depreciated over the same useful economic lives as assets not held under such arrangements.
Provisions
Provisions are recognised when a present obligation has arisen as a result of a past event which it is probable will result in an out(cid:565)ow of economic
benefits that can be reliably estimated.
Where the e(cid:909)ect of the time value of money is material, the provision is based on the present value of future out(cid:565)ows, discounted at the pre tax
discount rate that re(cid:565)ects the risks specific to the liability.
In those geographies where it is a legal requirement, provision is also made for end of service benefit ((cid:518)EOSB’), being amounts payable to employees
when their contract with the group ends (see note 24).
66
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67
Post retirement benefits
Costs in respect of defined contribution pension arrangements are charged to the income statement on an accruals basis in line with the amounts
payable in respect of the accounting period. The Group has no defined benefit pension arrangements.
Revenue recognition
Revenue represents the value of services performed for customers under contract (excluding value added taxes). Revenue from contracts is
assessed on an individual basis with revenue earned being ascertained based on the stage of completion of the contract which is estimated using
a combination of the milestones in the contract and the proportion of total time expected to be required to undertake the contract which had been
performed.
The amount by which revenue exceeds progress billings is classified as amounts due from customers for contract work and included in trade and
other receivables. To the extent progress billings exceed relevant revenue, the excess is classified as advances received from customers for contract
work and included in trade and other payables.
Revenue is only recognised when there is a contractual right to consideration and any revenue earned can be estimated reliably. (cid:57)ariations in
contract work, claims and incentive payments are only recognised when it is probable they will result in revenue and they are capable of being
measured reliably.
Share based payments
The Group has issued share options to certain employees, in return for which the Group receives services from those employees. The fair value of
the employee services received in exchange for the grant of the options is recognised as an expense.
The total amount to be expensed is determined by reference to the fair value of the options granted including any market performance conditions
(for example the Company’s share price) but excluding the impact of any service or non market performance vesting conditions (for example the
requirement of the grantee to remain an employee of the Group).
Non market vesting conditions are included in the assumptions regarding the number of options that are expected to vest. The total expense is
recognised over the vesting period. At the end of each period the Group revises its estimates of the number of options expected to vest based on
the non market vesting conditions. It recognises the impact of any revision in the income statement with a corresponding adjustment to equity.
The grant by the Company of options over its shares to employees of subsidiary undertakings is treated as a capital contribution. The fair value of
employee services received is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding
credit to equity.
Trade receivables
Trade receivables are amounts due from clients for services provided in the ordinary course of business and are stated net of any provision for
impairment.
An allowance for impairment of trade receivables is established when there are indicators suggesting that it is uncertain whether all the amounts
due will be collectable. Known significant financial difficulties of the client and lengthy delinquency in receipt of payments are considered indicators
that a trade receivable may be impaired. Where a trade receivable is considered impaired the carrying amount is reduced using an allowance and
the amount of the loss is recognised in the income statement within other operating expenses.
2
ACCOUNTING ESTIMATES AND (cid:45)UDGEMENTS
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances.
In preparing the financial statements, the directors make estimates and assumptions concerning the future. The resulting accounting estimates, by
definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material ad(cid:77)ustment to
the carrying amounts of assets and liabilities within the next financial year are considered to be:
Recognition of contractual revenue
Revenue from contracts is assessed on an individual basis with revenue earned being ascertained based on the stage of completion of the contract
which is estimated using a combination of the milestones in the contract and the proportion of total time expected to be required to undertake the
contract which had been performed.
Estimates of the total time expected to be required to undertake the contracts are made on a regular basis and subject to management review.
These estimates may di(cid:909)er from the actual results due to a variety of factors such as efficiency of working, accuracy of assessment of progress to
date and client decision making.
The amount by which revenue exceeds progress billing is shown as amounts due from customers for contract work in note 19. The amount by which
progress billing exceeds revenue is shown as advances received from customers for contract work in note 20.
Impairment of trade receivables
The Group provides architectural, interior design and related services to a wide variety of clients including property developers, owner occupiers
and governmental organisations, both in the United Kingdom and overseas.
The Group endeavours to undertake work only for clients who have the financial strength to complete pro(cid:77)ects but even so, much property
development is financed by funds not unconditionally committed at the commencement of the pro(cid:77)ect. Problems with financing can on occasion
unfortunately lead to clients being unable to pay their debts either on a temporary or more permanent basis.
The Group monitors receipts from clients closely and undertakes a range of actions if there are indications a client is experiencing funding problems.
The Group makes impairment allowances if it is considered there is a significant risk of non payment. The factors assessed when considering an
impairment allowance include the ownership of the development site, the general financial strength of the client, likely use (cid:18) demand for the
completed project, and the length of time likely to be necessary to resolve the funding problems.
The Group strives to maintain good relations with clients, but on occasions disputes do arise with clients requiring litigation to recover outstanding
monies. In such circumstances, the directors carefully consider the individual facts relating to each case (such as strength of the legal arguments and
financial strength of the client) when deciding the level of any impairment allowance.
Further quantitative information concerning trade receivables is shown in note 30.
Impairment of goodwill
Details of the impairment reviews undertaken in respect of the carrying value of goodwill are given in note 13.
Recoverability of deferred tax assets
As shown in note 23, the Group has recognised some deferred tax assets as recoverable, principally in the United Kingdom relating to historic
trading losses. These trading losses arose during the three years ended 30 September 2011 as a result of the impact of the difficult economic
environment on the business.
As part of the Swanke Hayden Connell Europe Limited business combination in 2013 further tax losses were acquired in the United Kingdom. These
trading losses arose during the years ended 31 December 2011 and 31 December 2012.
As shown in note 3, the United Kingdom operation has been profitable and generated significant profits in the period 2014-2016 which has already
led to the recovery of a large proportion of the deferred tax assets.
The length of time taken to generate sufficient taxable profits to fully utilise these trading losses is primarily dependent on the strength of the
property development market. In combination with the goodwill impairment review described in note 13, forecasts have been prepared of the
projected utilisation of these trading losses.
Historically the property development market has both declined more swiftly and recovered more sharply than the economy as a whole, however
for the purposes of these forecasts the directors have prudently assumed that further recovery is slower and steadier than past property cycles.
Based on these forecasts the directors believe that it is probable that the remaining recognised deferred tax assets will be recoverable.
Potential deferred tax assets in (cid:77)urisdictions where the directors believe that it is not probable that they will be recoverable through future taxable
profits have not been recognised. As noted in note 23, the directors have prudently not recognised any deferred tax assets in the Russian operation.
Recognition of fee claim revenue
The nature of the project work undertaken by the Group means sometimes the scale and scope of a project increases after work has commenced.
Subsequent changes to the scale and scope of the work may require negotiation with the clients for variations.
Advance agreement of the quantum of variation fees is not always possible, in particular when the timescale for project completion is changing or
where the cost of variations cannot be determined until the work has been undertaken.
In such circumstances the revenue recognised is limited to the amounts considered both probably recoverable, and capable of reliable measurement,
taking into account all the relevant circumstances of the individual project and client.
68
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69
3 OPERATING SEGMENTS
The Group comprises a single business segment and three separately reportable geographical segments (Hubs), together with a group costs
segment. Geographical segments are based on the location of the operation undertaking each project.
During the period, the Group changed its operating segments as management now considers the business is based on geographic area, rather than
by individual country. Accordingly, the Group’s operating segments now consist of the United Kingdom, the Middle East and Continental Europe.
Turkey and Russia are no longer reported as separate reporting operating segments, but are included within Continental Europe together with
Germany and the C(cid:93)ech Republic. All comparatives have been restated to re(cid:565)ect these changes.
