&annual
report
accounts
2020
AUKETT SWANKE GROUP PLC
1
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 COVER / INSIDE COVER:
EQ, BRISTOL
Aukett Swanke provides design services,
focusing on architecture, master planning,
and interior design with specialisms in
executive architecture and associated
engineering services.
The practice designs
and delivers
commercial projects throughout the United
Kingdom, Continental Europe and
the
Middle East.
We are an award-winning architecture and
interior design practice. Our 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.
With over 60 years of professional
experience, we have a network of more
than 300 staff in 11 locations 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.
2
1
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 our
studio
locations
london
abu dhabi
al ain
berlin
dubai
frankfurt
istanbul
moscow
prague
tunbridge wells
Aukett Swanke Ltd / Veretec Ltd
10 Bonhill Street
LONDON EC2A 4PE
United Kingdom
T +44 (0)20 7843 3000 / 3199
london@aukettswanke.com
london@veretec.co.uk
Shankland Cox Ltd
Al Saman Tower, Office No 1407
Hamdan Street
PO Box 44396
ABU DHABI
United Arab Emirates
T +971 (0)2 671 5411
abudhabi@shanklandcox.com
Shankland Cox Ltd
ADNIC Building, Office No M03
Zayed Bin Sultan Street
PO Box 80670
AL AIN
United Arab Emirates
T +971 (0)3 766 9334
info@shanklandcox.com
Aukett Swanke Architectural Design Ltd
Sidra Tower, Office No 1405
Sheikh Zayed Road
PO Box 616
DUBAI
United Arab Emirates
T +971 (0)4 369 7197
dubai@aukettswanke.com
2
key
international
people
LUKE SCHUBERTH
Managing Director -
UK
SUZETTE VELA BURKETT
Managing Director -
UK
NICK PELL
Interior Design Director -
International
TOM ALEXANDER
Director
Aukett Swanke
K
U
KEITH MORGAN
Managing Director
Veretec
JAMES ATHA
Director
Veretec
GORDON MCQUADE
Director
Veretec
STEPHEN EMBLEY
Managing Director -
Middle East
PAULA MCKEON
Finance Director
Middle East
SUBRAYA KALKURA
Director
John R Harris & Partners
YOUSSEF FAKACH
Director
Shankland Cox
OMID ROUHANI
Director
Aukett Swanke
Architectural Design
Y
E
K
R
U
T
LARISA LIGAY
General Director
Moscow
MAXIM NERETIN
Director - Aurora
Moscow
TOM NUGENT
Director
Moscow
BURCU SENPARLAK
General Manager
Istanbul
ZEYNEP ORBERK
Director
Istanbul
H
C
E
Z
C
C
I
L
B
U
P
E
R
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
E
L
D
D
M
I
T
S
A
E
E
P
O
R
U
E
L
A
T
N
E
N
I
T
N
O
C
3
Aukett sro
Janáčkovo nábřeží 471/49
150 00 PRAGUE 5
Czech Republic
T +420 224 220 025
aukett@aukett.cz
Aukett Swanke OOO
3 Malaya Polyanka Street
MOSCOW 119180
Russia
T +7 (499) 238 37 29
moscow@aukettswanke.ru
Aukett Swanke Group Plc
1 Lonsdale Gardens
TUNBRIDGE WELLS
Kent TN1 1NU
T +44 (0)20 7843 3000
plcenquiries@aukettswanke.com
John R Harris & Partners
Sidra Tower, Office No 1308 & 1309
Sheik Zayed Road
PO Box 31043
DUBAI
United Arab Emirates
T +971 (0)4 286 2831
dubai@johnrharris.com
Swanke Hayden Connell Mimarlik AS
Esentepe Mahallesi Kore Şehitleri Caddesi 34/6
Deniz İş Hanı
34394 Zincirlikuyu
ISTANBUL
Turkey
T +90 212 318 0400
istanbul@aukettswanke.com
Aukett + Heese GmbH
Budapester Strasse 43
10787 BERLIN
Germany
T +49 (0)30 230994 0
mail@aukett-heese.de
Aukett + Heese Frankfurt GmbH
Gutleutstrasse 163
60327 FRANKFURT AM MAIN
Germany
T +49 (0)69 2475277 0
mail@aukett-heese-frankfurt.de
A
I
S
S
U
R
Y
N
A
M
R
E
G
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
NICHOLAS THOMPSON
Chief Executive Officer
ANTONY BARKWITH
Group Finance Director
& Company Secretary
ROBERT FRY
Executive Director &
Managing Director -
International
BEVERLEY WRIGHT
Director of Corporate
Finance & Strategy
E
V
I
T
U
C
E
X
E
T
N
E
M
E
G
A
N
A
M
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 • ANGLO AMERICAN DE BEERS •
ARLINGTON • ARUP • ASCOT UNDERWRITING • AVGUR ESTATE
• AVIVA • AXA • AZZEDINE ALAIA BAKER MCKENZIE • BANK
OF AMERICA MERRILL LYNCH • BANK OF MOSCOW • BAT-RUSSIA C+T
GROUP • BATIKENT 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 • CEG /
CENGIZ HOLDING • CENTRAL PROPERTIES • CHROME HEARTS •
CIN LASALLE • CISCO • CITY OF LONDON ACADEMY • COFUNDS
• COMSTRIN • CEG / 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
our
clients
include . . .
• DB SCHENKER • DECATHLON • DELOITTE • DEUTSCHE BANK •
DIMENSION DATA • DGV CONSULTING • DOĞUŞ GYO • DONSTROY
• DU • DUNHILL EASTMAN GROUP • EDE & RAVENSCROFT
• EMAAR HOSPITALITY GROUP LLC • EMLAK KONUT • ENDURANCE
ESTATES • EO ENGINEERS OFFICE (DUBAI) • EQUA BANK • ERNST
& YOUNG • ER YATIRIM • ETHICAL PROPERTY COMPANY • ETISALAT
• EUROFINANCE BANK • EXTENSA • EXXON MOBIL 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
LONDON • INCE GORDON DADDS • 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’SVMOLSON 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 YATIRIM • ROVNER INVESTMENT GROUP
• ROYAL BANK OF SCOTLAND • ROYAL EXCHANGE • ROYAL LONDON
• RUBLEVO-ARKHANGELSKOYE • RUSHYDRO • RWE NPOWER SAB
MILLER • SAFESTORE • SANOFI • 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 KATILIM
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
Directors’ biographies
Five year summary
Corporate information
Chief Executive’s Statement
Financial Review
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
Notes to the financial statements
Shareholder Information
4
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
11
12 - 13
14
14
15 - 17
18 - 21
22 - 24
25 - 29
29
30 - 34
35
36
37
38
39
40
41
42
43 - 87
88
5
contents news
&comment
New website for Aukett Swanke Group Plc
In December 2020 we were proud to announce the launch of a new website for Aukett Swanke Group Plc at
www.aukettswankeplc.com
New banking relocation to Istanbul
This year we are placed at 54th in the
Building Design 2021 World Architecture 100
League Table, up nine places from 2020.
WA100 is Building Design’s annual survey of the
world’s largest practices ranked by the number
of fee-earning architects they employ.
This also places us as the fifth largest UK
registered practice on the table and one of only
14 UK practices to appear in these rankings.
Appointment of new
Associate Director
We welcome Dominic Mayer who
has recently joined the Veretec
team as Associate Director.
He is an architect with over 20
years of experience and has
worked on a wide range of
building typologies, specialising
in large-scale residential and
workplace schemes as well as
recreation and leisure facilities.
EQ breaks ground in Bristol
Aukett Swanke’s 200,000sqft EQ development for CEG in the heart of Bristol
City Centre broke ground on the main construction phase in December 2020,
becoming the largest speculative office development currently underway in
the south of England.
Raising the bar in terms of quality, occupant wellbeing and sustainability -
targeting a BREEAM ‘Outstanding’ rating - EQ will provide occupier amenities
such as a rooftop bar, restaurant and business lounge with communal
terrace, ground floor café kitchen, 50 seat auditorium, fitness suite, break out
space and more than 260 cycle spaces, in excess of industry standard.
Luke Schuberth, Aukett Swanke Managing Director - UK is pictured (right) at
the event with the Mayor of Bristol Marvin Rees.
Swanke Hayden Connell Mimarlik, our Turkish studio, continues to play an important role in facilitating financial and
banking sector relocations from Ankara, led by the Central Bank of Turkey.
Vakifbank is the 3rd largest bank in Turkey with over 400bn TL of assets. The recent appointment to design Vakifbank’s
HQ interiors in the Istanbul Financial Centre is our second relocation project for this client and builds on a long tradition
of serving the financial community that began in the 1990s with major architectural high-rise projects for both Isbank and
Sabanci Bank.
The project comprises 60,000sqm of accommodation including offices, executive areas, meeting rooms, lounge areas,
training facilities, cafeteria and other social support functions.
Award for Veretec project
40 Beak Street in London’s West End has been announced winner
of the Workplace Exterior category at the 2021 Surface Design
Awards. Veretec collaborated with Stiff + Trevillion during the
detailed design and construction stages of this new flagship studio
and private art complex for Damien Hirst.
This beautiful façade displays intricate artwork by Lee Simmons
along the cornice and around the chamfered corner together
with high quality glazed bricks with over 100 bespoke specials
manufactured in Holland. These materials were 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. We are delighted that 40 Beak Street
has bagged yet another deserving award.
6
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
7
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
news
&comment
German Resilience
ROBERT FRY
During a decade when most developed European economies have struggled to achieve any significant growth the
German economy has proven remarkably resilient in an era of global turbulence. Led by Chancellor Angela Merkel
through four terms of office since 2005 in coalition governments of varying composition, Germany has negotiated a
course through the aftermath of the global financial crisis, a European migration crisis and now the ongoing Covid
pandemic to lead the beginning of what is hoped will become a more general economic recovery in Europe.
The construction sector has remained very robust over the last few years and has held up well during the pandemic
and is expected to remain strong throughout 2021. Confidence therefore remains in the construction sector boosted
by a rebound in manufacturing at the end of 2020 against a broader background of virus restrictions and falling
unemployment in sharp contrast to the contracting economies of France and Spain.
This economic backdrop is borne out by the performance of our joint venture studios in Berlin and Frankfurt, which
have been consistently profitable over the last three years with their revenues and profits increasing year on year and
mirroring the German economy as a whole. Their order books for 2020/21 are at the same level as they were pre-
Covid seemingly shrugging off any pandemic impact.
From a project perspective the quality and profile of work being undertaken by these studios remains of the highest
quality and significance. The Berlin studio has completed the Haus an der Dahme apartment building, started the
design of the Bahn Tower @ Sony Centre refurbishment and the site stages of the Edge East Side tower, set to be the
tallest building in Berlin, pre-let to Amazon.
EDGE EAST SIDE TOWER, BERLIN
(image ©EDGE)
MESSETURM, FRANKFURT
Frankfurt completed the Sparda Bank façade renovation and fit outs for Allergan and a leading international technology
company, the latter alongside base building upgrades in the iconic Messeturm building. Ongoing projects include
office fit outs for Commerzbank on their Cielo Campus in collaboration with the Berlin studio.
In overall terms, amid the prevailing turbulence globally, the German story remains one of
continued success, stability and resilience, factors which we hope will emerge positively
across the other studios and economies served by the Group.
8
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
9
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
Financial
highlights
United Kingdom and Middle East results down but Continental
Europe up significantly
Revenues - surge in coronavirus cases led to sharp decline in
revenues in second half (April to September) down 42% (H2 2020:
£4.79m, H2 2019: £8.19m)
Profit before tax – focus on costs contained loss before tax to a
creditable £46k (2019: profit £292k)
Cash – cash preserved through cost focus above and restructuring
of loan payments, with net funds of £837k at 30 September 2020
(2019: £820k)
Structural reorganisation through remote working and reduced
number of Middle East licences and office
“
The past year has confronted us with a succession of constantly changing
problems as Governments around the world have moved the goal posts
according to fluctuating circumstances, and responses of clients have
similarly varied. We have continued our efforts to contain costs whenever and
wherever possible whilst maintaining the quality of service our clients expect.
The net result is considerably better than one might have expected.
The current year started with revenues below our expectations due to further
project delays and below average enquiries, accordingly we expect to make a
loss in H1. However, increased levels of enquiries and notable project wins since
December have improved our order book and the potential for recovery in H2.
Nicholas Thompson
Chief Executive Officer
Raúl Curiel - Chairman
17 February 2021
Chairman’s Statement
This is my second year as Non-Executive Chairman, and there is no escaping the fact that it
has been dominated by the worldwide impact of the pandemic that evidently has affected every
family, every economy and every business in the world.
I would like to express my personal gratitude to all of our management and staff for the
considerable efforts that they have made to minimise the impact of this pandemic and to
explore more creative and imaginative ways to maintain and, where possible, expand our range
of services.
As a global business, we are well accustomed to dealing with circumstances that vary from
country to country and region to region; governments have reacted to this global crisis very
differently, with policies often changing from day to day. Our Directors and staff have worked
tirelessly to manage all of these factors and they have swiftly adapted to working remotely
without losing their invaluable team spirit.
Given these multiple challenges, I am delighted that the outcome this year is genuinely
creditable and better than anyone could reasonably have expected: a loss before tax of only
£46k (2019: profit £292k).
Looking forward to a recovery from this pandemic governments everywhere will be striving to
see their economies prosper once again. With our projects continuing and new commissions
being added we remain focused on maintaining our quality of service by adapting to changing
circumstances and until a more sustained market is evident.
I fully expect the Group to continue to build on the progress made in the last financial year as
the impact of pandemic starts to recede and that continued improvement to be reflected in the
Group’s valuation.
John Bullough, who has been an active non-executive director for 6 years, has decided to
retire from the board at the conclusion of the Annual General Meeting. I would like to take this
opportunity to thank John for his many years of hard work and commitment and wise counsel.
Therefore, in spite of the current market conditions, I look forward to the remainder of 2021
and beyond with great confidence.
10
10
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
11
Board of
Directors
Raúl Curiel
Non Executive Chairman *+ #
BA(Hons) MArch Aged 74
Raúl’s extensive career as a professional architect spanned some 40 years before his retirement from Aukett
Fitzroy Robinson in 2015. During this period, he delivered over 300,000sqm of space in Central London,
throughout the rest of UK and internationally, specialising in the design of large-scale Corporate Offices,
Business Parks and Master Planning.
As well as a practising architect, he has been Chairman of Fitzroy Robinson, European Managing Director of
its successor Aukett Fitzroy Robinson, and subsequently a non-executive director of the Group until 2010.
He was appointed Non-executive Group Chairman in 2019.
Nicholas Thompson
Chief Executive Officer #
BSc(Hons) MBA Aged 66
Nicholas became Group CEO in 2005 and has over 35 years of experience in property and consulting
organisations; twenty-six 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. 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. In 2015 he became a non-executive director of the Wren Insurance Association
Limited, a mutual Insurer for architectural practices. Nicholas is responsible for implementing the Group’s
strategy.
Antony Barkwith
Group Finance Director & Company Secretary ^
FCA MPhys(Hons) Aged 40
Tony is the Group Finance Director of Aukett Swanke Group Plc. He joined the Group in November 2018 as
Group Financial Controller, was promoted to Group Finance Director (non-Board) in April 2019 and was
subsequently appointed to the Board on 9th July 2019.
Tony is a Chartered Accountant, having qualified with BDO LLP, and has a master’s degree from the
University of Warwick. He was previously Group Financial Controller for Advanced Power, an international
power generation developer, owner and asset manager, working there from 2010 until 2018.
BOARD COMMITTEES
* Member of the Audit Committee chaired by Clive Carver
+ Member of the Remuneration Committee chaired by John Bullough
# Member of the Nomination Committee chaired by Raúl Curiel
^ Member of the Internal Controls and Risk Committee chaired by Clive Carver
John Bullough
Non-executive Director *+ #
FRICS Aged 70
John joined Aukett Swanke as a non-executive director in June 2014. He has over 45 years of international
experience in property development and investment. Following 18 years with Grosvenor, John joined
ALDAR Properties PJSC in Abu Dhabi and was their Chief Executive until November 2010.
He is a Fellow of the Royal Institution of Chartered Surveyors and is a past president of the British Council
of Shopping Centres.
Robert Fry
Executive Director & Managing Director - International ^
BA(Hons) DipArch MA RIBA Int’l AIA Aged 64
Robert was appointed to the Aukett Swanke Group Plc Board in March 2018, retaining the role of Managing
Director - International. He graduated with a diploma and master’s degree in Architecture from Sheffield
University becoming a qualified Architect during his 6-year career with Milton Keynes Development
Corporation. In 1987 Robert became a founding member of Swanke Hayden Connell’s London office
joining its Board in 2002, becoming Managing Director of the UK and Europe group in 2005.
His 35 years of property and construction experience covers many sectors in the disciplines of master
planning, architecture, interior design and workplace consulting. He now plays a key role in evaluating
ASG’s businesses and senior management teams, mergers and acquisitions and corporate governance
initiatives across all geographic locations and works closely with the CEO and GFD in the development of
the Group’s operational strategy.
