&annual
report
accounts
2018
A U K E T T S W A N K E G R O U P P L C
Aukett Swanke provides design services, focusing on architecture, masterplanning 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 330 staff in 13 studios across 6 countries: UK, Germany, Russia, Turkey, the UAE and the Czech Republic. The studios’ expertise includes work in mixed-use, commercial office, hotel, retail, residential, education and healthcare sectors as well as workplace consulting. Our key international people
GROUP
MANAGEMENT
UNITED
KINGDOM
MIDDLE EAST
CONTINENTAL
EUROPE
JV
PARTNERS
LUKE SCHUBERTH
Managing Director -
UK ‡
SUZETTE VELA BURKETT
Managing Director -
UK ‡
STEPHEN EMBLEY
Managing Director -
Middle East ‡
ROBERT FRY
Managing Director -
International ‡
GORDON MCQUADE
Director
Veretec
JAMES ATHA
Director
Veretec
KEITH MORGAN
Managing Director
Veretec
NICK PELL
Interior Design Director
International
TOM ALEXANDER
Director
Aukett Swanke
ANDREW MURDOCH
Chairman
Middle East
OMID ROUHANI
Director
Aukett Swanke
Architectural Design
PAULA MCKEON
Finance Director
Middle East
BOB PUNCHARD
Director
John R Harris & Partners
SUBRAYA KALKURA
Director
John R Harris & Partners
YOUSSEF FAKACH
Director
Shankland Cox
LARISA LIGAY
General Director
Moscow
TOM NUGENT
Director
Moscow
BURÇU SENPARLAK
General Manager
Istanbul
ZEYNEP ORBERK
Director
Istanbul
10 Bonhill Street
LONDON EC2A 4PE
United Kingdom
T +44 (0)20 7843 3000
london@aukettswanke.com
Al Salman Tower, Office No 1402
Hamdan Street
PO Box 38764
ABU DHABI
United Arab Emirates
T +971 (0) 2 622 6788
abudhabi@aukettswanke.com
Al Salman Tower, Office No 1407
Hamdan Street
PO Box 44936
ABU DHABI
United Arab Emirates
T +971 (0) 671 5411
abudhabi@shanklandcox.com
ADNIC Building, Office No M03
Zayed Bin Sultan Street
PO Box 80670
AL AIN
United Arab Emirates
T +971 (0)3 766 9334
abudhabi@shanklandcox.com
Sidra Tower, Office No 1308
Sheikh Zayed Road
PO Box 616
DUBAI
United Arab Emirates
T +971 (0) 4 3697197
dubai@aukettswanke.com
Al Goze Building, Office 2, 1st Floor
Sheik Zayed Road, Al Quoz
PO Box 37133
DUBAI
United Arab Emirates
T +971 (0)4 338 0144
dubai@shanklandcox.com
Humaid Bin Drai Building, Office 103,
13th Street, Umm Ramool
PO Box 31043
DUBAI
United Arab Emirates
T: +971 (0) 4 286 2831
dubai@johnrharris.com
Mohd Hasan Abdulla Omran Bld.
PO Box 36800
RAS AL KHAIMAH
United Arab Emirates
T +970 (0)4 671 5411
dubai@shanklandcox.com
Our studios
18 Prospekt Andropova, bld 7
Floor 11, Office 5
MOSCOW 115432
Russia
T +7 (499) 683 0145
moscow@aukettswanke.com
Kore Sehitleri 34/6
Deniz Is Hani
34394 Zincirlikuyu
ISTANBUL
Turkey
T +90 212 318 0400
istanbul@aukettswanke.com
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
london
abu dhabi
al ain
berlin
dubai
frankfurt
istanbul
moscow
prague
ras al khaimah
LUTZ HEESE
Managing Director
Aukett + Heese
ANDREW HENNING JONES
Director
Aukett + Heese
MARCUS DIETZSCH
Director
Aukett + Heese Frankfurt
JANA LEHOTSKA
Director
Aukett sro
TOMAS VOREL
Director
Aukett sro
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
3
Our clients include . . .
AB Development / Aberdeen Standard / 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 / Al Ain
Museum / ALDAR / Al-Futtaim Group Real Estate / Al Hamra Real Estate Development / Allen & Overy / Allianz Insurance / Allied World
Assurance / Al Qudra Broadcasting / Arup / Ascot Underwriting / Avgur Estate / Aviva / AXA / Azzedine Alaia 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 / Birmingham City University / Blackstone Group / Bloomberg / BNP Paribas / BNY Mellon /
Bovis Lendlease / Bristows / Bundesdruckerei / Buro Happold / Buwog Cambridge University Hospitals NHS Trust / Canadian Embassy,
Moscow / Candy & Candy / CAPCO / CBRE / Cedar Capital / Cengiz Holding / Central Properties / Chrome Hearts / CIN LaSalle / Cisco
/ City of London Academy / Cofunds / Comstrin / Commercial Estates Group / Commerzbank / Corinthia Hotel Group / Corporation of
London / Cornerstone Investment & Real Estate / Costain / Countryside Properties / CPI / CR City / CR Office / Credit Suisse / Crowne Plaza
Hotels Dacorum Borough Council / Daimler Chrysler / Damac /
Danfoss / DB Schenker / Decathlon / Deloitte / Deutsche Bank /
Dimension Data / DGV Consulting / Doğuş GYO / Donstroy / DTC
de Beers / du / Dunhill Eastman Group / Ede & Ravenscroft /
Emaar Hospitality Group LLC / Emlak Konut / Endurance Estates
/ EO Engineers Office (Dubai) / Equa Bank / Ernst & Young / Er
Yatırım / Ethical Property Company / Etisalat / Eurofinance Bank / Extensa / F&C Reit / Fenwick / Fiba Gayrimenkul / FIM Group / Firoka
/ First Bank / Freight 1 Gazprom / Gazpromstroyinvest / GD Investments / GE Capital / Generali / Gertler / GLAV UPDK / Glavstroy /
Global Stream / GMO Group / Goldman Sachs / Goodman / Google / Great Portland Estates / GroupM / Grosvenor / GSK / GTN Global
Properties / Güneri Insaat A.S Halk GYO / Hammer AG / Helical Bar / Henderson Global Investors / Henderson Land / Heptares /
Hexal / Hilton International / Hochtief / Homerton University Hospital / Honeywell / HOWOGE / HSBC / Huishan Zhang ICAP / ICKM /
ICT Istroconti / IFFCO / IKEA / Imperial College / Ince & Co / Infosys / ING Bank / 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 / Jesus
College, Cambridge / John Martin Gallery / Johnson Controls / Jones Lang LaSalle / JP Morgan / JTI Russia KaDeWe / Kalinka Realty /
KfW Bank / Khansaheb / Kier Build / Kiler Holding / Knight Frank / Knight Harwood / Koray Inşaat / Korine Property Partners / KORTROS
/ KPMG / KR Properties / KSA / Kuznetsky Most Development Laing O’Rourke Middle East Holdings / Lakhta Centre St.Petersburg / La
Meridien / Landsec / LaSalle Investment / Legion Development / Lendlease / Lenovo / Lesso / Lidl / 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) /
Moody’s / Molson Coors / Morgans Hotel Group / Mott Macdonald / Mouchel / MR Group / Multiplex Napp Pharmaceuticals /
National Grid / Nations Bank / Native Land / NATS / NDA / Network Rail / Nextra / New York University / Nicholson Estates / NIDA Insaat /
Nike / Novartis / Nurol GYO Oceanic Estates / Open University / Opin Group / Optima Corporation / Oracle / Orchard Homes / Orchard
Street Investments / Oxford Properties Palestra / Panavto / Park City / Pera Gayrimenkul / Peresvet Region Kuban / Pfizer / Phillips /
Phoenix Development / Pilsner Urquel / PIK / PPF Real Estate / Premier Inn / Procter & Gamble / Princeton Holdings / Prologis / Protos
/ PwC Quantum Homes / Qatar Foundation / Quintain RAK Properties / R&R Industrial SAS / Radisson Edwardian / Radisson Blu /
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 / Royal London / Rublevo-Arkhangelskoye / Rushydro / RWE npower SAB
Miller / Safestore / SAP / Savills / Sberbank / Second Watch Factory Slava / Servotel / Schlumberger / Scottish Development Agency /
Scottish Widows / Segro / Sellar Group / Seniats / Shell / Sibneft / Sibneftegaz / Siemens / Sir Robert McAlpine / Sistema Hals / Skanska
/ Skype / Sotheby’s / Southampton Solent University / South Cambridgeshire District Council / Soyak Inşaat / Sparda Bank / Standard Life
Investments / St John’s College, Cambridge / Staropramen Breweries / Stephenson Harwood / Stolny Grad Development / Stone Brewing
/ Strelka / Sumitomo Mitsui Banking Corporation (SMBC) / Sun Microsystems / Suse Linux / Swan Operations / Symantec / Syngenta
International Tahincioğlu Gayrimenkul / Talan / Takeda / TAT Immobilen / Taylor Wimpey / TDIC / TechInvest / Tekar / Tekfen Emlak /
Tenkhoff Properties / The London Clinic / The Mercers’ Company / The Royal College of Surgeons of England / The Royal St George’s Golf
Club / Tiffany s.r.o. / Tishman Speyer / Tonstate / Transport for London / Trinity College, Cambridge / Trinity Hall / Türkiye Finans Katılım
Bankasi UGMK Holding / U+I / UK Expo Pavilion 2020 / University of Cambridge / University of Sheffield Vakifbank / Vesper / Vestas /
Vinci Construction / VMWare / Vodafone / Voreda / VTB Capital Bank / Vysota Wates / Welbeck Land / Westminster City Council / White
& Case / Willis Group / WPP Zamania / Züblin / 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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28 - 35
36 - 40
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42 - 46
47
48
49
50
51
52
53
54
Notes to the financial statements
55 - 90
NOTICE OF MEETING
SHAREHOLDER INFORMATION
91
92
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 We are very pleased that one of our Prague partner’s interiors
projects was a finalist at the 2018 Grand Prix of the Czech
Architects Association Awards, the National Awards for
Architecture, which were announced in October at Prague Castle.
The project was the 2400sqm fitout in Prague for the Global
Delivery Centre for Dimension Data, a global technology
company headquartered in South Africa.
Two of our recent office projects have been shortlisted in the 2019 British
Council for Offices (BCO) Awards in their respective regions: Radio House,
Cambridge for Orchard Street Investment Management (top), and No 2
Forbury Place, Reading for M&G/Bell Hammer (right).
Aukett Swanke have been placed 67th
in the Building Design 2019 World
Architecture 100 League Table.
This also places us as the ninth largest
UK registered practice on the table.
Our London studio for Aukett Swanke and Veretec has relocated to the
City of London after ten years at Kings Cross. At our new premises we have
created a flexible, multifunction space as a social focus for collaboration,
debate, and connectivity where we can eat, meet, talk and learn.
Highlights and awards
In the 2018 BCO Awards our refurbishment of Adelphi,
London WC2 was Highly Commended for Best Refurbished
/ Recycled Building (London and South East).
The 330,000sqft project was carried out for Blackstone.
Aukett Swanke has been placed 52nd
in the Architect’s Journal 2018 AJ100 league
table, which is based on UK staffing levels.
< October 2018 saw the grand opening of the Mercedes
Platz, the heart of the new quarter around the Mercedes-
Benz Arena by the River Spree, Berlin after only two years
construction.
Our JV partners AUKETT + HEESE were responsible for
the Design and Detailed Building Permit Application and
provided for Hochtief the detailed design and complete
working drawings for the Mercedes Platz. The client is the
Anschutz Entertainment Group.
Photo: Anschutz Entertainment Group Berlin
In July 2018, Aukett Swanke were proud to be inaugural
sponsors for the Loughborough School of Architecture,
Building and Civil Engineering’s First Year Prize for model
making. Our sponsorship marks the beginning of a new
relationship with the school as visiting critics, following our
design of the Sir Frank Gibb Building (above) which houses
the department.
The school has a world class reputation for research and
testing of building systems and products, with facilities that
are open to the students for study and experimentation.
Tom Alexander, Director in our London Studios, judged the
award and was present for the awards ceremony.
Veretec has been appointed as subconsultant to Benedetti Architects working as
part of a collaborative team on the refurbishment and expansion of the British
Academy of Film and Television Arts Grade II listed headquarters at 195 Piccadilly,
London W1.
The extensive refurbishment of the building aims to enhance BAFTA’s identity as
an international centre of excellence for the motion picture arts, balancing the
members’ needs with extra revenue generation to ensure long-term financial
sustainability for the charity.
The expansion proposals include the reintegration of the large unused historic
roof-light spaces from the building’s original purpose as the Royal Institute of
Painters in Water Colours, and provision of new cinema theatres, banqueting
hall, multipurpose event spaces, members’ bar, restaurant and club, meeting
rooms, staff offices and two terraces overlooking Piccadilly and the Grade I listed
St James Church. The project is due commence on site in summer 2019.
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
Veretec have worked in collaboration with Stiff + Trevillion during the detailed
design and construction stages of this new flagship studio and private art
complex for Damien Hirst, which is currently on site and nearing completion.
Located in the heart of Soho, the development houses a high quality restaurant
at ground and basement, with the remaining four floors and roof terraces
occupied by the new art complex.
The entire exterior has been constructed using high quality glazed bricks with
over 100 bespoke specials manufactured in Holland used to reference the
art-deco style of the surrounding buildings, whilst the full height windows and
decorative balustrades have a contrasting powder coated metal finish.
Artist Lee Simmons was commissioned to design the exterior artwork in cast
aluminum for the splayed reveals to the corner windows and projecting cornice
around the entrance onto Beak Street.
Two major retail openings in London in 2018: a flagship boutique for Azzedine Alaia on Bond Street, London W1
for our client Richemont, and the upgrading of the courtyard at the Royal Exchange in the City of London for our
client Oxford Properties. This included the installation of a new F&B outlet for Fortnum & Mason by Universal Design
Studio, new floor to the courtyard and redesign of the stairs to the mezzanine level.
Our Berlin studio partners Aukett + Heese, together with BRAUNundBRAUN,
were the architects and interior designers for the Fontenay Grand Hotel
in Hamburg, which opened in March 2018, supplying detailed design,
working drawings, FF&E and tender packages, and interior site supervision.
Architectural design by Störmer, Murphy & Partners and interiors concept by
Matteo Thun.
The Bradfield Centre, Cambridge Science Park
was announced as joint winner in the Large
Building Category at the 2017 Cambridge Forum
for the Construction Industry (CFCI) Design and
Construction Awards in March 2018.
We are delighted that the Four Seasons Hotel
London at Ten Trinity Square, our restoration and
conversion of the historic Beaux-Arts Grade II*
listed former Port of London Authority building
in the City of London, was named AA Hotel of the
Year London 2018-19 at the annual AA Hospitality
Awards in London.
The Mei Ume Restaurant at the Four Seasons
Hotel London at Ten Trinity Square was winner of
the 2018 Best Overall UK Restaurant at the 2018
Restaurant and Bar Design Awards. It was also
shortlisted in two further categories: for Restaurant
or Bar in a Heritage Building and Restaurant or Bar
in a Hotel.
Two of our longest serving directors have retired from the practice this year.
PETER EATON started his career with Aukett in 1986 and specialised in occupier-led
and speculative office developments, designing and delivering many award-winning
projects in this sector. Notable projects include South Cambridgeshire District Council
HQ, Napp Pharmaceuticals and The Bradfield Centre at Cambridge Science Park, and
the Imperial West masterplan, including the Molecular Sciences Research Hub, for
Imperial College. He developed considerable experience in planning strategy, master
planning, education, regeneration, urban design and landscape projects, and worked
on projects in the UK, Europe and the Middle East.