Income statement segment information
Segment revenue
United Kingdom
Middle East
Continental Europe
Revenue
Segment revenue less sub consultant costs
United Kingdom
Middle East
Continental Europe
Revenue less sub consultant costs
2016
£’000
12,142
7,383
1,316
20,841
2016
£’000
12,080
5,424
906
18,410
All of the Group’s revenue relates to the value of services performed for customers under construction type contracts.
Segment net finance expense
United Kingdom
Middle East
Continental Europe
Group costs
Net finance expense
Segment depreciation
United Kingdom
Middle East
Continental Europe
Depreciation
Segment amortisation
United Kingdom
Middle East
Continental Europe
Amortisation
2016
£’000
-
-
8
(28)
(20)
2016
£’000
254
72
33
359
2016
£’000
27
112
38
177
2015
£’000
14,488
2,129
2,051
18,668
2015
£’000
14,368
1,306
1,212
16,886
2015
£’000
(5)
-
3
(8)
(10)
2015
£’000
303
10
32
345
2015
£’000
27
32
21
80
2016 Segment result
United Kingdom
Middle East
Continental Europe
Group costs
Profit before tax
2015 Segment result
United Kingdom
Middle East
Continental Europe
Group costs
Profit before tax
Before goodwill
impairment
£’000
Release of
negative goodwill
£’000
Goodwill
impairment
£’000
1,052
(119)
112
(261)
784
-
160
-
-
160
-
-
(17)
-
(17)
Before goodwill
impairment
£’000
Release of
negative goodwill
£’000
Goodwill
impairment
£’000
1,993
47
88
(258)
1,870
-
-
-
-
-
Statement of financial position segment information
Segment assets
United Kingdom
Middle East
Continental Europe
Trade receivables and amounts due from customers for contract work
Other current assets
Non current assets(cid:13)
Total assets
(cid:13)Non current assets include investments in associates and (cid:77)oint ventures.
Segment liabilities
United Kingdom
Middle East
Continental Europe
Trade payables, advances received for contract work and accruals
Other current liabilities
Non current liabilities
Total liabilities
Total
£’000
1,052
41
95
(261)
927
Total
£’000
1,993
47
88
(258)
1,870
2015
£’000
3,443
1,307
470
5,220
3,083
4,306
-
-
-
-
-
2016
£’000
2,633
4,918
374
7,925
3,141
4,900
15,966
12,609
2016
£’000
2,502
1,860
147
4,509
2,393
1,875
8,777
2015
£’000
3,809
760
320
4,889
1,061
408
6,358
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
71
Geographical areas
Revenue
United Kingdom
Country of domicile
Russia
Turkey
United Arab Emirates
Foreign countries
Revenue
Non current assets
United Kingdom
Country of domicile
Russia
Czech Republic
Germany
Turkey
United Arab Emirates
Foreign countries
Non current assets excluding deferred tax
Deferred tax
Non current assets
2016
£’000
12,142
12,142
448
868
7,383
8,699
20,841
2016
£’000
2,347
2,347
11
17
693
239
1,374
2,334
4,681
219
4,900
Major clients
During the year ended 30 September 2016, the Group derived 10(cid:8) or more of its revenues from one (2015: one) client.
Largest client revenues
The largest client revenues for 2016 and 2015 relate to the United Kingdom operating segment.
2016
£’000
2,252
2015
£’000
14,488
14,488
1,283
768
2,129
4,180
18,668
2015
£’000
2,518
2,518
43
7
347
237
866
1,500
4,018
288
4,306
2015
£’000
2,309
Revenue by project site
The geographical split of revenue based on the location of pro(cid:77)ect sites was:
United Kingdom
Middle East
Continental Europe
Rest of the World
Revenue
4 OTHER OPERATING INCOME
Property rental income
Management charges to joint ventures and associates
License fee income
Other sundry income
Release of negative goodwill on acquisition (note 35)
Total other operating income
5
FINANCE INCOME
Receivable on bank deposits
Other finance income
Total finance income
6
FINANCE COSTS
Payable on bank loans and overdrafts
Other finance costs
Total finance costs
2016
£’000
12,014
7,349
1,396
82
20,841
2016
£’000
432
104
5
31
160
732
2016
£’000
8
-
8
2016
£’000
28
-
28
2015
£’000
14,262
2,311
2,085
10
18,668
2015
£’000
433
94
10
89
-
626
2015
£’000
-
3
3
2015
£’000
12
1
13
RADIO HOUSE, CAMBRIDGE
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73
7
AUDITOR REMUNERATION
9 OPERATING LEASES
During the year the Group incurred the following costs in relation to the Company’s auditor and associates of the Company’s auditor:
The operating lease payments recognised as an expense during the year were:
Fees payable to the Company’s auditor for the audit of the Company’s annual accounts
Fees payable to the Company’s auditor and its associates for other services
Audit of the Company’s subsidiaries pursuant to legislation
Non audit services - tax compliance services
Non audit services (cid:514) audit related assurance services
2016
£’000
30
64
1
3
2015
£’000
36
69
3
-
The figures presented above are for Aukett Swanke Group Plc and its subsidiaries as if they were a single entity. Aukett Swanke Group Plc has taken
the exemption permitted by United Kingdom Statutory Instrument 2008(cid:18)489 to omit information about its individual accounts.
8
EMPLOYEE INFORMATION
The average number of persons employed by the Group during the year was as follows:
Technical
Administrative
Total
2016
Number
220
47
267
2015
Number
201
43
244
In addition to the number of sta(cid:909) disclosed above, the Group’s associate and (cid:77)oint ventures employed an average of 121 persons (2015: 105
persons).
The costs of the persons employed by the Group during the year were:
Wages and salaries
Social security costs
Contributions to defined contribution pension arrangements
Total
2016
£’000
11,254
853
359
12,466
2015
£’000
8,783
895
347
10,025
The wages and salaries costs above include (cid:101)10,000 of restructuring costs (2015: (cid:101)151,000).
The Group contributes to defined contribution pension arrangements for its employees both in the UK and overseas. The assets of these
arrangements are held by financial institutions entirely separately from those of the Group.
The Group’s Turkish subsidiary is required to pay termination indemnities to each employee who completes one year of service and whose
employment is terminated upon causes that qualify the employees to receive termination indemnity payments.
The Group’s Middle East subsidiaries are required to pay termination indemnities to each employee who completes one year of service as stipulated
by UAE labour laws. Further details of this can be found in note 24.
Property
Plant (cid:9) equipment
Total
10 DIRECTORS’ EMOLUMENTS
2016
£’000
1,141
32
1,173
2015
£’000
1,144
33
1,177
2016
Anthony Simmonds
Nicholas Thompson
Beverley Wright
(cid:45)ohn Bullough
Andrew Murdoch
Nick Pell
David Hughes
Total
2015
Anthony Simmonds
Nicholas Thompson
Beverley Wright
(cid:45)ohn Bullough
Andrew Murdoch
Nick Pell
David Hughes
Duncan Harper
Total
Aggregate
emoluments
£’000
Pension
contributions
£’000
Total
received
£’000
Waived
£’000
Total
entitlement
£’000
45
206
153
30
113
113
25
685
-
30
21
-
21
3
9
84
45
236
174
30
134
116
34
769
-
-
-
-
-
-
-
-
45
236
174
30
134
116
34
769
Aggregate
emoluments
£’000
Pension
contributions
£’000
Total
received
£’000
Waived
£’000
Total
entitlement
£’000
45
241
167
30
135
118
174
11
921
-
29
21
-
16
3
5
1
75
45
270
188
30
151
121
179
12
996
-
-
-
-
-
1
-
-
1
45
270
188
30
151
122
179
12
997
Duncan Harper resigned from the Group on 10 October 2014.
David Hughes resigned as a Director on 22 December 2015.
Aggregate emoluments include bonuses awarded.
Benefits were accruing to five Directors (2015: six Directors) under defined contribution pension arrangements.