Clive Carver
Non-executive director +*#^
FCA FCT Aged 60
Clive joined the board in May 2019. He is the Chairman of AIM listed Caspian Sunrise PLC and executive
chairman and CFO of soon to be relisted Airnow PLC. He is an experienced AIM non-executive director
who spent 15 years as a Qualified Executive with a number of City broking firms and was until 2011 Head
of Corporate Finance at finnCap. He qualified as a Chartered Accountant with Coopers & Lybrand and has
worked in the corporate finance departments of Kleinwort Benson, Price Waterhouse, Williams de Broe
and Seymour Pierce. He is also a qualified Corporate Treasurer.
12
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
13
Five year summary
Years ending 30 September
2020
£’000
2019
£’000
2018
£’000
2017
£’000
2016
£’000
Total revenues under management1
28,534
31,505
31,950
34,583
30,379
Revenue
12,166
15,492
14,380
18,395
20,841
Revenue less sub consultant costs1
11,336
13,711
13,094
16,070
18,410
(Loss) / profit before tax
Basic earnings per share (p)
Dividends per share (p)
Net assets
Cash and cash equivalents2
Secured bank loans
Net funds3
(46)
0.00
-
4,374
992
(155)
837
292
0.21
-
4,514
1,145
(325)
820
(2,544)
(1.42)
-
4,136
710
(553)
157
(325)
(0.20)
-
6,761
960
927
0.47
0.18
7,189
1,839
(776)
(1,049)
184
790
1 Alternative performance measures, refer to page 21 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
Antony Barkwith
cosec@aukettswanke.com
Registered number
England & Wales 02155571
Share registrars
Equiniti
www.equiniti.com
0121 415 7047
Auditors
BDO LLP
www.bdo.co.uk
Registered office
10 Bonhill Street
London EC2A 4PE
Website
www.aukettswankeplc.com
Nominated adviser and broker
Arden Partners Plc
www.arden-partners.com
Bankers
Coutts & Co
www.coutts.com
Investor / Media enquiries
Chris Steele 07979 604687
Solicitors
Payne Hicks Beach www.phb.co.uk
Fox Williams www.foxwilliams.com
Chief Executive’s Statement
Navigating our way through a pandemic is not a common occurrence in the commercial world and so we, like every other business, had to quickly
adapt our organisation and services provision to a set of unknown factors with uncertain consequences. It has been no mean feat to stem the potential
losses that we faced in the second half and the outcome of a loss just below breakeven at £46k for the year is a quite remarkable result under these
circumstances. Both I and my co-Directors are grateful to all those in the Group who have contributed to this outcome.
At the interim stage we had achieved a small but important continuation to our profit recovery. This recovery was left very much in doubt as the
impact of the COVID-19 worldwide pandemic took hold. We said at that time that COVID-19 created an uncertain future and that we would adapt our
operations as best we could. This has largely been achieved through remote working and reduced office occupancy levels where appropriate but,
with the increasing number of project delays through specific gateways (planning to technical drawings and onto construction) and the unpredictable
nature of localised lockdowns and new regulations, some disruption has, predictably, occurred to the decision-making process required to transition
across these gateways. Because of this we were unable to match the full reduction in the revenue loss arising from such delays in the second half with
equivalent cost reductions. This final result achieved is even more satisfying given this unprecedented background.
n Group Performance
This year is a tale of two halves.
The first half saw a growing revenue line and a return to profitability. This follows on from 2019 where the Group returned a profit in the second
half. However, having initially contained the impact of the COVID-19 pandemic in the first half of our year, successive months in H2 2020 saw a steady
deterioration in top line revenues with a consequent impact on profit. Revenues for the year as a whole fell by £3.32m (21%) to £12.17m (2019:
£15.49m) which was entirely in the second half. Our short-term cost controls and expense avoidance managed to mitigate this to a marginal loss for the
year at £46k (2019: profit £292k).
The UK operation continued to produce a profit before the allocation of central costs, and the Middle East incurred a small loss, whereas our Continental
Europe operations went from strength to strength. Both the UK and Middle East were impacted by delays through decision gateways whereas the
Continental European operations did not see such immediate impasses to the progress in their projects.
On a brighter note we managed our cash balances well with group wide cash balances at the year-end standing at £992k (2019: £1,145k) After deducting
the final balance due on the Group’s long term loan, net funds stood at £837k (2019: £820k). This provides us with some comfort in the months ahead
given the apparent longevity of the COVID-19 pandemic, at least until the current vaccination programme successfully takes hold.
n United Kingdom
Second half revenues stalled as client gateways became more difficult
to cross, resulting in the small increase in revenues seen in H1 being
reversed in H2. Revenue ended the year at £7.11m (2019: £7.45m) and
loss before tax (including management charges) at £282k (2019: £89k),
whilst profit before group management charge fell to a respectable
£214k (2019: £451k) given the impact of wider events.
Although the pandemic had a negative effect on the transition through
project gateways there were many projects where considerable
progress was made and we are able to report no cancellations due to
COVID-19.
Particular project highlights during the year have been: Birmingham
City University’s STEAMhouse at Eastside Locks and our £60m EQ
headquarter building in Bristol, both of which are now on site; site
progress with the Asticus Building in London’s West End; a new office
planning application comprising 290,000sqft in Wimbledon for M&G
and Bell Hammer, following a competition win earlier in the year; and
a number of hybrid scheme rollouts including the formal position of
Hybrid Architect at Highams Park in London for 400 residential units
and 85,000sqft of industrial space. We have also seen an increase in
the number of Life Sciences buildings. STEAMhouse, EQ and Asticus
also include our workplace consultancy services. In addition, we won
our first overseas hybrid scheme for a major oil and gas company in
Moscow’s Skolkovo development area.
STEAMHOUSE, EASTSIDE LOCKS, BIRMINGHAM
EQ. BRISTOL
14
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
15
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 THE FEATHERSTONE BUILDING, LONDON EC1
DU TELECOM, AL QUDRA
ETISALAT RETAIL STORE
In our specialised delivery group, Veretec, it is pleasing to report that there were no project
cancellations. However, there were a number of temporary suspensions, together with
construction delays for projects on site to establish new COVID-19 social distancing and hygiene
solutions following the lockdown in March 2020.
We only saw new onsite instructions starting to come through towards the end of the financial year
when the lockdown restrictions were lifted, which will benefit 2021 but, obviously, not the current
result. Two larger commissions have been contracted during H1.
Key projects around London include Featherstone Building, Old Street; Nova East, Victoria; 1
Museum Street, Holborn; Hawley Wharf, Camden and Carey Street Spitalfields where we were
the executive delivery architect, together with ongoing technical design audits.
Although we did not experience any major losses in operational efficiency it became clear, after
a few months of remote working, that some project team work would benefit from personal
contact (such as design reviews and the detailed review of drawings) and as a result the office
was re-opened, on a voluntary attendance basis, in July as restrictions were lifted. However, new
restrictions have been introduced since the year end that essentially retain the remote working
requirement for the time being.
n United Arab Emirates
Whilst the statistics on COVID-19 were less in the UAE than in say, Europe, the restrictions imposed
were much harsher. Initially this had a negative effect on the design side of the business with
virtually all jobs stalling or being terminated and no news ones being evident in our marketplace.
Construction sites remained open but any positive COVID-19 test on site staff resulted in immediate
closure and a discontinuous service profile. As a result, revenue fell sharply in H2 to end the year
on at £4.82m (2019: £7.52m) a year on year fall of 36%. Whilst management implemented a
combination of short-term cost reductions primarily through payroll and permanent operational
savings which are further described in the financial review, this effectively eliminated any
possibility of a profit, hence a final loss of just £23k (2019: profit £525k) at pre management
charge level is a good result.
The team in the UAE retain a strong local market position with a number of clients where their
services are regularly sought. This has led to the current commissions from T&T (as project
manager) Du telecom; Etisalat with their retail and stores and business centres; WSP on a number
of detailed design and site based projects; DCT in Al Ain with the historic building stock such as Al
Ain Museum and Sheikh Khalifa House. On a more individual project basis we have continued to
receive additional instructions on the landmark Atlantis, The Palm hotel refurbishment, the Expo
2020 site and Imkan and Miral in Abu Dhabi, as well as from high net worth individuals in the
region.
We started to see new enquiries coming through in the latter months of the year, with some larger
projects being evident. However, until the vaccine is widely available with more positive sentiment
being evident we see the market as generally flat.
n Continental Europe
This hub comprises one wholly owned subsidiary, two joint ventures and an associate plus a
former wholly owned subsidiary in Russia operating under a licensee arrangement. Revenue and
costs for the partly-owned entities are not included in revenue or costs in the Consolidated Income
Statement; in line with the use of the equity method of accounting only the after-tax result is
included in Group income statement.
The hub has been by far the best performing hub this year with profits of £657k (2019: £495k).
The main contributor was again Berlin which seemingly shrugged off the pandemic as did its sister
company in Frankfurt. The smaller operations in Istanbul and Prague both had positive years with
Prague having its best year for over ten years.
Projects this year by the Berlin office included the completion of the Haus an der Dahme apartment
building, the design start for the refurbishment of the Bahn Tower at the Sony Centre and the start
on site of the Edge East Side tower, set to be the tallest building in Berlin, pre-let to Amazon.
In Frankfurt completions include the Sparda Bank façade renovation and fit-outs for Allergan and
a leading international technology company, the latter in the iconic Messeturm building. Projects
soon to complete include office fit-outs for Commerzbank on their Cielo Campus in collaboration
with the Berlin office.
Prague project completions include the fit-out of Swarco’s offices, the design stages for the WPP
Bubenska and Exxon Mobil HQ fit-out projects and the ongoing site stages for the refurbishment
of the Trikaya OC Repy shopping centre and DB Schenker Logistics building extension.
Turkey had a positive year and the resilience of the corporate sector precipitated new fit-out
projects for LC Waikiki and Google, and the completion of an architectural refurbishment project
for the Turkish Chamber of Commerce TUSIAD Enka in Istanbul. Several follow-on projects to create
COVID-19 safe working environments were also completed for Google and Allianz in Istanbul and
VM Ware in Bulgaria. Architectural designs were completed for new housing and villa types in
Erbil, Iraq, due to start on site in 2021.
The Moscow office completed several concept designs for mixed use projects in Moscow, Tumen
and the Krasnodar region, and collaborated with the London studio on a significant education
centre and a private residence project in the Moscow region. The Moscow operation’s first year as
a licensee business has made a positive contribution to Group revenues.
n Group Costs
Central expenditure continued to be kept under tight control during the second half and reduced
through salary savings, travel avoidance and minimising overhead spending. This was aided by
the reversal of a significant accrual that had been provided for a significant one-off event but
having been evaluated as at the year end, is no longer considered sufficiently probable to warrant
retention in the books. This reduced net Group Costs by 24% or £285k against the prior period
spend of £1.18m.
n Going Concern
As noted at the beginning of this statement, COVID-19 has created a level of uncertainty for the
future. With project delays and disruption continuing after the year end and into 2021, we expect
increased challenges on our working capital position over the next 12 months.
We begin each financial year needing to win new work and this next year is no different.
We typically bid for a large number of projects and have an enviable and consistent track record of
winning more than our fair share. The position is no different in the current financial year except
that the impact of COVID-19 makes it more difficult to predict the number of projects sent out to
tender and more importantly the timings on the projects we win. To date we have managed this
risk by controlling costs and remaining close to our clients.
The board has a reasonable expectation that the Group will have adequate resources to operate
for the foreseeable future, however we face the usual uncertainties that occur in our market
regarding the future levels and timing of work that are made by client decisions which are beyond
our control.
The going concern statement in the Directors report and corresponding section in note 1 provide a
summary of the assessments made by the directors to establish the financial risk to the Group over
the next 12 months. This is further supplemented by the principal risks and uncertainties section
in the strategic report.
SWARCO, PRAGUE
VMWARE, SOFIA
MIXED USE DEVELOPMENT, TUMEN, RUSSIA
n Summary and Outlook
2020 could have been so much better. We had every expectation of a return to profit from prior year losses, over the full year, but only managed this
for the first six months. The loss in the second half is a direct result of COVID-19 issues.
The 2020-21 financial year has started with revenues below our expectations due to further project delays through client gateway decisions and below
average enquiries, accordingly we expect to make a loss in the first half. However, increased levels of enquiries and notable project wins since December
have improved our order book and the potential for recovery in the second half.
On behalf of the Board
Nicholas Thompson
Chief Executive Officer
17 February 2021
16
HAUS AN DER DAHME, BERLIN
17
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 Financial review
The headline financial results of the Group were:
Total revenues under management1
Revenue
Revenue less sub consultant costs1
Net operating expenses
Other operating income
Net finance costs
Gain on disposal of subsidiary
Share of results of associate and joint ventures
(Loss) / profit before tax
Tax credit
(Loss) / profit for the year
455
(112)
52
442
(46)
26
(20)
371
(42)
-
382
292
40
332
1 Alternative performance measures, refer to page 21 for definition
Revenues for the year were £12.17m, a decrease of 21.5% on the previous year (2019: £15.49m). Similarly, revenues less sub consultants decreased to
£11.34m (2019: £13.71m), a 17.3% decrease. Subconsultant costs decreased from £1.78m last year to £0.83m. Each of the Group’s hubs experienced
a fall in revenue. While the UK limited its decrease to 4.7%, and the Continental Europe decrease was anticipated (following the sale of the Russian
subsidiary in October 2019 generating a profit on disposal of £52k in the process), the Middle East felt the greatest impact of economic slowdown with
revenues falling by 35.9% (revenue less subconsultant costs down by 30.1%).
Operating expenses in the year were reduced by £1.91m, of which £1.36m related to technical staff costs, 84% of which was from a combination of
permanent reductions in headcount and temporary salary reductions agreed with staff within the UAE reflecting the reduction in technical workload
and revenue. Indirect personnel expenses reduced £0.34m, of which £0.19m was in the UAE and £0.15m saved in Group central costs from temporary
salary savings, reduced travel and entertaining, and professional services. Further savings were made in the UAE on property costs as the UAE (£0.09m)
continued to consolidate its office location, and across the business as operations downsized through the COVID-19 pandemic in the second half of the
year.
Other operating income included £158k of government grants claimed on the UK furlough scheme, of which £133k had been received in cash by the
year end. The cash position through the second half of the year and at year end was further protected through a £227k UK VAT deferral which is due
to be repaid in instalments between March 2021 and February 2022, and a UK rent deferral of £139k to be paid monthly over the period January to
December 2021.
The Group adopted IFRS16 this year with no material net impact on the profit and loss account felt from the transition. The adjustments recognised on
adoption are detailed in note 34.
The result before tax was a loss of £46k (2019: £292k profit). The adverse performance compared to the prior year recognised the challenges in rescaling
fixed operating costs, and intermittent trading in the 2nd half of the year in the UAE and UK, as well as wider challenges to the UAE operation in levels of
construction investment in the region.
Taking account of a £26k tax credit, and loss attributable to non-controlling interests of £25k our profit after tax at £5k gives an EPS profit of 0.00 pence
per share (2019: 0.21 pence per share (profit)).
2020
£’000
28,534
12,166
11,336
2019
£’000
31,505
15,492
13,711
n United Kingdom
Revenue
Revenue less sub consultant costs1
FTE technical staff1
Net revenue per FTE technical staff1
Profit before tax (excluding Group management charges)1
Loss before tax (including Group management charges)
2020
£’000
7,106
6,990
69
101
214
(282)
2019
£’000
7,454
7,379
73
101
451
(89)
(12,219)
(14,130)
1 Alternative performance measures, refer to page 21 for definition
The UK’s revenue decreased 4.7% year on year. The year started strongly with earnings exceeding £4.09m in the first half of the year, driven by continued
growth in the Veretec executive architecture offering which generate revenue of £2.5m in the 6 months to March 2020. However the impact of economic
slowdown hit Veretec earnings significantly harder than Aukett Swanke Limited in the second half of the year as earnings reduced 41.5% to £1.5m.
Earnings also reduced in the second half of the year in Aukett Swanke Limited however this was limited to a reduction of 10.5%.
Staff numbers (FTE technical staff) grew to 80 by March 2020 before then dipping to a low of 54 in July 2020 and ending the year at 60. Staff numbers
were adjusted primarily through the release of agency and freelance staff on short notice periods, with some temporary utilisation of the UK government
furlough scheme for payroll employees. This agile response enabled the UK hub to maintain revenue at £100k per FTE for the full year, comparable
with the prior year result.
Whilst management took steps to limit the impact of lower earnings, much of the operating cost base is fixed in the costs of the London office, IT
infrastructure and insurances. Modest savings were achieved in day to day running costs, travel and discretionary spend and as a result the hub
recorded a result (excluding Group management charges) £237k down on the prior year (on revenues £348k lower).
n Middle East
Revenue
Revenue less sub consultant costs1
FTE technical staff1
Net revenue per FTE technical staff1
(Loss)/profit before tax (excluding Group management charges)1
Loss before tax (including Group management charges)
1 Alternative performance measures, refer to page 21 for definition
2020
£’000
4,823
4,122
52
79
(23)
(472)
2019
£’000
7,522
5,900
70
84
525
(69)
Revenues decreased 35.9% from £7.52m to £4.82m in the year, due to the effect of a general slowdown in construction investment in the region
combined with further economic contraction following the onset of the COVID-19 pandemic mid-way through the year.
