&annual
report
accounts
2021
AUKETT SWANKE GROUP PLC
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
1
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 over 250 staff in six locations across four countries.
The studios’ expertise includes work in commercial office, hotel,
retail, residential, education, hybrid and healthcare sectors as well
as workplace consulting.
COVER / INSIDE COVER: STEAMHOUSE, EASTSIDE LOCKS, BIRMINGHAM
A2
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
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
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
John R Harris & Partners /
Shankland Cox Ltd
Sidra Tower, Office No 1308 & 9
Sheik Zayed Road
PO Box 31043
DUBAI
United Arab Emirates
T +971 (0) 4 286 2831
dubai@johnrharris.com
T +971 (0) 3 766 9334
info@shanklandcox.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
Swanke Hayden Connell Mimarlik AS
Esentepe Mahallesi Kore Şehitleri Caddesi 3
4/6 Deniz İş Hanı
34394 Zincirlikuyu
ISTANBUL
Turkey
T +90 212 318 0400
istanbul@aukettswanke.com
Aukett Swanke Group Plc
1 Lonsdale Gardens
TUNBRIDGE WELLS
Kent TN1 1NU
United Kingdom
T +44 (0) 20 7843 3000
plcenquiries@aukettswanke.com
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
key international people
UK
LUKE SCHUBERTH
Managing Director - UK
SUZETTE VELA BURKETT Managing Director - UK
NICK PELL
TOM ALEXANDER
KEITH MORGAN
JAMES ATHA
Interior Design Director, Int’l
Director, Aukett Swanke
Managing Director - Veretec
Director, Veretec
GORDON MCQUADE
Director, Veretec
MIDDLE EAST
STEPHEN EMBLEY
SUBRAYA KALKURA
YOUSSEF FAKACH
OMID ROUHANI
Managing Director -
Middle East
Director, John R Harris &
Partners
Director, Shankland Cox
Director, Aukett Swanke
Architectural Design
CONTINENTAL EUROPE
BURCU SENPARLAK
General Manager, Istanbul
ZEYNEP ORBERK
BULENT DUNDAR
LUTZ HEESE
Director, Istanbul
Director, Istanbul
Managing Director -
Aukett + Heese
ANDREW HENNING JONES Director, Aukett + Heese
Director, Aukett + Heese
MARCUS DIETZSCH
Frankfurt
EXECUTIVE MANAGEMENT
NICHOLAS THOMPSON
ANTONY BARKWITH
ROBERT FRY
BEVERLEY WRIGHT
Chief Executive Officer
Group Finance Director &
Company Secretary
Executive Director &
Managing Director - Int’l
Director of Corporate
Finance & Strategy
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
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london • berlin • dubai • frankfurt • istanbul • tunbridge wellsour studios
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 • Argent Related • Arlington • Arup • Ascot Underwriting • Astrea • Avgur Estate •
Aviva • AXA • Azzedine Alaia • Baker McKenzie •
Bank of America Merrill Lynch • Batıkent Yapi Sanayi ve
Ticaret • Bautek A.S • BCM McAlpine • Bell Hammer
• Bentall Green Oak • BioIstanbul • BioMed Realty •
Birmingham City University • Blackstone Group • Blenheim House Construction • Bloomberg • BNP Paribas
• BNY Mellon • Bovis Lendlease • Bristows • Bundesdruckerei • Buro Happold • Buwog • Cambridge
University Hospitals NHS Trust • Canadian Embassy, Moscow • Candy & Candy • CAPCO • CBRE Global
Investors • Cedar Capital • CEG • Cengiz Holding • Central Properties • Chrome Hearts • CIN LaSalle •
Cisco • City of London Academy • Cofunds • Commerzbank • Corinthia Hotel Group • Corporation of London
• Cornerstone Investment & Real Estate • Countryside Properties • CPI • CR City • CR Office • Credit Suisse
• Crowne Plaza Hotels • Dacorum Borough Council • Daimler Chrysler • Damac • Danfoss • DB Schenker
• Decathlon • Deloitte • Derwent • Deutsche Bank • Dimension Data • DGV Consulting • Doğuş GYO •
du • Dunhill • DWS • Eastman Group • Ede & Ravenscroft • Emaar Hospitality Group LLC • Emlak Konut •
Endurance Estates • EO Engineers Office (Dubai) • Equa Bank • Ernst & Young • Er Yatırım • Ethical Property
Company • Etisalat • Eurofinance Bank • Exxon Mobil • F&C Reit • Faithdean • Fenwick • Fiba Gayrimenkul
• FIM Group • Firoka • First Bank • Formal Investments • Frasers Property • Freshwater • GD Investments