STEPHEN ATKINSON originally joined Fitzroy Robinson, one of the founding practices,
in 1980 and initially worked in the London studio, mainly on projects in the City of
London. He later set up the Bristol office after two significant project wins and worked
closely with clients such as English Partnerships, Railtrack, KPMG and SWEB on
feasibility studies for long term projects, national construction programmes, building
design and fitout work. He was also instrumental in developing low-energy building
design solutions with major environmental consultants in the UK.
We wish them both a long and happy retirement!
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 20132018 In December 2013 the merger of two major practices,
Aukett Fitzroy Robinson and Swanke Hayden Connell
Europe, was announced to form the combined studio
Aukett Swanke, with studios in the UK, Continental
Europe and the Middle East.
Five years on, we look back at some of the major
projects from our portfolio that we have carried out
since then . . .
1
2
3
4
1/ Bebel Suite, Hotel de Rome, Berlin
2/ Harwell Innovation Centre, Oxford
Al Hamra Hotel, Ras Al Khaimah
3/
Palladium Tower, Istanbul
4/
Ascot Underwriting, City of London
5/
Sanderson Hotel, London W1
6/
62 Buckingham Gate, London SW1
7/
8/ Group M, Istanbul
9/
Symantec, Reading
10/ Phillips, 30 Berkeley Square, London W1
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5
6
7
8
2013/14
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Corner House, London W1 (Veretec)
Zurich Insurance, London EC2
Kempinski Hotel, Dubai
1/ Meteor D, Prague
2/ Matrix Tower, Dubai
3/
4/ Winx Tower, Frankfurt
5/
6/
7, 8 / Arcus III, Moscow
9/ No 1 Forbury Place, Reading
10/ 125 Wood Street, London EC2
11/ Adelphi, London WC2
12/ Tefken Oz, Istanbul
13/ Turnmill, London EC1 (Veretec)
14/ Allianz, Istanbul
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2
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3
8
9 10
11
2015
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14
1
2
3
1/ Monet Apartments, Moscow
2/ Uxbridge Business Park
3/ Mirdiff Lifestyle Mall, Dubai
4/ Molecular Sciences Research Hub,
Imperial West, London W12
5/
6/
7/
8/
9/
10/ Boutique Hotel, Central London
11/ Ten Trinity Square, London EC3
12/ Nidakule Kusey, Istanbul
IT Group, Geneva
Sleep Concept, London
1 Welbeck Street, London W1
Joseph Priestley Building, Eastside Locks
JTI, Moscow
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8
2016
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12
2
3
1
6
2017
Project Sapphire, Granta Park,
Kursovoy Apartments, Moscow
1/
Cambridge
2/
3/ Perm Tower, Siberia
4/ No 2 Forbury Place, Reading
Industrial Transformation R+D
5/
Verde, London SW1
6/
5* Hotel, Abu Dhabi
7/
Schlumberger, London SW1
8/
9/
The Bradfield Centre,
Cambridge Science Park
4 5
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 1
2
5
3
4
Residential / Industrial R+D
Churchill Residence, Prague
Azzedine Alaia, New Bond Street, London W1
40 Beak Street, London W1 (Veretec)
Riverscape, 10 Queen Street Place, London EC4
Allianz Operations Centre, Izmir
1/
2/
3/
4/
5/
6/
7/ Mercedes Platz, Berlin
8/
9/ Dimension Data, Prague
10/ UK Expo Pavilion 2020, Dubai (Veretec)
Fontenay Grand Hotel, Hamburg
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2018
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 The Steinmetz Building, Granta Park, Cambridge
Current and recent
projects - UK
The Hub, Cambridge Science Park
The Green House, London E2 (Veretec)
10 Queen Street Place, London EC4
No 2 Forbury Place, Reading
Residential / Industrial Hybrid
STEAMhouse, Eastside Locks, Birmingham
Azzedine Alaia, New Bond Street, London W1
Lincoln Square, London WC2 (Veretec)
Riverscape, 10 Queen Street Place, London EC4
< Kings College Music School, Wimbledon (Veretec)
Hilton Double Tree Hotel, Moscow
Zurich Insurance, Frankfurt
215,000sqm retail/residential masterplan, Istanbul
Dimension Data, Prague
Founders Memorial, Abu Dhabi
The Clarion School, Dubai
Current and recent
projects - international
Allianz Operations Centre, Izmir
Credit Suisse, Istanbul
Stock Pilsen Brewery, Prague
Private Residential, Moscow
80,000sqm residential development, Moscow
Fontenay Grand Hotel, Hamburg
Skolkovo Masterplan, Moscow
The Address Hotel, Dubai
UK Expo Pavilion 2020, Dubai (Veretec)
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Board of Directors
Anthony Simmonds
Non Executive Chairman *+ #^
MA FCA FCCA Aged 74
Nicholas Thompson
Chief Executive Officer #
BSc(Hons) MBA Aged 64
Beverley Wright
Chief Financial Officer &
Company Secretary ^
BA(Hons) FCA Aged 60
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
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&A, due diligence, as well as
initial introductions to the market.
He has held a number of executive
and
and non-executive positions
is
strategic
in
development of businesses and the
management of financial risk.
experienced
the
Nicholas is Aukett Swanke’s CEO and has
over 34 years of experience in property
and consulting Organisations; twenty-
four of these with Aukett Swanke.
During his career with Aukett Swanke he
has held the position of Finance Director
moving on to become Managing Director
in 2002 and, finally as CEO of the Group
from 2005.
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
Insurance
the Wren
director of
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 direction.
joined Aukett Swanke
in
Beverley
September 2014. She is a qualified
Chartered Accountant and has more
than 25 years of experience with
construction and engineering firms
including
in
senior financial roles for international
companies.
significant experience
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
corporate
finance, M&A and structuring, as well as
commercial and financial management,
analysis, control and governance.
treasury,
tax,
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.
John Bullough
Non Executive Director +*#
FRICS Aged 68
John joined Aukett Swanke as a non-
executive director in June 2014.
He has over 45 years of international
experience in property development
investment. Following 18 years
and
with Grosvenor,
joined ALDAR
John
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.
Robert Fry
Executive Director ^
BA(Hons) DipArch MA RIBA Int’l AIA
Aged 62
Robert was appointed to the Aukett
Swanke Group Plc Board in March 2018,
retaining the role of Managing Director -
International held since December 2013,
following the merger of Aukett Fitzroy
Robinson Limited and Swanke Hayden
Connell Europe Limited.
With over 35 years of experience in
the property and construction industry
as an architect with a Master’s Degree
from Sheffield University he spent 6
years with Milton Keynes Development
to becoming a
Corporation prior
founding member of Swanke Hayden
Connell’s London office in 1987, then a
Principal in 2000, joining the Board in
2002 and then Managing Director of the
UK and Europe group in 2005.
His breadth of experience covers many
sectors in the disciplines of master
planning, architecture, interior design
and workplace consulting.
He currently has a strategic role working
closely with the CEO and CFO in the
development of the Group’s operational
strategy.
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Chairman’s Statement
and Corporate Governance
Five year summary
Anthony Simmonds
Chairman
29 January 2019
I am responsible for overseeing the performance of the Board and for the
effectiveness of our Corporate Governance.
Financial highlights
Your Company endured a perfect storm during the year ended 30 September 2018. Its architecture design
operation in the United Kingdom suffered from a series of delayed projects and significant fee competition
as a result of the continuing uncertainty of Brexit, whilst its business in the United Arab Emirates, although
it started the year well, ended with a series of intermittent instructions, a reduced order book and debtor
provisions taking their toll. Against this, our UK delivery business, Veretec, maintained its market position and
is anticipating increased income for next year. Continental Europe also remained a positive contributor, but at
the lower end of performance expectations.
Revenue for the year fell by 22% to £14.38m (2017: £18.40m) which was too far and too rapid for us to address
by cost reductions so that the year-end loss extended to £2.54m (2017: loss £325k). However, the recent
relocation of the UK office to Bonhill Street and property consolidation in the UAE will achieve considerable
reductions in excess of £400k per annum in our fixed costs in future periods.
Whilst we now have a significant hill to climb to recover our financial position, a recent increase in enquiries
does afford some optimism for the future. In addition, we managed our funds well, ending the year in net
funds of £157k (2017: £184k), similar to last year.
In these circumstances a dividend is not being recommended this year.
Corporate Governance
Reports from the Audit, Remuneration, Nomination, and Internal Control and Risk Committees are contained
in pages 36 to 37.
The Audit Committee has been particularly active due to the loss incurred, specifically in respect of considering
any impairment or, other provisions, necessary. Following the resignation of the Chief Financial Officer (“CFO”)
in September and my own declared retirement in March 2019, the Nomination Committee has considered how
best to respond to these replacements. The Risk Committee has made significant progress with a group-wide
Risk Register that is now embedded in the reporting of all our operations. Finally, in compliance with AIM Rule
26 which became effective from 28 September 2018 the QCA Corporate Governance Code (2018) for Small
and Mid-Size Quoted Companies published by the Quoted Companies Alliance was adopted. Our website
sets out how we have applied these principles: www.aukettswanke.com/investorrelations/otherdocuments
Finally, I would like to thank my colleagues on the Board and all of our staff for their hard work and collective
contributions in meeting the challenges of the past year. Whilst the result is not as we had hoped for, I do
believe that the dedication of our team will, in time, produce positive results.
(Revenues from the joint ventures and associate are not included in Group revenues).
Years ending 30 September
2018
£’000
2017
£’000
2016
£’000
2015
£’000
2014
£’000
Total revenues under management 1
31,950
34,583
30,379
27,553
25,066
Revenue
Revenue less sub consultant costs 1
(Loss) / profit before tax
Basic (losses) / earnings per share (p)
Dividends per share (p)
Net assets
Cash and cash equivalents 2
Secured bank loans
Net funds 3
14,380
13,094
(2,544)
(1.42)
-
4,357
710
(553)
157
18,395
16,070
(325)
(0.20)
-
6,761
960
20,841
18,410
927
0.47
0.18
7,189
1,839
(776)
(1,049)
18,668
16,886
1,870
1.00
0.22
6,251
1,873
-
184
790
1,873
17,326
14,732
1,400
0.65
0.18
5,053
1,891
(113)
1,778
1 Alternative performance measures, refer to page 33 for definition
2 Cash and cash equivalents includes cash at bank and in hand less bank overdrafts
3 Net funds includes cash at bank and in hand less bank loans and overdrafts (see note 21)
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 / Media enquiries
Ben Alexander 07926 054 111
Registered office
10 Bonhill Street
London EC2A 4PE
Website
www.aukettswanke.com
Nominated adviser and broker
finnCap
www.finncap.com
Bankers
Coutts & Co
www.coutts.com
Solicitors
Fox Williams
www.foxwilliams.com
26
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
27
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Strategic report
The Directors present their Strategic Report on the Group for the year ended 30 September 2018.
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 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. At the same time we aim to provide an
enjoyable and rewarding working environment for our staff. The cyclical
nature of the markets in which we operate gives rise to peaks and
troughs in our financial performance. Management is cognisant that our
business model needs to reflect this variable factor in both its decision-
making and expectation of future performance.
Over the past four years we have acquired a number of strategically
located practices to reinforce our business model which we anticipate
will provide a balanced result over time. In the short term and since
these acquisitions were completed some of our markets have been the
subject of some significant economic or political changes which we had
not expected and these have negatively impacted our performance. In
particular, the continuing Brexit negotiations; the state of emergency in
Turkey and the lower oil price impacting Russia and the Middle East,
adversely affected our business in these regions
This was the case in 2017 and has continued into these results for 2018.
In the light of the current results we are not pursuing an acquisition
strategy at present and the focus is more on optimising our current
platform with consideration being given to the value added by each entity.
Business Model
We operate through a three hub structure covering: The United Kingdom
with our office in London; the Middle East with offices in Dubai, Abu
Dhabi, Al Ain and Ras Al Khaimah; and Continental Europe with five
offices in Berlin, Frankfurt, Istanbul, Moscow and Prague.
The United Kingdom hub comprises three principal service offers:
comprehensive architectural design including master planning, interior
design and fit-out capability and an executive architectural delivery
service operating under the ‘Veretec’ brand.
Our Middle East business comprises a number of registered companies
which are now marketed under a common brand ‘Aukett Swanke’.
The service offers within the region include architectural and interior
design, post contract delivery services including architect of record
and engineering design and site services. Increasingly these separate
activities are being combined as a single multidisciplinary service as
demanded by this market and we are now well placed to offer such a
‘one-stop shop’ service.
Our Continental European operations are all separately managed by
local directors, operating through subsidiary, associated and joint
venture structures. The services offered are consistent with the other two
hubs. Entities within this hub provide additional drawing services to the
larger operations in order to optimise both local and group resources.
Management of the group operations is delegated to members of the
Group Management Board (‘GMB’) which comprises both the Chief
Executive Officer (“CEO”) and CFO along with the Managing Directors
from each of the hubs. The GMB meets on a regular basis to review
topics impacting our operations and to discuss future architectural and
related strategic issues.
As a Group we now have a total average full time equivalent (“FTE”)
staff contingent of 330 (2017: 379) throughout our organisation which
includes both wholly owned, associate and joint venture operations. We
are ranked by professional staff in the World Architecture 100 2019 at
number 67 (2018: 43).
Group Activities
Performance in the current year, as previously indicated has declined
with revenues falling 22% to £14.38m (2017: £18.40m) and the Group
loss widened considerably to £2.54m (2017: loss £325k). This result
arises from a number of adverse situations that we articulated in June
last year and that have occurred in each of our hubs this year.
Total revenues under management (which includes 100% of our associate
and joint ventures’ revenue) fell 8% to £31.95m (2017: £34.58m). Of the
330 FTE staff around 126 (2017: 156) FTE staff are employed by our joint
ventures and associate and as non-subsidiaries the income attributable
to them is not shown in the consolidated revenue lines. More detailed
financial information is given on page 32.
One significant area of comfort in relation to the adverse trading
performance is our cash management with year-end net funds standing
at £157k (2017: £184k) broadly the same as in the prior year but after
paying down a further £236k of our long term acquisition loan. The
maintenance of net funds at this level owes much to our collection regime
and ability to move cash funds around our organisation in order to meet
the differing timing requirements of day to day cash calls and thereby
minimising any short term bank overdraft or the need to retain funds in
any one location. In addition as markets return, through design-led work
this aspect of our financial performance trends towards improvement far
more quickly than a return to profitability.
United Kingdom
As we stated in last year’s report revenues net of sub consultants have
continued to fall – this year by a further 25% being a cumulative decline
of 45% over the past two years from £12.08m to £6.61m. This rapid fall
in revenue over this two-year period could not be fully offset in reduced
operating costs as many are fixed or are necessary to retain our service
offer.
Some of this adverse performance is due to the continuing Brexit
negotiations which have resulted in numerous delays or short term
suspensions on contracts, for which we are not paid and cannot otherwise
reallocate staff. Elsewhere we have been less successful in converting a
number of design-led opportunities as market prices have weakened
considerably and often we found design-led projects were awarded to
28
other bidders at up to 50% of our own pricing. As such our bidding costs
increased considerably during the year, as explained below.
With the expiry of our ten-year lease in Kings Cross we took the
opportunity to move the studio back into the City and achieved a
significant cost saving in the process. This strategic move generates
a substantial long term reduction in fixed costs and in the immediate
future a relaxation of rental payments via a rent free period of two years
improves our near term liquidity from May 2019 after taking account of
the rent deposit.
Whilst the resulting loss of £1.51m (2017: profit £19k) is large, it includes
around £750k (2017: £340k) of bidding costs for work which we were
not successful in winning and one off property costs of £370k (including
overlap rental costs, moving costs and dilapidation fees uncovered by
brought forward provisions), leaving the underlying loss at £385k .
One area of the UK business that has progressed well during the year is
Veretec – our executive delivery business. Veretec currently accounts for
approximately 50% of UK revenues and has continued to expand over the
past few years. It owes this success partly to its position as The Architects’
Journal 100 No 1 delivery architect for two successive years (and being
nominated for a third) plus its ability to meld with other architectural
professionals in maintaining concept and planning design intent but also
giving clients and contractors alike pricing and delivery time certainty.