Some of the large projects which had restarted in the prior year stalled or stopped completely, which included projects providing fees into all of the
region’s subsidiaries. With new opportunities more scarce, competitiveness on fees and onerous clauses being proposed on potential new contracts,
management undertook significant cost cutting measures both in direct technical staff costs by implementing permanent headcount reductions,
temporary reduced working hours and temporary salary reductions, and in the ongoing administrative, property and operational costs, with measures
to simplify the organisational structure and further consolidate and co-locate the entities’ operations into common buildings.
Average technical staff FTE numbers reduced to 52 (2019: 70) and net revenue per FTE technical staff dropped from £84k to £79k.
The reduction in revenue less subconsultant costs of £1.79m, meant that the hub registered a small loss before management charges, being £0.55m
down on the prior year.
18
19
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 n Continental Europe
Revenue
Revenue less sub consultant costs1
FTE technical staff1
Net revenue per FTE technical staff1
Profit before tax (excluding Group management charges)1
Profit before tax (including Group management charges)
Including 100% of associate & joint ventures
Total revenues under management1
Revenue less sub consultant costs1
FTE technical staff1
Net revenue per FTE technical staff1
1 Alternative performance measures, refer to page 21 for definition
2020
£’000
237
224
7
33
657
511
16,605
11,646
129
90
2019
£’000
516
432
13
33
495
351
16,529
10,140
116
87
Reported revenues, comprise the Turkey subsidiary (prior year Turkey and Russia). Turkey reported revenues for the year of £237k (2019: £261k),
however this decrease was attributable to the devaluation of the Turkish Lira across the period. In local currency revenue less sub consultant costs
actually increased by 13.4% to TRY 1.87m. With international clients and contracts denominated in USD and EUR, the subsidiary recorded further foreign
exchange gains and recorded a local profit (including Group management charges) of £25k.
The result before tax (including Group management charges), also including the joint venture and associate in Germany and the joint venture in the
Czech Republic, was a profit of £511k (2019: £351k).
Continental Europe’s result is materially dominated by the associate Berlin and joint venture in Frankfurt, which remained strong and profitable
throughout the year. They together contributed £418k (2019: £382k) profit (including Group management charges) to the Continental Europe result.
The Czech Republic also enjoyed a much stronger year with increased revenue and a Group share of profit at £25k.
While total revenues under management increased 0.5%, revenue less sub consultant costs increased 14.9%, as the mix of projects undertaken required
a lower share of third party technical support. Revenue less sub consultant costs increased in both operations in Germany and the Czech Republic with
each relatively unaffected by the economic impact of COVID-19.
Staff numbers increased to 129 from 116 due to growth across the entities, with steady income streams enabling improved efficiency and profitability.
As a result, earnings per FTE technical staff were improved at £90k (2019: £87k).
n Financing
Taking account of the year’s result, total equity is now £4.37m (2019: £4.51m).
Net funds (see note 21) at year end were marginally improved, being £837k (2019: £820k), comprising cash of £992k (2019: 1,145k), and the loan taken
out in respect of the acquisition of Shankland Cox Limited (“SCL”), which now stands at just £155k (2019: £325k).
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 was being repaid
in equal quarterly instalments of USD 80k over five years. During the year it was agreed with Coutts & Co to reschedule the final USD 240k balance into
monthly instalment payments of USD 20k from Aug-20 to July-21. This facility is also used by the Group to hedge foreign exchange exposures.
The Group’s overdraft facility from its bankers Coutts & Co was maintained at £500k throughout the year, continuing to provide working capital flexibility
and to support the UK business. This is renewable annually and currently remains in place until November 2021, with a review in May 2021.
The Group has four finance leases taken out by Aukett Swanke Limited to fund the purchase of fit-out costs of the London office in June & November
2018 which were capitalised as a tangible fixed assets (reclassified as right of use assets in the current year following adoption of IFRS16) and finance
lease liabilities. The lease liability as at 30 September 2020 was £207k (2019: £278k).
On adoption of IFRS16 the Group recognised a right of use asset and lease liability on the London office which was taken out on a 10 year lease to
May 2028. The impact on this change in accounting policy is disclosed in notes 14 and 34. The lease liability as at 30 September 2020 was £3,137k. The
office leases in the UAE and Turkey are all short term, and other leases in the Group are low value, therefore no IFRS16 capitalisation of these leases
has been made.
Throughout the year there has continued to be a 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 utilisation of the facility is expected to continue to be required
throughout the going concern period.
The Plc continues to act as the Group’s central banker, and it has sought to optimise the Group’s position by maximising cash 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.
n 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 two businesses: Veretec Limited and Aukett Swanke Limited. Veretec had been growing over the past few years, continuing that
trend through the first half of the 2019/20 financial year until the impact of a slowdown during the COVID-19 pandemic from April 2020. We consider
that to be a temporary slowdown and the company to rebound into the 2020/21 year growing back up to the levels of revenue and staff numbers
previously attained. Aukett Swanke Limited maintained a core stable team through much of the year with a smaller impact from COVID-19 as most
of its live projects continued through preconstruction phases.
• The Middle East adapted its strategy during the year. Previously Aukett Swanke Architectural Design Limited targeted 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. In the year 2019/20 these larger, long term projects largely stalled or stopped due to the economic challenges in the
region, and the hub focussed on winning smaller projects to maintain its core staff and capability. However the long term strategy remains the focus
of the business going forwards with the mix of larger, longer term projects giving a combination of more predictable revenue streams on which to
grow the business, balancing with the smaller projects so as not to be over reliant on a small number of key clients.
• Continental Europe remains mixed across the portfolio. The German businesses are strongest, and Berlin and Frankfurt have strong forward order
books continuing their levels of profitability. Turkey and the Czech Republic continue to try and build strength, with both enhancing their capability
to support other businesses in the Group.
n 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, and is disclosed on pages 18-20. As total revenues under management includes
revenue derived from subconsultants, this figure can vary significantly year on year depending on the nature of external expertise required on
individual projects as described on page 20. Consolidated Group revenue can be reconciled to total revenues under management by adding i) the
revenue of the associate disclosed in note 16; and ii) double the share of revenue in joint ventures disclosed in note 17;
• 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, and is discussed by segment on pages
18-20;
• Revenue less sub consultant costs being generated per full time equivalent (FTE) technical member of staff (‘net revenue per FTE technical 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 19 and 20;
• Result before taxation (excluding Group management charges), and result before taxation (including Group management charges), which are
further assessed on pages 18-20;
Cash at bank and in hand and net funds / (debt), which is assessed further on page 14.
The numbers of full time equivalent technical members of staff differ 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 19 and 20.
On behalf of the Board
Antony Barkwith
Group Finance Director
17 February 2021
20
21
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 Strategic report
The Directors present their Strategic Report on the Group for the year ended 30 September 2020.
n 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 and at the same time provides a pleasant and rewarding working environment for our staff. In addition, we undertake to deliver projects
throughout the technical drawing stages and, onto site and up to practical completion and handover.
Our markets are subject to cyclical and other economic and political influences in the markets in which we operate, which gives rise to peaks and troughs
in our financial performance. Management is cognisant that our business model needs to reflect these variable factors in both our decision making and
expectation of future performance. The recent pandemic, which affected all our operations, is an event that has required specific responses and creates
an uncertain outlook in terms of both continuity of project instructions and new business activity. However, the business and the component parts have
been through many sustained crises before and whilst losses have been incurred the business has been able to respond positively by adopting new
business models along with re-structuring the operational costs.
n Business Model
We operate through a ‘three hub’ structure covering: the United Kingdom with our office in London; the Middle East with offices in Abu Dhabi, Al Ain,
and Dubai; and Continental Europe with four offices in Berlin, Frankfurt, Istanbul, and Prague; along with a Licensee operation in Moscow. This model
has remained unchanged for several years.
The presentation of the results of our operations is at local, underlying, trading level and before the allocation of central costs in order to provide a level
playing field in terms of comparable performance across the hubs as many only incur a small management charge.
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 in the United Arab Emirates (“UAE”) comprises several 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 better placed to offer such a ‘one-stop shop’ service.
Our Continental European operations provide services offered that are consistent with the other two hubs. Entities within this hub can provide additional
drawing services to the larger operations in order to optimise both local and group wide resources.
Management of the operations is delegated to locally based Directors who are, in most instances, indigenous to the country with oversight on a regular
basis by the Group’s executive management.
As a Group we now have a total average full time equivalent (“FTE”) staff contingent of 291 (2019: 305) throughout our organisation which includes
both wholly owned and joint venture operations. We are ranked by professional staff in the 2021 World Architecture 100 at number 54= (2019: 2020
WA100 number 63=).
As stated above the pandemic created by COVID-19 has required us to adopt a series of measures to maintain our business envelope which we have
achieved through: remote and home working; voluntary attendance in the office; communication through a series of media tools; investing in Office
365, all of which has been achieved in each hub.
n 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.
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. With regards to Brexit,
now that the UK has left the EU with a trade and cooperation agreement in place, the UK has improved clarity on the future trading arrangements. In the
short term this improves business confidence to make operational and investment decisions, however there still remains some uncertainty in predicting
and quantifying the long term impact for the UK business.
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.
The effect of COVID-19 has driven political decisions on the grounds of public health and safety, which impacts the ability for both the Group and its
clients to operate, and for staff to travel; and economic grounds to reduce the long-term impact on the viability of companies and sustain jobs. Further,
this impacts clients’ decision making thereby influencing levels of property development activity. Whilst the lock-down measures imposed by the UK
government in 2020 and into 2021 demonstrated an ability to manage case levels, the easing of these measures highlighted how quickly case levels can
increase and stretch the UK health service’s ability to cope. Whilst the recent approvals of a number of vaccines is welcomed, it is too early to tell how
effective their roll out will be which makes the effect of the pandemic in the coming 12 months impractical to quantify.
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, IT 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.
The UK office lease rent free period which expired in May 2020 includes the option to further extend the rent free period for a further 4 months
subject to landlord approved installation of specific property improvements. The decision whether to undertake this work has been paused while
management undertake a thorough review of how the UK operation anticipates utilising the office space in the future. The UAE continued further property
rationalisation and simplification of local licenses to reduce ongoing fixed costs. The UK continues to maintain a balance in the mix of permanent vs.
contract and agency staff to give flexibility to respond to falls in revenue as was experienced during the year.
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 contracts assets (and consequentially higher levels of contract liabilities);
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 contract assets. Payment also tends to take longer in the Middle East.
The decline in revenue in the UK and the Middle East in the second half of the year tightened the free cash available to be remitted to the Plc by the
year end, which was partially offset by dividends received from the German joint Ventures. Further pressure on cash resources is anticipated through
the first half of 2021.
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 2020 renewed the Group’s overdraft facility until November 2021, 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 17 February 2021 of which is USD 120k.
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; and
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.
22
23
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 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 17 February 2021 and signed on its behalf by
Antony Barkwith
Group Finance Director
24
Directors’ report
The Directors present their report for the year ended 30 September 2020.
n Corporate governance
In accordance with AIM Rule 26 the Company is required to apply a recognised corporate code. The Board continued to adopt the QCA Corporate
Governance Code (2018) published by the Quoted Companies Alliance.
The QCA Corporate Governance Code (2018) comprises 10 Principles. We 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.
n 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 three independent non-executive directors who bring a wide range of experience and skills
to the Company.
The Board considers John Bullough, Clive Carver and Raúl Curiel 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.
n 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 Clive Carver, as Chairman, John Bullough and Raúl Curiel, 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.
n 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 three occasions. The
Committee comprises John Bullough, Clive Carver and Raúl Curiel 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.
n 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.
25
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 The Nomination Committee is chaired by Raúl Curiel with the other members being Nicholas Thompson, John Bullough and Clive Carver.
During the year the Committee reviewed the effectiveness of the Board and the matrix of its skill sets. It met on one occasion.
n Substantial shareholdings
At 17 February 2021 the Company had been informed of the following notifiable interests of three per cent or more in its share capital:
n 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 Clive Carver. Antony Barkwith and Robert Fry are also members.
n Directors
Antony Barkwith, John Bullough, Clive Carver, Raúl Curiel, Robert Fry and Nicholas Thompson all served as Directors of the Company throughout the
year ended 30 September 2020.
Biographical details of the current Directors are set out on pages 12 and 13.
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
Robert Fry
Antony Barkwith
Non-executive Directors
John Bullough
Raúl Curiel
Clive Carver
13
13
13
13
13
13
13
13
13
13
13
12
n Directors’ interests
Directors’ interests in the shares of the Company were as follows:
Number of ordinary shares
Nicholas Thompson
John Bullough
Raúl Curiel
Clive Carver
Antony Barkwith
Robert Fry
30 September 2020
30 September 2019
16,802,411
500,000
9,240,018
-
-
16,802,411
500,000
9,240,018
-
-
2,150,000
2,150,000
n 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. Antony Barkwith 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.
Shareholder
Notes
Number of ordinary shares
Nicholas Thompson
Director of the Company
Jeremy Blake
Andrew Murdoch
Begonia 365 SL
Raúl Curiel
Former employee of the Group
Former director of the Company
Controlled by a former director of the Company
Non-Executive Director of the Company
Stephen Atkinson
Former employee of the Group
John Vincent
Former director of the Company
16,802,411
13,030,638
12,478,486
9,515,192
9,240,018
7,634,922
5,791,394
Percentage of
ordinary shares
10.17%
7.89%
7.56%
5.76%
5.59%
4.62%
3.51%
n Share price
The mid-market closing price of the shares of the Company at 30 September 2020 was 1.60 pence and the range of mid-market closing prices of the
shares during the year was between 1.40 pence and 2.90 pence.
n 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.
n 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 72 ‘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 9 LEED (Leadership in Energy and Environmental Design) ‘Gold’
award and 5 ‘Silver’ awards.
26
27
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
n 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.
n Health and safety
The Group seeks to promote all aspects of health and safety at work throughout its operations in the interests of employees and visitors.
The Group has 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. Antony Barkwith 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.
n 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.
n Future developments
An indication of likely future developments in the business of the Group is contained in the Strategic Report.
n Financial instruments
Information concerning the use of financial instruments by the Group is given in notes 27 to 31 of the financial statements.
n Dividends
With the continuing pandemic and the uncertainty that this has on near-term trading along with the requirement to conserve cash flow, the Board does
not intend to pay a dividend in the forthcoming year.
n Going Concern
The impact of measures taken around the world to restrict the spread of the COVID-19 virus have had a significant impact to which the business has to
date stood up well.
Actions taken in the Spring and Summer of 2020, resulted in new working practices to allow existing projects to continue and to for the Group to
continue to bid for new work. The cost cutting actions taken also mitigated the financial impact of the above on the Group and the Group continues to
operate within its banking limits, with an anticipated breach of the debt servicing covenant having been waived prior to this occurring for the year ended
30 September 2020.
More details of the actions taken, and the results of forecasting performed by the Group in response to the COVID-19 pandemic are summarised in the
Going Concern section of note 1.
In addressing any going concern issues the Directors are required to consider likely cashflows over at least a 12 month period following the date of the
approval of the Financial Statements.
While the business is currently operating within its banking limits, should there be any material delays in projects under way or should the Group stop
winning its share of new projects there may be a need for further action.
At year end, the Group had net assets of approximately £4.4 million, and total current assets less current liabilities of approximately £0.5 million.
Based on forecasts prepared and reviewed for the period to 30 September 2022 the Directors have a reasonable expectation that the Group will
have adequate resources to continue in operational existence for the foreseeable future. However there remains a risk that in the current COVID-19
environment, the Group may find itself as the result of unexpected levels of delays on project work beyond its control or depending on the outcome of
overdraft facility renewals scheduled for November 2021, requiring additional financing.
For this reason, the Board considers it appropriate to prepare the financial statements on a going concern basis however given the lack of certainty
involved in preparing these cash flow forecasts, there is a material uncertainty which may cast significant doubt on the Group’s and the Parent Company’s
ability to continue as a going concern.
The financial statements do not include the adjustments that would result if the Group or the Parent Company was unable to continue as a going
concern.
n Annual General Meeting
Notice of the annual general meeting will be issued in due course and no later than 21 days before the Meeting is due to be held.
The Directors’ report was approved by the Board on 17 February 2021 and signed on its behalf by
Antony Barkwith
Company Secretary
Aukett Swanke Group Plc
Registered number 02155571
Statement of directors’ responsibilities
n 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 accounting standards in conformity with the requirements of the Companies
Act 2006. 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 AIM.
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 international accounting standards in conformity with the requirements of the Companies
Act 2006, 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 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.
n 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.