The aggregate emoluments of the highest paid Director were (cid:101)206,000 (2015: (cid:101)241,000).
74
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
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75
11 TAX CHARGE
Current tax
Adjustment in respect of previous years
Total current tax
Origination and reversal of temporary di(cid:909)erences
Changes in tax rates
Total deferred tax (note 23)
Total tax charge
2016
£’000
13
(20)
(7)
89
24
113
106
The standard rate of corporation tax in the United Kingdom is applicable for the financial year was 20(cid:8) (2015: 20.5(cid:8))
The tax assessed for the year di(cid:909)ers from the United Kingdom standard rate as explained below:
Profit before tax
Profit before tax multiplied by the standard rate of corporation tax in the
United Kingdom of 20(cid:8) (2015: 20.5(cid:8))
E(cid:909)ects of:
non tax deductible goodwill impairment
other non tax deductible expenses
di(cid:909)erences in overseas tax rates
associate and joint ventures reported net of tax
impact on deferred tax of change in UK tax rate
tax losses not recognised
utilisation of previously unrecognised tax losses
current tax adjustment in respect of previous years
income not taxable
Total tax charge
2016
£’000
927
185
3
54
3
(53)
24
35
-
(20)
(125)
106
2015
£’000
261
(26)
235
(19)
(1)
(20)
215
2015
£’000
1,870
383
-
69
(1)
(57)
(1)
-
(80)
(26)
(72)
215
12 EARNINGS PER SHARE
The calculations of basic and diluted earnings per share are based on the following data:
Earnings
Continuing operations
Profit for the year
Number of shares
Weighted average of Ordinary Shares in issue
E(cid:909)ect of dilutive options
Diluted weighted average of ordinary shares in issue
2016
£’000
772
772
2016
Number
2015
£’000
1,653
1,653
2015
Number
165,213,652
165,213,652
153,916
305,482
165,367,568
165,519,134
As explained in note 26 the Company has granted options over 1,000,000 of its Ordinary Shares. These have been included above as the average
share price was above the exercise price in 2016 and they therefore have a dilutive e(cid:909)ect.
13 GOODWILL
Group
Cost
At 1 October 2014
Acquisition of subsidiary
Exchange di(cid:909)erences
At 30 September 2015
Other adjustments
Exchange di(cid:909)erences
At 30 September 2016
Impairment
At 1 October 2014
Impairment
Exchange di(cid:909)erences
At 30 September 2015
Charge
Exchange di(cid:909)erences
At 30 September 2016
Net book value
At 30 September 2016
At 30 September 2015
At 30 September 2014
£’000
2,085
481
(33)
2,533
45
101
2,679
250
-
-
250
17
3
270
2,409
2,283
1,835
76
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77
The net book value of goodwill is allocated to the Group’s cash generating units as follows:
At 30 September 2014
Acquisition of subsidiary
Impairment
Exchange di(cid:909)erences
At 30 September 2015
Acquisition of subsidiary
Other adjustments
Impairment
Exchange di(cid:909)erences
At 30 September 2016
United
Kingdom
£’000
1,740
-
-
-
1,740
-
-
-
1,740
Russia
£’000
Turkey
£’000
25
-
-
(9)
16
-
(17)
1
-
70
-
-
(14)
56
-
-
10
66
Middle
East
£’000
-
481
-
(10)
471
-
45
-
87
603
Total
£’000
1,835
481
-
(33)
2,283
-
45
(17)
98
2,409
The other ad(cid:77)ustment of (cid:101)45,000 (2015: (cid:101)nil) to the Middle East CGU is in respect of a measurement period ad(cid:77)ustment relating the acquisition
of (cid:45)ohn R Harris (cid:9) Partners Limited in (cid:45)une 2015 to re(cid:565)ect new information obtained within one year about facts and circumstances that were in
existence at the acquisition date.
The goodwill allocated to each cash generating unit is tested annually for impairment.
The recoverable amount of a cash generating unit is determined based on value in use calculations. These calculations use pre tax cash (cid:565)ow
pro(cid:77)ections based on financial budgets and forecasts covering a five year period. Cash (cid:565)ows beyond the five year period are extrapolated using long
term average growth rates.
The carrying value of goodwill allocated to the United Kingdom and the Middle East is significant in comparison with the total carrying value of
goodwill but the carrying value of goodwill allocated to Turkey is not. During the year, goodwill allocated to Russia has been impaired in full.
The key assumptions in the discounted cash (cid:565)ow pro(cid:77)ections for the United Kingdom operation are:
(cid:527)
(cid:527)
(cid:527)
(cid:527)
the future level of revenue - which is based on knowledge of past property development cycles and external forecasts such as the construction
forecasts published by Experian. Historically the property development market has both declined more swiftly and recovered more sharply
than the economy as a whole(cid:30)
the future level of costs - which is based on the expected variability with revenue of the various types of expenditure incurred, and in particular
the average revenue earning capacity of members of sta(cid:909). These assumptions are based on historical experience and an assessment of the
current cost base(cid:30)
long term growth rate - which has been assumed to be 2.4(cid:8) per annum based on the average historical growth in gross domestic product in
the United Kingdom over the past fifty years(cid:30) and
the discount rate - which is the Group’s pre tax weighted average cost of capital and has been assessed at 14.5(cid:8) (2015: 19(cid:8)). This is
considered appropriate as the United Kingdom operation produces the majority of the Group’s revenue less sub consultant costs.
A 6% fall in all future forecast revenues without a corresponding reduction in costs in the UK CGU would result in carrying amounts exceeding their
recoverable amount.
The key assumptions in the discounted cash (cid:565)ow pro(cid:77)ections for the Middle East operation are:
(cid:527)
(cid:527)
(cid:527)
(cid:527)
the future level of revenue - which is based on knowledge of the current and expected level of construction activity in the Middle East, in
particular in the build up to the World Expo 2020(cid:30)
the future collection of trade receivables - which is based on management’s best estimates of recoverability in a geography where it is common
to have high levels of over 60 days trade receivables(cid:30)
the future level of costs - which is based on the expected variability with revenue of the various types of expenditure incurred, and in particular
the average revenue earning capacity of members of sta(cid:909). These assumptions are based on historical experience and an assessment of the
current cost base(cid:30)
long term growth rate - which has been assumed to be 5.1(cid:8) per annum based on the average historical growth in gross domestic product in
the Middle East over the past forty years(cid:30) and
(cid:527)
the discount rate - the pre tax cost of capital has been assessed at 13.6(cid:8) (2015: 16.0(cid:8)). This is considered appropriate as the Middle East
operation does not su(cid:909)er corporation tax.
A 10% fall in all future forecast revenues without a corresponding reduction in costs in the Middle East CGU would result in carrying amounts
exceeding their recoverable amount.
14 OTHER INTANGIBLE ASSETS
Group
Cost
At 30 September 2014
Acquisition of subsidiary
Exchange di(cid:909)erences
At 30 September 2015
Acquisition of subsidiary (note 35)
Exchange di(cid:909)erences
At 30 September 2016
Amortisation
At 30 September 2014
Charge
Exchange di(cid:909)erences
At 30 September 2015
Charge
Exchange di(cid:909)erences
At 30 September 2016
Net book value
At 30 September 2016
At 30 September 2015
At 30 September 2014
Trade name
£’000
Customer
relationships
£’000
Order book
£’000
Trade
licence
£’000
402
-
(23)
379
282
46
707
13
15
(1)
27
41
5
73
634
352
389
234
158
(23)
369
28
51
448
29
37
(6)
60
50
4
114
334
309
205
36
117
(4)
149
-
26
175
36
26
(7)
55
79
19
153
22
94
-
-
63
2
65
-
11
76
-
2
-
2
7
1
10
66
63
-
Total
£’000
672
338
(48)
962
310
134
1,406
78
80
(14)
144
177
29
350
1,056
818
594
Amortisation is included in other operating charges in the consolidated income statement.