Key design projects undertaken this year are: completion of Ten Trinity
Square - a Four Seasons Hotel for Reignwood Group; two office buildings
at Granta Park; the Hub at Cambridge Science park; a refurbishment of
10 Queen Street Place; a major fit-out in Reading for an overseas investor
managed by Deutsche Bank; a 14,000m2 new build postgraduate
complex with office use for Birmingham City University with Goodman; a
new store for Alaia in Bond Street; and seven major projects all of which
had partial instructions during the year but are currently on hold.
Awards won are AA hotel of the year for Reignwood’s Four Seasons Hotel
at Ten Trinity Square in the City of London, which also won restaurant of
the Year. Verde won the OAS award for best West End refurbishment /
regeneration and was shortlisted for NLA and BCO awards. Adelphi was
‘Highly Commended’ at the BCO London refurbished / recycled awards.
Finally, the Bradfield Centre won the ‘best new large building’ at the
Cambridge Design and Construction awards
Veretec is delivering a range of projects from RIBA work stages 4 and
5 including: Damien Hirst’s new flagship studio and art complex at 40
Beak Street, in the heart of Soho (Design Architect: Stiff + Trevillion); the
redevelopment of a disused Mecca Bingo Hall into a £25m new high
quality mixed-use building incorporating apartments and commercial
space for LBS Hackney (Design Architect: Hawkins Brown); The Green
House in London E2 which is being remodelled and extended to create
76,000 sqft of space for a new client Ethical Property Company (Design
Architect: Waugh Thistleton); Dovehouse Street in Kensington & Chelsea,
a new state of the art extra care facility consisting of 56 residential
apartments for self-contained independent living which includes a
range of communal and wellbeing facilities for Multiplex (Concept by
PDP Architects); Lincoln’s Inn Fields, a 10-storey new build high end
residential scheme consisting of 220 apartments for Lodha Developers
UK (Architect: PLP, Contractor: Multiplex); a new Music School for
Kings College School Wimbledon, comprising three inter-linked blocks
(Hopkins Architects & Partners, Interserve Construction); and finally the
UK Pavilion, where Veretec has been selected as part of the winning
multidisciplinary team alongside celebrated designer Es Devlin to create
the UK’s showcase pavilion at the next World Expo 2020 in Dubai.
With the process to leave the EU continuing to provide political and
market uncertainty we are mindful of making any statement that can be
deemed to announce a turning point. That said it appears that there is
a definite market shift to investment into property development with a
focus on offices, industrial complexes and hotels and a move away from
residential – these former three are areas in which we can claim a strong
market presence. However, residential remains a key element in most of
our major city developments.
We can foresee Veretec continuing to grow.
Our reduced operating costs led by the property saving will provide
incremental support to this operation’s working capital in the forthcoming
period. The lower operating base will enable the UK to achieve a more
profitable result, subject to a small increase in revenue.
Middle East
The story in the Middle East is similar to that of the United Kingdom but
the reasons are very different.
The real estate market in the UAE slowed in the latter part of 2018 resulting
from a decrease in market liquidity. In contrast to the UK requests for new
project proposals increased, but the time taken in awarding contracts
has also extended, reducing the actual new project win pipeline during
the second half of the year. This is evidenced with actual projects that
have been won: a 1.26m sqft. retail scheme for a Chinese developer in
Dubai; a new hotel development for a repeat client in Abu Dhabi and a
major residential scheme for a major Dubai developer under our newly
enlarged operation - all three being variously intermittently suspended,
going slower than programme or put on permanent hold. Although the
cost base of the UAE operation has been reduced during the year the
combined impact of uncertain awards and project duration has resulted
in the operation being unable to accurately plan resourcing and at times
holding staff for too long. The necessary reduction in staff resulted in
a greater outflow of cash than would occur under normal trading. It
was then unable to recover the full amount of the fees earned against
resource input before the year end and was required to make various
debtor and work in progress provisions.
The outcome of this is that revenue fell 21% to £6.82m (2017: £8.63m)
resulting in a loss of £1.209m (2017 profit: £13k). This result includes
some £697k of provisions for write downs in project work in progress
RESIDENTIAL DEVELOPMENT, HACKNEY ROAD, LONDON E1 (VERETEC)
29
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 NEW RESIDENTIAL DEVELOPMENT, TYUMEN, RUSSIA
Turkey won a significant fit-out contract for VMware in Sofia, Bulgaria
along with projects in Istanbul for Allianz, Credit Suisse, Sanofi and
Vodafone. Russia managed to keep a stable revenue stream from ongoing
residential schemes and private apartments in Moscow alongside a
range of smaller residential and commercial projects in regional cities
including Perm, Tyumen, Tobolsk and Petropavlovsk-Kamchatsky.
Both of the operations are mainly self-funded with little reliance on the
Group.
The joint ventures and associate contributed £121k (2017: £253k) in
profit after tax with the decrease due almost entirely to Berlin making
a reduced, but still profitable contribution. This was attributable to its
three major projects which ended in the second quarter requiring a
significant downsizing of staff numbers and also to a project cancellation
in the final quarter. Frankfurt had a positive year; the Czech Republic
made a small loss.
Project completions this year in Germany included the Mercedes
Platz Entertainment District, the Gropius Passagen shopping centre
refurbishment, the Regatta residential apartment projects in Berlin and
the Fontenay Hotel in Hamburg. Various financial service sector fit-outs
were completed for Commerzbank throughout Germany, and for Woori
Bank and Zurich Insurance in Frankfurt. The Czech Republic completed
the Stock Pilzen Brewery and Dimension Data fit-outs in Prague.
VODAFONE, ISTANBUL
As such, the hub reversed its prior year performance and made a positive
contribution to the Group in the year of £131k (2017: loss £136k).
and debtors across all businesses. Late payment is unfortunately a
commonplace feature of the commercial world in this region and
consequently can lead to invoice disputes and question marks over
recoverability. Excluding this the underlying loss was £512k.
The outlook for this hub is dependent on a change in market confidence,
a positive outcome to a number of the new project proposals submitted
and our major projects continuing on a permanent basis. The Expo
2020 development represents a bubble of building work with much
of it comprising small scale pavilions and will only marginally assist in
generating additional revenue during the current year.
We are also continuing to review our structure and cost base in the UAE,
including combining our three separate operations under a common
brand and, subject to local licensing requirements for space allocation,
considering co-location of our Dubai businesses. We have completed
this process in Abu Dhabi.
We see the outlook as primarily flat and our emphasis is on cost control
in order to maximise revenue opportunities. Cash will continue to be
contained and operations rationalised until the operation has a more
stable economic outlook.
Continental Europe
This operation comprises two joint ventures and an associate plus two
wholly-owned subsidiaries. Once again the businesses had very mixed
results in 2018. Revenue for the partly-owned entities is not included in
revenue in the Consolidated Income Statement; in line with the use of
the equity method of accounting only the after tax result is included in
the results.
Revenue for the hub, (i.e. the Russian and Turkish wholly-owned
subsidiaries only), declined marginally by 3.8% to £817k (2017: £849k),
and achieved a small profit of £10k (loss £389k) as the net income after
subconsultants rose from £472k to £632k.
With Berlin returning to an optimal size of around 100 staff and Frankfurt
continuing to perform well, we expect this hub to quickly recover to its
former financial position and to continue to make a positive contribution
to the Group result and generate future cashflow.
Group Expenditure
The Group carefully managed costs,
little non-essential
expenditure during the current year. This continues to be the case in 2019.
incurring
Summary, Group Prospects and Shareholder Value
The results for the year are poor by any standard and somewhat worse
than those seen during the financial crisis of a decade ago. We have
taken action to reduce costs (mainly staff) but have only been able to
rebase our fixed costs in the UK by any significant amount. This will
benefit the Group in the longer term.
We expect a better outcome in 2019 than that for 2018 based on our
current order book and likely prospect of recovery or, at least, of not
having to provide for any further write downs of debtors or work in
progress. Whilst we expect 2019 overall to report a positive result, the
first half will be very much focused on mitigating any residual effect of
the large loss from the prior year and our overall approach to 2019 is
one of caution as it remains revenue sensitive at current operating levels.
On behalf of the Board
Nicholas Thompson
Chief Executive Officer
29 January 2019
Financial review
The headline financial results of the Group were:
Total revenues under management 1
Revenue
Revenue less sub consultant costs 1
Net operating expenses
Other operating income
Net finance costs
Share of results of associate and joint ventures
Loss before tax
Tax credit
Loss for the year
1 Alternative performance measures, refer to page 33 for definition
2018
£’000
31,950
14,380
13,094
2017
£’000
34,583
18,395
16,070
(16,010)
(17,703)
287
(36)
121
(2,544)
171
(2,373)
1,089
(34)
253
(325)
21
(304)
Revenues for the year were £14.38m, a decrease of 21.8% on the previous year (2017: £18.40m), as a result of a poor year in both the Group’s major
hubs, the UK and the Middle East. Similarly revenues less sub consultants also fell to £13.09m (2017: £16.07m), an 18.5% decrease. In the year,
subconsultant costs fell from £2.32m last year to £1.29m. Most of the decrease was in the Middle East and reflects the shift to self-delivery from within
the Group.
Costs in the year were also reduced by an overall reduction of £1.7m, of which £1.1m related to technical staff. This was split almost equally between
the UK and the UAE, and reflects the staff costs reductions inherent in achieving the stated scaling back as set out in the following United Kingdom and
Middle East segment notes.
The result before tax was a loss of £2,544k (2017: £325k loss), reflecting the losses in the UK and the Middle East as well as a weaker profit from Berlin.
Taking account of a £171k tax credit, our loss after tax at £2,373k gives an EPS loss of 1.42 pence per share (2017: 0.20 pence per share (loss)).
United Kingdom
Revenue
Revenue less sub consultant costs 1
FTE technical staff 1
Net revenue per FTE technical staff 1
(Loss) / Profit before tax
2018
£’000
6,744
6,610
72
91
(1,505)
2017
£’000
8,915
8,765
82
107
19
1 Alternative performance measures, refer to page 33 for definition
The UK’s second half revenue was an 9.5% improvement on the first half leading to a full year result 24% down on the prior period.
Full year result before tax was a loss of £1,505k, with a second half loss of £626k compared with a loss of £879k in the first half. As explained in the
Strategic Report, there were significant one-off property related costs incurred in the second half of £375k without which the loss would have been
£251k.
Reflecting the lower workload staff numbers were reduced, however productivity (net revenue per FTE) also fell as a result of bid and competition work.
30
31
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Middle East
Revenue
Revenue less sub consultant costs 1
FTE technical staff 1
Net revenue per FTE technical staff 1
(Loss) / profit before tax
2018
£’000
6,819
5,852
83
70
(1,209)
2017
£’000
8,631
6,833
95
72
13
1 Alternative performance measures, refer to page 33 for definition
Revenues decreased 21.0% from £8.63m to £6.82m in the year. The second half was £495k lower than the first half, reflecting the effect of large projects
which were put on hold or delayed such that milestone revenues could not be recognised. This in turn also impacted profit before tax and although
costs were controlled and cut as much as possible the final result was a loss of £1,209k.
Staff numbers were reduced as much as possible within the constraints of maintaining an operational business and delivering the forecast order book.
Productivity at £70k net revenue per FTE technical staff was maintained.
Continental Europe
Revenue
Revenue less sub consultant costs 1
FTE technical staff1
Net revenue per FTE technical staff 1
Profit / (loss) before tax
Including 100% of associate & joint ventures
Total revenues under management 1
Revenue less sub consultant costs 1
FTE technical staff 1
Net revenue per FTE technical staff 1
2018
£’000
817
632
15
42
131
18,387
9,990
132
76
2017
£’000
849
472
17
27
(136)
17,037
10,349
162
64
1 Alternative performance measures, refer to page 33 for definition
Reported revenues, comprising the two Continental European subsidiaries, Russia and Turkey, were at £817k, 3.8% lower than the prior year (£849k).
The result before tax, also including the joint venture and associate in Germany and the joint venture in the Czech Republic, was a profit of £131k (2017:
£136k loss).
Continental Europe’s result continues to comprise a mix of performances across the businesses. Russia and the Czech Republic both reported negative
results, although Russia showed a substantial improvement on prior years. Pleasingly Turkey turned around in the year and reported a comparatively
strong profit. The remaining businesses, Berlin and Frankfurt remain strong, and whilst Berlin reduced profitability overall, it returned to profit in the
second half.
Earnings per FTE technical staff were slightly higher at £76k (2017: £64k).
Staff numbers reduced to 132 from 162 due to down-sizing in Berlin when its large projects came to an end in the second quarter.
Financing
Taking account of the year’s result, total equity is now £4.36m (2017: £6.76m).
Net funds (see note 21) at year end were £157k (2017: £184k), comprising cash of £710k (2017: £1.19m), overdrafts of £nil (2017: £228k) and the loan
taken out in respect of the acquisition of Shankland Cox Limited (“SCL”), which now stands at £553k (2017: £776k). Despite the reported loss the Group
has maintained a position of positive net funds.
The loan set out in note 20 to acquire SCL 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. This facility is also used by the Group to hedge foreign exchange exposures.
As reported last year, the Group’s overdraft facility from its bankers Coutts & Co was increased to £500k in October 2017, in order to provide working
capital flexibility and to support the UK business. This is renewable annually and currently remains in place until November 2019, with a review in May
2019.
Throughout the year there has been very strong focus on cash management, liquidity forecasts and covenant compliance. Although nothing was drawn
at year end, use was made of the overdraft throughout the year. Going forward and from the second half of the 2019 financial year utilisation of the
facility is expected to reduce.
The Plc continues to act as the Group’s central banker and it has sought to optimise the Group’s position by maximising flows and flexibility across
geographies. The overdraft is effectively assigned to the UK businesses. All other businesses are required to be cash generative or as a minimum cash
neutral. Subject to formal approval, short term working capital advances or small funding loans may be made.
Future work
Tracking and keeping an accurate record of the pipeline of future work is key to understanding the business and managing its future shape and portfolio.
It is also essential in order to afford the directors time to react to any changes.
With the distribution of the business across the three hubs, there are differing profiles:
•
•
•
The UK trades as 2 businesses: Veretec and ASL. Veretec is growing and increasing revenues and commensurately staff numbers. ASL has been
shrinking with some redundancies in the year; transfers to Veretec; and by natural attrition.
The Middle East continues the strategy of Aukett Swanke Architectural Design Limited winning larger, longer-term projects which underpin its
workload and in part that of SCL. John R Harris & Partners Limited (“JRHP”) and SCL also pursue and win smaller projects which they deliver
individually.
Continental Europe remains mixed across the portfolio. The German businesses are strongest and Berlin has a very strong forward order book
signalling a return to its former levels of profitability. Turkey, Russia and the Czech Republic continue to try and build strength, with Turkey and the
Czech Republic enhancing their capability to support other businesses in the Group.
Key Performance Indicators (“KPIs”)
The key performance indicators used within the Group for assessing financial performance are:
•
•
•
•
•
total revenues under management. This includes 100% of the revenues generated by our joint ventures in Prague and Frankfurt and associate in
Berlin. This is used as a measurement of the overall size and reach of the Group and to track performance against the strategic objective of creating
a diversified and balanced business across the three regional hubs;
revenue less sub consultant costs which reflects the revenue generated by our own technical staff but excludes the revenue attributable to sub
consultants, which are mainly passed through at cost. This is the key driver of profitability for our business;
revenue less sub consultant costs being generated per full time equivalent (FTE) technical member of staff. 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 and is a key measure of productivity. This KPI is only analysed on a segmental basis and calculations for each segment
can be found on pages 31 to 32;
result before taxation; and
cash at bank and in hand and net funds / (debt)
The numbers of full time equivalent technical members of staff differs from the employee numbers disclosed in note 7 as, at times, the Group uses
some non-employed workers through agencies and freelance contracts. Staff working on a part time basis, or on long term leave, are also pro-rated in
the number of full time equivalent staff number, which differs from the method of calculating the average number of employees for the year under the
Companies Act 2006 as disclosed in note 7. Full time equivalent technical members of staff are given for each hub on pages 31 to 32.