28
29
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 Independent auditor’s report
to the members of Aukett Swanke Group Plc
n 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 2020 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 changes in cash flows, the consolidated and company
statements of changes in equity and the 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 financial statements is applicable law and international accounting
standards in conformity with the requirements of the Companies Act 2006 and, 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’s and of the Parent Company’s affairs as at 30 September 2020 and of the
Group’s loss for the year then ended;
• the Group financial statements have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006;
• the Parent Company financial statements have been properly prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
n 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.
n Material uncertainty related to going concern
We draw attention to note 1 to the financial statements which indicates the Directors’ assessment of going concern. In the current COVID-19 environment,
the Group may find itself as a result of unexpected levels of delays on project work beyond its control requiring additional financing. As stated in note 1,
these events or conditions along with other matters as set out in note 1, indicate that a material uncertainty exists that may cast significant doubt on the
Group’s and parent company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.
We have highlighted going concern as a key audit matter based on our assessment of the significance of the risk and the effect on our audit strategy.
Our audit procedures in response to this key audit matter included:
• We agreed the forecasts to the plans agreed by the Board of Directors for approval, ensuring that the cash flow forecast and net funds represent an
accurate extraction of the future plans;
• Reconciled the opening cash position to the 30 September 2020 audited consolidated cash balance;
• Understood the relative contribution of the business segments to the Group’s going concern analysis and challenged the focus of the analysis on
the UK segment;
• Corroborated the secured and potential work pipelines to work performed on the value in use models and audit of contracts, challenging
Management as to any material post-year end variances in revenues and enquiring about the impact of any project delays in secured and potential
continuation work;
• Challenged the future revenue pipeline and enquired about the status of outstanding bids, agreeing to submitted proposal documents and newly
won contracts where appropriate;
• Checked the calculations used by Management in sensitising the base case cash flow model to the downside scenarios highlighted in note 1 to
confirm their mechanical accuracy;
• Considering the availability of the facility by challenging Management on conversations held with the Group’s bankers from the latest facility update,
in addition to auditing the assessment by Management of covenant sensitivity to the future forecasts and the impact therefore on retention of the
facility during the going concern period; and
• Challenged the cost savings and cash deferral initiatives planned by Management throughout the going concern period, including corroborating to
supporting evidence of the cash availability from these measures.
n Key audit matters
Key audit matters are those matters that, in our professional judgement, 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. In addition to the matter described in the Material uncertainty related to going concern section, we have determined
the matters described below to be the key audit matters to be communicated in our report.
Valuation of contract assets and completeness of contract liabilities for long-term architectural services contracts
Matter
How we addressed the matter in our audit
The accounting policies for the recognition of revenue on contracts with
customers in accordance with IFRS 15 are documented on page 48.
The measurement of revenue earned on architectural services contracts
with customers is determined by reference to the stage of completion
of those contracts at the statement of financial position date, which is a
function of the costs (fee earners and subcontractors) incurred on the
contract compared to the total costs expected at the culmination of the
contract, less any bills raised to date.
We considered the design and implementation of controls around the
recognition and measurement of revenue in the year to the statement
of financial position date, including controls around contract and
sales invoice approval, timecard entries and total cost estimation by
directors.
We tested the operating effectiveness of controls around the approval
of invoices by Management and the reconciliation of the billing system
to the accounting system.
Since the above measurement requires Directors to assess the final
costs expected on a contract to determine the stage of completion,
there is inherent estimation uncertainty and therefore significant
judgment arising in the formulation of these estimates, which could
vary materially over time and dependent on customer activity.
We selected a sample of contracts for testing from the statement of
financial position balances of contract assets and contract liabilities and
performed the following procedures:
• We agreed the revenue from the revenue recognition model to the
underlying contract and where relevant, contract variations agreed
between the Group and its clients.
• Chargeable time costs incurred to date for the selected projects
were agreed to reports generated from the timekeeping system. A
sample of individuals costs from the reports were agreed through
to their supporting timecard and their charge rate agreed to firm
wide charge rates to test the accuracy of the recorded time.
• Reviewed work done by the component auditor to agree a sample
of revenue entries recorded in the accounting system to the
supporting contract, a copy of the physical sales invoice raised and
cash received (see below for work performed around revenue
recognition work performed on the year-end balances).
• For the sample of recorded projects (both in the UK and by the
UAE component auditor), the relevant calculation of revenue at the
statement of financial position date was recomputed to test the
accuracy of the calculation of contract asset or contract liability.
•
In both the UK and in the UAE (component auditor), we assessed
and challenged the key stage of completion judgments made by
the directors. This involved reviewing the basis of future costs
expected to be incurred on the project, and obtaining a detailed
understanding of the project from management and the project
Director. Where relevant, key judgments (costs to completion,
project recovery rates) and objectives achieved (submission of key
deliverables indicating closure of costs allocable to certain project
stages) were corroborated to supporting documentation and post-
year end time chargeability to test the accuracy of judgments made
at the statement of financial position date.
Key observation
Based on the procedures performed, we consider that assumptions made by management in recognising revenue on part-completed contracts
with customers at the statement of financial position date to be appropriate.
30
31
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 Annual impairment review of the UK, Shankland Cox Limited (‘SCL’) and John R Harris & Partners (‘JRHP’)
Cash Generating Units
Matter
How we addressed the matter in our audit
The accounting policies for the impairment reviews performed annually
under applicable accounting standards are described on page 46.
The total statement of financial position goodwill arising from past
acquisitions of £2.4m, exists predominantly within the UK (£1.7m),
with another £0.6m being in relation to the JRHP cash generating unit
(located within the UAE operating segment). The residual £0.1m, which
is immaterial, is allocable to the Turkey CGU. While no goodwill is
allocable to the SCL CGU (also in the UAE operating segment), £0.3m of
other intangible assets are situated within the CGU. There is a risk that
these are impaired in the context of the results of the Group and the
UK and UAE economic operating environments.
The impairment review includes a number of significant judgments
around future cash flows (primarily revenue less sub consultant costs),
discount rates and long term growth rates, to which the CGUs are
sensitive to variations in. In the light of the COVID-19 pandemic there is
even heightened uncertainty around future revenue less sub consultant
cost pipelines and the consequent profitability of the CGUs.
There is significant management judgment and uncertainty involved
in the preparation of the value in use models under applicable
accounting standards for the Group and as a result this was considered
to be a key audit matter.
Our audit procedures included:
• We assessed the value in use models for each CGU to test
compliance with the requirements of applicable accounting
standards and mathematical accuracy of each model.
• The Weighted Average Cost of Capital (‘WACC’) of the models was
recomputed with reference to external data to test its accuracy of
computation.
• The cash flows within the model were challenged to check that
these were accurately stated, reasonable and achievable in the
light of the economic environment and future pipeline of work.
The pipeline of work was specifically challenged and samples
of underlying revenue pipeline corroborated to the supporting
contracts from where the revenue has been derived.
• The sensitivity analysis performed by Management was assessed to
determine the susceptibility of future cash flows to variance in the
input assumptions along with the headroom in the model.
Key observation
Based on the procedures performed, we consider that the assumptions and the methodology used in preparing the value in use calculations are
appropriate.
n Our application of materiality
We apply the concept of materiality both in the planning and performing of our audit, and in evaluating the impact of misstatements. We consider
materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken
on the basis of the financial statements.
Materiality for the Group financial statements was set at £191,000 (2019: £205,000) which represents approximately 1.5% (2019: 1.5%) of the three
yearly average revenue less sub consultant costs for the year. This benchmark is considered to be appropriate as this fairly reflects the activity of the
Group in a lossmaking environment, where we would generally base the materiality for a listed Group on its profits.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance
materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial
as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on
the financial statements as a whole. The performance materiality level applied to the Group was £133,000 (2019: £143,000), being 70% (2019:70%) of
the materiality level.
The audit of the company-only financial statements of Aukett Swanke Group Plc was performed at a level of £91,000 (2019: £141,000) which represents
3% of net assets at the year-end (2019: 3%). This benchmark was considered to be most appropriate as it represents the principal purpose of the
company as a holding entity to the subsidiaries of the Group. The performance materiality level applied to the company-only audit was £63,700 (2019:
£98,700) being 70% (2019: 70%) of the company-only materiality level.
Component materiality ranged from £6,000 to £50,000, based on 1.5% of revenue less sub-consultant costs as noted above. In the audit of each
component, we further applied performance materiality levels of 70% of the component materiality to our testing to ensure that the risk of errors
exceeding component materiality was appropriately mitigated.
We agreed to report to the Audit Committee any corrected or uncorrected identified misstatements exceeding £6,600 (2019: £7,000) in addition to other
misstatements that warranted reporting on qualitative grounds.
n An overview of the scope of our audit
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. We also addressed the risk of management override of internal
controls, including assessing whether there was evidence of bias by the directors that may have represented a risk of material misstatement due to
fraud. 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.
The audit of the Group financial statements comprised full scope audits performed on the consolidated group headed up by Aukett Swanke Group Plc,
the standalone parent entity financial statements and its seven UK-domiciled subsidiaries as required by statutory regulations in the UK. The significant
components to the Group were determined to be Aukett Swanke Limited, Veretec Limited, John R Harris & Partners and Shankland Cox Limited.
The full scope audit of Aukett Swanke Limited and Veretec Limited was conducted by the group audit team, while the full scope audits of John R Harris
& Partners and Shankland Cox Limited were performed by a non-BDO component audit firm in Dubai.
The UAE component auditor’s work resulted in them auditing the following percentages of the Group (the balance being audited by BDO LLP):
• Revenue less sub-consultant costs: 36%
• Gross assets: 12%
In addition to the above, the UAE segment for which the component auditor was responsible, contributed a loss of £472k to the overall group loss before
tax of £46k.
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
LLP in the component audit work performed was as follows:
• Direction of planning activities and expected areas of audit focus including the materiality, anticipated risk areas and approach to audit work to be
adopted;
• Planning meeting between component auditor and BDO LLP to establish understanding of terms and instructions, conducted by video conference;
• Detailed remote review of audit files produced by UAE component auditor by the Group Engagement team (performed over video conference);
• Attendance at the clearance meeting between UAE local management and UAE component auditor by video conference; and
• Direction and supervision of clearance of core audit areas relevant to the Group with involvement in steering and concluding on any remaining audit
adjustments and judgements.
The above elements of the review and involvement in the component auditor’s activities in our role as group auditor under ISA 600 were largely
conducted by video conference (where noted) in view of the travel restrictions in place due to the SARs-Cov19 pandemic. As group auditor we were able
to obtain sufficient assurance over the audit work performed on the significant components through use of this approach.
Whilst not considered significant components, specific procedures were performed around certain elements of the Berlin Associate and Frankfurt joint
venture due to their contribution to the Group’s result before tax. All entities within the group not subject to a full scope audit were reviewed analytically
by reference to their expected financial performance and position. These procedures were performed by the group audit team.
n 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.
n 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.
n 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.
32
33
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 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 by the Parent Company, 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.
n Responsibilities of directors
As explained more fully in the statement of Directors’ responsibilities set out on page 29 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.
n 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.
n 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.
Nicholas Carter-Pegg (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
Date: 18 February 2021
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
ATRIUM STUDY, LONDON
Consolidated income statement
For the year ended 30 September 2020
Note
3
3
4
5
9
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
Gain on disposal of subsidiary
Share of results of associate and joint ventures
(Loss) / profit before tax
Tax credit
(Loss) / profit for the year
(Loss) / profit attributable to:
Owners of Aukett Swanke Group Plc
Non-controlling interests
Basic and diluted earnings per share for profit attributable to the
ordinary equity holders of the Company:
From continuing operations
Total profit per share
10
2020
£’000
12,166
(830)
11,336
(9,600)
(1,295)
(1,324)
455
(428)
(112)
(540)
52
442
(46)
26
(20)
5
(25)
(20)
0.00p
0.00p
2019
£’000
15,492
(1,781)
13,711
(11,294)
(1,542)
(1,294)
371
(48)
(42)
(90)
-
382
292
40
332
346
(14)
332
0.21p
0.21p
34
35
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 Consolidated statement of comprehensive income
For the year ended 30 September 2020
Consolidated statement of financial position
At 30 Sepember 2020
(Loss) / profit for the year
Currency translation differences
Other comprehensive (loss)/profit for the year
Total comprehensive (loss)/profit for the year
Total comprehensive (loss)/profit for the year is attributable to:
Owners of Aukett Swanke Group Plc
Non-controlling interests
2020
£’000
(20)
(38)
(38)
(58)
(33)
(25)
(58)
2019
£’000
332
46
46
378
392
(14)
378
ST GEORGE’S HOUSE EAST, WIMBLEDON
Note
11
12
13
14
16
17
22
18
3
19
3
20
14
20
14
22
23
24
Non current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use assets
Investment in associate
Investments in joint ventures
Deferred tax
Total non current assets
Current assets
Trade and other receivables
Contract assets
Cash at bank and in hand
Total current assets
Total assets
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Lease liabilities
Total current liabilities
Non current liabilities
Borrowings
Lease liabilities
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
2020
£’000
2,392
653
272
2,929
927
317
214
7,704
3,527
628
992
5,147
12,851
(3,333)
(606)
(155)
(539)
(4,633)
-
(2,805)
(47)
(992)
(3,844)
(8,477)
4,374
1,652
1,176
(16)
41
1,494
4,347
27
4,374
2019
£’000
2,412
762
590
-
711
277
193
4,945
4,904
663
1,145
6,712
11,657
(4,528)
(836)
(331)
-
(5,695)
(272)
-
(53)
(1,123)
(1,448)
(7,143)
4,514
1,652
1,176
22
37
1,494
4,381
133
4,514
36
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
37
The financial statements on pages 35 to 87 were approved and authorised for issue by the Board of Directors on 17 February 2021 and were signed on
its behalf by:
Nicholas Thompson
Chief Executive Officer
Antony Barkwith
Group Financial Director
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 Company statement of financial position
At 30 September 2020
Consolidated statement of cash flows
For the year ended 30 September 2020
Note
13
15
18
18
19
20
20
24
Non current assets
Property, plant and equipment
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
Deferred tax
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
2020
£’000
15
3,348
26
3,389
1,928
164
2,092
5,481
(2,430)
(155)
(2,585)
(3)
-
(3)
(2,588)
2,893
1,652
(1,429)
1,176
1,494
2,893
2019
£’000
-
5,514
27
5,541
2,096
88
2,184
7,725
(2,692)
(260)
(2,952)
-
(65)
(65)
(3,017)
4,708
1,652
386
1,176
1,494
4,708
The result for the year contained within the parent company’s income statement is a loss of £1,815k (2019: profit £335k).
The financial statements on pages 35 to 87 were approved and authorised for issue by the Board of Directors on 17 February 2021 and were signed on
its behalf by:
Nicholas Thompson
Chief Executive Officer
Antony Barkwith
Group Financial Director
Note
26
Cash flows from operating activities
Cash generated from operations
Interest paid
Income taxes received/(paid)
Net cash inflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Sale of property, plant and equipment
Dividends received
Net cash (expended on)/received in investing activities
Net cash inflow before financing activities
Cash flows from financing activities
Payments of lease liabilities
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
Cash and cash equivalents at end of year
2020
£’000
151
(9)
218
360
(245)
16
211
(18)
342
(314)
(154)
(468)
(126)
1,145
(27)
992
992
992
2019
£’000
647
(42)
(1)
604
(90)
2
186
98
702
(36)
(250)
(286)
416
710
19
1,145
1,145
1,145
38
39
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 Company statement of cash flows
For the year eded 30 September 2020
Consolidated statement of changes in equity
For the year ended 30 September 2020
Foreign
currency
translation
reserve
£’000
Retained
earnings
£’000
Other
distributable
reserve
£’000
(24)
(309)
1,494
Cash flows from operating activities
Cash generated from operations
Interest paid
Net cash inflow/(outflow) from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Dividends received
Net cash generated from investing activities
Net cash 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
Note
26
2020
£’000
45
(9)
36
(17)
211
194
230
(154)
(154)
76
88
164
164
164
2019
£’000
10
(24)
(14)
-
186
186
172
(250)
(250)
(78)
166
88
88
88
Share
capital
£’000
1,652
-
-
-
1,652
-
1,652
-
-
-
-
At 30 September 2018
Profit for the year
Other comprehensive
income
Total comprehensive
income
Balance at 30 September
2019 as originally
presented
Effect of adoption of
IFRS16 (note 34)
Restated total equity at 1
October 2019
Profit/(loss) for the year
Acquisition of minority
interest
Other comprehensive
income
Total comprehensive
income
At 30 September 2020
1,652
346
-
346
37
(1)
36
5
-
-
5
-
46
46
22
-
22
-
-
(38)
(38)
(16)
Merger
reserve
£’000
1,176
-
-
-
Total
£’000
3,989
346
46
392
-
-
-
1,494
1,176
4,381
Non
controlling
interests
£’000
147
(14)
-
(14)
133
Total
equity
£’000
4,136
332
46
378
4,514
-
-
(1)
-
(1)
1,494
1,176
4,380
-
-
-
-
-
-
-
-
5
-
(38)
(33)
133
(25)
(81)
-
4,513
(20)
(81)
(38)
(106)
(139)
41
1,494
1,176
4,347
27
4,374
RECEPTION STUDY, LONDON
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.