• GE Capital • Generali • Gertler • Global Stream • GMO Group • Goldman Sachs • Goodman • Google
• Great Portland Estates • Group M • 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 • ISG • IşGYO
• Italian Embassy, Czech Republic • J&T Global • Jarrold & Son • Jesus College, Cambridge • John Martin
Gallery • Johnson Controls • Jones Lang LaSalle • Joseph Homes • JP Morgan • JTI Russia • KaDeWe
• Kadans • Kalinka Realty • KfW Bank • Khansaheb • Kier Build • Kiler Holding • Knight Frank • Knight
Harwood • Koray Inşaat • Korine Property Partners • KPMG • KR Properties • KSA • Labtech • Laing
O’Rourke Middle East Holdings • La Meridien • Landsec • LaSalle Investment • Lendlease • Lesso • Lidl •
London Square • L’Oréal • Loughborough University • M&G Investments • Macquarie Bank • Man Group •
Marcol • Marks & Spencer • Mars, Wrigley, Royal Canin • Marsan AS • Marriott • McLaren • MEPC • Mercury
• Merkur Development • MFI • MICEX • Microsoft • Miral • Mobile TeleSystems (MTS) • Moody’s • Molson
Coors • Morgans Hotel Group • Mott Macdonald • Mouchel • MR Group • Multiplex • Napp Pharmaceuticals
• National Grid • Nations Bank • Native Land • NATS • NDA • Network Rail • Nextra • New York University •
Nicholson Estates • NIDA Insaat • Nike • Novartis • Nurol GYO • Oceanic Estates • Open University • Opin
Group • Optima Corporation • Osborne • Orchard Homes • Orchard Street Investments • Oxford Properties •
Palestra • Park City • Pera Gayrimenkul • Pfizer • Phillips • Phoenix Development • Pilsner Urquel • 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 • Regal London • Reignwood
Investment UK • Renaissance Capital • Reuters • Rezidor • Richemont • Rio Tinto • Robin Oil • Rocco Forte
Hotels • Rodrigo Hidalgo • Rönesans Gayrimenkul Yatırım • Rovner Investment Group • Royal Bank of Scotland
• Royal Exchange • Royal London • RWE npower • SAB Miller • Safestore • Sanofi • SAP • Savills •
Second Watch Factory Slava • Servotel • Schlumberger • Scottish Development Agency • Scottish Widows •
Segro • Sellar Group • Seniats • Shell • Siemens • Sir Robert McAlpine • Skanska • Skype • Sotheby’s •
Southampton Solent University • South Cambridgeshire District Council • Southwark Council • Soyak Inşaat •
Standard Life Investments • St John’s College, Cambridge • Staropramen Breweries • Stephenson Harwood •
Stone Brewing • Sumitomo Mitsui Banking Corporation (SMBC) • Suse Linux • Swan Operations • Symantec
• Syngenta International • Tahincioğlu Gayrimenkul • Talan • Takeda • TAT Immobilen • Taylor Wimpey •
TDIC • TechInvest • Tekar • Tekfen Emlak • Telereal Trillium • Tenkhoff Properties • The Arch Company • 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 • Travis Perkins • Trilogy • Trinity
College, Cambridge • Trinity Hall • Türkiye Finans Katılım Bankasi • UCB • UGMK Holding • U+I • UK Expo
Pavilion 2020 • University of Cambridge • University of Sheffield • Vakifbank • Vestas • Vinci Construction •
VMWare • Vodafone • Voreda • Wates • Welbeck Land • Westminster City Council • White & Case • Willis
Group • WPP • XLB Properties • Zamania • Züblin • Zurich Insurance Group •
contents
Studio locations
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
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18 - 22
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
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our clients include . . . news & highlights
New websites launched this year
Following on from the successful launch of our website for Aukett Swanke Group Plc in December 2020, we
have launched further websites during 2021: for the Aukett Swanke London studio at www.aukettswanke.com,
for Veretec at www.veretec.co.uk, for Aukett + Heese’s Berlin studio at www.aukett-heese.de and for Aukett +
Heese’s Frankfurt studio at www.aukett-heese-frankfurt.de
This year we are placed at 68th in the
AJ100 League Table, up two places from 2020.