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 projects that are available. These changes can be identified by rises and
falls in overall GDP, construction output, planning application submissions, construction tenders and starts, investment in the property sector and
numbers of new clients. Not all of this information is available in each market place and so we have to adapt to the information flow 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 and deferrals of projects.
32
33
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Geo-political factors
Political events and decisions, or the lack thereof, can seriously affect the markets and economies 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. In particular Brexit is
a risk for the UK business although it is difficult to quantify its impact.
Diversification of operations in multiple unrelated geographies, as well as the ability to transfer between sectors, provides the Group greater resilience
in respect of this risk. Maintaining a flexible workforce, subject to working practices in local markets, additionally affords 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 flexibility when considering M&A activity.
Conversely a weaker share price affords the Group less flexibility.
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 outflows when faced with sharp and
unpredicted falls in revenue. As reported, action has however been taken in the UK to mitigate property cost and the business there now benefits from
a twenty-four month rent free period. Property rationalisation has also been undertaken and is under constant review in the UAE.
The project payment arrangements under which the Group operates vary significantly by geographical location. Payment terms by jurisdiction are
typically:
•
•
•
•
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;
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;
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; 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.
In addition the decrease in the size of the UK business and delayed receipts in the UAE mean that there is less free cash available to remit to the Plc.
The Directors seek to ensure that the Group retains appropriate funding arrangements and regularly and stringently monitor expected future
requirements through the Group’s annual budgeting, quarterly forecasting, monthly cash flow and weekly and daily cash reporting processes in order
to react immediately to a required change with maximum flexibility. Covenant compliance is also strictly monitored.
The Group’s principal bankers remain supportive and in December 2018 renewed the Group’s overdraft facility until November 2019, at the existing
£500k level. In February 2016 a USD 1.6m loan was also offered and drawn down with respect to the acquisition of Shankland Cox Limited, the current
value as at 29 January 2019 of which is USD 640k.
Where possible, the Group deploys four strategies to help reduce operational gearing:
First, the Group has a well-developed staffing plan which flexes the total number of staff using a combination of permanent employees, temporary
employees, agency staff and freelance staff as applicable to each legal jurisdiction; and in doing so matches resources to fee paying work as closely as
possible, sometimes linking staff retention directly to specific projects;
Second, the Group can sub-let or licence occupation of part of its property space to other professional services businesses to offset some of the total
occupancy cost;
Third, the Group maximises the benefit of different payment terms in varying geographies, mainly the UK and UAE, to take advantage of the flexibility
between the businesses;
Lastly the Group seeks flexible contract terms with major suppliers such that certain costs can be suspended during times of economic difficulty.
Staff skills and retention
Our business model relies upon a certain standard and number of skilled individuals based on qualifications and project 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 staff.
Staff training programmes, career appraisals and education assistance are provided, including helping our professionally qualified staff comply with
their continuing professional development obligations. Training programmes take various forms including external courses and external speakers.
Quality of technical delivery
In common with other firms providing professional services, the Group is subject 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 UK operation is registered under ISO 9001 which reflects 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 economic downturns and global recession. Additionally architects may be under pressure to work
without fees (for a time) in order to win a project or retain sufficient qualified staff to complete the project 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, affecting 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 subject to commercial and legal review. Post-acquisition there is
structured implementation planning and ongoing monitoring and review.
Overseas diversification
The Group continues to derive an increasing proportion of its revenues from projects located outside the UK. This offers 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 differ in these overseas businesses when compared to the UK and these may significantly increase
the risks to the Group. To mitigate these risks:
•
•
•
•
•
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;
the Group seeks to work for multinational or the larger and more established domestic clients who themselves often have significant international
experience;
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 projects;
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; and
as far as possible foreign currency flows are matched to minimise any impact of exchange rate movements and significant exposures are hedged.
The Strategic Report was approved by the Board on 29 January 2019 and signed on its behalf by
Beverley Wright
Chief Financial Officer
34
35
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Directors’ report
The Directors present their report for the year ended 30 September 2018.
Corporate governance
Following the introduction of AIM Rule 26 the Company is now required to apply a recognised corporate code by 28 September 2018. The Board has
considered this and has resolved to adopt the QCA Corporate Governance Code (2018) published by the Quoted Companies Alliance.
The QCA Corporate Governance Code (2018) comprises 10 Principles. We have set out our compliance with these Principles on the Group’s website.
This includes a matrix (‘the QCA Matrix’). This lists the Principles as well as related considerations and requirements, all of which have been assigned a
sub-number within each Principle.
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 three executive directors and two independent non-executive directors who bring a wide range of experience and skills
to the Company.
The Board considers Anthony Simmonds and John 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 effectiveness 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 John Bullough and they report to the Board on matters discussed at
the Committee meetings.
During the year the Committee met on three occasions to review, in addition to the above, budgets, monthly management accounts and working
capital requirements by reference to the Company’s financial strategy. It also reviewed through a sub-committee the management of risk inherent in
the business.
Remuneration Committee
The Remuneration Committee convenes not less than twice a year, ordinarily on a six monthly basis, and during the year it met on two occasions. The
Committee comprises Anthony Simmonds and John Bullough, with John Bullough as Chairman. It is responsible for determining remuneration policy
and all aspects of the Executive Directors’ remuneration and incentive packages including pension arrangements, bonus provisions, discretionary share
options, relevant performance targets and the broader terms and conditions of their service contracts.
In fulfilling its duties the Committee initiates research as appropriate into market remuneration comparables, appointing third party advisors as
required. In liaison with the Nomination Committee it has regard to succession planning and makes recommendations to the Board in relation to
proposed remuneration packages for any proposed new executive and non-executive appointments.
Where appropriate the Committee consults the Chief Executive Officer regarding its proposals. No Director plays a part in any discussion regarding his
or her own remuneration.
36
Nomination Committee
The Nomination Committee is responsible for keeping under regular review the size, 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 John Bullough.
During the year the Committee made recommendations with respect to succession and the appointment of an additional non-executive director.
Internal Controls and Risk Committee
The Directors acknowledge that they are responsible for the Group’s system of internal controls and for reviewing its effectiveness (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 internal 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. Robert Fry and Beverley Wright are also members.
Directors
Anthony Simmonds, John Bullough, Nicholas Thompson and Beverley Wright served as Directors of the Company throughout the year ended 30
September 2018. On 29 March 2018 Andrew Murdoch and Nick Pell resigned, and Robert Fry was appointed as a Director of the Company. On 29
March 2018 it was also announced that Anthony Simmonds will stand down as Chairman at the Company’s next AGM in March 2019. On 25 September
2018 it was announced that Beverley Wright has resigned but will remain with the Group for her notice period of 6 months.
Biographical details of the current Directors are set out on pages 24 and 25.
The Company maintains directors’ and officers’ liability insurance.
Attendance at Board meetings by members of the Board were as follows:
Number of meetings while in office
Number of meetings attended
Executive Directors
Nicholas Thompson
Beverley Wright
Andrew Murdoch
Nick Pell
Robert Fry
Non executive Directors
Anthony Simmonds
John Bullough
12
12
6
6
6
12
12
12
12
6
5
5
10
10
37
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
Directors’ interests
Directors’ interests in the shares of the Company were as follows:
Number of ordinary shares
Anthony Simmonds
Nicholas Thompson
Beverley Wright
John Bullough
Andrew Murdoch
Nick Pell
Robert Fry
30 September
2018
1,000,000
16,802,411
100,000
500,000
30 September
2017
1,000,000
16,602,411
100,000
500,000
1,826,700
2,150,000
1,826,700
2,150,000
Directors’ service contracts
The Company’s policy is to offer service agreements to executive directors with notice periods of not more than twelve months. Nicholas Thompson has
a rolling service contract with the Company which is subject to twelve months’ notice of termination by either party. Beverley Wright and Robert Fry have
rolling service contracts with the Company which are subject 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.
THE HUB, CAMBRIDGE SCIENCE PARK
12,478,486
12,478,486
Raul Curiel
Former director of the Company
Substantial shareholdings
At 29 January 2019 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
Jeremy Blake
Former employee of the Group
Andrew Murdoch
Former director of the Company
Begonia 365 SL
Controlled by a former director of the Company
River & Mercantile Long Term
Recovery Fund
Stephen Atkinson
Former employee of the Group
John Vincent
Former director of the Company
Broadwalk Asset Management
16,802,411
13,030,638
12,478,486
9,515,192
9,240,018
7,915,000
7,638,913
5,791,394
5,317,000
10.17%
7.89%
7.56%
5.76%
5.59%
4.79%
4.62%
3.51%
3.22%
Share price
The mid-market closing price of the shares of the Company at 30 September 2018 was 2.23 pence and the range of mid-market closing prices of the
shares during the year was between 1.375 pence and 2.875 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 £826,068 representing 50% 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
£165,214 representing 10% of the issued share capital, without first offering such shares to shareholders. The directors consider this authority desirable
as it will give them the flexibility 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 project. We design innovative solutions and focus on:
•
•
•
•
•
incorporating passive design principles that mitigate solar gain and heat loss from the outset;
reducing energy demand through active and passive renewable energy sources;
the use of energy and resource efficient materials, methods and forms;
the re-use of existing buildings and materials and flexibility for future change;
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 70 ‘Excellent’ or
‘Very 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 6 LEED (Leadership in Energy and Environmental Design) ‘Gold’
award and 5 ‘Silver’ awards.
38
39
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Employees
As a professional services business, the Group’s ability to achieve its commercial objectives and to service the needs of its clients in a profitable and
effective manner depends upon the contribution of its employees. The Group seeks to keep its employees informed on all material aspects of the
business affecting them through the operation of a structured management system, staff 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 staff.
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, efforts 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.
Statement of directors’ responsibilities
Directors’ responsibilities
The Directors are responsible for preparing the annual report and 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
affairs 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:
•
select suitable accounting policies and then apply them consistently;
• make judgments and accounting estimates that are reasonable and prudent;
•
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;
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.
The Group has a Health and Safety Steering Committee, chaired by Robert Fry, to guide the Group’s health and safety policies and activities. Health and
safety is included on the agenda of each board meeting. Beverley Wright is also a member of the Committee.
•
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:
•
•
so far as they are aware, there is no relevant audit information of which the auditor is unaware; 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.
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.
Future developments
An indication of likely future developments in the business of the Group is contained in the Strategic Report.
RADISSON BLU HOTEL, FRANKFURT
Financial instruments
Information concerning the use of financial instruments by the Group is given in notes 27 to 31 of the financial statements.
Dividends
Given the uncertainty with respect to near-term trading, the Board will review the position regarding dividend payments in the second half of the 2019
financial year.
Annual General Meeting
The Annual General Meeting will be held on 28 March 2019. Notice of the Annual General Meeting is set out on page 91.
The Directors’ report was approved by the Board on 29 January 2019 and signed on its behalf by
Beverley Wright
Company Secretary
Aukett Swanke Group Plc
Registered number 2155571
40
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
41
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Independent auditor’s report
to the members of Aukett Swanke Group Plc
Opinion
We have audited the financial statements of Aukett Swanke Group Plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 30
September 2018 which comprise the consolidated income statement, the consolidated statement of comprehensive income, the consolidated and
company statements of financial position , the consolidated and company statements of cash flows, the consolidated and company statements of
changes in equity and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the group and parent company financial statements is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by the European Union as regards the parent company financial statements, as applied
in accordance with the provisions of the Companies Act 2006.
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the group and of the parent company affairs as at 30 September 2018 and of the
group’s loss for the year then ended;
the group and parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union;
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those
standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the
group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including
the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
•
•
the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group’s
or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date
when the financial statements are authorised for issue.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current
period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which
had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These
matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide
a separate opinion on these matters.
Matter
How we addressed the matter in our audit
Recognition of contractual revenue, margin and
related receivables and liabilities
As explained in the Group Revenue Recognition accounting policy
on page 59 and accounting estimates and judgements – Recognition
of contractual revenue on page 60, the Group recognises revenue
based on the stage of completion of contracts for services by
reference to the proportion of costs incurred to the statement of
financial position date compared with the estimated final costs
of the contract at completion. Variations to expected revenue are
assessed and recognised on a contract-by-contract basis when the
Group believes it is probable they will result in revenue and they are
capable of being measured reliably.
A high degree of judgement therefore exists in the Directors’
assessment in the stage of completion of individual contracts
for services at the statement of financial position date and the
completeness of total cost and revenues to be included within
individual contracts. Changes to the total contract cost and / or
revenue estimates could give rise to material variances in the amount
of revenue and margin to be recognised in the reporting period.
We evaluated the design and implementation of controls of the
Group’s UK entities to monitor amounts recorded as revenue at the
statement of financial position date (and reviewed the equivalent
documentation of controls by the United Arab Emirates (‘UAE’)-based
component auditor on those elements of the Group). This included
review of the processes and controls under which information flows
from key revenue documents (contracts, timecards, resourcing
budgets and sales invoices) into the revenue model and ultimately
the accounting system.
The following references to “we” refer to the work performed
collectively as a Group, i.e. covering both the work done by BDO
UK on UK segments of the business and the work done on the UAE
segments by the component auditor.
We selected a sample of contracts to test, from a complete population
of all contracts.
The following procedures were performed in respect of the sample
selected:
• We traced total anticipated revenue on the sampled projects (as
listed on the revenue model) to supporting documentation including
the original contract and/or amendments to contracts (where
applicable eg. due to agreed variations).
• We agreed the chargeable time costs incurred to date for our
sample of projects noted in the stage of the completion calculations
to reports from the timekeeping system and tested a sample back
to submitted time cards, including validation of the core charge out
rate applied to ensure consistency with the firm’s charge rates on the
given individuals.
• In the UK, the accuracy of sales invoices raised to date against the
sampled projects and the completeness of the information source
with regard to bills raised against those projects were audited by
testing the underlying controls, to which no exceptions were noted.
The UAE auditor’s work around these invoices was substantive in
nature.
• Finally, we assessed the key judgements adopted by management
in relation to the revenue recognition, in particular, judgements
with respect to the percentage of completion by obtaining an
understanding from the project managers of how they estimated the
final expected project costs. This involved challenging assumptions
made, evaluating the outturn of the projects against budget since
inception and agreeing the actual costs incurred after the year-end
to the forecasted costs for the project as at the year end to determine
the accuracy with which the project was proceeding by reference to
its budget.
• The underlying calculation for each of the sampled projects was
validated on the basis of the above information to ensure it complied
with the requirements of IAS 18.
• Further to this, we traced a sample of year-end trade receivables to
invoices and subsequent post year-end cash receipt.
42
43
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Matter
How we addressed the matter in our audit
judgements around
We considered management’s
•
the
recognition (or non-recognition) of material fee claims as at the
statement of financial position date to determine the validity of the
circumstances surrounding the revenue recognised on such claims
and challenged management through review of key documentation
and consideration of the underlying facts. No exceptions were
noted from this work.
Goodwill impairment assessment of the UK
and Middle East CGUs
As explained in the Group Goodwill accounting policy on page 58
and assumptions included within value in use calculations on pages
68-69, the Group’s balance sheet includes goodwill, principally
arising from past acquisitions totalling £2.4m as at 30 September
2018. This comprising primarily of £1.7m within the UK Cash
Generating Unit (‘CGU’) and £0.6m within the Middle East CGUs.
There is a risk that goodwill allocated to CGU is not recoverable
and should be impaired. An impairment assessment has therefore
been carried out by management at the balance sheet date.
This assessment includes a number of estimates and assumptions
for future performance that determine the net present value of
future cash flows, including but not limited to, the discount rate,
long term growth rate, and operating profitability of the group.