The other distributable reserve was created in September 2007 during a court and shareholder approved process to reduce the capital of the Company.
EDGE EAST SIDE TOWER, BERLIN
(image ©EDGE)
40
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
41
Company statement of changes in equity
For the year ended 30 September 2020
At 30 September 2018
Profit and total comprehensive income for the year
At 30 September 2019
Share capital
£’000
1,652
-
1,652
Retained
earnings
£’000
Other
distributable
reserve
£’000
Merger reserve
£’000
Total Equity
£’000
51
335
386
1,494
1,176
4,373
-
-
335
1,494
1,176
4,708
Loss and total comprehensive income for the year
-
(1,815)
-
-
(1,815)
At 30 September 2020
1,652
(1,429)
1,494
1,176
2,893
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.
Notes to the financial statements
1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of these financial statements are set out below.
n Basis of preparation
The financial statements for the Group and parent have been prepared in accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006.
n New accounting standards, amendments and interpretations applied
For the year ended 30 September 2020, a number of new or amended standards became applicable and the Group had to change its accounting
policies to correctly reflect the requirements of the following standards:
-
-
IFRS 16 Leases, and
IFRIC 23 Uncertainty over income tax treatments
The impact of the adoption of IFRS 16 and the new accounting policies are disclosed in note 34. There was no change to the Group on adoption of IFRIC
23.
n 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 2020 and have not yet been adopted by the Group:
PRIVATE RESIDENCE , MOSCOW
i)
IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
(Amendment – Definition of Material)
IFRS 3 Business Combinations (Amendment – Definition of Business)
ii)
iii) Revised Conceptual Framework for Financial Reporting
In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified as current or non-
current. These amendments clarify that current or non-current classification is based on whether an entity has a right at the end of the reporting period
to defer settlement of the liability for at least twelve months after the reporting period. The amendments also clarify that ‘settlement’ includes the
transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion feature classified as
an equity instrument separately from the liability component of a compound financial instrument. The amendments are effective for annual reporting
periods beginning on or after 1 January 2022.
At present the Group has not analysed the impact of these new accounting standards and amendments.
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.
n 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 an overdraft facility of £500k for additional
financial flexibility and foreign currency hedging purposes. This overdraft facility is renewed annually and was renewed for a further 12 months in
November 2020, with a review in May 2021.
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 March 2020 by the Financial Reporting Council,
“FRC guidance for companies and auditors during the COVID-19 crisis”.
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.
As the COVID-19 pandemic developed through 2020 and into 2021 it affected all of the territories in which the Group operates to varying extents and
other countries in which the Group has clients and projects. In March 2020 the Group moved to remote working without any significant disruption,
ensuring that staff could continue to work efficiently and service active projects.
42
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
43
With the economic uncertainty that the pandemic presents, the Groups’ operational management took preventative steps including: implementing pay
reductions in the UK and UAE operations, and the central administrative operation of varying percentages and durations; furloughing permanent staff;
releasing temporary or freelance staff; and encouraging unpaid leave and part time working - all of which provided management with a range of tools
that can be implemented at short notice and with immediate effect. The Group has also sought to remove non-essential or deferrable expenditure.
Entities deferred operational cash flows where possible to provide short term support to the Groups’ working capital and therefore avoid any new
external borrowings and limited use of existing facilities. However, those deferrals unwind in 2021, and haven’t as yet been replaced with similar
assistance.
The Groups’ 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, and we have no reason not to expect that the overdraft
facility would not be renewed again in November 2021.
Due to the uncertainty in forecasting profits during the COVID-19 pandemic Coutts & Co have agreed to waive the debt servicing covenant for the year
ended 30 September 2020 and to remove the debt servicing covenant from the facility agreement for the year ending 30 September 2021 and as such if
this covenant is reintroduced in the November 2021 renewal this covenant would next be due for assessment following the year ending 30 September
2022 (assessed on completion of the annual audit, anticipated in January 2023).
During the year Coutts & Co supportively agreed to extend the terms of repayment of the outstanding US Dollar loan. This loan was originally scheduled
to be cleared in November 2020, but was extended to July 2021. As at 17 February 2021 the balance on this loan is USD 120k.
The other covenants applicable relate to a measure of the Groups’ gearing, and maintaining a level of UK eligible debtors. The Groups’ Directors are
confident that the structure of the Group ensures that the covenants will continue to be satisfied so long as the Group operates within the £500k
overdraft limit.
Certain Governments have brought in support packages for businesses during the pandemic such as the UK government backed Coronavirus Business
Interruption Loan Scheme (CBILS). However, there is limited information on how long these schemes with continue, with for example CBILS currently
extended to 31 March 2021.
The Group has managed cash flow within its existing facilities so far, but it is possible that such schemes will be withdrawn during the course of the next
12 month going concern review period, and as such our forecast assumes that no additional external financing is received when measuring the Groups
ability to continue to operate.
The Groups’ assessment of going concern is therefore focussed on its ability to operate within the £500k overdraft limit.
The Group forecasts on the basis of earnings and billings from i) secure contractual work, ii) known potential work which is deemed to have a greater
than 50% chance of being undertaken and is predominantly follow on stages of currently instructed work, on which a factoring is applied; and iii) new
work from known sources such as competitive tenders and submitted fee proposals, or new work to be achieved based on historical experience of
market activity and timescales in which work can be converted from an enquiry to an active project which varies by territory and the service each office
in the Group provides.
Aware that the risk of the COVID-19 pandemic could lead to recessions and delays in clients making financial investment decisions, the forecasts assessed
by the Directors then apply sensitivities based on levels of earnings reductions sustained over the next 12 months, making controllable adjustments to
the cost base through structural adjustments to staffing numbers and deferring and removing non-essential costs. We also assess overall cash levels
across the Group and how those can be best deployed to ensure each of the entities in the Group has sufficient cash to operate.
The above cost planning exercise and focus on near term secure income and contract extensions has resulted in the Group reforecasting based on cash
inflows from turnover less sub consultant costs reduced by an average of 10% against management accounts over the next 12 months. This reforecasting
ensures that where the business is sensitive to expected declines in cash inflows from work, management are able to plan ahead for this and manage
cost outflows effectively.
In the event that the level of turnover falls by more than the 10% indicated above, management have identified further cash flow initiatives around
the Group which could be utilised to generate additional free cash to allow the company to continue to trade. This could include options to sublet,
administrative staff and discretionary overhead cost savings and freeing up liquidity in our German associate and joint venture.
In the shorter term management reviewed a number of scenarios, including a scenario modelling a pause on short term expected work amounting
to 21.4% of income for 3 months, then followed by the same reductions in workload from the 12 month model (averaging out to over 14% across 12
months). The short-term impact would necessitate the Group moving a level of cash from the investments in joint ventures and associates into the
Group, and an improved debtor collection rate than we normally forecast to remain within the limits of our facilities.
The Directors note that the UK and other governments in the territories in which we operate, have been supportive in their efforts to enable construction
and infrastructure projects to continue throughout the pandemic so far including whilst lock-down measures have been imposed. With the measures
put in place by contractors and sites to date combined with lessons learnt from companies to enable continued operations through remote working, we
see the industry now better positioned to reduce the risks of impact from further COVID-19 spikes.
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. However there remains a risk that in the current COVID-19 environment, the Group may
find itself as the result of unexpected levels of delays on project work beyond its control requiring additional financing.
For this reason, the Board considers it appropriate to prepare the financial statements on a going concern basis, however given the lack of certainty
involved in preparing these cash flow forecasts, there is a material uncertainty which may cast significant doubt on the Group’s and the Parent Company’s
ability to continue as a going concern and therefore their ability to realise their assets and discharge their liabilities in the normal course of business.
The financial statements do not include the adjustments that would result if the Group or the Parent Company was unable to continue as a going
concern.
n 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
The associate in Berlin is the entity 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.
n 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.
n 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.
n 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.
n 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.
n 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 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.
44
45
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 n 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.
Identifying Leases
The Group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for a period of time in exchange for
consideration. Leases are those contracts that satisfy all of the following criteria:
n Equity instruments
Equity instruments issued by the Company are recorded as the proceeds received, net of direct issue costs.
n 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.
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.
n 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.
n 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.
n 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.
n 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.
n Leases and asset finance arrangements
The majority of the Group’s accounting policies for leases are set out in note 14.
a) There is an identified asset;
b)
c)
The Group obtains substantially all the economic benefits from use of the asset; and
The Group has the right to direct use of the asset.
The Group considers whether the supplier has substantive substitution rights. If the supplier does have those rights, the contract is not identified as
giving rise to a lease.
In determining whether the Group obtains substantially all the economic benefits from use of the asset, the Group considers only the economic benefits
that arise from use of the asset, not those incidental to legal ownership or other potential benefits.
In determining whether the Group has the right to direct use of the asset, the Group considers whether it directs how and for what purpose the asset
is used throughout the period of use. If there are no significant decisions to be made because they are pre-determined due to the nature of the asset,
the Group considers whether it was involved in the design of the asset in a way that pre-determines how and for what purpose the asset will be used
throughout the period of use. If the contract or portion of a contract does not satisfy these criteria, the Group applies other applicable IFRSs rather than
IFRS 16.
n 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.
n Other operating expenses
Other operating expenses include legal and professional costs, professional indemnity insurance premiums, marketing expenses and other general
expenses.
n 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
n Provisions
Provisions are recognised when a present obligation has arisen as a result of a past event which 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.
Employee benefits
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).
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.
n 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.
46
47
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 n 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 each performance
obligation within the contract and the proportion of total time expected to be required to undertake each performance obligation which had been or
is being performed.
Step 1) Identification of the contract
Contracts with clients are mostly on a fixed basis with the consideration generally being stipulated based on a percentage of the build cost.
Contract variations are treated as variations to a specific performance obligation, with any additional fees associated with that variation, and
the time and cost required to fulfil the variations, included within the overall assessment of the time required to complete the overall
performance obligation. This is on the basis that those variations are normally not distinct in themselves (modifications to existing elements
of the obligations) and therefore are repriced as if they were part of the original contract.
Step 2) Identification of performance obligations
Whilst the nature of performance obligations may vary from project to project, they are generally split by identification of Royal Institute
of British Architects (‘RIBA’) work stages (delivered as either an individual work stage or a group of work stages depending on the exact
nature of the contract), which constitute individual and distinctive promises within the contract. These are capable of being delivered
independently. Local equivalents of RIBA apply depending on the jurisdiction of the contract, and may be identified.
Step 3) Identify the consideration
Consideration is generally fixed and agreed within the contract for services between the Group and the client, subject to modifications as
noted above in step 1.
Step 4) Allocate the transaction price
The performance obligations within the contract are billed on the basis of a fee allocated to each element of the project, however revenue
is allocated to the performance obligations based on the total expected time cost and contract cost expected to be required to undertake
each performance obligation within the contract. This leads to recognition of revenue being reallocated between work stages where
Management assess that the billing milestones associated to specific stages as stated in the contract do not fairly reflect the total time and
cost required to complete those tasks.
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.
Step 5) Recognition of revenue
For all contracts undertaken by Management, the measurement of revenues follows an “over time” pattern.
The basis on which this is the case is that the work performed by the Group has no alternative use and the contracts contain provisions by
which consideration can be recovered for part-performance of obligations in the event that a contract is terminated. The revenue recoverable
in such an instance would approximate to compensating the Group for the selling price of the services rendered to date.
The amount by which revenue exceeds progress billings is classified as contract assets. To the extent progress billings exceed relevant revenue, the
excess is classified as contract liabilities.
n 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.
Following the adoption of IFRS 9, the Group followed the simplified approach and so makes an expected credit loss allowance using lifetime expected
credit losses for all trade receivables and contract assets. The estimates and judgements applied are detailed further in note 18.
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 further loss allowances if it is considered that there is a significant risk of non-payment. The factors assessed when considering a loss
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 further impairment allowance.
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:
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.
An increase of 6% (2019: 6%) as a percentage of total trade receivables would lead to a material bad debt exposure. Based on the combination of credit
loss allowances and specifically identified further provisions, there is a £1.0m, (2019: £1.0m) 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 notes 18 and 29.
Impairment of goodwill
Details of the impairment reviews undertaken in respect of the carrying value of goodwill are given in note 11.
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 11.
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.
The Group have limited numbers of situations where we are entitled to a fee claim, on which estimation of the amount we would be entitled to in such a
claim is considered on a case by case basis, and only recognised when it is highly probable that there will not be a subsequent reversal of the estimated
revenues of a probable outcome under the requirements of IFRS 15 for variable consideration.
In the current year no material fee claim revenue has been recognised at 30 September 2020.
IFRS 16 Right-of-use asset and Lease liability
The lease of its UK, Bonhill Street studio includes an upward rent review after 5 years, does not contain any break clauses and expires in May 2028.
The lease includes provision for an additional 4 month rent free period on condition that the Group undertakes specific property improvements to the
Landlords reasonable satisfaction. The Group estimates that the cost of installation of these improvements would be equivalent or higher in cost than
the value of the 4 months rent free saving. As the Group would have to pay for the comfort cooling system to gain the rent free saving, the 4 month rent
free period is not included within the IFRS 16 calculation for the right-of-use asset and associated lease liability.
48
49
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
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 is included within Continental Europe
together with Germany and the Czech Republic.
n 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
2020
£’000
7,106
4,823
237
12,166
2020
£’000
6,990
4,122
224
11,336
2019
£’000
7,454
7,522
516
15,492
2019
£’000
7,379
5,900
432
13,711
All of the Group’s revenue relates to the value of services performed for customers under construction type contracts. These contracts are generally fixed
price and take place over a long term basis.
No segmentation of timing of revenue recognition is provided as all services continue to be provided on an ‘over time’ basis.
All impairment losses recognised in note 18 are in respect of the Group’s contracts with customers.
Segment net finance expense
United Kingdom
Middle East
Continental Europe
Group costs
Net finance expense
Segment depreciation
United Kingdom
Middle East
Continental Europe
Group costs
Depreciation
50
2020
£’000
(104)
-
-
(8)
(112)
2020
£’000
29
40
3
2
74
2019
£’000
(18)
-
-
(24)
(42)
2019
£’000
101
48
1
-
150
Segment amortisation
United Kingdom
Middle East
Continental Europe
Amortisation
2020
Segment result
United Kingdom
Middle East
Continental Europe
Group costs
Loss before tax
2019
Segment result
United Kingdom
Middle East
Continental Europe
Group costs
Profit before tax
2020
£’000
367
43
9
419
Reallocation of
group management
charges
£’000
496
449
146
(1,091)
-
Sub-total
£’000
(282)
(472)
511
197
(46)
Reallocation of
group management
charges
£’000
Sub-total
£’000
(89)
(69)
351
99
292
540
594
144
(1,278)
-
2019
£’000
27
43
11
81
Total
£’000
214
(23)
657
(894)
(46)
Total
£’000
451
525
495
(1,179)
292
Before goodwill
and acquisition
adjustments
£’000
Fair value gains
on deferred
consideration
and acquisition
settlement
£’000
(282)
(472)
511
197
(46)
-
-
-
-
-
Before goodwill
and acquisition
adjustments
£’000
Fair value gains
on deferred
consideration
and acquisition
settlement
£’000
(89)
(123)
351
99
238
-
54
-
-
54
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.
n Revenue from contracts with customers
Assets and liabilities related to contracts with customers
The Group has recognised the following assets and liabilities related to contracts with customers:
Current contract assets relating to professional services contracts
Loss allowance
Total contract assets
Contract liabilities relating to professional services contracts
Total contract liabilities
2020
£’000
648
(20)
628
606
606
2019
£’000
680
(17)
663
836
836
51
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 Significant changes in contract asset and liabilities
There were no significant changes in Contract assets as the timing of providing services ahead of the agreed payment schedules for contracts remained
largely unchanged. Most of the contract assets are derived from contracts in the Middle East operating segment.
Contract liabilities have decreased as the Group has invoiced for lower amounts ahead of providing services. Contract liabilities derive primarily from
contracts in the UK operating segment.
Revenue recognised in relation to contract liabilities
The following table shows how much of the revenue recognised in the current reporting period relates to carried-forward contract liabilities and how
much relates to performance obligations that were satisfied in a prior year:
Total contract liabilities as at 1 October 2019
Revenue recognised that was included in the contract liability balance at the beginning of the period
Credits issued relating to the contract liability balance at the beginning of the year, previously invoiced but not
recognised as revenue.
Cash received in advance of performance and not recognised as revenue in the period
Total contract liabilities as at 30 September 2020
£’000
(836)
737
28
(535)
(606)
The Group did not recognise any revenue in the reporting period from performance obligations satisfied (or partially satisfied) in previous periods.
n Statement of financial position segment information
Segment assets
United Kingdom
Middle East
Continental Europe
Trade receivables and contract assets
Other current assets
Non current assets*
Total assets
2020
£’000
1,354
1,562
91
3,007
2,140
7,704
2019
£’000
1,488
2,565
91
4,144
2,568
4,945
12,851
11,657
n Geographical areas
Revenue
United Kingdom
Country of domicile
Russia
Turkey
United Arab Emirates
Foreign countries
Revenue
Non current assets
United Kingdom
Country of domicile
Czech Republic
Germany
Turkey
United Arab Emirates
Foreign countries
Non current assets excluding deferred tax
Deferred tax
Non current assets
n Major clients
During the year ended 30 September 2020, the Group did not derive 10% or more of its revenues from any client (2019: no client).