Trade name
The trade name was acquired as part of the acquisition of Swanke Hayden Connell Europe Limited (“SHC”) in December 2013 and also on the
acquisition of Shankland Cox Limited ((cid:522)SCL(cid:523)) in February 2016. The SHC trade name re(cid:565)ects the inclusion of the Swanke name in the enlarged
Group. Trade names are amortised on a straight line basis over a 25 year period from the acquisition date.
Customer relationships
The customer relationships were acquired as part of the acquisition of SHC in December 2013, on the acquisition of (cid:45)ohn R Harris (cid:9) Partners Limited
((cid:522)(cid:45)RHP(cid:523)) in (cid:45)une 2015 and on the acquisition of SCL in February 2016. This represents the value attributed to clients who provided repeat business
to the Group on the strength of these relationships. Customer relationships are amortised on a straight line basis over a 7-10 year period from the
acquisition dates.
78
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79
16
IN(cid:57)ESTMENTS
Company
Cost
At 30 September 2014
Additions
Disposals
Change in value of indemnification
asset
At 30 September 2015
Additions
Disposals
At 30 September 2016
Provisions
At 30 September 2014
Charge
At 30 September 2015
Charge
At 30 September 2016
Net book value
At 30 September 2016
At 30 September 2015
At 30 September 2014
Subsidiaries
£’000
Joint
ventures
£’000
Associate
£’000
6,931
897
-
(43)
7,785
2,142
-
9,927
3,497
-
3,497
-
3,497
6,430
4,288
3,434
21
-
-
-
21
-
-
21
-
-
-
-
-
21
21
21
12
-
-
-
12
-
-
12
-
-
-
-
-
12
12
12
Total
£’000
6,964
897
-
(43)
7,818
2,142
-
9,960
3,497
-
3,497
-
3,497
6,463
4,321
3,467
Order book
The net book value of the order book was acquired as part of the acquisition of (cid:45)RHP in (cid:45)une 2015. This represents the value of on going contracts
acquired at the acquisition date. The amortisation of the order book is over the period to completion of the contracts.
Trade licence
The trade licence was acquired as part of the acquisition of (cid:45)RHP in (cid:45)une 2015. This represents the value of licences granted to (cid:45)RHP for architectural
activities in the regions in which it operates. The licence is amortised on a straight line basis over a 10 year period from the acquisition date.
15 PROPERTY, PLANT (cid:9) E(cid:52)UIPMENT
Group
Cost
At 30 September 2014
Additions
Acquisition of subsidiary
Disposals
Exchange di(cid:909)erences
At 30 September 2015
Additions
Acquisition of subsidiary (note 35)
Disposals
Exchange di(cid:909)erences
At 30 September 2016
Depreciation
At 30 September 2014
Charge
Disposals
Exchange di(cid:909)erences
At 30 September 2015
Charge
Disposals
Exchange di(cid:909)erences
At 30 September 2016
Net book value
At 30 September 2016
At 30 September 2015
At 30 September 2014
Leasehold
improvements
£’000
Furniture &
equipment
£’000
569
-
-
-
(11)
558
-
-
(7)
6
557
227
106
-
(5)
328
103
(7)
3
427
130
230
342
1,025
209
75
(25)
(34)
1,250
151
132
(92)
53
1,494
719
239
(19)
(22)
917
256
(75)
20
1,118
376
333
306
Total
£’000
1,594
209
75
(25)
(45)
1,808
151
132
(99)
59
2,051
946
345
(19)
(27)
1,245
359
(82)
23
1,545
506
563
648
80
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81
Subsidiary operations
The following are the subsidiary undertakings at 30 September 2016:
Name
Subsidiaries
Country of
Incorporation
Class and proportion
of ordinary equity held
2016
2015
Nature of business
Aukett Swanke Limited
England & Wales
Aukett Fitzroy Robinson International Limited
England & Wales
(cid:57)eretec Limited
England & Wales
Aukett Swanke OOO
(formerly (cid:61)AO Aukett Fit(cid:93)roy (cid:57)ostok)
Russia
Swanke Hayden Connell International Limited
England & Wales
Swanke Hayden Connell Mimarlik AS
(cid:45)ohn R Harris (cid:9) Partners Limited
Turkey
Cyprus
Shankland Cox Limited
England & Wales
Swanke Hayden Connell Europe Limited
England & Wales
Aukett Fit(cid:93)roy Robinson Sp (cid:61)oo
Poland
Fitzroy Robinson Limited
Swanke Limited
(cid:45)ohn R Harris (cid:9) Partners Limited
Aukett Fitzroy Robinson Limited
Thomas Nugent Architects Limited
England & Wales
England & Wales
England & Wales
England & Wales
England & Wales
Aukett Fitzroy Robinson Europe Limited
England & Wales
Aukett Limited
Aukett (UK) Limited
Aukett Group Limited
England & Wales
England & Wales
England & Wales
Fitzroy Robinson West & Midlands Limited
England & Wales
100%
100%
100%
100%
100%
100%
80(cid:8)
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Architecture & design
Architecture & design
Architecture & design
100%
Architecture & design
100%
100%
80(cid:8)
Architecture & design
Architecture & design
Architecture & design
-
Architecture & Engineering
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Non trading
Non trading
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Aukett Fitzroy Robinson International Limited is incorporated in England & Wales, but operates principally through its Middle East branch which is
registered in the Abu Dhabi emirate of the United Arab Emirates.
(cid:45)ohn R Harris (cid:9) Partners Limited is incorporated in Cyprus and operates principally in the Middle East. It is also the only subsidiary for which there
is a non controlling interest. The proportion of equity and voting rights held by the non controlling interests is 20%.
Shankland Cox Limited is incorporated in England & Wales, but operates principally through its Middle East branches registered in emirates of the
United Arab Emirates including Abu Dhabi, Dubai, Al Ain and Ras Al Khaimah.
Interest in associate and joint ventures
Set out below are the associate and joint ventures of the Group as at 30 September 2016. The entities listed below have share capital consisting
solely of ordinary shares, held directly by the Group. The country of incorporation is also their principal place of business, and the proportion of
ownership interest is the same as the proportion of voting rights held.
Name of entity
Country of
incorporation
% of ownership interest
Nature of
relationship
Measurement
method
Aukett + Heese Frankfurt GmbH
Germany
Aukett sro
Czech Republic
Aukett + Heese GmbH
Germany
2016
50%
50%
25%
2015
50%
50%
25%
(cid:45)oint (cid:57)enture
(cid:45)oint (cid:57)enture
Associate
Equity
Equity
Equity
All joint venture and associate entities provide architectural and design services. There are no contingent liabilities or commitments in relation to
the joint ventures or associates.
17
IN(cid:57)ESTMENT IN ASSOCIATE
As disclosed in note 16, the Group owns 25(cid:8) of Aukett + Heese GmbH which is based in Berlin, Germany. The table below provides summarised
financial information for Aukett + Heese GmbH as it is material to the Group. The information disclosed re(cid:565)ects Aukett + Heese GmbH’s relevant
financial statements and not the Group’s share of those amounts. They have been amended to re(cid:565)ect ad(cid:77)ustments made by the Group when using
the equity method.