Due to the inherent uncertainty involved in forecasting and
discounting future cash flows, notably net earnings which are the
basis of the assessment of recoverability, this is one of the key
judgemental areas affecting the level of direction and strategy of
our audit and the use of our resources
Our procedures included critically assessing the key assumptions
applied by the Group in determining the recoverable amounts of
each CGU. In particular, we:
• considered the consistency and appropriateness of the allocation
of businesses and related goodwill balances into CGUs;
• audited the Value in Use schedules of the Group to ensure that
they were mathematically accurate;
• reviewed the net earnings budgeted for the year ended 30
September 2018 in the context of the degree of work secured,
including examination of supporting contracts and consideration
of the pipeline activity
• considered the underlying assumptions in determining the cash
flows and growth assumptions applied with reference to historical
forecasting accuracy and wider macro environment conditions;
• challenged the assumptions used in the calculation of the
discount rates used by the Group, including comparisons with
external data sources;
• assessed whether the Group’s disclosures about the sensitivity
of the outcome of the impairment assessment to changes in key
assumptions appropriately reflected the risks inherent in the
valuation of goodwill; and
• performed our own sensitivity analysis, notably on net earnings
which included consideration of the effect of a possible reduction
in assumed growth rates and cash flows, given reasonably possible
variations in operating cash flows (such as net earnings shortfall
against budget) in the context of the above work.
Our application of materiality
Materiality for the Group financial statements as a whole was set at £210,000 (2017: £235,000) which represents approximately 1.5% of revenue less
subconsultant costs for the year. The performance materiality level applied to the Group was £157,000 (2017: £176,000).
We report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £10,000 (2017: £11,750) in addition to other
misstatements that warranted reporting on qualitative grounds.
The audit of the company-only financial statements of Aukett Swanke Group Plc was performed at a level of £129,000 (2017: £83,000) which represents
approximately 3% of net assets at the year-end.
An overview of the scope of our audit
The audit of the Group financial statements comprised full scope audits performed on the consolidated group headed up by Aukett Swanke Group Plc
(in addition to its standalone parent entity financial statements), along with a full scope audit on its seven UK-domiciled subsidiaries as required by
statutory regulations in the UK. Full scope audits were also performed by a separate independent audit firm within the UAE on the business of John
R Harris & Partners, along with the Group’s UAE-domiciled branches of Shankland Cox Limited, Aukett Fitzroy Robinson International Limited and the
business of Aukett Swanke Architectural Design Limited.
The component auditor’s work resulted in them auditing the following percentages of the Group (the balance being audited by BDO UK):
•
•
•
Revenue less subconsultant costs: 45%
Result before taxation (normalised): 46%
Gross assets: 48%
For the work performed by component auditors, we determined the level of involvement needed in order to be able to conclude whether sufficient
appropriate audit evidence had been obtained as a basis for our opinion on the group financial statements as a whole. The level of involvement by BDO
UK in the component audit work performed was as follows:
•
•
•
•
•
Direction of planning activities and expected areas of audit focus including anticipated risk areas and approach to audit work to be adopted;
Planning meeting between component auditor and BDO UK to establish understanding of terms and instructions;
Detailed onsite review of audit files produced by UAE component auditor by Group Engagement Partner;
Attendance at clearance meeting between UAE local management and UAE component auditor; and
Direction and supervision of clearance of core audit areas relevant to the Group.
Specific procedures were performed around certain elements of the Berlin and Frankfurt joint ventures given their size and significance to the overall
group and other unaudited entities within the group were reviewed analytically by reference to their expected financial performance and position.
We planned our audit by undertaking an evaluation of the systems and controls in place on the group’s core transactional cycles and the controls in place
designed to capture and record information for financial statement disclosures. Our testing was performed using a combination of tests of operating
effectiveness of controls and for those areas where this would be perceived as being ineffective, substantive analytical procedures and other substantive
procedures such as verification of transactions or samples from populations to underlying evidence.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the
financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude
that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is
consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have
not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
•
•
•
•
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
44
45
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Responsibilities of directors
As explained more fully in the directors’ responsibilities statement set out on page 41, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going
concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend
to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due
to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee
that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.
org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the parent 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 parent 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 parent
company and the parent company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Tim Neathercoat (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London
United Kingdom
Date: 29 January 2019
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
ALLIANZ OPERATIONS CENTRE, IZMIR
Consolidated income statement
For the year ended 30 September 2018
Revenue
Sub consultant costs
Revenue less sub consultant costs
Personnel related costs
Property related costs
Other operating expenses
Other operating income
Operating loss
Finance costs
Loss after finance costs
Share of results of associate and joint ventures
Loss before tax
Tax credit
Loss for the year
Loss attributable to:
Owners of Aukett Swanke Group Plc
Non-controlling interests
Basic and diluted earnings per share for loss attributable to
the ordinary equity holders of the Company:
From continuing operations
Total loss per share
Note
3
3
4
5
10
11
2018
£’000
14,380
(1,286)
13,094
(11,915)
(2,029)
(2,066)
287
(2,629)
(36)
(2,665)
121
(2,544)
171
(2,373)
(2,345)
(28)
(2,373)
(1.42)p
(1.42)p
2017
£’000
18,395
(2,325)
16,070
(13,114)
(2,360)
(2,229)
1,089
(544)
(34)
(578)
253
(325)
21
(304)
(323)
19
(304)
(0.20)p
(0.20)p
46
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
47
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Consolidated statement of comprehensive income
Consolidated statement of financial position
For the year ended 30 September 2018
At 30 September 2018
Loss for the year
Currency translation differences
Other comprehensive loss for the year
Total comprehensive loss for the year
Total comprehensive loss for the year is attributable to:
Owners of Aukett Swanke Group Plc
Non-controlling interests
2018
£’000
(2,373)
(31)
(31)
(2,404)
(2,370)
(34)
(2,404)
2017
£’000
(304)
(124)
(124)
(428)
(425)
(3)
(428)
Note
12
13
14
16
17
22
18
19
20
23
20
22
23
24
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 at bank and in hand
Total current assets
Total assets
Current liabilities
Trade and other payables
Current tax
Borrowings
Provisions
Total current liabilities
Non current liabilities
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
2018
£’000
2,372
810
114
545
248
377
4,466
5,995
710
6,705
11,171
(5,272)
(1)
(246)
-
(5,519)
(307)
(61)
(927)
(1,295)
(6,814)
4,357
1,652
1,176
(17)
(95)
1,494
4,210
147
4,357
2017
£’000
2,377
908
210
530
233
213
4,471
7,931
1,188
9,119
13,590
(4,723)
-
(467)
(151)
(5,341)
(537)
(71)
(880)
(1,488)
(6,829)
6,761
1,652
1,176
8
2,250
1,494
6,580
181
6,761
48
The financial statements on pages 47 to 90 were approved and authorised for issue by the Board of Directors on 29 January 2019 and were signed on
its behalf by:
Nicholas Thompson
Chief Executive Officer
Beverley Wright
Chief Financial Officer
49
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Company statement of financial position
Consolidated statement of cash flows
At 30 September 2018
For the year ended 30 September 2018
Note
15
18
18
19
20
20
24
Non current assets
Investments
Trade and other receivables
Total non current assets
Current assets
Trade and other receivables
Cash at bank and in hand
Total current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Total current liabilities
Non current liabilities
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
2018
£’000
5,514
27
5,541
1,475
166
1,641
7,182
(2,256)
(246)
(2,502)
(307)
(307)
(2,809)
4,373
1,652
51
1,176
1,494
4,373
2017
£’000
5,514
26
5,540
1,311
623
1,934
7,474
(2,536)
(239)
(2,775)
(537)
(537)
(3,312)
4,162
1,652
(160)
1,176
1,494
4,162
The result for the year contained within the parent company’s income statement is £211,000 (2017: £411,000).
The financial statements on pages 47 to 90 were approved and authorised for issue by the Board of Directors on 29 January 2019 and were signed on
its behalf by:
Nicholas Thompson
Chief Executive Officer
Beverley Wright
Chief Financial Officer
Note
26
Cash flows from operating activities
Cash expended from operations
Interest paid
Income taxes paid
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Sale of property, plant and equipment
Dividends received
Net cash received in investing activities
Net cash outflow before financing activities
Cash flows from financing activities
Repayment of bank loans
Net cash outflow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at start of year
Currency translation differences
Cash and cash equivalents at end of year
21
Cash and cash equivalents are comprised of:
Cash at bank and in hand
Secured bank overdrafts
Cash and cash equivalents at end of year
2018
£’000
(11)
(36)
-
(47)
(79)
26
99
46
(1)
(236)
(236)
(237)
960
(13)
710
710
-
710
2017
£’000
(746)
(34)
(8)
(788)
(27)
2
215
190
(598)
(250)
(250)
(848)
1,839
(31)
960
1,188
(228)
960
50
51
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Company statement of cash flows
Consolidated statement of changes in equity
Note
26
For the year ended 30 September 2018
Cash flows from operating activities
Cash (expended by) / generated from operations
Interest paid
Net cash (outflow) / inflow from operating activities
Cash flows from investing activities
Dividends received
Net cash generated from investing activities
Net cash (outflow) / inflow before financing activities
Cash flows from financing activities
Repayment of bank loans
Net cash outflow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
Cash and cash equivalents are comprised of:
Cash at bank and in hand
Cash and cash equivalents at end of year
2018
£’000
(292)
(28)
(320)
99
99
(221)
(236)
(236)
(457)
623
166
166
166
2017
£’000
96
(34)
62
215
215
277
(250)
(250)
27
596
623
623
623
For the year ended 30 September 2018
Foreign
currency
translation
reserve
£’000
110
-
(102)
Retained
earnings
£’000
2,573
(323)
-
(102)
(323)
Share
capital
£’000
1,652
-
-
-
Other
distributable
reserve
£’000
1,494
-
-
-
Merger
reserve
£’000
1,176
-
-
-
Total
£’000
7,005
(323)
(102)
(425)
At 30 September 2016
Loss for the year
Other comprehensive
income
Total comprehensive
income
At 30 September 2017
1,652
Loss for the year
Other comprehensive loss
Total comprehensive
income
-
-
-
At 30 September 2018
1,652
8
-
(25)
(25)
(17)
2,250
1,494
1,176
6,580
(2,345)
-
(2,345)
-
-
-
-
-
-
(2,345)
(25)
(2,370)
Non-
controlling
interests
£’000
184
19
(22)
Total
equity
£’000
7,189
(304)
(124)
(3)
(428)
181
(28)
(6)
(34)
6,761
(2,373)
(31)
(2.404)
(95)
1,494
1,176
4,210
147
4,357
The other distributable reserve was created in September 2007 during a court and shareholder approved process to reduce the capital of the Company.
The merger reserve was created through a business combination in December 2013 representing the issue of 19,594,959 new ordinary shares at a price
of 7.00 pence per share.
RESIDENTIAL / INDUSTRIAL HYBRID R+D
52
53
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Company statement of changes in equity
Notes to the financial statements
For the year ended 30 September 2018
At 30 September 2016
Profit and total comprehensive income
for the year
At 30 September 2017
Profit and total comprehensive income
for the year
At 30 September 2018
Share capital
£’000
1,652
-
1,652
-
1,652
Retained
earnings
£’000
(571)
411
(160)
211
51
Other
distributable
reserve
£’000
Merger reserve
£’000
Total Equity
£’000
1,494
1,176
3,751
-
-
411
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below.
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.
New accounting standards, amendments and interpretations applied
For the year ended 30 September 2018, the changes to IAS 7, notably IAS 7.44(A), were adopted in the financial statements.
A presentation of the cash flow and non-cash flow movements relating to financing of the Group is presented within note 26 to the accounts.
1,494
1,176
4,162
The Group has not voluntarily presented the equivalent comparatives of this note for the year ended 30 September 2017.
-
-
211
1,494
1,176
4,373
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 effective date making them applicable to future financial statements. The following standards are effective for accounting periods beginning on or
after 1 January 2018 and have not yet been adopted by the Group:
The other distributable reserve was created in September 2007 during a court and shareholder approved process to reduce the capital of the Company.
The merger reserve was created through a business combination in December 2013 representing the issue of 19,594,959 new ordinary shares at a price
of 7.00 pence per share.
NO 2 FORBURY PLACE, READING
i)
ii)
IFRS 15 ‘Revenues from contracts with customers’ (see below).
IFRS 9 ‘Financial instruments’. The standard provides a single classification and measurement model for financial assets and replaces
the existing IAS 39. The standard introduces new requirements for the classification and measurement of financial liabilities; a new model
for recognising provisions based on expected credit losses and simplifies hedge accounting compared to IAS 39. New disclosure requirements
will also be introduced upon adoption of the standard.
The most significant part of the new requirements is anticipated to be the need to apply an expected credit loss model when calculating
impairment losses on the Group’s trade and other receivables. In applying IFRS 9, the Group must consider the probability of default
occurring over the contractual life of its trade receivables and contract asset balances on initial recognition of those assets. This is likely
to result in earlier recognition of impairment provisions and greater judgement will be required due to the need to factor in forward looking
information when estimating the appropriate amount of provisions. In view of the fact that defaults in the UK have historically been immaterial,
we consider that the expected credit loss model is unlikely to have a material effect on the measurement of provisions against trade receivables
at the statement of financial position date. The impact of applying this model to the Middle East segment of the business is still being
investigated and will be quantified in the interim financial statements to 31 March 2019.
On review of the financial instruments of the Group, it is expected that there will be little change to the measurement basis of financial assets
and financial liabilities given the intentions of management in respect of the business model of the financial instruments held and the fact
that most of the Group’s financial instruments generate cash flows solely through the payment of principal and interest. As such, it is expected
that the financial instruments of the Group will continue to be accounted for at amortised cost.
The group expects to adopt this standard for its accounting period beginning on 1 October 2018.
ii)
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 effectively brings the majority leases onto the balance sheet.
This standard is effective for accounting periods beginning on or after 1 January 2019 and the group expects to adopt this standard for its
accounting period beginning on 1 October 2019. The impact of applying this standard is still being investigated.
There are no other IFRSs or International Financial Reporting Interpretations Committee interpretations that are not yet effective that would be expected
to have a material impact on the Group.
IFRS 15 Revenues from contracts with customers
IFRS 15 is the new revenue standard which replaces existing standards and guidance including IAS 18 Revenue and IAS 11 Construction Contracts.
Applying IFRS 15, an entity recognises revenue to depict the transfer of promised goods or services to the customer in an amount that reflects the
consideration to which the entity expects to be entitled in exchange for those goods or services.
To recognise revenue under IFRS 15, an entity applies the following five steps:
Step 1:
Step 2:
Identify the contract(s) with a customer;
Identify the performance obligations in the contract. Performance obligations are promises in a contract to transfer to a customer
goods or services that are distinct;
54
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
55
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
Step 3: Determine the transaction price. The transaction price is the amount of consideration to which an entity expects to be entitled in
exchange for transferring promised goods or services to a customer. If the consideration promised in a contract includes a variable
amount, an entity must estimate the amount of consideration to which it expects to be entitled in exchange for transferring the promised
goods or services to a customer;
Step 4: Allocate the transaction price to each performance obligation on the basis of the relative stand-alone selling prices of each distinct good
or service promised in the contract; and
Step 5: Recognise revenue when a performance obligation is satisfied by transferring a promised good or service to a customer. A performance
obligation may be satisfied at a point in time or over time. For a performance obligation satisfied over time, an entity would select an
appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied.
The Group will apply IFRS 15 for its accounting period beginning on 1 October 2018. There will be no impact on cash flows with collection remaining in
line with contractual terms.
Management has performed an initial review of the expected impact of adopting IFRS 15 to the Group’s financial statements. Management’s expectation
from performing such a review is that a material change to recognition of revenues in the UK segment of the business is unlikely to deviate materially
from the measurement of revenues under IAS 18 and the revenue recognition for the majority of contracts will still follow an “over time” pattern.