AJ100 is the Architect’s Journal annual survey
of the world’s largest practices ranked by the
number of UK qualified architects.
Retirement of John Bullough
John Bullough retired from the Board of Aukett Swanke Group Plc in March 2021 after
seven years service.
During his long career in property, he became a very eminent and well-known figure in
the industry, both in the UK and in the UAE. Following 18 years with Grosvenor, with a
string of successful bids for town centre redevelopments, creating truly interesting places,
he was Chief Executive of Abu Dhabi’s ALDAR Properties until 2010. Amongst his many
distinguished industry roles he was President of the British Council of Shopping Centres.
We have been exceptionally privileged to benefit from his experience and his wisdom, and
we shall miss his contagious and uplifting enthusiasm, his generosity of spirit, his profound
emotional intelligence and his passion for the built environment in its broadest sense.
This year we are placed at 63rd in the
Building Design 2021 World Architecture 100
League Table.
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 sixth largest UK
registered practice on the table and one of only
17 UK practices to appear in these rankings.
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
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STEAMhouse, Eastside Locks nearing completion
Our project for Birmingham City University at Eastside Locks in Birmingham is nearing completion after two years on site. The project brings together
multiple faculties into one HQ innovation hub and incorporates the historic and locally listed Belmont Works, whose industrial heritage as part of
a Victorian factory complex is a key driver for the design. This is reflected in the formation of the large extension to the rear of the existing building,
which aims pays homage to the industrial past while being sensitive to its historic counterpart. The production heritage of the site and context marries
perfectly with its future purpose, where the products, services and companies of the future will be created through interdisciplinary collaboration.
Once the base build is complete, our Interiors Team in London will undertake the fitout for the University in time for the start of the academic year.
UK Pavilion opens to the public at
EXPO 2020 in Dubai
Veretec were part of the competition winning multi-disciplinary team, alongside celebrated designer
Es Devlin, to deliver the UK’s showcase pavilion at the 2020 World Expo in Dubai, which opened in
October 2021.
The UK Pavilion, designed by Es Devlin Studios, uses mass timber constructed in a conical form
from CLT and Glulam cassettes inset with LED screens allowing visitors to submit words through a
smartphone app to create illuminated and imaginative poems.
A hugely complex integration of services was concealed within the structure using innovative
methods of design and construction – a fantastic achievement from this truly unique design team!
A new City Quarter
in Berlin
AUKETT + HEESE have been commissioned
by pwr development, in collaboration with
architects Herzog & de Meuron, who are
responsible for the design, to develop the
planning for new residential, office and
retail buildings in Am Tacheles, Berlin.
The masterplan for a new urban quarter
envisages a mix of new buildings and a
redevelopment of more than 20,000sqm.
The sub-projects planned by AUKETT +
HEESE have a gross area of 56,200sqm and
will be completed between 2022 and 2023.