* Non current assets include investments in associate and joint ventures.
Largest client revenues
Segment liabilities
United Kingdom
Middle East
Continental Europe
Trade payables, contract liabilities and accruals
Other current liabilities
Non current liabilities
Total liabilities
52
2020
£’000
2,168
1,052
25
3,245
1,388
3,844
8,477
2019
£’000
2,989
1,594
85
4,668
1,027
1,448
7,143
The largest client revenues for 2020 relate to the United Kingdom operating segment (2019: Middle East operating segment).
n 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
2020
£’000
6,769
4,994
373
30
12,166
2020
£’000
7,106
7,106
-
237
4,823
5,060
2019
£’000
7,454
7,454
254
262
7,522
8,038
12,166
15,492
2020
£’000
5,072
5,072
25
1,219
57
1,117
2,418
7,490
214
7,704
2020
£’000
877
2019
£’000
2,479
2,479
-
988
75
1,210
2,273
4,752
193
4,945
2019
£’000
940
2019
£’000
6,900
7,827
589
176
15,492
53
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 4 OTHER OPERATING INCOME
Property rental income
Management charges to joint ventures and associates
Government grants (UK furlough scheme)
Other sundry income
Fair value gain on the reduction of deferred consideration
Total other operating income
5
FINANCE COSTS
Payable on bank loans and overdrafts
Finance lease interest payable
Total finance costs
6
AUDITOR REMUNERATION
2020
£’000
148
122
158
27
-
455
2020
£’000
9
103
112
During the year the Group incurred the following costs in relation to the Company’s auditor and associates of the Company’s auditor:
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
2020
£’000
53
69
-
-
2019
£’000
170
114
-
33
54
371
2019
£’000
28
14
42
2019
£’000
42
65
-
-
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
2020
Number
129
32
161
Company
2019
Number
2020
Number
2019
Number
152
36
188
-
7
7
-
7
7
In addition to the number of staff disclosed above, the Group’s associate and joint ventures employed an average of 141 persons (2019: 126 persons).
The costs of the persons employed by the Group and Company during the year were:
Wages and salaries
Social security costs
Contributions to defined contribution pension
arrangements
Total
Group
Company
2020
£’000
6,958
461
273
7,692
2019
£’000
8,254
517
259
9,030
2020
£’000
542
65
41
648
2019
£’000
647
75
38
760
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.
SANOFI, ISTANBUL
54
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
55
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 8 DIRECTORS’ EMOLUMENTS
Directors with operational roles in the UK business, and the Executive Directors and Non-executive Directors of Aukett Swanke Group (“ASG”) Plc, waived
part of their emoluments in the current year to reflect difficult trading conditions. The total amounts waived were 2020: £38k (2019: £nil).
The tax assessed for the year differs from the United Kingdom standard rate as explained below:
2020
Nicholas Thompson
John Bullough
Robert Fry
Clive Carver
Raúl Curiel
Antony Barkwith
Total
2019
Anthony Simmonds
Nicholas Thompson
Beverley Wright
John Bullough
Robert Fry
Clive Carver
Raúl Curiel
Antony Barkwith
Total
Aggregate
emoluments
£’000
Pension
contributions
£’000
Total
received
£’000
218
28
119
28
28
101
522
10
-
19
-
-
13
42
228
28
138
28
28
114
564
Waived
£’000
15
2
9
2
2
8
38
Total
entitlement
£’000
243
30
147
30
30
122
602
Aggregate
emoluments
£’000
Pension
contributions
£’000
Total
received
£’000
Total
entitlement
£’000
23
210
81
30
123
12
19
25
523
-
21
17
-
17
-
-
3
58
23
231
98
30
140
12
19
28
581
23
231
98
30
140
12
19
28
581
Benefits were accruing to three Directors (2019: five Directors) under defined contribution pension arrangements.
The aggregate emoluments of the highest paid Director were £218,000 (2019: £210,000) together with pension contributions of £10,000 (2019: £21,000).
9
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
2020
£’000
-
-
-
(26)
-
(26)
(26)
2019
£’000
1
(218)
(217)
83
94
177
(40)
Loss/(profit) before tax
Loss/(profit) before tax multiplied by the standard rate of corporation tax
in the United Kingdom of 19% (2019: 19%)
Effects of:
Other non tax deductible (credits)/expenses
Associate and joint ventures reported net of tax
Tax losses not recognised
Current tax adjustment in respect of previous years
Deferred tax adjustment in respect of previous years
Income not taxable
Total tax credit
10 EARNINGS PER SHARE
The calculations of basic and diluted earnings per share are based on the following data:
Earnings
Continuing operations
Profit for the year
Number of shares
2020
£’000
(46)
(9)
(12)
(84)
84
-
7
(12)
(26)
2020
£’000
5
5
2020
Number
2019
£’000
292
55
8
(73)
105
(218)
94
(11)
(40)
2019
£’000
346
346
2019
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 1,500,000 of its ordinary shares. These have not been included above as the average
share price was below the exercise price in 2020 and they therefore do not have a dilutive effect.
STEAMHOUSE, EASTSIDE LOCKS, BIRMINGHAM
The standard rate of corporation tax in the United Kingdom is applicable for the financial year was 19% (2019: 19%)
56
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
57
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 11 GOODWILL
Group
Cost
At 1 October 2018
Exchange differences
At 30 September 2019
Addition
Disposal
Exchange differences
At 30 September 2020
Impairment
At 1 October 2018
Exchange differences
At 30 September 2019
Disposal
Exchange differences
At 30 September 2020
Net book value
At 30 September 2020
At 30 September 2019
At 30 September 2018
£’000
2,641
42
2,683
19
(271)
(39)
2,392
269
2
271
(271)
-
-
2,392
2,412
2,372
The disposal recorded in the year related to Goodwill on a Russian subsidiary which was sold during the year as noted on page 18. As the Goodwill
allocated to that entity had previously been fully impaired no gain or loss was recognised on disposal of the goodwill.
The addition recorded in the year related to Goodwill on the acquisition of an additional 15% shareholding in John R Harris & Partners Limited increasing
the Group’s shareholding from 80% to 95%.
The net book value of goodwill is allocated to the Group’s cash generating units (“CGU”) as follows:
At 30 September 2018
Exchange differences
At 30 September 2019
Addition
Exchange differences
At 30 September 2020
United Kingdom
£’000
Turkey
£’000
Middle East
£’000
1,740
-
1,740
-
-
1,740
32
5
37
-
(11)
26
600
35
635
19
(28)
626
Total
£’000
2,372
40
2,412
19
(39)
2,392
An annual impairment test is performed over the cash generating units (‘CGUs’) of the Group where goodwill is allocable to those CGUs.
While JRHP and SCL are identifiable as separate CGUs for the purposes of performing an impairment review under IAS 36, the goodwill of the two CGUs
is aggregated here for reference purposes in the disclosure tables.
58
HYBRID MASTERPLAN
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 material.
The key assumptions in the discounted cash flow projections for the United Kingdom operation are:
•
•
•
the future level of revenue, set at a compound growth rate of 3.7% over the next five years - 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. Projections consider a gradual return to economic health in the year to September 2021 due
to the ongoing effects of the COVID-19 pandemic, then growing to an operation generating revenue in excess of £8m for subsequent years;
long term growth rate - which has been assumed to be 2.0% (2019: 2.1%) 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 UK segment’s pre-tax weighted average cost of capital and has been assessed at 12.66% (2019: 13.3%).
Based on the discounted cash flow projections, the recoverable amount of the UK CGU is estimated to exceed carrying values by £5,504k (282%). A 7%
fall in all future forecast revenues (applied as a smooth reduction to the compound growth rate noted above) without a corresponding reduction in costs
in the UK CGU, or an increase in the discount rate to over 39%, would result in carrying amounts exceeding their recoverable amount. A decrease in the
effective compound growth rate of revenue to 2.1% instead of the 3.7% noted above, without a corresponding reduction in costs in the UK CGU, 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, set at a compound growth rate of 5.5% (for JRHP) and 0.9% (for SCL) over the next five years - which is based on
knowledge of the current and expected level of construction activity in the Middle East; Projections for SCL assume a continuation of the effect of
economic slowdown through the year to September 2021 before returning to revenue in excess of AED 8.5m for subsequent years. For JRHP we
assume earnings in the year to September 2021 of AED 9m with earnings rising above AED 10m from the year 2022/23.
• 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 3.15% 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 – which is the Middle East segment’s pre-tax weighted average cost of capital, has been assessed at 13.7% (2019: 11.9%).
•
Based on the discounted cash flow projections, the recoverable amount of JRHP within the Middle East CGU is estimated to exceed carrying values by at
least £1.50m (115%). A decrease in the effective compound growth rate of revenue to 3.6% instead of the 5.5% noted above, without a corresponding
reduction in costs in the Middle Eastern CGU, would result in carrying amounts exceeding their recoverable amount. An increase in the discount rate to
30.7% would result in carrying amounts exceeding their recoverable amount.
Based on the discounted cash flow projections, the recoverable amount of SCL within the Middle East CGU is estimated to exceed carrying values by
at least £1.65m (296%). A decrease in the effective compound growth rate of revenue to minus (1.34)% instead of the 0.9% noted above, without a
corresponding reduction in costs in the Middle Eastern CGU, would result in carrying amounts exceeding their recoverable amount. An increase in the
discount rate to 51.4% 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.
59
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 12 OTHER INTANGIBLE ASSETS
Group
Cost
At 30 September 2018
Disposal
Exchange differences
At 30 September 2019
Disposal
Exchange differences
At 30 September 2020
Amortisation
At 30 September 2018
Disposal
Charge
Exchange differences
At 30 September 2019
Disposal
Charge
Exchange differences
At 30 September 2020
Net book value
At 30 September 2020
At 30 September 2019
At 30 September 2018
Trade name
£’000
Customer
relationships
£’000
Order book
£’000
Trade
licence
£’000
677
-
24
701
-
(29)
672
121
-
26
5
152
-
26
(9)
169
503
549
556
383
-
21
404
-
(31)
373
180
-
47
10
237
-
45
(23)
259
114
167
203
157
(157)
-
-
-
-
-
157
(157)
-
-
-
-
-
-
-
-
-
-
75
-
5
80
-
(4)
76
24
-
8
2
34
-
8
(2)
40
36
46
51
Total
£’000
1,292
(157)
50
1,185
-
(64)
1,121
482
(157)
81
17
423
-
79
(34)
468
653
762
810
Amortisation is included in other operating expenses in the consolidated income statement.
n 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 18 and 20 years,
respectively.
n 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 3 months. The customer relationships acquired
in June 2015 and February 2016 both have remaining amortisation periods of 5 years.
60
n 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 5 years.
13 PROPERTY, PLANT & EQUIPMENT
Group
Cost
At 30 September 2018
Additions
Disposals
Exchange differences
At 30 September 2019
Reclassification due to adoption of IFRS 16 (note 14)
Additions
Disposals
Exchange differences
At 30 September 2020
Depreciation
At 30 September 2018
Charge
Disposals
Exchange differences
At 30 September 2019
Reclassification due to adoption of IFRS 16 (note 14)
Charge
Disposals
Exchange differences
At 30 September 2020
Net book value
At 30 September 2020
At 30 September 2019
At 30 September 2018
Leasehold
improvements
£’000
Furniture &
equipment
£’000
671
241
(317)
2
597
(578)
-
-
(5)
14
351
95
(317)
2
131
(112)
-
-
(5)
14
-
466
320
1,426
59
(35)
23
1,473
-
245
(80)
(32)
1,606
1,312
55
(35)
17
1,349
-
74
(64)
(25)
1,334
272
124
114
Total
£’000
2,097
300
(352)
25
2,070
(578)
245
(80)
(37)
1,620
1,663
150
(352)
19
1,480
(112)
74
(64)
(30)
1,348
272
590
434
61
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
Company
Cost
At 30 September 2019
Additions
At 30 September 2020
Depreciation
At 30 September 2019
Charge
At 30 September 2020
Net book value
At 30 September 2020
At 30 September 2019
14 LEASES
Furniture &
equipment
£’000
-
17
17
-
2
2
15
-
Total
£’000
-
17
17
-
2
2
15
-
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
-
-
Leases of low value assets; and
Leases with a duration of 12 months or less.
IFRS 16 was adopted 1 October 2019 without restatement of comparative figures. For an explanation of the transitional requirements that were applied
as at 1 October 2019, see Note 34. The following policies apply subsequent to the date of initial application, 1 October 2019.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term, with the discount rate determined
by reference to the rate inherent in the lease unless (as is typically the case) this is not readily determinable, in which case the Group’s incremental
borrowing rate on commencement of the lease is used. Variable lease payments are only included in the measurement of the lease liability if they
depend on an index or rate. In such cases, the initial measurement of the lease liability assumes the variable element will remain unchanged throughout
the lease term. Other variable lease payments are expensed in the period to which they relate.
On initial recognition, the carrying value of the lease liability also includes:
-
-
-
amounts expected to be payable under any residual value guarantee;
the exercise price of any purchase option granted in favour of the Group if it is reasonably certain to assess that option;
any penalties payable for terminating the lease, if the term of the lease has been estimated on the basis of termination option being
exercised.
Right of use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received, and increased for:
-
-
-
lease payments made at or before commencement of the lease;
initial direct costs incurred; and
the amount of any provision recognised where the Group is contractually required to dismantle, remove or restore the leased asset (typically
leasehold dilapidations – see note 23).
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the balance outstanding and are reduced
for lease payments made. Right-of use assets are amortised on a straight-line basis over the remaining term of the lease or over the remaining economic
life of the asset if, rarely, this is judged to be shorter than the lease term.
When the Group revises its estimate of the term of any lease (because, for example, it re-assesses the probability of a lessee extension or termination
option being exercised), it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which are discounted
using a revised discount rate. The carrying value of lease liabilities is similarly revised when the variable element of future lease payments dependent
on a rate or index is revised, except the discount rate remains unchanged. In both cases an equivalent adjustment is made to the carrying value of the
right-of-use asset, with the revised carrying amount being amortised over the remaining (revised) lease term. If the carrying amount of the right-of-use
asset is adjusted to zero, any further reduction is recognised in profit or loss.
Nova East, London SW1
n2, NOVA EVOLVED, LONDON SW1
When the Group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature of the modification:
-
-
-
if the renegotiation results in one or more additional assets being leased for an amount commensurate with the standalone price for the
additional rights-of-use obtained, the modification is accounted for as a separate lease in accordance with the above policy;
in all other cases where the renegotiated increases the scope of the lease (whether that is an extension to the lease term, or one or more
additional assets being leased), the lease liability is remeasured using the discount rate applicable on the modification date, with the right-
of-use asset being adjusted by the same amount;
if the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease liability and right-of-use asset are
reduced by the same proportion to reflect the partial of full termination of the lease with any difference recognised in profit or loss. The
lease liability is then further adjusted to ensure its carrying amount reflects the amount of the renegotiated payments over the renegotiated
term, with the modified lease payments discounted at the rate applicable on the modification date. The right-of-use asset is adjusted by the
same amount.
For contracts that both convey a right to the Group to use an identified asset and require services to be provided to the Group by the lessor, the Group
has elected to account for the entire contract as a lease, i.e. it does allocate any amount of the contractual payments to, and account separately for, any
services provided by the supplier as part of the contract.
n Nature of leasing activities (in the capacity as lessee)
The Group leases a number of properties in the jurisdictions from which it operates. In some jurisdictions it is customary for lease contracts to provide
for payments to increase each year by inflation or and in others to be reset periodically to market rental rates. In some jurisdictions’ property leases the
periodic rent is fixed over the lease term.
The Group also leases certain items of plant and equipment. Leases of plant and equipment comprise only fixed payments over the lease terms.
The lease liability recognised by the Group on land and buildings relates to the lease on the London premises. Rent on the premises is fixed, subject to
a market value rent review in 2023.
The payments on leasehold improvements are all fixed payments for the length of the leases.
The Group sometimes negotiates break clauses in its property leases. On a case-by-case basis, the Group will consider whether the absence of a break
clause would exposes the Group to excessive risk. Typically factors considered in deciding to negotiate a break clause include:
-
-
-
the length of the lease term;
the economic stability of the environment in which the property is located; and
whether the location represents a new area of operations for the Group.
At 30 September 2020 the leases recognised do not include any break clauses.
62
63
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 15 INVESTMENTS
Company
Cost
At 30 September 2018 and 2019
Addition
At 30 September 2020
Provisions
At 30 September 2018 and 2019
Charge
At 30 September 2020
Net book value
At 30 September 2018 and 2019
At 30 September 2020
Subsidiaries
£’000
Joint
ventures
£’000
Associate
£’000
10,077
100
10,177
4,596
2,266
6,862
5,481
3,315
21
-
21
-
-
-
21
21
12
-
12
-
-
-
12
12
Total
£’000
10,110
100
10,210
4,596
2,266
6,862
5,514
3,348
The increase in cost of £100k during the year relates to the acquisition of a further 15% equity shareholding in John R Harris & Partners Limited.