The impact of IFRS 15 on the Middle East business segment continues to be reviewed by management and will be fully quantified within the 31 March
2019 interim financial statements. It is expected that the revenue stream may need to be amended to be recognised on a “point in time” basis, however
the financial impact of this on the opening reserves for the year ended 30 September 2019 remains open to conclusion.
The Group will apply the new standard using the cumulative transition method, with the cumulative effect of applying the standard recorded as an
adjustment to retained earnings on the date of initial application, being the 1 October 2018. Our decision to adopt this method rather than retrospectively
restate prior periods depends on a number of factors including time, cost and available resources compared to the benefits to the users of the financial
statements.
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 31. These factors are all considered when assessing the Group’s
ability to operate as a going concern.
The Group currently meets its day to day working capital requirements through its cash balances. It maintains its overdraft facility for additional financial
flexibility and foreign currency hedging purposes. This overdraft facility is renewed annually and was renewed for a further 12 months in December
2018.
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
flow statements for each of the Group’s operations, as well as an assessment of covenant tests.
At times, the flows rely on receipt of specific large amounts, but by managing balances across geographies 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 has again renewed the Group’s overdraft facility as described in note 31 and above.
All 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 applying the processes and 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 affect
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 joint ventures.
Associates
Associates are entities for which the Group has significant influence but not control or joint control. This is presumed to be the case where the Group
holds between 20% and 50% of the voting rights, but consideration is given to the substance of the contractual governance agreements in place.
Investments in associates are accounted for under the equity method.
Joint ventures
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
difference 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 effective 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
where these form an integral part of the group’s cash management process, for the purposes of the statement of cash flows.
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 Company’s result is disclosed at the foot of the Company’s statement of financial position.
Current Taxation
Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or
substantially enacted by the statement of financial position date.
Deferred taxation
Deferred income tax is provided in full, using the statement of financial position liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amount in the financial statements, and measured at an undiscounted basis.
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
differences can be utilised.
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.
Equity instruments
Equity instruments issued by the Company are recorded as the proceeds received, net of direct issue costs.
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
consolidated income statement for the year.
56
57
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
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, which are materially consistent with the spot rates observed in the year for those entities. Exchange differences 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 differences 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 suffered 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 flows 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 – 25 years
Trade licence – 10 years
Customer relationships – 7 to 10 years
Order book – Over the life of the contracts
Amortisation is charged to other operating expenses within the consolidated income statement.
Investments
Investments in subsidiaries, associates and joint ventures are held in the statement of financial position of the Company at historical cost less any
allowance for impairment.
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. 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 off the cost of acquisition over the expected useful economic lives using the straight
line method and over the following number of years:
•
•
•
•
Leasehold improvements – Unexpired term of lease
Office furniture – 4 years
Office equipment – 4 years
Computer equipment – 2 years
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 outflow of economic
benefits that can be reliably estimated.
Where the effect of the time value of money is material, the provision is based on the present value of future outflows, discounted at the pre-tax discount
rate that reflects the risks specific to the liability.
In those geographies where it is a legal requirement, provision is also made for end of service benefit (‘EOSB’), being amounts payable to employees
when their contract with the group ends (see note 23).
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. Variations 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.
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 the specific debtor balance in question have
been impaired. 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 JUDGEMENTS
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.
Accounting estimates
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 adjustment to the
carrying amounts of assets and liabilities within the next financial year are considered to be:
58
59
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 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 differ 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 18. The amount by which
progress billing exceeds revenue is shown as advances received from customers for contract work in note 19.
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 projects but even so, much property development
is financed by funds not unconditionally committed at the commencement of the project. 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 and financial difficulties of the client, likely use / 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.
An increase of 5% (2017: 4%) as a percentage of total trade receivables would lead to a material bad debt exposure. Based on current likely recoverability
present, there is a £0.9m, (2017: £0.7m) trade receivables provision primarily against Middle East trade receivables. Given the nature of these, there
remains the potential to collect these in future years. Further quantitative information concerning trade receivables is shown in note 29.
3 OPERATING SEGMENTS
The Group comprises 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.
The Group’s operating segments consist of the United Kingdom, the Middle East and Continental Europe. Turkey and Russia are included within
Continental Europe together with Germany and the Czech Republic.
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
2018
£’000
6,744
6,819
817
14,380
2018
£’000
6,610
5,852
632
13,094
All of the Group’s revenue relates to the value of services performed for customers under construction type contracts.
Impairment of goodwill
Details of the impairment reviews undertaken in respect of the carrying value of goodwill are given in note 12.
Segment net finance expense
Impairment of investments in subsidiaries, associate and joint ventures
The company’s investment in subsidiaries, associate and joint ventures is reviewed annually for impairment. The recoverable amount is determined
based on value in use calculations. These calculations use pre-tax cash flow projections based on financial budgets and forecasts covering a five year
period. Cash flows beyond the five year period are extrapolated using long term average growth rates.
The key assumptions made in these projections are the same as those given in relation to impairment of goodwill in note 12.
Critical accounting judgements
Critical judgements represent key decisions made by management in the application of the Group’s accounting policies. Where a significant risk of
materially different outcomes exists due to management assumptions, this will represent a critical accounting judgement. Accounting judgements are
continually reviewed in light of new information and are based on historical experience and other factors, including expectations of future events that
are believed to be reasonable under the circumstances. The judgements which have a significant risk of causing a material adjustment to the carrying
amount of assets and liabilities are considered to be:
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.
In the current year, no material fee claim revenue has been recognised at 30 September 2018.
60
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
2018
£’000
(8)
-
-
(28)
(36)
2018
£’000
81
61
19
161
2018
£’000
27
40
13
80
2017
£’000
8,915
8,631
849
18,395
2017
£’000
8,765
6,833
472
16,070
2017
£’000
-
-
-
(34)
(34)
2017
£’000
164
95
29
288
2017
£’000
27
65
18
110
61
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 2018 Segment result
United Kingdom
Middle East
Continental Europe
Group costs
(Loss) / profit before tax
2017 Segment result
United Kingdom
Middle East
Continental Europe
Group costs
(Loss) / profit before tax
Before goodwill and
acquisition adjustments
£’000
Fair value gains on
deferred consideration
and acquisition settlement
£’000
(1,505)
(1,336)
131
39
(2,671)
-
127
-
-
127
Before goodwill and
acquisition adjustments
£’000
Fair value gains on
deferred consideration
and acquisition settlement
£’000
19
(687)
(136)
(221)
(1,025)
-
700
-
-
700
Total
£’000
(1,505)
(1,209)
131
39
(2,544)
Total
£’000
19
13
(136)
(221)
(325)
The Group’s share of results from associate and joint ventures included within the Continental Europe segment result are shown in notes 16 and 17.
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*
Total assets
* Non current assets include investments in associate and joint ventures.
2018
£’000
1,798
2,972
84
4,854
1,851
4,466
2017
£’000
2,564
3,971
241
6,776
2,343
4,471
11,171
13,590
62
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
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
2018
£’000
2,776
1,577
90
4,443
1,076
1,295
6,814
2018
£’000
6,744
6,744
311
506
6,819
7,636
2017
£’000
1,656
1,762
225
3,643
1,698
1,488
6,829
2017
£’000
8,915
8,915
367
482
8,631
9,480
14,380
18,395
2018
£’000
2,031
2,031
1
-
793
75
1,189
2,058
4,089
377
4,466
2017
£’000
2,138
2,138
25
17
747
139
1,192
2,120
4,258
213
4,471
63
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Major clients
During the year ended 30 September 2018, the Group did not derive 10% or more of its revenues from any client (2017: no client).
6
AUDITOR REMUNERATION
During the year the Group incurred the following costs in relation to the Company’s auditor and associates of the Company’s auditor:
Largest client revenues
2018
£’000
1,219
The largest client revenues for 2018 relate to the Middle East operating segment (2017: Middle East operating segment)
Revenue by project site
The geographical split of revenue based on the location of project 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
Licence fee income
Other sundry income
Fair value gain on the reduction of deferred consideration
Gain recognised on acquisition settlement
Total other operating income
2018
£’000
6,200
6,954
998
228
14,380
2018
£’000
28
115
-
17
127
-
287
2017
£’000
1,121
2017
£’000
8,107
9,032
1,119
137
18,395
2017
£’000
238
109
3
39
128
572
1,089
The gain recognised on acquisition settlement of £nil (2017: £572,000) relates to an amicable settlement on deferred consideration with the vendor of
Shankland Cox Limited in respect of contract losses which were not known at the date of acquisition.
5
FINANCE COSTS
Payable on bank loans and overdrafts
Total finance costs
64
2018
£’000
36
36
2017
£’000
34
34
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 - audit related assurance services
2018
£’000
42
58
-
-
2017
£’000
36
62
-
-
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 2008/489 to omit information about its individual accounts.
7
EMPLOYEE INFORMATION
The average number of persons employed by the Group and Company during the year was as follows:
Technical
Administrative
Total
Group
2018
Number
174
39
213
2017
Number
203
43
246
Company
2018
Number
-
7
7
2017
Number
-
8
8
In addition to the number of staff disclosed above, the Group’s associate and joint ventures employed an average of 122 persons (2017: 156 persons).
The costs of the persons employed by the Group and Company during the year were:
Group
Company
Wages and salaries
Social security costs
Contributions to defined contribution pension
arrangements
2018
£’000
9,447
594
308
2017
£’000
10,733
643
335
Total
10,349
11,711
2018
£’000
630
84
79
793
2017
£’000
697
87
78
862
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 benefits to each employee who completes one year of service and whose employment is
terminated upon causes that qualify the employee to receive termination indemnity payments.
The Group’s Middle East subsidiaries are required to pay termination benefits to each employee who completes one year of service as stipulated by UAE
labour laws. Further details of this can be found in note 23.
65
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 8 OPERATING LEASES
The operating lease payments recognised as an expense during the year were:
Property
Plant & equipment
Total
2018
£’000
830
40
870
2017
£’000
944
25
969
9 DIRECTORS’ EMOLUMENTS
Directors with operational roles in the UK business, and The Executive Directors of Aukett Swanke Group (“ASG”) Plc, waived part of their emoluments
in the year to reflect difficult trading conditions. The total amounts waived were £14,000 (2017: £22,000).
2018
Anthony Simmonds
Nicholas Thompson
Beverley Wright
John Bullough
Andrew Murdoch
Nick Pell
Robert Fry
Total
2017
Anthony Simmonds
Nicholas Thompson
Beverley Wright
John Bullough
Andrew Murdoch
Nick Pell
Total
Aggregate
emoluments
£’000
Pension
contributions
£’000
Total
received
£’000
Waived
£’000
Total
entitlement
£’000
45
198
156
30
60
57
61
607
-
24
18
-
9
2
7
60
45
222
174
30
69
59
68
667
Aggregate
emoluments
£’000
Pension
contributions
£’000
Total
received
£’000
45
198
156
30
104
105
638
-
31
23
-
18
-
72
45
229
179
30
122
105
710
-
7
5
-
-
-
2
14
Waived
£’000
-
-
-
-
11
11
22
45
229
179
30
69
59
70
681
Total
entitlement
£’000
45
229
179
30
133
116
732
Andrew Murdoch and Nick Pell resigned as Directors’ on 29 March 2018.
Robert Fry was appointed as a Director on 29 March 2018.
Aggregate emoluments include bonuses awarded.
Benefits were accruing to five Directors (2017: three Directors) under defined contribution pension arrangements.
The aggregate emoluments of the highest paid Director were £198,000 (2017: £198,000) together with pension contributions of £24,000 (2017: £31,000).
10 TAX CHARGE
Current tax
Adjustment in respect of previous years
Total current tax
Origination and reversal of temporary differences
Changes in tax rates
Total deferred tax (note 22)
Total tax credit
2018
£’000
(1)
-
-
172
-
172
171
The standard rate of corporation tax in the United Kingdom is applicable for the financial year was 19% (2017: 19%)
The tax assessed for the year differs from the United Kingdom standard rate as explained below:
(Loss) before tax
(Loss) before tax multiplied by the standardrate of corporation tax
in the United Kingdom of 19% (2017: 19%)
Effects of:
Non-tax deductible goodwill impairment
other non tax deductible expenses
differences 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
current tax adjustment in respect of previous years
income not taxable
Total tax credit
SPARDA BANK, FRANKFURT
2018
£’000
(2,544)
(483)
-
59
-
(23)
-
279
-
(3)
(171)
2017
£’000
2
2
4
17
-
17
21
2017
£’000
(325)
(62)
-
43
-
(48)
-
60
(2)
(12)
(21)
66
67
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 11 EARNINGS PER SHARE
The calculations of basic and diluted earnings per share are based on the following data:
Earnings
Continuing operations
Loss for the year
Number of shares
2018
£’000
(2,345)
(2,345)
2018
Number
2017
£’000
(323)
(323)
2017
Number
Weighted average of ordinary shares in issue
Effect of dilutive options
165,213,652
165,213,652
-
-
Diluted weighted average of ordinary shares in issue
165,213,652
165,213,652
As explained in note 25 the Company has granted options over 500,000 of its ordinary shares. These have not been included above as the average share
price was below the exercise price in 2018 and they therefore do not have a dilutive effect.
12 GOODWILL
Group
Cost
At 1 October 2016
Exchange differences
At 30 September 2017
Exchange differences
At 30 September 2018
Impairment
At 1 October 2016
Exchange differences
At 30 September 2017
Exchange differences
At 30 September 2018
Net book value
At 30 September 2018
At 30 September 2017
At 30 September 2016
68
£’000
2,679
(31)
2,648
(7)
2,641
270
1
271
(2)
269
2,372
2,377
2,409
The net book value of goodwill is allocated to the Group’s cash generating units (“CGU”) as follows:
At 30 September 2016
Exchange differences
At 30 September 2017
Exchange differences
At 30 September 2018
United Kingdom
£’000
1,740
-
1,740
-
1,740
Turkey
£’000
66
(12)
54
(22)
32
Middle East
£’000
603
(20)
583
17
600
Total
£’000
2,409
(32)
2,377
(5)
2,372
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 flow projections
based on financial budgets and forecasts covering a five year period. Cash flows 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 material. The total carrying value of goodwill allocated to Turkey
is not.
The key assumptions in the discounted cash flow projections for the United Kingdom operation are:
•
•
•
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. Management also considers the level of future secured revenues at the point of drawing up these calculations;
long term growth rate - which has been assumed to be 2.3% (2017: 2.4%) per annum based on the average historical growth in gross domestic
product in the United Kingdom over the past fifty years; and
the discount rate - which is the Group’s pre-tax weighted average cost of capital and has been assessed at 13.1% (2017: 14.9%).
Based on the discounted cash flow projections, the recoverable amount
of the UK CGU is estimated to exceed carrying values by at least 200%. A
6% fall in all future forecast revenues without a corresponding reduction
in costs in the UK CGU, or an increase in the discount rate by over 35%,
would result in carrying amounts exceeding their recoverable amount.
Management believes that the carrying value of goodwill remains
recoverable despite this sensitivity given the conservative nature of the
underlying forecasts prepared.
The key assumptions in the discounted cash flow projections for the Middle
East operation are:
•
•
•
•
the future level of revenue - which is based on knowledge of
the current and expected level of construction activity in the Middle
East;
working capital requirements - which is based on management’s
best in a geography where it is common to have high levels of trade
receivables;
long term growth rate - which has been assumed to be 3.9% per
annum based on the average historical growth in gross domestic
product in the Middle East over the past forty years; and
the discount rate - the pre-tax cost of capital has been assessed at
11.6% (2017: 14.0%). This is considered appropriate as the Middle
East operation does not suffer corporation tax.