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
Serving an ace in Wimbledon
Planning approval has been granted for St George’s House East, a 300,000sqft gross flagship office development designed
by Aukett Swanke for M&G Real Estate working with Bell Hammer. The project was won through a competitive process that
led to the commission to develop proposals for a new headquarters office above retail that builds on the site’s prominent
gateway position and Council’s emerging plans for Wimbledon. Through a highly collaborative process the proposals were
developed to planning through 2021 and with the London Borough of Merton’s planning team to create one of the first
phases in delivering their wider Future Wimbledon Vision.
The building will provide 190,000sqft of office space, including affordable workspace, 14,700sqft retail space and over 300
cycle parking spaces. It will be BREEAM Excellent with Zero Operation Emissions by 2030 and 195% net biodiversity gain.
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
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Veretec’s new project
with Heatherwick
Studio
Veretec have been appointed as lead consultant
to work alongside Heatherwick Studio for a state
of the art redevelopment and refurbishment
of the former Eli Lilly campus in Windlesham,
Surrey for UCB Celltech.
The project will include extensive refurbishment
/ remodelling of the existing buildings on the
19Ha campus, providing new state of the art
laboratory facilities.
chairman’s statement
Raúl Curiel - Chairman
3O March 2022
This is my third year as Non-Executive Chairman, and the challenges that the business has experienced
during this period have been unprecedented: first Brexit, then the Covid pandemic, and finally - at the
time of writing - the ongoing tragedy taking place in Ukraine.
During the last financial year, the world continued to suffer the aftershocks of the worldwide pandemic, but
the latest Omicron variant appears to be considerably less lethal than the previous ones. In consequence,
many countries are starting to relax the strict measures that have been in place for almost two years,
and there is a gradual return to many pre-pandemic activities, including an uplift of international travel.
Were this the remaining major challenge, we would say with some confidence that the services we
provide would be determined by the market economics that we were previously accustomed to and
experienced in dealing with. However, the invasion of the Ukraine by Russian forces has introduced a
further challenge to the business. Leaving aside the appalling humanitarian tragedy developing in front
of our eyes, and the obvious impossibility to predict either the nature of the outcome or of its timing,
these conditions will make exceptional demands on our management and our talented professionals.
Despite these once-in-a-lifetime challenges, our executive team and our highly motivated staff have
continued to exercise their considerable talents to work through these demanding environments. They
have retained their energy, optimism, and creativity to provide the very highest levels of client service that
is a key part of our company’s reputation.
Governments throughout the world will continue to use the resources within their reach to power up
their economies out of the pandemic. It is axiomatic that the building industry is one of the motors of
the economy, and it is one of the few sectors that has continued to operate even during periods of total
lockdown. It is thus not unreasonable to expect that demand for design services will continue, albeit in
a modified form.
During this financial year, we have seen a continuing level of demand in all our markets, with a steady
level of enquiries that have often converted into commissions. As we said in last year’s Report and is
equally applicable now: we remain focused on maintaining our quality of service by adapting to changing
circumstances and until a more sustained market is evident.
This year’s result, a loss of £1.5m which includes £249k one-off non-cash impairment, is disappointing,
given the considerable efforts made by all parties to manage the Company in a very difficult business
environment. Nevertheless, I fully expect our management team to continue to steer the Company
around the current difficulties, always looking for suitable business opportunities.
Our CEO, Nicholas Thompson, has announced his retirement at the end of this calendar year. His many
accomplishments, as Chief Executive Officer of the Company have been of the very highest calibre, and
the Company owes him a debt of gratitude for the exceptional achievements during his long tenure. I
would like to take this opportunity to thank Nicholas for his service to the Company throughout all these
decades, for the excellence of his leadership and the clarity of his commercial vision. As is to be expected,
the Board is addressing in a timely way the succession issues arising from his departure.