Summarised balance sheet
Assets
Non current assets
Current assets
Total assets
Liabilities
Current liabilities
Non current liabilities
Total liabilities
Net assets
Reconciliation to carrying amounts:
Opening net assets at 1 October
Profit for the period
Other comprehensive income
Dividends paid
Closing net assets
Group’s share in %
Group’s share in £’000
Carrying amount
2016
£’000
372
3,116
3,488
(1,372)
-
(1,372)
2,116
1,017
840
259
-
2,116
25%
529
529
2015
£’000
233
1,991
2,224
(1,207)
-
(1,207)
1,017
976
1,055
(49)
(965)
1,017
25%
254
254
82
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83
Summarised statement of comprehensive income
Revenue
Sub consultant costs
Revenue less sub consultant costs
Operating costs
Profit before tax
Taxation
Profit for the period from continuing operations
Other comprehensive income
Total comprehensive income
2016
£’000
8,254
(1,807)
6,447
(5,244)
1,203
(363)
840
259
1,099
2015
£’000
7,713
(2,215)
5,498
(3,986)
1,512
(457)
1,055
(49)
1,006
The Group received dividends of (cid:101)nil (2015: (cid:101)241,000) from Aukett + Heese GmbH. The principal risks and uncertainties associated with Aukett +
Heese GmbH are the same as those detailed within the Group’s Strategic Report.
18
IN(cid:57)ESTMENTS IN (cid:45)OINT (cid:57)ENTURES
Frankfurt
As disclosed in note 16, the Group owns 50% of Aukett + Heese Frankfurt GmbH which is based in Frankfurt.
At 30 September 2014
Share of profits
Dividends paid
Exchange di(cid:909)erences
At 30 September 2015
Share of profits
Dividends paid
Exchange di(cid:909)erences
At 30 September 2016
£’000
124
13
(37)
(6)
94
50
-
20
164
The following amounts represent the Group’s 50% share of the assets and liabilities, and revenue and expenses of Aukett + Heese Frankfurt GmbH.
Assets
Non current assets
Current assets
Total assets
Liabilities
Current liabilities
Non current liabilities
Total liabilities
Net assets
2016
£’000
8
308
316
(152)
-
(152)
164
2015
£’000
9
186
195
(101)
-
(101)
94
Revenue
Sub consultant costs
Revenue less sub consultant costs
Operating costs
Profit before tax
Taxation
Profit after tax
Prague
As disclosed in note 16, the Group owns 50(cid:8) of Aukett sro which is based in Prague.
At 30 September 2014
Share of profits
Exchange di(cid:909)erences
At 30 September 2015
Share of profits
Exchange di(cid:909)erences
At 30 September 2016
The following amounts represent the Group’s 50% share of the assets and liabilities of Aukett sro.
Assets
Non current assets
Current assets
Total assets
Liabilities
Current liabilities
Non current liabilities
Total liabilities
Net assets
2016
£’000
474
(92)
382
(323)
59
(9)
50
2016
£’000
1
71
72
(55)
-
(55)
17
2015
£’000
443
(147)
296
(277)
19
(6)
13
£’000
7
-
(1)
6
8
3
17
2015
£’000
1
64
65
(59)
-
(59)
6
84
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85
Revenue
Sub consultant costs
Revenue less sub consultant costs
Operating costs
Profit before tax
Taxation
Profit after tax
19 TRADE AND OTHER RECEI(cid:57)ABLES
Group
Gross trade receivables
Impairment allowances
Net trade receivables
Amounts due from customers for contract work
Amounts owed by associates and joint ventures
Other receivables
Prepayments
Total
Company
Amounts due after more than one year
Amounts owed by associate and joint ventures
Total amounts due after more than one year
Amounts due within one year
Amounts owed by subsidiaries
Amounts owed by associate and joint ventures
Other receivables
Prepayments
Total amounts due within one year
Total
2016
£’000
168
(10)
158
(150)
8
-
8
2016
£’000
7,334
(1,276)
6,058
1,867
49
435
818
9,227
2016
£’000
49
49
1,270
-
35
6
1,311
1,360
2015
£’000
143
(22)
121
(121)
-
-
-
2015
£’000
4,498
(357)
4,141
1,079
70
425
715
6,430
2015
£’000
48
48
382
22
16
12
432
480
20 TRADE AND OTHER PAYABLES
Group
Trade payables
Advances received from customers for contract work
Amounts due to associate and joint ventures
Other taxation and social security
Other payables
Dividends payable
Accruals
Total
Company
Trade payables
Amounts owed to subsidiaries
Other payables
Dividends payable
Accruals
Total
See note 34 for further details of the amounts due to subsidiaries.
21 SECURED BANK LOAN
Group and Company
Instalments repayable within one year
Current liability
Instalments repayable between one and two years
Instalments repayable between two and five years
Non current liability
Total
2016
£’000
1,089
1,616
-
626
1,302
116
1,804
6,553
2016
£’000
22
3,421
1
116
59
3,619
2016
£’000
247
247
247
555
802
1,049
2015
£’000
881
2,572
4
704
236
-
1,436
5,833
2015
£’000
4
2,157
2
-
137
2,300
2015
£’000
-
-
-
-
-
-
The bank loan and overdraft are secured by debentures over all the assets of the Company and certain of its United Kingdom subsidiaries. The bank
loan and overdraft carry interest at 2.5(cid:8) above the London Interbank O(cid:909)er Rate (LIBOR) in the relevant currency.
The amounts owed by subsidiaries were secured in January 2013 by debentures over all the assets of the relevant subsidiaries. These debentures
rank after the debentures securing the bank loan and overdraft.
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87
22 ANALYSIS OF NET FUNDS
Group
Cash and cash equivalents
Cash and cash equivalents
Secured bank loan (note 21)
Net funds
23 DEFERRED TAX
Group
At 30 September 2014
Income statement
Exchange di(cid:909)erences
At 30 September 2015
Income statement
Exchange di(cid:909)erences
At 30 September 2016
Group
Deferred tax assets
Deferred tax liabilities
Net deferred tax balance
Tax depreciation
on plant and
equipment
£’000
65
(5)
-
60
(4)
-
56
Trading
losses
£’000
225
15
(12)
228
(73)
1
156
2016
£’000
1,839
1,839
(1,049)
790
Other
temporary
di(cid:909)erences
£’000
(71)
10
7
(54)
(36)
(3)
(93)
2016
£’000
219
(100)
119
2015
£’000
1,873
1,873
-
1,873
Total
£’000
219
20
(5)
234
(113)
(2)
119
2015
£’000
288
(54)
234
Deferred income tax assets are recognised for tax losses carried forward to the extent that the realisation of the related tax benefit through future
taxable profits is probable.
The Group did not recognise deferred income tax in respect of losses that can be carried forward against future taxable income in its Russian
operation.
The Group also did not recognise deferred income tax in respect of taxable losses carried forward against future taxable income of certain of its
subsidiaries which are incorporated in the UK but operate wholly through permanent establishments in the Middle East and future profits are
therefore anticipated to be non taxable.
Further information regarding the assessment of the recoverability of deferred tax assets is given in note 2.
The Company has a deferred tax asset of (cid:101)nil (2015: (cid:101)2,000) recognised in respect of other temporary di(cid:909)erences.
24 PRO(cid:57)ISIONS
Group
At 30 September 2014
On acquisition of subsidiary
Utilised
Released
Provided
Exchange di(cid:909)erences
At 30 September 2015
On acquisition of subsidiary
Utilised
Released
Provided
Exchange di(cid:909)erences
At 30 September 2016
Redundancy
provision
£’000
Property
lease
provision
£’000
Employee benefit
obligations
£’000
7
-
(3)
(1)
-
(3)
-
-
-
-
-
-
-
52
-
-
-
95
-
147
-
-
-
45
-
192
45
164
(15)
-
18
(5)
207
589
(124)
-
97
102
871
Total
£’000
104
164
(18)
(1)
113
(8)
354
589
(124)
-
142
102
1,063
Redundancy provision
The redundancy provision at 30 September 2014 related to the expected costs of reducing sta(cid:909) numbers to better match staffing resources with
projected workload. The provision arose from obligations contained in employment contracts and statutory obligations.
Property lease provision
The provision carried forward at 30 September 2016 is the future estimated cost of work to be performed after seeking appropriate external
professional advice for the Group’s two London premises, on obligations arising under its lease.