A provision for impairment of £2,141k has also been made against the Company’s investment in Shankland Cox Limited as a result of the matters
described in note 11, the value of that subsidiary is considered to have suffered a permanent diminution.
A provision for impairment of £125k has also been made against the Company’s investment in Aukett Fitzroy Robinson International Limited, as the
United Arab Emirates branch of the subsidiary ceased trading when its’ licence expired and was cancelled in July 2020.
The current net book values of the investments in subsidiaries was £5,581k before charges made in the current year, which is larger than the net assets
of the consolidated statement of financial position of £4,374k (2019: £4,514k). After the charge taken on Shankland Cox Limited the net book value of
£3,440k is less than the net assets of the consolidated statement of financial position.
The net book values are supported by the value in use calculations detailed further in note 11.
POTSDAMER PLATZ, BERLIN
n Right-of-use Assets
At 1 October 2019
Additions
Adjustment to brought forward amortisation
Amortisation
At 30 September 2020
n Lease liabilities
At 1 October 2019
Additions
Interest expense
Lease payments
At 30 September 2020
Short-term lease expense
Low value lease expense
Land and
buildings
£’000
2,803
-
-
(325)
2,478
Restoration
costs
£’000
Leasehold
improvements
£’000
188
-
-
(22)
166
Land and
buildings
£’000
3,277
-
92
(232)
3,137
278
-
44
(37)
285
Leasehold
improvements
£’000
278
-
11
(82)
207
Expense relating to variable lease payments not included in the measurement of lease liabilities
Aggregate undiscounted commitments for short-term leases
The maturity analysis of lease liabilities of the Group at each reporting date are as follows:
Total
£’000
3,269
-
44
(384)
2,929
Total
£’000
3,555
-
103
(314)
3,344
£’000
142
17
-
66
At 30 September 2020
Up to 3 months
£’000
Between 3 and
12 months
£’000
Between 1 and
2 years
£’000
Between 2 and
5 years
£’000
Over 5 years
£’000
Lease liabilities
114
340
469
1,300
1,121
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 leases.
Not later than one year
Later than one year and not later than five years
Later than five years
Total
2020
£’000
74
-
-
74
2019
£’000
68
-
-
68
64
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
65
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 n Subsidiary operations
The following are the subsidiary undertakings at 30 September 2020:
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
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
Country of
incorporation and
registered office
address
(see table below)
Proportion of
ordinary equity held
Nature of
business
2020
2019
(A)
(A)
(A)
(B)
(A)
(C)
(D)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
100%
100%
100%
0%
100%
100%
95%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
80%
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
Architecture & design
Architecture & Engineering
Architecture & design
Non-trading
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Fitzroy Robinson West & Midlands Limited
Aukett Swanke OOO was sold to a third party in October 2019.
Aukett Fitzroy Robinson International Limited is incorporated in England & Wales. The entity operated principally through its Middle East branch which
was registered in the Abu Dhabi emirate of the United Arab Emirates. The branch licence expired and was cancelled in July 2020, with new work
continuing through Aukett Swanke Architectural Design Limited.
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 Group was increased from 80% to 95% on the 30th September 2020,
non-controlling interests correspondingly decreased from 20% to 5%.
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.
The UAE domiciled branches are consolidated in to the Group principally based on profit sharing agreements in place.
66
n Interest in associate and joint ventures
Set out below are the associate and joint ventures of the Group as at 30 September 2020. 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
(E)
(F)
(G)
Proportion
of ordinary equity held
Nature of
relationship
Measurement
method
2020
50%
50%
25%
2019
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)
Country of Incorporation
Registered office address
England & Wales
10 Bonhill Street, London, EC2A 4PE, United Kingdom
Russia
Turkey
Cyprus
3 Malaya Polyanka Street, office 501, Moscow, 119180, Russia
Esentepe Mahallesi Kore Şehitleri Caddesi 34, Deniz İş Hanı K.6 34394 Zincirlikuyu, Istanbul, Turkey
17-19 Themistokli Dervi street, The City House, 1066 Nicosia, Cyprus
Germany
Gutleutstrasse 163, 60327 Frankfurt am Main, Germany
Czech Republic
Janackovo Nabrezi 471/49, 150 00 Prague 5, Czech Republic
Germany
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.
Summarised balance sheet
Assets
Non current assets
Current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
2020
£’000
280
6,755
7,035
(3,329)
(3,329)
3,706
2019
£’000
170
4,568
4,738
(1,896)
(1,896)
2,842
67
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 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
2020
£’000
2,842
1,201
102
(439)
3,706
25%
927
927
2020
£’000
13,208
(3,764)
9,444
(7,724)
1,720
(519)
1,201
102
1,303
2019
£’000
2,179
1,065
(4)
(398)
2,842
25%
711
711
2019
£’000
13,425
(5,372)
8,053
(6,525)
1,528
(463)
1,065
(4)
1,061
The Group received dividends of £105,000 after deduction of German withholding taxes (2019: £100,000) 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.
INDUSTRIAL / LEISURE HYBRID
17 INVESTMENTS IN JOINT VENTURES
n Frankfurt
As disclosed in note 15, the Group owns 50% of Aukett + Heese Frankfurt GmbH which is based in Frankfurt, Germany.
At 30 September 2018
Share of profits
Dividends paid
Exchange differences
At 30 September 2019
Share of profits
Dividends paid
Exchange differences
At 30 September 2020
£’000
248
117
(86)
(2)
277
117
(110)
8
292
The Group received dividends of £106,000 after deduction of German withholding taxes (2019: £86,000) 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
2020
£’000
18
500
518
(226)
(226)
292
2020
£’000
1,233
(451)
782
(610)
172
(55)
117
2019
£’000
12
580
592
(315)
(315)
277
2019
£’000
1,030
(343)
687
(516)
171
(54)
117
68
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
69
The principal risks and uncertainties associated with Aukett + Heese Frankfurt GmbH are the same as those detailed within the Group’s Strategic Report.
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 n Prague
As disclosed in note 15, the Group owns 50% of Aukett sro which is based in Prague, Czech Republic.
At 30 September 2018
Share of losses
Exchange differences
At 30 September 2019
Share of profits
Exchange differences
At 30 September 2020
The following amounts represent the Group’s 50% share of the assets and liabilities, and revenue and expenses of Aukett sro.
Assets
Current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets / (liabilities)
Revenue
Sub consultant costs
Revenue less sub consultant costs
Operating costs
Profit / (loss) before tax
Taxation
Profit / (loss) after tax
2020
£’000
105
105
(80)
(80)
25
2020
£’000
347
(141)
206
(172)
34
(4)
30
£’000
-
-
-
-
25
-
25
2019
£’000
88
88
(93)
(93)
(5)
2019
£’000
265
(124)
141
(146)
(5)
-
(5)
In the prior year the carrying value of the investment in the joint venture was limited to £nil as the company had net liabilities. The current year share
of profit is therefore reduced by £5k so that the carrying value of the investment in joint venture matches the Groups’ share of the entities’ net assets
being £25k as at 30 September 2020.
The principal risks and uncertainties associated with Aukett sro are the same as those detailed within the Group’s Strategic Report.
18 TRADE AND OTHER RECEIVABLES
Group
Gross trade receivables
Impairment allowances
Net trade receivables
Other financial assets at amortised cost
Amounts owed by associates and joint ventures
Corporate tax asset
Other current assets
Total
2020
£’000
3,410
(1,031)
2,379
419
41
-
688
3,527
2019
£’000
4,503
(1,022)
3,481
510
37
218
658
4,904
The corporate tax asset of £218k brought forward from the prior year related to cash receivable from UK R&D tax claims. The asset was received during
the year as per the Income Taxes Received line in the Consolidated Statement of Cash Flows.
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 financial assets at amortised cost
Other current assets
Total amounts due within one year
Total
2020
£’000
26
26
1,830
14
30
54
1,928
1,954
2019
£’000
27
27
2,045
10
4
37
2,096
2,123
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.
n Impairment allowances
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected loss allowance for all trade
receivables and contract assets.
To measure the expected credit losses, trade receivables and contract assets have been grouped based on shared credit risk characteristics and the
days past due. The contract assets relate to unbilled work in progress and project retentions, and have substantially the same risk characteristics as the
trade receivables for the same types of contracts. The Group has therefore concluded that the expected loss rates for trade receivables are a reasonable
approximation of the loss rates for the contract assets.
The Group engages with clients who are creditworthy, liquid developers. Management identified that the loss allowances should be calculated and
applied separately based on geographic segments of the Group, and more specifically to each country in which the Group has operations. Whilst the
specific terms each contract the Group engages in may be different, certain common characteristics can be applied.
Provisions on bad and doubtful debts in the UK and Turkey have been immaterial in the historical period reviewed in order to establish the expected
loss rate at 30 September 2020. In the UK the Group generally builds up advances for contract work recognised as a credit to the balance sheet which
reduces the impact of potential bad debts. Amounts due for contract work not yet billed are generally not material. No loss allowance provision has been
made for trade receivables and contracts assets owed to Group entities operating in these countries.
70
71
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 Amounts due for contract work in the Middle East segment are material, with contracts in the Middle East often billed in arrears. Sizeable write offs in
prior years have informed the overall rate calculated for the provisioning matrix.
Whilst the total impairment allowance is comparable with the prior year, impairment allowances as a percentage of gross trade receivables has
increased to 30% (2019: 23%). The reduction in gross trade receivables is primarily a result of the reduced trading in the Group in the final months of
the year compared to the prior year and better rates of debtor collection. Whilst the gross trade receivables and impairment allowance both include a
number of old specific balances maintained from prior years which have been provided for but as yet not formally written off.
The loss allowance for the Middle East operating segment as at 30 September 2020 (excluding additional loss allowances measured on a case-by-case
basis) was determined as follows for both trade receivables and contract assets:
30 September 2020
1-30 days past
due
More than 30
days past due
More than 60
days past due
More than 90
days past due
Current
Expected loss rate (%)
Gross carrying amount (£’000)
Loss allowance (£’000) through CSOFP
3%
1,080
33
4%
69
3
7%
161
11
12%
14
2
16%
552
89
The comparative loss allowance for the Middle East operating segment as at 30 September 2019 was:
30 September 2019
1-30 days past
due
More than 30
days past due
More than 60
days past due
More than 90
days past due
Current
Expected loss rate (%)
Gross carrying amount (£’000)
Loss allowance (£’000) through CSOFP
3%
1,955
67
4%
100
4
8%
193
16
15%
105
15
20%
399
78
Total
1,876
138
Total
2,752
180
The loss allowance for the Middle East operating segment as at 30 September 2020 was determined as follows for both trade receivables and contract
assets:
The loss allowance was initially calculated in United Arab Emirate Dirhams (AED) being the functional currency of the Group entities in the Middle
East operating segment. On conversion to GBP in the Group consolidation, the carried forward loss allowance is converted at the balance sheet rate,
whereas the movement in the loss allowance in the year is converted at the average rate in the statement of comprehensive income. A foreign exchange
difference of (£8k) arises which is taken through the foreign currency translation reserve.
Opening loss allowance provision as at 1 October 2019
Loss allowance provision
Amounts restated through opening Foreign Currency translation reserve
Loss allowance calculated based on ECL loss matrices
Additional provisions identified on a case by case basis
Total loss allowance as at 30 September 2020 - calculated under IFRS 9
Contract assets
£’000
Trade receivables
£’000
17
3
-
20
-
20
163
(37)
(8)
118
913
1,031
The loss allowances decreased by £45k to £118k for trade receivables and increased by £3k to £20k for contract assets during the year to 30 September
2020.
A further allowance for impairment of trade receivables and contract assets is established on a case-by-case basis (amounting to £913k at 30 September
2020 and £859k at 30 September 2019 when there are indicators suggesting that the specific debtor balance in question has experienced a significant
deterioration in credit worthiness. 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 or contract asset 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.
The movement on impairment allowances for trade receivables was as follows:
At 30 September 2018
Loss allowance provision
Charged to the income statement based on additional case by case provisions
Allowance utilised
Exchange differences
At 30 September 2019
Loss allowance provision
Charged to the income statement based on additional case by case provisions
Allowance utilised
Exchange differences
At 30 September 2020
19 TRADE AND OTHER PAYABLES
Group
Trade payables
Other taxation and social security
Other payables
Accruals
Total
Company
Trade payables
Amounts owed to subsidiaries
Other payables
Accruals
Total
See note 33 for further details of the amounts due to subsidiaries.
£’000
1,095
(25)
137
(243)
58
1,022
(37)
105
(20)
(39)
1,031
2019
£’000
1,760
573
123
2,072
4,528
2019
£’000
26
2,389
4
273
2,692
2020
£’000
1,713
549
145
926
3,333
2020
£’000
57
2,156
103
114
2,430
72
73
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 20 BORROWINGS
Group
Secured bank loan
Finance lease liabilities
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
2020
£’000
155
-
155
155
155
-
-
-
155
2019
£’000
325
278
603
331
331
136
136
272
603
Finance lease liabilities were included in borrowings until 30 September 2019, but were reclassified to lease liabilities on 1 October 2019 in the process
of adopting the new leasing standard. See notes 14 & 34 for further information about the change in accounting policy for leases.
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
2020
£’000
155
155
155
155
-
-
-
155
2019
£’000
325
325
260
260
65
-
65
325
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.
21 ANALYSIS OF NET FUNDS
Group
Cash at bank and in hand
Cash and cash equivalents
Secured bank loan (note 20)
Net funds
74
2020
£’000
992
992
(155)
837
2019
£’000
1,145
1,145
(325)
820
22 DEFERRED TAX
Group
At 30 September 2018
Income statement
Exchange differences
At 30 September 2019
Income statement
Exchange differences
At 30 September 2020
Group
Deferred tax assets
Deferred tax liabilities
Net deferred tax balance
Tax depreciation
on plant and
equipment
£’000
89
(5)
-
84
(41)
-
43
Trading
losses
£’000
280
(163)
-
117
68
-
185
Other
temporary
differences
£’000
(53)
(9)
1
(61)
(1)
1
(61)
2020
£’000
214
(47)
167
Total
£’000
316
(177)
1
140
26
1
167
2019
£’000
193
(53)
140
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 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 2018
Utilised
Recorded in property, plant and equipment (note 15)
Charged to the income statement
Exchange differences
At 30 September 2019
Utilised
Charged to the income statement
Exchange differences
At 30 September 2020
Property lease
provision
£’000
Employee benefit
obligations
£’000
-
-
210
-
-
210
-
-
-
210
927
(232)
-
163
55
913
(205)
121
(47)
782
Property lease provision
The provision arose from lease obligations in respect of the Company’s leased London premises.
Total
£’000
927
(232)
210
163
55
1,123
(205)
121
(47)
992
75
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 There are uncertainties around the provision due to the fact that costs may increase over the period to maturity and the eventual outturn will be
dependent on the level of negotiation over settlement of proposals with the Company’s landlord.
25 SHARE OPTIONS
The provision payable in greater than five years reflects the future estimated cost of work to be performed.
The effect of time value of money is not considered material, having been assessed by Management as a risk free rate of 10 year UK government bonds.
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 key actuarial assumptions used in the calculation are detailed below:
Combined average length of service
Discount rate
Salary growth rate
2020
5 years
1.04%
1.5%
2019
5 years
1.98%
1.2%
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.
Combined average length of service
Salary growth rate
Discount rate
Impact on employee benefit obligation
Change in assumption
Increase in assumption
Decrease in assumption
1 year
1%
1%
1.34%
0.20%
(0.19)%
(3.79)%
(0.20)%
0.20%
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.
24 SHARE CAPITAL
Group and Company
Allocated, called up and fully paid
165,213,652 (2019: 165,213,652) ordinary shares of 1p each
At 1 October 2018
No changes
At 30 September 2019
No changes
At 30 September 2020
2020
£’000
1,652
2019
£’000
1,652
Number
165,213,652
-
165,213,652
-
165,213,652
The Company’s issued ordinary share capital comprises a single class of ordinary share. Each share carries the right to one vote at general meetings of
the Company.
The objectives, policies and processes for managing capital are outlined in the strategic report.