Aukett + Heese at
KaDeWe, Berlin
AUKETT + HEESE was commissioned
by the KaDeWe group for design and
working drawings for the refurbishment
of various quadrants of their historic
department store in Berlin.
The new escalators connect six floors
of the luxury department store via new
circular slab openings that grow larger
from the bottom to the top, like an
upside-down cone. The escalators are
arranged in a spiral fashion. As a result,
customers exit at different points on each
floor and new perspectives open up at
each level.
AUKETT + HEESE was responsible for
producing construction drawings as well
as overseeing construction on site.
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
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board of directors
Raúl Curiel
Non-executive Chairman *+ #
BA(Hons) MArch Aged 75
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 67
Nicholas became Group CEO in 2005 following a reverse takeover. He has over 35 years of experience
in property and consulting organisations; twenty-eight of these with Aukett Swanke. He holds a master’s
degree in Business Administration from Bayes Business School (formerly Cass) and currently sits on the
Bayes MBA Advisory Board. He is also a qualified accountant (ACMA).
Nicholas is a non-executive director of the Wren Insurance Association Limited, a mutual Insurer for
architectural practices and sits on their Audit, Remuneration, and Investment Strategy Committees.
Antony Barkwith
Group Finance Director & Company Secretary ^
FCA MPhys(Hons) Aged 41
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 Raúl Curiel
# Member of the Nomination Committee chaired by Raúl Curiel
^ Member of the Internal Controls and Risk Committee chaired by Clive Carver
Robert Fry
Executive Director & Managing Director – International ^
BA(Hons) DipArch MA RIBA Int’l AIA Aged 65
Robert was appointed to the Aukett Swanke Group Plc Board in March 2018, retaining the role of Managing
Director – International. Following his graduation from Sheffield University he spent his formative years at
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.
Robert works closely with the CEO and GFD in the development of the Group’s operational strategy and
his considerable property and construction experience has enabled his role to assist in the development
of ASG’s businesses, senior management teams and corporate endeavours including mergers, acquisitions
and governance initiatives in all locations.
Clive Carver
Non-executive director +*#^
FCA FCT Aged 61
Clive joined the board in May 2019. He is the Chairman of AIM listed Caspian Sunrise PLC and Chairman
and CFO of Airnow PLC, which intends to seek a Nasdaq listing. 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.
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
13
five year summary
Years ending 30 September
Total revenues under management 1
Revenue
2021
£’000
26,426
12,014
2020
£’000
28,534
12,166
Revenue less sub consultant costs 1
8,822
11,336
(Loss) / profit before tax
Basic earnings per share (p)
Dividends per share (p)
Net assets
Cash and cash equivalents 2
Secured bank loans
Net funds 3
(1,531)
(0.69)
-
3,067
515
(500)
15
(46)
0.00
-
4,374
992
(155)
837
1 Alternative performance measures, refer to pages 21-22 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
2019
£’000
31,505
15,492
13,711
292
0.21
-
4,514
1,145
(325)
820
2018
£’000
31,950
14,380
13,094
(2,544)
(1.42)
-
4,136
710
(553)
157
2017
£’000
34,583
18,395
16,070
(325)
(0.20)
-
6,761
960
(776)
184
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
Investor / Media enquiries
Chris Steele 07979 604687
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
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
Solicitors
Fox Williams
www.foxwilliams.com
chief executive’s statement
Nicholas Thomson -
Chief Executive
This has been a difficult year for the Group. The whole of the period was covered by the pandemic and as
stated in previous reports this has led to uncertainty in decision making and the inevitable delays that this
encourages. Notwithstanding this, we continue to enjoy a level of repeat and new business instructions
albeit with some noticeable gaps in timing. We are, and continue to be, appreciative of those clients who
have supported us with ongoing instructions during this period of uncertainty.