Employee benefit obligations
The Group’s Middle East subsidiaries are required to pay termination indemnities to each employee who completes one year of service as stipulated
by UAE labour laws. The net charge to the income statement comprises the service cost and the interest on the liability and is included in personnel
related expenses. The obligation has been measured at the reporting date using the projected unit credit method in accordance with IAS 19 and is
funded from working capital.
The key actuarial assumptions used in the calculation are detailed below:
Combined average length of service
5 years
Discount rate
Salary growth rate
2.125%
2.7%
The Group determined discount rates on the basis of current yields on 5 year government bonds in the same currency as the liabilities. Forecast
consumer price in(cid:565)ation (CPI) in the region has been used as a proxy for forecast salary growth.
The sensitivity of the employee benefit obligation to changes in assumptions is set out below. The e(cid:909)ects of a change in assumption are weighted
proportionally to the total plan obligations to determine the total impact for each assumption presented.
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89
Impact on employee benefit obligation
27 CASH GENERATED FROM OPERATIONS
Change in assumption
Increase in assumption
Decrease in assumption
Group
Combined average length of service
Salary growth rate
Discount rate
1 year
1%
1%
2.1%
0.6%
(0.6)%
(8.7)(cid:8)
(0.6)%
0.6%
The Group’s Turkish subsidiary is required to pay termination indemnities to each employee who completes one year of service and whose
employment is terminated upon causes that qualify the employee to receive termination indemnity. The liability has been measured in line with
IAS 19 and is funded from working capital.
25 SHARE CAPITAL
Group and Company
Allocated, called up and fully paid
165,213,652 (2015: 165,213,652) ordinary shares of 1p each
At 1 October 2014
No changes
At 30 September 2015
No changes
At 30 September 2016
2016
£’000
1,652
2015
£’000
1,652
Number
165,213,652
-
165,213,652
-
165,213,652
The objectives, policies and processes for managing capital are outlined in the strategic report.
26 SHARE OPTIONS
The Company has granted options over its Ordinary Shares to Group employees as follows:
At 1 October
2015
Number
1,000,000
1,000,000
Granted
11 April 2011
Total
Granted
Number
Lapsed
Number
-
-
-
-
At 30
September
2016
Number
1,000,000
1,000,000
Exercise
price
Pence
Earliest
exercisable
date
Latest
exercisable
date
5.00
12 April 2013
11 April 2017
The share options were granted on 11 April 2011 and vest after two years’ service. They are exercisable between two and six years after grant.
Profit before tax (cid:514) continuing operations
Finance income
Finance costs
Share of results of associate and joint ventures
Goodwill impairment provision
Intangible amortisation
Depreciation
Loss(cid:18)(profit) on disposal of property, plant (cid:9) equipment
Change in trade and other receivables
Change in trade and other payables
Change in provisions
Negative goodwill
Unrealised foreign exchange di(cid:909)erences
Net cash generated from operations
Company
Profit before income tax
Dividends received
Finance costs
Change in trade and other receivables
Change in trade and other payables
Unrealised foreign exchange di(cid:909)erences
Net cash (used by) (cid:18) generated from operations
2016
£’000
927
(8)
28
(267)
17
177
359
10
628
2015
£’000
1,870
(3)
14
(277)
-
80
345
(2)
597
(1,583)
(1,273)
16
(160)
(40)
104
2016
£’000
543
(820)
23
(879)
70
217
(846)
92
-
-
1,443
2015
£’000
757
(1,279)
2
(26)
616
-
70
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91
28 FINANCIAL INSTRUMENTS
Risk management
The Company and the Group hold financial instruments principally to finance their operations or as a direct consequence of their business activities.
The principal risks considered to arise from financial instruments are foreign currency risk and interest rate risk (market risks), counterparty risk
(credit risk) and liquidity risk. Neither the Company nor the Group trade in financial instruments.
Categories of financial assets and liabilities
Group
Trade receivables
Amounts due from customers for contract work
Amounts owed by associate and joint ventures
Other receivables
Cash and cash equivalents
Loans and receivables
Trade payables
Other payables
Amounts due to associate and joint ventures
Accruals
Secured bank loan
Provisions
Financial liabilities measured at amortised cost
Net financial instruments
Company
Amounts owed by subsidiaries
Amount owed by associate and joint ventures
Other receivables
Cash and cash equivalents
Loans and receivables
Trade payables
Amounts owed to subsidiaries
Other payables
Accruals
Secured bank loan
Financial liabilities measured at amortised cost
Net financial instruments
2016
£’000
6,058
1,867
49
434
1,839
10,247
(1,089)
(1,419)
-
(1,804)
(1,049)
(1,063)
(6,424)
3,823
2016
£’000
1,271
49
-
596
1,916
(22)
(3,422)
(117)
(59)
(1,049)
(4,669)
(2,753)
2015
£’000
4,141
1,079
70
425
1,873
7,588
(881)
(236)
(4)
(1,436)
-
(354)
(2,911)
4,677
2015
£’000
382
70
16
1,007
1,475
(4)
(2,157)
(2)
(137)
-
(2,300)
(825)
Collateral
As disclosed in note 21 the bank loan and overdraft are secured by a debenture over all the present and future assets of the Company and certain
of its United Kingdom subsidiaries. The carrying amount of the financial assets covered by this debenture were:
Group
Company
2016
£’000
5,930
1,010
2015
£’000
10,959
1,551
Other receivables in the consolidated statement of financial position include a (cid:101)148,000 rent security deposit (2015: (cid:101)148,000) in respect of one of
the Group’s London studio premises and a (cid:101)6,000 rent deposit (2015: (cid:101)10,000) in respect of the Group’s Moscow studio premises.
29 FOREIGN CURRENCY RISK
The Group’s operations seek to contract with customers and suppliers in their own functional currencies to minimise exposure to foreign currency
risk, however, for commercial reasons contracts are occasionally entered into in foreign currencies.
Where contracts are denominated in other currencies the Group usually seeks to minimise net foreign currency exposure from recognised project
related assets and liabilities by using foreign currency denominated overdrafts.
The Group does not hedge future revenues from contracts denominated in other currencies due to the rights of clients to suspend or cancel
pro(cid:77)ects. The Board has taken a decision not to hedge the net assets of the Group’s overseas operations.
The denomination of financial instruments by currency was:
Group
Czech Koruna
EU Euro
Polish (cid:61)loty
Russian Rouble
UAE Dirham
UK Sterling
US Dollar
Turkish Lira
Net financial instruments
Company
Czech Koruna
EU Euro
UK Sterling
US Dollar
UAE Dirham
Turkish Lira
Net financial instruments
2016
£’000
48
78
2
100
2,210
1,773
(653)
265
3,823
2016
£’000
49
80
(1,332)
(906)
(650)
6
(2,753)
2015
£’000
48
63
(9)
408
512
3,961
(324)
18
4,677
2015
£’000
48
62
(929)
(74)
68
-
(825)
The Directors consider that there were no material di(cid:909)erences between the carrying values and the fair values of all the Company’s and all the
Group’s financial assets and financial liabilities at each year end based on the expected future cash (cid:565)ows.
A 10(cid:8) percent weakening of UK Sterling against all currencies at 30 September would have increased (cid:18) (decreased) equity by the amounts shown
below. This analysis is applied currency by currency in isolation (i.e. ignoring the impact of currency correlation and assumes that all other variables,
in particular interest rates, remain consistent). A 10(cid:8) strengthening of UK Sterling against all currencies would have an equal but opposite e(cid:909)ect.
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93
Group
Company
2016
Profit
£’000
100
(142)
Equity
£’000
105
-
2015
Profit
£’000
45
10
Equity
£’000
35
-
The following foreign exchange gains (cid:18) (losses) arising from financial assets and financial liabilities have been recognised in the income statement:
All of the trade receivables considered to be impaired were greater than 90 days overdue.