Based on the discounted cash flow projections, the recoverable amount
of the Middle East CGU is estimated to exceed carrying values by at least
£900,000. A 3.5% fall in all future forecast revenues without a corresponding
reduction in costs in the Middle East CGU, or an increase in the discount
rate by 370 basis points, would result in carrying amounts exceeding
their recoverable amount. Management believe that the carrying value of
goodwill remains recoverable despite this sensitivity given the conservative
nature of the underlying forecasts prepared.
69
KINGS COLLEGE MUSIC SCHOOL, WIMBLEDON
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
13 OTHER INTANGIBLE ASSETS
Group
Cost
At 30 September 2016
Exchange differences
At 30 September 2017
Exchange differences
At 30 September 2018
Amortisation
At 30 September 2016
Charge
Exchange differences
At 30 September 2017
Charge
Exchange differences
At 30 September 2018
Net book value
At 30 September 2018
At 30 September 2017
At 30 September 2016
Trade name
£’000
Customer
relationships
£’000
Order book
£’000
Trade
licence
£’000
707
(18)
689
(12)
677
73
27
-
100
26
(5)
121
556
589
634
448
(31)
417
(34)
383
114
53
(12)
155
47
(22)
180
203
262
334
175
(11)
164
(7)
157
153
22
(11)
164
-
(7)
157
-
-
22
76
(3)
73
2
75
10
8
(2)
16
7
1
24
51
57
66
Total
£’000
1,406
(63)
1,343
(51)
1,292
350
110
(25)
435
80
(33)
482
810
908
1,056
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 (“SCL”) in February 2016. The SHC trade name reflects 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 and have remaining amortisation periods of 20 and 22 years,
respectively.
Customer relationships
The customer relationships were acquired as part of the acquisition of SHC in December 2013, on the acquisition of John R Harris & Partners Limited
(“JRHP”) in June 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. The customer relationships acquired in December 2013 have a remaining amortisation period of 2 years. The customer relationships acquired in
June 2015 and February 2016 both have remaining amortisation periods of 7 years.
Order book
The net book value of the order book was acquired as part of the acquisition of JRHP in June 2015. This represents the value of ongoing contracts
acquired at the acquisition date. The amortisation of the order book is over the period to completion of the contracts, all of which had been completed
by 30 September 2017.
Trade licence
The trade licence was acquired as part of the acquisition of JRHP in June 2015. This represents the value of licences granted to JRHP 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 and has a
remaining amortisation period of 7 years.
14 PROPERTY, PLANT & EQUIPMENT
Group
Cost
At 30 September 2016
Additions
Disposals
Exchange differences
At 30 September 2017
Additions
Disposals
Exchange differences
At 30 September 2018
Depreciation
At 30 September 2016
Charge
Disposals
Exchange differences
At 30 September 2017
Charge
Disposals
Exchange differences
At 30 September 2018
Net book value
At 30 September 2018
At 30 September 2017
At 30 September 2016
Leasehold
improvements
£’000
Furniture &
equipment
£’000
557
-
(204)
(7)
346
-
-
(12)
334
427
74
(178)
(7)
316
28
-
(10)
334
-
30
130
1,494
27
(45)
(20)
1,456
79
(86)
(23)
1,426
1,118
214
(45)
(11)
1,276
133
(75)
(22)
1,312
114
180
376
Total
£’000
2,051
27
(249)
(27)
1,802
79
(86)
(35)
1,760
1,545
288
(223)
(18)
1,592
161
(75)
(32)
1,646
114
210
506
70
71
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 15 INVESTMENTS
Company
Cost
At 30 September 2016
Additions
At 30 September 2017
At 30 September 2018
Provisions
At 30 September 2016
Conversion of debt
Charge
At 30 September 2017
At 30 September 2018
Net book value
At 30 September 2018
At 30 September 2017
At 30 September 2016
Subsidiaries
£’000
Joint
ventures
£’000
Associate
£’000
9,927
150
10,077
10,077
3,497
150
949
4,596
4,596
5,481
5,481
6,430
21
-
21
21
-
-
-
-
-
21
21
21
12
-
12
12
-
-
-
-
-
12
12
12
Total
£’000
9,960
150
10,110
10,110
3,497
150
949
4,596
4,596
5,514
5,514
6,463
The increase in cost of £150,000 during the prior year relates to converting amounts due from Aukett Fitzroy Robinson Sp Zoo into ordinary share capital
before the commencement of liquidation proceedings. The original loan balance due had been impaired in previous accounting periods and therefore,
there is no effect on the results of the Company arising from this transaction.
Subsidiary operations
The following are the subsidiary undertakings at 30 September 2018:
Name
Subsidiaries
Aukett Swanke Limited
Aukett Fitzroy Robinson International Limited
Veretec Limited
Aukett Swanke OOO
Swanke Hayden Connell International Limited
Swanke Hayden Connell Mimarlik AS
John R Harris & Partners Limited
Shankland Cox Limited
Aukett Swanke Architectural Design Limited
Swanke Hayden Connell Europe Limited
Aukett Fitzroy Robinson Sp Zoo
Fitzroy Robinson Limited
Swanke Limited
John R Harris & Partners Limited
Aukett Fitzroy Robinson Limited
Thomas Nugent Architects Limited
Aukett Fitzroy Robinson Europe Limited
Aukett Limited
Aukett (UK) Limited
Aukett Group Limited
Fitzroy Robinson West & Midlands Limited
Country of incorporation and
registered office address
(see table below)
Proportion
of ordinary equity held
2018
2017
Nature of business
(A)
(A)
(A)
(B)
(A)
(C)
(D)
(A)
(A)
(A)
(E)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
100%
100%
100%
100%
100%
100%
80%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Architecture & design
Architecture & design
Architecture & design
Architecture & design
Architecture & design
Architecture & design
80%
Architecture & design
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Architecture & Engineering
Architecture & design
Non-trading
In liquidation
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.
John R Harris & 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.
Aukett Swanke Architectural Design Limited is incorporated in England & Wales, but operates principally in the United Arab Emirates.
72
73
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 Interest in associate and joint ventures
Set out below are the associate and joint ventures of the Group as at 30 September 2018. 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 and
registered office address
(see below)
Aukett + Heese Frankfurt GmbH
Aukett sro
Aukett + Heese GmbH
(F)
(G)
(H)
Proportion
of ordinary equity held
2017
2018
Nature of
relationship
Measurement
method
50%
50%
25%
50%
50%
25%
Joint venture
Joint venture
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.
Country of incorporation and registered office addresses
Ref
(A)
(B)
(C)
(D)
(E)
(F)
(G)
(H)
Country of Incorporation
Registered office address
England & Wales
10 Bonhill Street, London, EC2A 4PE, United Kingdom
Russia
Turkey
Cyprus
Poland
Germany
Czech Republic
Germany
18 Prospekt Andropova, bld.7, floor 11, office 5, Moscow, 115432, Russia
Kore Sehitleri 34, Deniz Is Hani, 34394 Zincirlikuyu, Istanbul, Turkey
17-19 Themistokli Dervi street, The City House, 1066 Nicosia, Cyprus
ul Emilii Plater 18, 00-688 Warszawa, Poland
Gutleutstrasse 163, 60327 Frankfurt am Main, Germany
Janackovo Nabrezi 471/49, 150 00 Prague 5 , Czech Republic
Budapester Strasse 43, 10787 Berlin, Germany
16 INVESTMENT IN ASSOCIATE
As disclosed in note 15, the Group owns 25% 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 reflects Aukett + Heese GmbH’s relevant financial
statements and not the Group’s share of those amounts. They have been amended to reflect adjustments made by the Group when using the equity
method.
Summarised balance sheet
Assets
Non current assets
Current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
74
2018
£’000
146
3,151
3,297
(1,118)
(1,118)
2,179
2017
£’000
270
3,428
3,698
(1,577)
(1,577)
2,121
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
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
2018
£’000
2,121
170
21
(133)
2,179
25%
545
545
2018
£’000
15,729
(7,773)
7,956
(7,712)
244
(74)
170
21
191
2017
£’000
2,116
569
41
(605)
2,121
25%
530
530
2017
£’000
14,310
(5,885)
8,425
(7,610)
815
(246)
569
41
610
The Group received dividends of £33,000 (2017: £151,000) 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.
75
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 17 INVESTMENTS IN JOINT VENTURES
Frankfurt
As disclosed in note 15, the Group owns 50% of Aukett + Heese Frankfurt GmbH which is based in Frankfurt.
Prague
As disclosed in note 15, the Group owns 50% of Aukett sro which is based in Prague.
At 30 September 2016
Share of profits
Dividends paid
Exchange differences
At 30 September 2017
Share of profits
Dividends paid
Exchange differences
At 30 September 2018
£’000
164
112
(65)
5
216
96
(66)
2
248
The Group received dividends of £66,000 (2017: £65,000) from Aukett + Heese Frankfurt GmbH. 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
Total liabilities
Net assets
Revenue
Sub consultant costs
Revenue less sub consultant costs
Operating costs
Profit before tax
Taxation
Profit after tax
2018
£’000
14
444
458
(210)
(210)
248
2018
£’000
754
(186)
568
(428)
140
(44)
96
2017
£’000
9
453
462
(246)
(246)
216
2017
£’000
684
(128)
556
(406)
150
(38)
112
At 30 September 2016
Share of losses
Exchange differences
At 30 September 2017
Share of losses
At 30 September 2018
The following amounts represent the Group’s 50% share of the assets and liabilities of Aukett sro.
Assets
Current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
Revenue
Sub consultant costs
Revenue less sub consultant costs
Operating costs
Loss before tax
Loss after tax
£’000
17
(1)
1
17
(17)
-
2017
£’000
117
117
(100)
(100)
17
2017
£’000
255
(85)
170
(171)
(1)
(1)
2018
£’000
46
46
(46)
(46)
-
2018
£’000
166
(33)
133
(150)
(17)
(17)
The principal risks and uncertainties associated with Aukett Sro are the same as those detailed within the Group’s Strategic Report.
The principal risks and uncertainties associated with Aukett + Heese Frankfurt GmbH are the same as those detailed within the Group’s Strategic Report.
76
77
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 18 TRADE AND OTHER RECEIVABLES
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
2018
£’000
4,578
(915)
3,663
1,191
27
303
811
5,995
2018
£’000
-
27
27
1,422
-
9
44
1,475
1,502
2017
£’000
5,945
(685)
5,260
1,516
29
590
536
7,931
2017
£’000
-
26
26
1,268
3
10
30
1,311
1,337
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.
19 TRADE AND OTHER PAYABLES
Group
Trade payables
Advances received from customers for contract work
Other taxation and social security
Other payables
Dividends payable
Accruals
Total
78
2018
£’000
1,493
886
525
304
-
2,064
5,272
2017
£’000
1,282
663
625
455
-
1,698
4,723
Company
Trade payables
Amounts owed to subsidiaries
Other payables
Dividends payable
Accruals
Total
See note 33 for further details of the amounts due to subsidiaries.
20 BORROWINGS
Group
Secured bank overdrafts
Secured bank loan
Total borrowings
Amounts due for settlement within 12 months
Current liability
Amounts due for settlement between one and two years
Amounts due for settlement between two and five years
Non current liability
Total borrowings
Company
Secured bank loan
Total borrowings
Instalments due within 12 months
Current liability
Instalments due between one and two years
Instalments due between two and five years
Non current liability
Total borrowings
2018
£’000
44
1,910
11
-
291
2,256
2018
£’000
-
553
553
246
246
246
61
307
553
2018
£’000
553
553
246
246
246
61
307
553
2017
£’000
34
2,422
3
-
77
2,536
2017
£’000
228
776
1,004
467
467
239
298
537
1,004
2017
£’000
776
776
239
239
239
298
537
776
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% above the London Interbank Offer Rate (LIBOR) for the relevant currency.
79
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 21 ANALYSIS OF NET FUNDS
Group
Cash at bank and in hand
Secured bank overdrafts (note 20)
Cash and cash equivalents
Secured bank loan (note 20)
Net funds
Tax depreciation
on plant and equipment
£’000
56
33
-
89
-
-
89
Trading
losses
£’000
156
(41)
-
115
165
-
280
22 DEFERRED TAX
Group
At 30 September 2016
Income statement
Exchange differences
At 30 September 2017
Income statement
Exchange differences
At 30 September 2018
Group
Deferred tax assets
Deferred tax liabilities
Net deferred tax balance
2018
£’000
710
-
710
(553)
157
Other temporary
differences
£’000
(93)
25
6
(62)
7
2
(53)
2018
£’000
377
(61)
316
2017
£’000
1,188
(228)
960
(776)
184
Total
£’000
119
17
6
142
172
2
316
2017
£’000
213
(71)
142
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 has not recognised 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.
23 PROVISIONS
Group
At 30 September 2016
Utilised
Charged to the income statement
Exchange differences
At 30 September 2017
Utilised
Charged to the income statement
Exchange differences
At 30 September 2018
Property lease
provision
£’000
Employee benefit
obligations
£’000
192
(65)
24
-
151
(151)
-
-
-
871
(163)
206
(34)
880
(156)
191
12
927
Total
£’000
1,063
(228)
230
(34)
1,031
(307)
191
12
927
Property lease provision
During the year the group vacated its London property on expiry of the lease and moved to a new property, in the process utilising the provision that
had been provided in respect of obligations arising under the 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 applicable labour laws currently require a percentage of final salary to be paid upon resignation or termination. The percentage
is determined by reference to the number of years of continuous employment and cannot exceed two years’ salary.
The 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
Discount rate
Salary growth rate
2018
5 years
3.09%
4.2%
2017
5 years
2.15%
3.7%
The Group determined discount rates on the basis of current yields on 5 year high quality corporate bonds in the same currency as the liabilities.
Forecast consumer price inflation (“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 effects of a change in assumption are weighted
proportionally to the total plan obligations to determine the total impact for each assumption presented.
Change in assumption
Increase in assumption
Decrease in assumption
Impact on employee benefit obligation
Combined average length of service
Salary growth rate
Discount rate
1 year
1%
1%
2.28%
0.48%
(0.47)%
(8.52)%
(0.47)%
0.49%
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.
80
81
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 24 SHARE CAPITAL
Group and Company
Allocated, called up and fully paid
165,213,652 (2017: 165,213,652) ordinary shares of 1p each
At 1 October 2016
No changes
At 30 September 2017
No changes
At 30 September 2018
2018
£’000
1,652
2017
£’000
1,652
Number
165,213,652
-
165,213,652
-
165,213,652
Company
Profit before income tax
Dividends receivable
Finance costs
(Increase) / decrease in trade and other receivables
Decrease in trade and other payables
Fixed asset impairment
Unrealised foreign exchange differences
Net cash (expended by) / generated from operations
2018
£’000
211
(99)
28
(164)
(280)
-
12
(292)
2017
£’000
411
(715)
34
23
(583)
949
(23)
96
Changes in liabilities arising from financing activities including changes arising from cash flows and non-cash changes
The Company’s issued ordinary share capital comprised a single class of ordinary share. Each share carries the right to one vote at general meetings of
the Company.
Group
The objectives, policies and processes for managing capital are outlined in the strategic report.
Non- current loans
and borrowings
£’000
Current loans
and borrowings
£’000
25 SHARE OPTIONS
The Company has granted options over its Ordinary Shares to Group employees as follows:
Granted
6 March 2017
Total
At 1 October
2017
Number
-
-
Granted
Number
500,000
500,000
Lapsed
Number
-
-
At 30
September
2018
Number
500,000
500,000
Exercise
price
Pence
Earliest
exercisable
date
Latest
exercisable
date
4.25
6 March 2019
6 March 2023
The 500,000 share options granted on 6 March 2017 relate to Beverley Wright, a Director of the Company. These share options vest after 2 years’ service
and are exercisable between 2 and 6 years after grant. The fair value of these options is not considered to be material. Further details of transactions
with related parties can be found in note 33.