Our attention during the year has been on maintaining our structure and ability to service those
instructions that we have which in turn has meant retaining a staff and overhead structure that is
sub optimal. This is essential to preserving critical mass throughout our operations in advance of any
meaningful recovery in the demand for our services. At the same time, however, we have addressed
some longer-term fixed costs in the Plc company, the UK and in the Middle East operations – the benefit
of which is to be seen in future periods and is further explained in the narrative below.
n Group Performance
The past two years has been a tale of four halves. The worst of the pandemic was covered by the first six
months in the current year and our revenue performance for H2 2021 is now moving slowly back to the early
pandemic period covered by H2 2020.
Revenue less sub consultant
costs
H2 2021
£’000
4,683
H1 2021
£’000
4,139
Total net expenditure
(5,043)
(5,227)
Impairment of intangibles
Share of results of associate
and joint ventures
(249)
95
-
71
H2 2020
£’000
4,476
(4,994)
-
336
(Loss) / profit before tax
(514)
(1,017)
(182)
H1 2020
£’000
6,860
(6,830)
-
106
136
Notwithstanding this out-turned result, the situation mid-year continued to indicate no immediate end to the
pandemic and we continued to take advantage of the UK Government’s Coronavirus Business Interruption
Loan Scheme (“CBILS”) and various employee schemes that were available throughout the Group’s UK and
overseas operations. This action provided the necessary working capital to allow us to make an orderly return
to pre pandemic levels of trading.
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2020
15
n United Kingdom
Much of the income during the year resulted from long term project work plus two
sizeable new instructions: 457 apartments at Vulcan Wharf for London Square and
a state-of-art redevelopment project for UCB with Heatherwick studio, both in our
Veretec business. The Veretec business has performed well throughout the pandemic
period. A number of projects were on site including: the Asticus building in London;
EQ, an Head office building for CEG in Bristol; The STEAMhouse development
for Birmingham City University; Nova or n2 in Victoria for Land Securities; the
Featherstone building for Skanska in the City; and completion of the UK Pavilion at
Dubai’s’ Expo 2020. The second half also saw a raft of new enquiries at the concept
stage. With much of this work progressing into the second half the operation
returned a profit before tax (excluding Group management charges) in H2 of £259k.
With the need to maintain our critical mass, attention was focused on overhead
cost savings. Two fixed cost areas have been addressed, both under the property
head. We have reduced our archiving storage cost and have appointed Agents to re-
structure our head office location and find sub tenants - we are seeking cost savings
of between £250k pa and £350k pa on an annualised basis, part of which has already
been achieved.
VULCAN WHARF. LONDON E15
EQ, BRISTOL
The UK is expecting to significantly increase revenues net of sub consultants in the
next financial year. Current secure work for 2022 already totals more than the 2021
outturn result.
n Middle East
With less work opportunities a proportion of our time was spent in reducing our
structural costs as the market for our services began to shrink. This has involved
reducing our Licence network from seven down to (eventually) one and then
terminating the linked property and manager cost requirements. This does not
restrict our ability to work across all of the seven emirates but will require some
partnering of services through our network of trusted sub consultant providers. As a
result of this re-structuring we have impaired our remaining investment in Shankland
Cox Limited and this is shown as a separate line in the results.
During the year we were on site with a number of projects including the Leader Sports
Mall, Kyber, Safa Community and Pristine Schools, two projects on Expo: Nissan Café
and the Pakistan Pavilion, two projects for WSP and three villas on Jumeriah Park. As
well as the further rollout of Etisalat retail stores, and three projects in the Emirate of
Al-Ain, a Mall and a Museum along with the Sheikh Mohammed bin Khalifa House
refurbishment.
Notwithstanding the initiatives stated above, with revenues down 14% in H2, a larger
loss before tax (excluding Group management charges and impairment provision)
than H1 was recorded at £210k. The forward position indicates a continuing fall in
revenue, but offset by the savings regime that is in place.
n Continental Europe
The Continental group of operations has again been the best performing of all three operations this year with profits (excluding Group management
charges) of £330k (2020: £657k). The main contributor was our associate office Aukett + Heese in Berlin, which with its sister joint venture company in
Frankfurt, managed to navigate around the worst impacts of the pandemic for the second year running.