The processes undertaken when considering whether a trade receivable may be impaired are set out in note 2. All amounts overdue have been
individually considered for any indications of impairment and provision for impairment made where considered appropriate.
The concentration of counterparty risk within the (cid:101)8,102,000 (2015: (cid:101)5,220,000) of trade receivables and amounts due from customers for contract
work is illustrated in the table below showing the three largest exposures to individual clients at 30 September.
2016
£’000
623
429
329
2015
£’000
445
292
175
Group
Company
2016
£’000
26
(190)
2015
£’000
(1)
(12)
Largest exposure
Second largest exposure
Third largest exposure
The Group’s exchange loss of (cid:101)26,000 (2015: loss of (cid:101)1,000) includes cumulative exchange reserve losses of (cid:101)nil (2015: (cid:101)nil) recycled through the
income statement on discontinued operations.
30 COUNTERPARTY RISK
Group
No collateral is held in respect of any financial assets and therefore the maximum exposure to credit risk at the date of the statement of financial
position is the carrying value of financial assets shown in note 28.
Counterparty risk is only considered significant in relation to trade receivables, amounts due from customers for contract work, other receivables
and cash and cash equivalents.
The ageing of trade receivables against which no impairment allowance has been made, as the directors consider their recovery is probable, was:
The Group’s principal banker is Coutts (cid:9) Co, a member of the Royal Bank of Scotland group.
At 30 September 2016 the largest exposure to a single financial institution represented 60(cid:8) (2015: 87(cid:8)) of the Group’s cash and cash equivalents.
Company
The Company does not have any trade receivables or amounts due from customers for contract work.
The amounts owed by United Kingdom subsidiaries were secured in January 2013 by debentures over all the assets of the relevant subsidiaries.
These debentures rank after the debentures securing the bank loan and overdraft. Prior to this all amounts owed by United Kingdom subsidiaries
and by associate and joint ventures were unsecured. The amounts owed by associate and joint ventures remain unsecured.
All of the Company’s cash and cash equivalents are held by Coutts & Co.
The Company is exposed to counterparty risk though the guarantees set out in note 33.
Not overdue
Between 0 and 30 days overdue
Between 30 and 60 days overdue
Greater than 60 days overdue
Total
The movement on impairment allowances for trade receivables was as follows:
2016
£’000
2,170
929
408
2,551
6,058
At 30 September 2014
Acquisition of subsidiary
Release to the income statement
Allowance utilised
Exchange di(cid:909)erences
At 30 September 2015
Acquisition of subsidiary
Release to the income statement
Allowance utilised
Exchange di(cid:909)erences
At 30 September 2016
2015
£’000
1,978
753
510
900
4,141
£’000
44
321
(11)
-
3
357
696
155
(80)
148
1,276
31
INTEREST RATE RISK
Group
Rent deposit
Secured bank loan
Interest bearing financial instruments
Company
Secured bank loans and overdrafts
Interest bearing financial instruments
2016
£’000
148
(1,049)
(901)
2016
£’000
(1,049)
(1,049)
2015
£’000
148
-
148
2015
£’000
(77)
(77)
The property rent deposit earns variable rates of interest based on short term inter bank lending rates.
Due to the current low levels of worldwide interest rates, and Group treasury management requirements, the cash and cash equivalents are in
practice currently not interest bearing, and therefore have not been included in interest bearing financial instruments disclosures.
The bank loan and overdraft carry interest at 2.5(cid:8) above the London Interbank O(cid:909)er Rate (LIBOR) of the relevant currency.
A 1(cid:8) point rise in worldwide interest rates would have the following impact on profit, assuming that all other variables, in particular the interest
bearing balance, remain constant. A 1(cid:8) fall in worldwide interest rates would have an equal but opposite e(cid:909)ect.
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95
2016
£’000
(9)
(10)
2015
£’000
2
(1)
The lease of its York Way studio does not contain any break clauses and expires in (cid:45)uly 2018. The lease of its Christopher Street studio expires in
September 2017.
At both 30 September 2016 and 2015 neither the Group nor the Company had any capital commitments in respect of property, plant and equipment.
The Group also acts as a lessor through the sub let of the ground and first (cid:565)oors at its Christopher Street studio. The following is the aggregate
receivables under these operating leases.
Group
Company
32 LI(cid:52)UIDITY RISK
The Group’s cash balances are held at call or in deposits with very short maturity terms.
At 30 September 2016 the Group had (cid:101)850,000 (2015: (cid:101)850,000) of gross borrowing facility under its United Kingdom gross bank overdraft facility.
In January 2017 Coutts & Co renewed the gross overdraft facility which is now next due for review in December 2017.
The Group and Company had outstanding borrowings of (cid:101)1,049,000 (2015: (cid:101)nil) at 30 September 2016.
The maturity analysis of borrowings, including contractual payments of (cid:565)oating rate interest is as shown below:
Gross borrowings
Instalments repayable within one year
Instalments repayable between one and two years
Instalments repayable between two and five years
Total gross borrowings
Expected future finance charges
Total net borrowings
2016
£’000
274
270
579
1,123
(74)
1,049
2015
£’000
-
-
-
-
-
-
33 GUARANTEES, CONTINGENT LIABILITIES AND OTHER COMMITMENTS
A cross guarantee and o(cid:909)set agreement is in place between the Company and certain of its United Kingdom subsidiaries in respect of the United
Kingdom bank loan and overdraft facility. Details of the UK bank loan are disclosed in note 21. At 30 September 2016 the overdrafts of its United
Kingdom subsidiaries guaranteed by the Company totalled (cid:101)nil (2015: (cid:101)205,000).
The Company and certain of its United Kingdom subsidiaries are members of a Group for (cid:57)alue Added Tax ((cid:57)AT) purposes. At 30 September 2016
the net (cid:57)AT payable balance of those subsidiaries was (cid:101)321,000 (2014: (cid:101)356,000).
At the year end, one of the Group’s Middle East subsidiaries had outstanding letter of guarantees totalling (cid:101)166,000 (2015: (cid:101)nil).
In common with other firms providing professional services, the Group is sub(cid:77)ect to the risk of claims of professional negligence from clients. The
Group maintains professional indemnity insurance in respect of these risks but is exposed to the cost of excess deductibles on any successful claims.
The directors assess each claim and make accruals for excess deductibles where, on the basis of professional advice received, it is considered that
a liability is probable.
The Group had the following aggregate commitments under operating leases.
Not later than one year
Later than one year and not later than five years
Later than five years
Total
2016
£’000
1,016
392
-
1,408
2015
£’000
1,012
1,345
-
2,357
The Group’s most significant lease relates to its two London studio premises which comprises (cid:101)1,350,000 (2015: (cid:101)2,228,000) of the amounts shown
in the table above.
Not later than one year
Later than one year and not later than five years
Later than five years
Total
34 RELATED PARTY TRANSACTIONS
2016
£’000
260
-
-
260
2015
£’000
346
258
-
604
Key management personnel compensation
The key management personnel of the Group comprise the directors of the Company together with the managing and financial directors of the
United Kingdom and international operations. During the year the key management of the business has been rationalised.
Group
Short term employee benefits
Post employment benefits
Total
The key management personnel of the Company comprise its directors.
Company
Short term employee benefits
Post employment benefits
Total
2016
£’000
1,553
136
1,689
2016
£’000
774
84
858
2015
£’000
2,065
132
2,197
2015
£’000
1,035
76
1,111
Transactions and balances with associate and joint ventures
The amount owed to the Group by Aukett + Heese Frankfurt GmbH at 30 September 2016 was (cid:101)22,000 (2015: (cid:101)22,000) relating to accrued
management charges. Invoices issued by the Group in respect of these services amounted to (cid:101)45,000 (2015: (cid:101)18,000).