76
The Company has granted options over its Ordinary Shares to Group employees as follows:
At 1 October
2019
Number
500,000
Granted
Number
-
-
1,000,000
500,000
1,000,000
Granted
6 March 2017
24 Aug 2020
Total
At 30
September
2020
Number
500,000
1,000,000
1,500,000
Lapsed
Number
-
-
-
Exercise
price
Pence
4.25
3.60
Earliest
exercisable
date
Latest
exercisable
date
6 March 2019
6 March 2023
24 Aug 2022
24 Aug 2026
The 500,000 share options granted on 6 March 2017 relate to Beverley Wright, a former Director of the Company. The 1,000,000 share options granted
on 24 August 2020 relate to Antony Barkwith, a current Director of the Company. These share options vested and vest respectively 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 GENERATED FROM OPERATIONS
Group
(Loss) / profit before tax – continuing operations
Finance costs
Share of results of associate and joint ventures
Intangible amortisation
Depreciation
Amortisation of right-of-use assets
Profit on disposal of property, plant & equipment
Decrease in trade and other receivables
(Decrease) / increase in trade and other payables
Change in provisions
Unrealised foreign exchange differences
Net cash generated from operations
Company
(Loss) / profit before income tax
Dividends receivable
Finance costs
Depreciation
Provision on investments
Decrease / (increase) in trade and other receivables
(Decrease) / increase in trade and other payables
Unrealised foreign exchange differences
Net cash generated from operations
2020
£’000
(46)
112
(442)
79
74
340
-
989
(794)
(79)
(82)
151
2020
£’000
(1,812)
(211)
9
2
2,266
169
(362)
(16)
45
2019
£’000
292
42
(382)
81
150
-
(3)
425
86
(68)
24
647
2019
£’000
335
(186)
24
-
-
(580)
395
22
10
77
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 n Changes in liabilities arising from financing activities including changes arising from cash flows and non-cash changes
Group
At 1 October 2019 (as originally stated)
IFRS16 Lease Liabilities
At 1 October 2019 (restated)
Cash flows
- Repayment of borrowings
- Payment of interest
- Payment of lease liabilities
Non-cash flows
- Effects of foreign exchange
- Loans and borrowings classified as non-current
at 30 September 2020
- Interest accrued in period
At 30 September 2020
Company
At 1 October 2019
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 2020
- Interest accrued in period
At 30 September 2020
Non- current loans and
borrowings
£’000
Current loans and
borrowings
£’000
272
3,137
3,409
-
-
-
-
(604)
-
2,805
331
140
471
(154)
(9)
(314)
(16)
604
112
694
Non- current loans and
borrowings
£’000
Current loans and
borrowings
£’000
65
-
-
-
(65)
-
-
260
(154)
(9)
(16)
65
9
155
Total
£’000
603
3,277
3,880
(154)
(9)
(314)
(16)
-
112
3,499
Total
£’000
325
(154)
(9)
(16)
-
9
155
HAUS AN DER DAHME, BERLIN
27 FINANCIAL INSTRUMENTS
n 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.
n Categories of financial assets and liabilities
Group
Net trade receivables
Contract assets
Other financial assets at amortised cost
Amounts owed by associate and joint ventures
Cash at bank and in hand
Loans and receivables measured at amortised cost
Trade payables
Other payables
Accruals
Lease liabilities
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 measured at amortised cost
Trade payables
Amounts owed to subsidiaries
Other payables
Accruals
Secured bank loan
Financial liabilities measured at amortised cost
Net financial instruments
2020
£’000
2,379
628
419
41
992
4,459
(1,713)
(145)
(926)
(3,554)
(155)
(6,493)
(2,034)
2020
£’000
1,830
40
30
164
2,064
(57)
(2,156)
(103)
(114)
(155)
(2,585)
(521)
2019
£’000
3,481
663
510
37
1,145
5,836
(1,760)
(123)
(2,072)
(278)
(325)
(4,558)
1,278
2019
£’000
2,045
37
4
88
2,174
(26)
(2,389)
(4)
(273)
(325)
(3,017)
(843)
78
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
79
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.
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 n Collateral
As disclosed in note 20 the bank loan and overdraft (undrawn at 2019 and 2020 year ends) 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
2020
£’000
3,052
1,025
2019
£’000
3,464
1,044
Other receivables in the consolidated statement of financial position include a £207k rent security deposit (2019: £279k) in respect of the Group’s
London studio premises. The rent deposit redeems a cash sum of £279k at the end of the term of the lease in May 2028. As disclosed in Note 34, on
adoption of IFRS 16 £60k was capitalised as a right of use asset with a (£1k) adjustment to retained earnings.
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
Net financial instruments held in foreign currencies
Company
Czech Koruna
EU Euro
Russian Rouble
US Dollar
UAE Dirham
Net financial instruments held in foreign currencies
2020
£’000
26
21
-
1,844
(3)
(11)
1,877
2020
£’000
26
20
-
(12)
999
1,033
2019
£’000
37
18
719
1,993
(46)
(252)
2,469
2019
£’000
37
18
40
(252)
945
788
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.
Group
Company
2020
Profit
£’000
25
103
Equity
£’000
132
-
2019
Profit
£’000
1
79
Equity
£’000
203
-
The following foreign exchange gains / (losses) arising from financial assets and financial liabilities have been recognised in the income statement:
Group
Company
2020
£’000
(12)
(19)
2019
£’000
(17)
18
29 COUNTERPARTY RISK
n 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 an IFRS 9 impairment loss allowance has been made, as the directors consider their recovery is probable,
was:
Not overdue
Between 0 and 30 days overdue
Between 30 and 60 days overdue
Greater than 60 days overdue
Total
Not overdue
Between 0 and 30 days overdue
Between 30 and 60 days overdue
Greater than 60 days overdue
Total
Receivables pre-allowance
2020
£’000
loss
allowance
£’000
Receivables post-allowance
2020
£’000
1,038
306
222
931
2,497
(13)
(3)
(11)
(91)
(118)
1,025
303
211
840
2,379
Receivables pre-allowance
2019
£’000
loss
allowance
£’000
Receivables post-allowance
2019
£’000
2,206
508
336
594
3,644
(49)
(5)
(16)
(93)
(163)
2,157
503
320
501
3,481
The processes undertaken when considering whether a trade receivable may be impaired are set out in notes 2 and 18.
All amounts overdue have been individually considered for any indications of impairment and specific provision for impairment made where considered
appropriate. All of the trade receivables specifically considered to be impaired were greater than 90 days overdue.
An additional expected loss allowance provision has then been applied to the residual trade receivables as detailed in note 18.
The concentration of counterparty risk within the £3,007k (2019: £4,144k) 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.
80
81
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 Largest exposure
Second largest exposure
Third largest exposure
2020
£’000
323
128
120
2019
£’000
759
304
203
The Group’s principal banker is Coutts & Co, a member of the Royal Bank of Scotland group.
At 30 September 2020 the largest exposure to a single financial institution represented 55% of the Group’s cash and cash equivalents held by John R
Harris & Partners Limited with The National Bank of Ras Al-Khaimah (P.S.C) (2019: 73% held by Shankland Cox Limited with Emirates NBD Bank PJSC,
a Dubai government-owned bank).
n 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.
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
2020
£’000
278
(155)
-
123
2020
£’000
(155)
(155)
2019
£’000
278
(325)
-
(47)
2019
£’000
(325)
(325)
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.
Group
Company
82
2020
£’000
1
(2)
2019
£’000
-
(3)
31 LIQUIDITY RISK
The Group’s cash balances are held at call or in deposits with very short maturity terms.
At 30 September 2020 the Group had £850,000 (2019: £850,000) of gross borrowing facility and £500,000 net borrowing facility (2019: £500,000) under
its United Kingdom bank overdraft facility. In November 2020 Coutts & Co renewed the overdraft facility, maintaining it at £500,000, which is now next
due for review in November 2021, with an interim review in May 2021.
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 2019
Timing of cashflows
Within one year
Between one and two years
Between two and five years
Greater than five years
Expected future charges through the income statement
Financial liabilities at 30 September 2020
Borrowings
£’000
Lease liabilities
£’000
Other financial
liabilities
£’000
362
160
141
663
(34)
629
157
-
-
-
157
(2)
155
-
-
-
-
-
-
547
547
1,450
1,161
3,705
(361)
3,344
3,955
-
-
3,955
-
3,955
2,784
-
-
-
2,784
-
2,784
Total
£’000
4,317
160
141
4,618
(34)
4,584
3,488
547
1,450
1,161
6,646
(363)
6,283
At 30 September 2019, borrowings included finance leases on leasehold Improvements. On adoption of IFRS16 these have been reclassified as lease
liabilities. At 30 September 2020, lease liabilities includes the finance lease on leasehold improvements and the land and buildings office lease (see
note 14) recognised on adoption of IFRS 16 (note 34).
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 2019
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 2020
Borrowings
£’000
Other
financial liabilities
£’000
268
66
-
334
(9)
325
157
-
-
157
(2)
155
2,692
-
-
2,692
-
2,692
2,430
-
-
2,430
-
2,430
Total
£’000
2,960
66
-
3,026
(9)
3,017
2,587
-
-
2,587
(2)
2,585
83
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 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 2020 the overdrafts of its United
Kingdom subsidiaries guaranteed by the Company totalled £nil (2019: £75,000).
The Company and certain of its United Kingdom subsidiaries are members of a group for Value Added Tax (VAT) purposes. At 30 September 2020 the
net VAT payable balance of those subsidiaries was £376,000 (2019: £251,000).
At the year end, one of the Group’s Middle East subsidiaries had outstanding letters of guarantee totalling £110,000 (2019: £95,000). 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 has contractual commitments totalling £nil (2019: £40,000) per annum in respect of software maintenance plans, which expired in December
2019. The total future commitments arising under these contracts as at the balance sheet date amount to £nil (2019: £40,000).
The Group has contractual commitments totalling £3,000 (2019: 3,000) per annum in respect of an IT hardware plan, expiring in December 2021. The
total future commitments arising under this contract as at the balance sheet date amount to £4,000 (2019: £7,000).
33 RELATED PARTY TRANSACTIONS
n 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
The key management personnel of the Company comprises its Directors.
Company
Short term employee benefits
Post employment benefits
Total
2020
£’000
1,221
109
1,330
2020
£’000
585
42
627
2019
£’000
1,349
120
1,469
2019
£’000
589
58
647
n 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 £47,000 (2019: £48,000). Aukett + Heese Frankfurt GmbH charged the Group £nil (2019: £nil) for architectural services. Dividends of £106,000 (2019:
£86,000) 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 (2019: £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 £63,000 (2019: £64,000). Dividends of £105,000 (2019: £100,000) were received from Aukett + Heese GmbH during the year. The amount
owed to the Group by Aukett + Heese GmbH at 30 September 2020 was £nil (2019: £nil).
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 £14,000 (2019: £5,000) were made to Aukett sro in respect of these services. The Group was also charged £nil (2019: £2,000) for architectural
services provided by Aukett sro during the year, of which £nil (2019: £nil) was owed by the Group at the balance sheet date. Separately, Aukett sro owed
the Group and the Company £40,000 as at 30 September 2020 (2019: £37,000) relating to previously declared but not yet paid dividends, management
fees and name licence charges.
84
None of the balances with the associate or joint ventures are secured.
n 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 £971,000 (2019: £1,164,000) and paid charges to its subsidiaries
for office accommodation and other related services of £95,000 (2019: £90,000).
At 30 September 2020 the Company was owed £1,830,000 (2019: £2,045,000) by its subsidiaries and owed £2,156,000 (2019: £2,389,000) 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.
Under IFRS 9, the Company has recorded no allowance for expected credit losses, as all subsidiaries owing funds to the Company are in a position to
repay the amounts owed in line with the payment terms stipulated by the Company.
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 CHANGES IN ACCOUNTING POLICIES
This note explains the impact of the adoption of IFRS 16 Leases on the Group’s financial statements and discloses the new accounting policies that have
been applied from 1 October 2019, where they are different to those applied in prior periods.
The Group has adopted IFRS 16 retrospectively from 1 October 2019, but has not restated comparatives for the 2018-19 reporting period, as permitted
under the modified retrospective cumulative catch-up transitional provisions in the standard. The reclassifications and the adjustments arising from the
new leasing rules are therefore recognised in the opening balance sheet on 1 October 2019.
n 34a) Adjustments recognised on adoption of IFRS 16
Operating lease commitments disclosed as at 30 September 2019
Adjustment for conditional rent free periods
(Less): short-term leases recognised on a straight-line basis as expense
(Less): low-value leases recognised on a straight-line basis as expense
Discounted using the lessee’s incremental borrowing rate of at the date of initial application
Add: finance lease liabilities recognised as at 30 September 2019
Lease liability recognised as at 1 October 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
£’000
3,637
193
(103)
(12)
3,715
3,277
278
3,555
211
3,344
3,555
The associated right-of-use assets for property leases were measured on a retrospective basis as if the new rules had always been applied. Other right-
of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to
that lease recognised in the balance sheet as at 30 September 2019. There were no onerous lease contracts that would have required an adjustment to
the right-of-use assets at the date of initial application.
85
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
The recognised right-of-use assets relate to the following types of assets:
Properties (operating lease type assets)
Properties (rent deposit)
Leasehold improvements (finance lease type assets)
Total right-of-use assets
30 September 2020
£’000
1 October 2019
£’000
2,426
52
451
2,929
2,743
60
466
3,269
n Impact on the financial Statements
The following table shows the adjustments recognised for each individual line item. Line items that were not affected by the changes have not been
included. As a result, the sub-totals and totals disclosed cannot be recalculated from the numbers provided.
30 Sep 2019
as originally
presented
£’000
Finance lease type
assets
IFRS 16
£’000
Restoration costs
IFRS 16
£’000
Operating lease
type assets
IFRS 16
£’000
590
-
4,945
4,904
6,712
11,657
(4,528)
(331)
-
(5,695)
(272)
-
(1,123)
(1,448)
(7,143)
4,514
37
4,381
4,514
(278)
278
(188)
188
-
-
-
-
71
(71)
-
207
(207)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,803
2,803
(60)
(60)
2,743
533
-
(140)
393
-
(3,137)
-
(3,137)
(2,744)
(1)
(1)
(1)
(1)
1 Oct 2019
as restated
£’000
124
3,269
7,748
4,844
6,652
14,400
(3,995)
(260)
(211)
(5,302)
(65)
(3,344)
(1,123)
(4,585)
(9,887)
4,513
36
4,380
4,513
Property, plant & equipment
Right-of-use assets
Total non current assets
Current Assets
Trade and other receivables
Total current assets
Total assets
Current liabilities
Trade and other payables
Borrowings
Lease liabilities
Total current liabilities
Non current liabilities
Borrowings
Lease liabilities
Provisions
Total non current liabilities
Total liabilities
Net assets
Retained Earnings
Total equity attributable to equity
holders of the Company
Total equity
86
n Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
-
the accounting for operating leases with a remaining lease term of less than 12 months as at 1 October 2019 as short-term leases.
The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into
before the transition date the Group relied on its assessment made applying IAS 17 and IFRIC 4 Determining whether an Arrangement contains a Lease.
As the Group has applied the modified retrospective transition approach, for leases previously classified as finance leases the lease liability on transition
is unchanged, being the carrying amount of the lease liability immediately before the date of initial application.
n 34b) The Group’s leasing activities and how these are accounted for
The Group leases various offices, leasehold improvements relating to office fit-out costs, and IT equipment. Rental contracts are typically made for
fixed periods of 3 to 5 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease
agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
Until the financial year ended 30 September 2019, leases of property, plant and equipment were classified as either finance or operating leases.
Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the
period of the lease.
From 1 October 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use
by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period
so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over
the shorter of the asset’s useful life and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following
lease payments:
-
-
-
-
-
fixed payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payment that are based on an index or a rate;
amounts expected to be payable by the lessee under residual value guarantees;
the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee’s incremental borrowing
rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic
environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
-
-
-
-
the amount of the initial measurement of lease liability;
any lease payments made at or before the commencement date less any lease incentives received;
any initial direct costs; and
restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-
term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment with a value when new of £4,000 or less.
35 CORPORATE INFORMATION
General corporate information regarding the Company is shown on page 14. The addresses of the Group’s principal operations are shown on page 2.
A description of the Group’s operations and principal activities is given within the Strategic Report.
87
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 Shareholder information
n 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
n 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.
n 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 9.00am to 5.00pm,
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.shareview.
co.uk.
n Investor relations
In accordance with AIM Rule 26 regarding company information disclosure, various investor orientated information is available on our web site at www.
aukettswankeplc.com.
The Company Secretary can be contacted by email at cosec@aukettswanke.com.
n 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.
88
Luke Schuberth, UK managing director of Aukett Swanke, said: “EQ will be a first
class piece of architecture that we have enjoyed being involved in creating. It is
testament to a client that has clear ambition and vision and a design team that
has a strength in depth and a culture of pushing innovation. It has been a joy to
design EQ, to stretch the boundaries of office design with health and well-being
and a sustainable ethos that is at the core. The building will increase the energy
of the people within it, whilst reducing the energy required to run it. We are
delighted that it will now be realised and look forward to its completion.”
EQ, BRISTOL
“
EQ will be a first class piece of architecture that we have
enjoyed being involved in creating. It is testament to a client
that has clear ambition and vision and a design team that
has a strength in depth and a culture of pushing innovation.
It has been a joy to design EQ, to stretch the boundaries of
office design with health and well-being and a sustainable
ethos that is at the core. The building will increase the
energy of the people within it, whilst reducing the energy
required to run it.
We are delighted that it will now be realised and look
forward to its completion.”
LUKE SCHUBERTH, MANAGING DIRECTOR - UK
AUKETT SWANKE
89
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020 www.aukettswankeplc.com
Designed and produced by Aukett Swanke Graphics
© Copyright 2021 / Aukett Swanke Group Plc
90
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020