The smaller operations of Istanbul and Prague were impacted to differing degrees this year with Istanbul, a wholly owned subsidiary, recording a
profit (excluding Group management charges) of £35k despite a turbulent year of political and economic instability in Turkey. The severe impact of the
pandemic on the Czech Republic market led to a substantial fall in projected workload resulting in the local directors implementing an orderly closure
of this joint venture operation by agreement with the Plc Board.
Significant project completions in Berlin this year included the topping out of the 56,000 sqm mixed use Am Tacheles project and the entrance areas of
the historic KaDeWe department store. The 34 storey Edge East Side Tower, the tallest building in Berlin and let to Amazon, is now rising above 5th floor
level and will complete in 2023.
In Frankfurt completions included several fit-outs for corporate and financial sector tenants alongside further landlord upgrades in the iconic Messeturm
building. A major new refurbishment project has begun for an international bank in Frankfurt together with a new building for a Tata Group subsidiary
company in Bonn in collaboration with the Berlin office.
The Istanbul office completed major corporate sector fit-out projects for LC Waikiki,
Google, Allianz and Vakifbank in Istanbul and VM Ware in Bulgaria. A series of
residential villa designs were completed for DAAX in Erbil, Iraq and concept studies
for further buildings on the Cengis Campus.
The Moscow licensee completed a 37,500 sqm 500 apartment residential project in
Tyumen and, in collaboration with London, concept designs for mixed use projects
in Moscow including the Skolkovo Educational Hub project and an international
medical centre on a nearby site. The Moscow operation’s third year as a licensee
business continues to make a positive contribution to Group other operating income.
This latter project, being designed in the UK studio, reached a work stage milestone
pre Ukraine conflict and a payment has been received since that time. No further
services are being performed. Any delay in receiving the Licence fee is not material
and is only recognised on receipt.
n Group / Plc costs
As the Group has been reducing in size the Board is cognisant of the disproportionate
central cost in relation to the ability of the underlying operations to generate sufficient
profit to cover it. In 2020 we made some one-off savings which are not carried into
2021 resulting in a higher central cost charge this year. We are expecting this total
cost to be under £1m in the forthcoming year with a further reduction in executive
salaries. However, this assumes that the underlying operations can achieve more
than this in profit generation to make the plc structure viable. With the pandemic
abating or at least becoming a normal course of business event the Board is
considering various structural changes to mitigate the central cost impact.
n Going Concern
We expected this year to present a continuing set of challenges arising out of the
pandemic and this has been the case. The main challenge has been in relation to
working capital which has reduced over the period along with Group net assets
as a result of losses in our main trading operations and in administering the listed
company structure.
During the second half of the financial year, we saw our revenues becoming more
stable as project uncertainty became the norm with our risk management procedures
focusing on cost controls where this was possible.
KADEWE DEPARTMENT STORE, BERLIN
GOOGLE, ISTANBUL
In February 2022 the Group received a 3 month covenant waiver to avoid the risk of a breach on the net gearing covenant from February to April 2022.
The Group will then attend the scheduled 6 monthly review with Coutts & Co in May 2022 to discuss the Groups’ financing needs. The Group is therefore
currently reliant on the ongoing support of Coutts & Co.
The Directors are considering a range of options regarding our strategy for the Group structure and geographic footprint to stabilise and improve the
Groups’ underlying financial position. With this in mind, 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, which could result in the Group requiring additional external financing.
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.
n Prospects and Strategic Review
With the pandemic becoming a feature of commercial life we now have more visibility on what the future holds, and this is now factored into our
plans. We are considering a range of options about our future particularly in the context of the size and ownership structure of the underlying entities
and consequent regulatory cost. In this context we shall be seeking a replacement for the position of CEO to lead the delivery of the next phase of the
Group’s plans.