The Group makes management charges to Aukett + Heese GmbH. Invoices issued by the Group during the year in respect of these services
amounted to (cid:101)55,000 (2015: (cid:101)60,000). The amount owed to the Group by Aukett + Heese GmbH at 30 September 2016 in respect of these
management charges was (cid:101)nil (2015: (cid:101)nil).
As disclosed in note 16, the Group owns 50% of Aukett + Heese Frankfurt GmbH and 25% of Aukett + Heese GmbH. The remaining 50% of Aukett +
Heese Frankfurt GmbH and 75% of Aukett + Heese GmbH are owned by Lutz Heese, a former director of the Company.
The amount owed to the Group and to the Company by Aukett sro at 30 September 2016 was (cid:101)49,000 (2015: (cid:101)48,000) relating to previously
declared but not yet paid dividends and name licence charges. During the year, management charges of (cid:101)5,000 (2015: (cid:101)nil) were made to Aukett
sro.
None of the balances with the associate or (cid:77)oint ventures are secured.
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97
Transactions and balances with subsidiaries
The names of the Company’s subsidiaries are set out in note 16.
The Company made management charges to its subsidiaries for management services of (cid:101)800,000 (2015: (cid:101)782,000) and paid charges to its
subsidiaries for office accommodation and other related services of (cid:101)90,000 (2015: (cid:101)390,000).
At 30 September 2016 the Company was owed (cid:101)1,271,000 (2015: (cid:101)382,000) by its subsidiaries and owed (cid:101)3,421,000 (2015: (cid:101)2,157,000) to its
subsidiaries. These balances arose through various past transactions including working capital advances, treasury management and management
charges. The amounts owed at the year end are non interest bearing and repayable on demand.
The amounts owed by United Kingdom subsidiaries were secured in January 2013 by debentures over all the assets of the relevant subsidiaries.
These debentures rank after the debentures securing the bank loan and overdraft. Prior to this all amounts owed by subsidiaries were unsecured.
35 BUSINESS COMBINATION
On 10 February 2016 the Group acquired 100% of the issued share capital of Shankland Cox Limited (‘SCL’), a company incorporated in England
and Wales but operating through 4 branches in the United Arab Emirates.
The total consideration, all to be paid in cash, was structured as follows:
•
•
AED 4.5m on completion.
AED 1.5m upon release of banking guarantees, paid after the acquisition date.
(cid:527) Maximum deferred consideration of AED 9.8m dependant on the collection of trade receivables and work in progress from the agreed Balance
Sheet within 2 years from the completion date.
The deferred consideration up to a maximum of AED 9.8m had a fair value of AED 5.4m at acquisition. The minimum amount currently payable in
respect of this deferred consideration is AED1.3m, representing receivables which have been collected. The maximum amount payable is currently
AED 8.7m, which is contingent on the collection of all acquired trade receivables before 10 February 2018.
Of the AED 11.4m fair value of consideration transferred, AED 6.0m cash consideration has been paid and the full deferred consideration remains
outstanding at the balance sheet date. At the year end, the fair value of deferred consideration has been estimated to be AED 4.8m.
The acquisition considerably improves our market position and o(cid:909)ering in the Middle East.
The table below summarises the consideration paid for SCL, the fair value of assets acquired and liabilities assumed at the acquisition date.
Negative goodwill of (cid:101)160,000 has arisen on acquisition following recognition of the intangible assets noted above. This credit to the income
statement compensates for short term costs incurred to restructure the business.
Acquisition costs of (cid:101)58,220 have been included in other operating charges in the consolidated income statement for the year ended 30 September
2016.
The fair value of trade and other receivables is £2,530,000 and includes trade receivables with a fair value of £2,146,000. The gross contractual
amount for trade receivables due is (cid:101)2,842,000, of which (cid:101)696,000 is expected to be uncollectable.
The fair values of the acquired identifiable intangibles are based on finalised valuations.
The revenue included in the consolidated income statement since 10 February 2016 contributed by SCL was £2,275,000. The revenue less sub
consultant costs contributed over the same period was £2,067,000. The loss before tax, amortisation and gain on bargain purchase during the
period since acquisition was £557,000.
Had SCL been consolidated from 1 October 2015, the consolidated income statement would show pro-forma revenue of (cid:101)22,608,000 and profit
before tax of £709,000.
36 CORPORATE INFORMATION
General corporate information regarding the Company is shown on page 40. The addresses of the Group’s principal operations are shown on
page 4. A description of the Group’s operations and principal activities is given within the Strategic Report.
Consideration at 10 February 2016
Cash
Fair value of deferred consideration at acquisition
Total consideration transferred at acquisition
Recognised amounts of identifiable assets acquired and liabilities assumed
Cash and cash equivalents
Property, Plant and Equipment (note 15)
Brand Name (note 14)
Customer relationships (note 14)
Amounts recoverable on contracts
Trade and other receivables
Trade and other payables
Provision for liabilities (note 24)
Total identifiable net assets
Release of negative goodwill on acquisition
Total
98
£’000
1,126
1,015
2,141
365
132
282
28
401
2,530
(848)
(589)
2,301
(160)
2,141
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
ONE FORBURY PLACE, READING
99
SHAREHOLDER
INFORMATION
Listing information
The shares of Aukett Swanke Group Plc are listed on the Alternative Investment Market (AIM) of the London Stock Exchange.
Tradable Instrument Display Mnemonic (TIDM formerly EPIC): AUK
Stock Exchange Daily Official List (SEDOL) code: 0061795
International Securities Identification Number (ISIN): GB0000617950
Share price
The Company’s share price is available from the website of the London Stock Exchange (www.londonstockexchange.co.uk).
The Company’s mid market share price is published daily in The Times, The Financial Times and The London Evening Standard newspapers.
Registrars
Enquiries relating to matters such as loss of a share certificate, dividend payments or notification of a change of address should be directed to
Equiniti who are the Company’s registrars at Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DD - 0371 384 2030 (Lines are open
8.30am to 5.30pm, Monday to Friday). Callers from outside the UK should dial +44 (0)121 415 7047 - www.equiniti.com.
Equiniti also provide a website which enables shareholders to view up to date information about their shareholding in the Company at www.
shareview.co.uk.
Investor relations
In accordance with AIM Rule 26 regarding Company information disclosure, various investor orientated information is available on our web site at
www.aukettswanke.com.
The Company Secretary can be contacted by email at cosec@aukettswanke.com.
Donate your shares
The Company supports ShareGift, the charity share donation scheme administered by The Orr Mackintosh Foundation (registered charity number
1052686).
Through ShareGift, shareholders who have only a very small number of shares which might be considered uneconomic to sell are able to donate
them to charity. Donated shares are aggregated and sold by ShareGift, the proceeds being passed onto a wide range of UK charities.
Donating shares to charity gives rise neither to a gain or loss for UK capital gains tax purposes and UK taxpayers may also be able to claim income
tax relief on such gifts of shares.
Further details about ShareGift can be obtained from ShareGift, 17 Carlton House Terrace, London, SW1Y 5AH - 020 7930 3737 - www.sharegift.org
100
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2016
125 WOOD STREET, LONDON EC2
Imperial College London is proud of Aukett Swanke’s design for
the Molecular Sciences Research Hub at our new White City Campus.
The building’s inherent flexibility is highlighted through our fitout
of complex and pioneering new research facilities within
the elegant shell and core structure.
Our vision to provide a multi-functional building that can
support a modern, collaborative approach to world-class science
within the context of Aukett Swanke’s original master plan has been
truly realised with this impressive building. The scheme anchors
the main central square in the northern half of the Campus,
sitting well with partner buildings, and will be a key part
of our longer-term vision for the site.
John Anderson
Director of Financial Strategy
Imperial College London
www.aukettswanke.com
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