26 CASH (EXPENDED BY) / GENERATED FROM OPERATIONS
Group
Loss before tax – continuing operations
Finance costs
Share of results of associate and joint ventures
Intangible amortisation
Depreciation
(Profit) / loss on disposal of property, plant & equipment
Decrease in trade and other receivables
Increase / (decrease) in trade and other payables
Change in provisions
Unrealised foreign exchange differences
Net cash expended by operations
82
2018
£’000
(2,544)
36
(121)
80
161
(14)
1,952
586
(117)
(30)
(11)
2017
£’000
(325)
34
(253)
110
288
23
913
(1,485)
3
(54)
(746)
At 1 October 2017
Cash flows
- Repayment of borrowings
- Payment of interest
Non-cash flows
- Effects of foreign exchange
- Loans and borrowings classified as non-current
at 30 September 2017
- Interest accrued in period
At 30 September 2018
Company
At 1 October 2017
Cash flows
- Repayment of borrowings
- Payment of interest
Non-cash flows
- Effects of foreign exchange
- Loans and borrowings classified as non-current
at 30 September 2017
- Interest accrued in period
At 30 September 2018
27 FINANCIAL INSTRUMENTS
537
-
-
9
(239)
-
307
467
(464)
(36)
4
239
36
246
Non- current loans
and borrowings
£’000
Current loans
and borrowings
£’000
537
-
-
9
(239)
-
307
239
(236)
(28)
4
239
28
246
Total
£’000
1,004
(464)
(36)
13
-
36
553
Total
£’000
776
(236)
(28)
13
-
28
553
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.
83
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 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 at bank and in hand
Loans and receivables
Trade payables
Other payables
Accruals
Secured bank loans and overdrafts
Financial liabilities measured at amortised cost
Net financial instruments
Company
Amounts owed by subsidiaries
Amount owed by associate and joint ventures
Other receivables
Cash at bank and in hand
Loans and receivables
Trade payables
Amounts owed to subsidiaries
Other payables
Accruals
Secured bank loan
Financial liabilities measured at amortised cost
Net financial instruments
2018
£’000
3,663
1,191
27
303
710
5,894
(1,493)
(304)
(2,064)
(553)
(4,414)
1,480
2018
£’000
1,422
27
9
166
1,624
(44)
(1,910)
(11)
(291)
(553)
(2,809)
(1,185)
2017
£’000
5,260
1,516
29
590
1,188
8,583
(1,282)
(455)
(1,698)
(1,004)
(4,439)
4,144
2017
£’000
1,268
29
10
623
1,930
(34)
(2,422)
(3)
(77)
(776)
(3,312)
(1,382)
28 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 projects.
The Board has taken a decision not to hedge the net assets of the Group’s overseas operations.
Financial instruments which are denominated in a currency other than the functional currency of the entity by which they are held are as follows:
Group
Czech Koruna
EU Euro
Russian Rouble
UAE Dirham
UK Sterling
US Dollar
Turkish Lira
Net financial instruments held in foreign currencies
Company
Czech Koruna
EU Euro
Russian Rouble
US Dollar
UAE Dirham
Turkish Lira
Net financial instruments held in foreign currencies
2018
£’000
27
32
642
1,220
(51)
(547)
-
1,323
2018
£’000
27
32
13
(547)
373
-
(102)
2017
£’000
29
97
714
938
(32)
(130)
42
1,658
2017
£’000
29
97
25
(768)
67
42
(508)
A 10% percent weakening of UK Sterling against all currencies at 30 September would have increased / (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% strengthening of UK Sterling against all currencies would have an equal but opposite effect.
The Directors consider that there were no material differences 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 flows.
Collateral
As disclosed in note 20 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
2018
Profit
£’000
(28)
(10)
Equity
£’000
168
-
2017
Profit
£’000
130
(51)
Equity
£’000
67
-
Group
Company
2018
£’000
1,941
745
2017
£’000
2,832
1,072
Other receivables in the consolidated statement of financial position include a £nil rent security deposit (2017: £148,000) in respect of the Group’s
London studio premises.
84
85
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 The following foreign exchange gains / (losses) arising from financial assets and financial liabilities have been recognised in the income statement:
Group
Company
2018
£’000
2
(25)
2017
£’000
(31)
(2)
Largest exposure
Second largest exposure
Third largest exposure
2018
£’000
637
332
286
2017
£’000
666
418
402
The Group’s exchange gain of £2,000 (2017: loss of £31,000) includes cumulative exchange reserve losses of £nil (2017: £nil) recycled through the
income statement on discontinued operations.
The Group’s principal banker is Coutts & Co, a member of the Royal Bank of Scotland group.
At 30 September 2018 the largest exposure to a single financial institution represented 50% (2017: 41%) of the Group’s cash and cash equivalents.
29 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 27.
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:
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 32.
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:
2018
£’000
1,555
635
332
1,141
3,663
At 30 September 2016
Charged to the income statement
Allowance utilised
Exchange differences
At 30 September 2017
Charged to the income statement
Allowance utilised
Exchange differences
At 30 September 2018
2017
£’000
2,013
638
728
1,881
5,260
£’000
1,276
213
(788)
(16)
685
374
(169)
25
915
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 £4,854,000 (2017: £6,776,000) 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.
Group
Company
86
30 INTEREST RATE RISK
Group
Rent deposit
Secured bank loans
Secured bank overdrafts
Interest bearing financial instruments
Company
Secured bank loans
Interest bearing financial instruments
2018
£’000
-
(553)
-
(553)
2018
£’000
(553)
(553)
2017
£’000
148
(776)
(228)
(856)
2017
£’000
(776)
(776)
The property rent deposit earns variable rates of interest based on short-term interbank 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% above the London Interbank Offer Rate (LIBOR) of the relevant currency.
A 1% 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% fall in worldwide interest rates would have an equal but opposite effect.
2018
£’000
(6)
(6)
2017
£’000
(9)
(8)
87
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 31 LIQUIDITY RISK
The Group’s cash balances are held at call or in deposits with very short maturity terms.
At 30 September 2018 the Group had £850,000 (2017: £850,000) of gross borrowing facility and £500,000 net borrowing facility (2017: £250,000) under
its United Kingdom bank overdraft facility. In December 2018 Coutts & Co renewed the overdraft facility, maintaining it at £500,000, which is now next
due for review in November 2019, with an interim review in May 2019.
The maturity analysis of financial liabilities, including expected future charges through the Income Statement is as shown below.
Group
Timing of cashflows
Within one year
Between one and two years
Between two and five years
Expected future charges through the income statement
Financial liabilities at 30 September 2017
Timing of cashflows
Within one year
Between one and two years
Between two and five years
Expected future charges through the income statement
Financial liabilities at 30 September 2018
Company
Timing of cashflows
Within one year
Between one and two years
Between two and five years
Expected future charges through the income statement
Financial liabilities at 30 September 2017
Timing of cashflows
Within one year
Between one and two years
Between two and five years
Expected future charges through the income statement
Financial liabilities at 30 September 2018
88
Borrowings
£’000
Other
financial liabilities
£’000
489
256
307
1,052
(48)
1,004
265
256
62
583
(30)
553
3,435
-
-
3,435
-
3,435
3,917
-
-
3,917
-
3,917
Borrowings
£’000
Other
financial liabilities
£’000
261
256
307
824
(48)
776
265
256
62
583
(30)
553
2,536
-
-
2,536
-
2,536
2,256
-
-
2,256
-
2,256
Total
£’000
3,924
256
307
4,487
(48)
4,439
4,182
256
62
4,500
(30)
4,470
Total
£’000
2,797
256
307
3,360
(48)
3,312
2,521
256
62
2,839
(30)
2,809
32 GUARANTEES, CONTINGENT LIABILITIES AND OTHER COMMITMENTS
A cross guarantee and offset 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 20. At 30 September 2018 the overdrafts of its United
Kingdom subsidiaries guaranteed by the Company totalled £nil (2017: £228,000).
The Company and certain of its United Kingdom subsidiaries are members of a group for Value Added Tax (VAT) purposes. At 30 September 2018 the
net VAT payable balance of those subsidiaries was £243,000 (2017: £284,000).
At the year end, one of the Group’s Middle East subsidiaries had outstanding letters of guarantee totalling £108,000 (2017: £165,000). These guarantees
are secured by matching cash on deposit, which is included within trade and other receivables.
In common with other firms providing professional services, the Group is subject 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
2018
£’000
131
1,406
2,129
3,666
2017
£’000
549
1
-
550
The Group’s most significant lease relates to its London studio premises which comprises £3,522,000 (2017: £403,000) of the amounts shown in the
table above. The lease of its Bonhill Street studio includes an upward rent review after 5 years, does not contain any break clauses and expires in May
2028. The lease of its York Way studio was concluded during the year.
The Group has contractual commitments totalling £150,000 per annum in respect of software maintenance plans, expiring in December 2019. The total
future commitments arising under these contracts as at the balance sheet date amount to £190,000.
At both 30 September 2018 and 2017 neither the Group nor the Company had any capital commitments in respect of property, plant and equipment.
The Group acts as a lessor through the sub-let of part of the third floor at its Bonhill Street studio. The following is the aggregate minimum future
receivables under these operating leases.
Not later than one year
Later than one year and not later than five years
Later than five years
Total
33 RELATED PARTY TRANSACTIONS
2018
£’000
149
68
-
217
2017
£’000
-
-
-
-
Key management personnel compensation
The key management personnel of the Group comprises the Directors of the Company together with the managing and financial directors of the United
Kingdom and international operations.
Group
Short term employee benefits
Post employment benefits
Total
2018
£’000
1,513
104
1,617
2017
£’000
1,472
114
1,586
89
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018 The key management personnel of the Company comprises its Directors.
Company
Short term employee benefits
Post employment benefits
Total
2018
£’000
690
60
750
2017
£’000
719
73
792
During the prior year the Company granted 500,000 options over its ordinary shares to Beverley Wright, a director of the Company. The fair value of
these share options is not considered to be material.
Transactions and balances with associate and joint ventures
The Group makes management charges to Aukett + Heese Frankfurt GmbH. The amount charged during the year in respect of these services amounted
to £48,000 (2017: £47,000). Aukett + Heese Frankfurt GmbH charged the Group £4,000 (2017: £7,000) for architectural services. Dividends of £66,000
(2017: £65,000) were received from Aukett + Heese Frankfurt GmbH during the year. The amount owed to the Group by Aukett + Heese Frankfurt GmbH
at the balance sheet date was £nil (2017: £nil).
The Group makes management charges to Aukett + Heese GmbH. The amount charged by the Group during the year in respect of these services
amounted to £64,000 (2017: £62,000). The Group also charged Aukett + Heese GmbH £nil (2017: £50,000) for architectural services. Dividends of
£33,000 (2017: £150,000) were received from Aukett + Heese GmbH during the year. The amount owed to the Group by Aukett + Heese GmbH at 30
September 2018 was £nil (2017: £1,000).
As disclosed in note 15, 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 Group charges name licence fees and management fees to Aukett sro, a joint venture in which the Group has a 50% interest. During the year, charges
of £3,000 (2017: £3,000) were made to Aukett sro in respect of these services. The Group was also charged £32,000 (2017: £29,000) for architectural
services provided by Aukett sro during the year, of which £14,000 (2017: £nil) was owed by the Group at the balance sheet date. Separately, Aukett sro
owed the Group and the Company £27,000 as at 30 September 2018 (2017: £29,000) relating to previously declared but not yet paid dividends and
name licence charges.
None of the balances with the associate or joint ventures are secured.
Transactions and balances with subsidiaries
The names of the Company’s subsidiaries are set out in note 15.
The Company made management charges to its subsidiaries for management services of £1,315,000 (2017: £1,191,000) and paid charges to its
subsidiaries for office accommodation and other related services of £90,000 (2017: £90,000).
At 30 September 2018 the Company was owed £1,421,000 (2017: £1,268,000) by its subsidiaries and owed £1,910,000 (2017: £2,422,000) 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.
34 CORPORATE INFORMATION
General corporate information regarding the Company is shown on page 27. The addresses of the Group’s principal operations are shown on page 3.
A description of the Group’s operations and principal activities is given within the Strategic Report.
Notice of meeting
Notice is hereby given that the Annual General Meeting of the Company will be held at 10:00am on Thursday 28 March 2019
at 10 Bonhill Street, London, EC2A 4PE for the following purposes:
Ordinary business
1
To receive and adopt the annual report for the year ended 30 September 2018.
2
3
Anthony Simmonds retires by rotation.
To re-appoint BDO LLP as auditors of the Company to hold office, from the conclusion of this meeting until the conclusion of the next general
meeting at which accounts are laid before the Company, at a remuneration to be fixed by the directors.
Special business
4
That the directors be and are hereby generally and unconditionally authorised for the purposes of section 551 of the Companies Act 2006 (the
‘Act’) to exercise all powers of the Company to allot shares in the Company up to an aggregate nominal amount of £826,068 to such persons
and upon such conditions as the directors may determine, such authority to expire at the conclusion of the next annual general meeting of the
Company save that the Company may before such expiry make an offer or agreement which would or might require shares in the Company to
be allotted after such expiry and the directors may allot shares in the Company in pursuance of such an offer or agreement as if the authority
conferred hereby had not expired.
5
To propose as a special resolution that the directors be and are hereby empowered pursuant to section 570 of the Act to allot shares in the
Company up to an aggregate nominal amount of £165,214 for cash pursuant to the authority conferred by resolution 6 above as if section 561 of
the Act did not apply to such allotment, such authority to expire at the conclusion of the next Annual General Meeting of the Company save that
the Company may before such expiry make an offer or agreement which would or might require shares in the Company to be allotted after such
expiry and the directors may allot shares in the Company in pursuance of such an offer or agreement as if the authority conferred hereby had not
expired.
By order of the Board
Beverley Wright, Company Secretary
29 January 2019
Registered office: 10 Bonhill Street, London, EC2A 4PE
Notes
1
Any member entitled to attend and vote at the meeting may appoint another person, whether a member or not, as their proxy to attend and, on a
poll, to vote instead of them. A form of proxy is enclosed for this purpose and to be valid must be lodged with the Company’s registrars together with
any power of attorney or other authority under which it is signed, not less than 48 hours before the time appointed for the meeting. Completion
and return of the form of proxy will not preclude a member from attending and voting at the meeting.
2
In accordance with regulation 41 of Uncertificated Securities Regulations 2001, the Company gives notice that only those shareholders entered on
the register of members at 6:30pm on Tuesday 26 March 2019 (the ‘Specified Time’) will be entitled to attend or vote at the meeting in respect
of the number of shares registered in their name at that time. Changes to entries on the register after the Specified Time will be disregarded in
determining the rights of any person to attend or vote at that meeting. Should the meeting be adjourned to a time not more than 48 hours after
the Specified Time, that time will also apply for the purpose of determining the entitlement of members to attend and vote (and for the purpose
of determining the number of votes they may cast) at the adjourned meeting. Should the meeting be adjourned for a longer period then to be so
entitled members must be entered on the register at the time which is 48 hours before the time fixed for the adjourned meeting or, if the Company
gives notice of the adjourned meeting, at the time specified in the notice.
Explanatory note to resolution 5
Section 84 of The Small Business, Enterprise and Employment Act 2015 with effect from 26 May 2015 prohibits UK companies from issuing bearer
shares regardless of whether they are permitted to do so in there Articles of Association. The Company is therefore proposing to delete these
redundant provisions from its Articles of Association.
90
91
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
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 and The Financial Times 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 6DA - 0371 384 2030 (lines are open 8.30am to 5.30pm,
Monday to Friday excluding public holidays in England and Wales). Callers from outside the UK should dial +44 (0)121 415 7047.
The website is www.equiniti.com.
Equiniti also provides a website which enables shareholders to view up to date information about their shareholding in the Company at www.share-
view.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, 67/68 Jermyn Street, London, SW1Y 6NY - 020 7930 3737 - www.sharegift.org.
92
AUKETT SWANKE GROUP PLC / ANNUAL REPORT AND ACCOUNTS 2018
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