On behalf of the Board
Nicholas Thompson
Chief Executive Officer
30 March 2022
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17
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
Impairment of intangibles
Share of results of associate and joint ventures
Loss before tax
Tax credit
Loss for the year
2021
£’000
26,426
12,014
8,822
2020
£’000
28,534
12,166
11,336
(10,536)
(12,219)
360
(94)
-
(249)
166
(1,531)
395
(1,136)
455
(112)
52
-
442
(46)
26
(20)
1 Alternative performance measures, refer to pages 21-22 for definition
Revenues for the year were £12.01m, a decrease of 1.2% on the previous year (2020: £12.17m). However, revenues less sub consultants decreased to
£8.82m (2020: £11.34m), a 22.2% decrease, as subconsultant costs increased from £0.83m last year to £3.19m.
The Group’s hubs experienced mixed performance and results. While the UK increased total revenue, this was primarily due to projects acting as lead
consultant. Revenue less subconsultant costs was down 13.3% year on year. Continental Europe reported an increase in both revenue (35.4%) and
revenue less subconsultant costs (8.0.%). The Middle East felt the greatest impact of economic slowdown with revenues falling by 41.5% (revenue less
subconsultant costs down by 38.9%).
Operating expenses in the year were reduced by £1.68m, of which £1.41m related to technical staff costs, 71% 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 £0.39m, of which £0.17m was in the UAE and £0.21m reduced in UK.
Other operating income reduced by £95k. This included £59k (2020: £158k) of government grants claimed on the UK furlough scheme, of which £58k
had been received in cash by the year end.
Cash deferrals agreed in the prior year with UK HMRC on VAT £227k and deferred rent on UK property of £139k started to get repaid during the year. As
at 30 Sep 2021 the deferred VAT balance was £114k and deferred rent £58k. Both were being paid back monthly with final instalments paid in Jan-22.
The result before tax was a loss of £1,531k (2020: £46k loss). Whilst the Group managed technical staff numbers (UK net revenue per FTE technical staff
increased slightly from £101k to £104k), the limited ability of the Group to reduce the fixed cost base of the operations and Plc running costs, meant that
the loss for the year was unavoidable given the level of reduction in revenue less subconsultant costs.
The tax credit of £395k arose as a combination of UK R&D tax claims made for the years 2018/19 and 2019/20 as well as deferred tax movements in
the year.
Taking account of the tax credit, and loss attributable to non-controlling interests of £13k our loss after tax at £1,123k gives an EPS loss of 0.69 pence
per share (2020: 0.00 pence per share (profit)).
n United Kingdom
Revenue
Revenue less sub consultant costs 1
FTE technical staff1
Net revenue per FTE technical staff 1
(Loss)/profit before tax (excluding Group management charges) 1
Loss before tax (including Group management charges)
1 Alternative performance measures, refer to pages 21-22 for definition
2021
£’000
8.871
6,063
58
104
(308)
(848)
2020
£’000
7,106
6,990
69
101
214
(282)
The UK’s revenue increased 24.8% year on year as a result of Veretec executive architecture acting as the lead consultant on more significant projects,
however revenue less subconsultants costs decreased 13.3%.
The first half of the year saw a continued slowdown of the business month on month from October to January as project delays and lower than
budgeted new project wins were sustained as a hangover from the prior year. Revenue in the 6 months to March 2021 was just £3.44m (revenue less
subconsultants costs £2.59m). The UK achieved 2 notable significant project wins around the turn of the year enabling a period of sustained month
on month earnings growth from February 2021 onwards. As a result revenue in the second half of the year was boosted to £5.43m (revenue less
subconsultants costs £3.47m).
Staff numbers (FTE technical staff) started the year at 60 in October 2020, this was reduced to a low point of 51 in March 2021 to respond to the levels
of workload. Adjustments were made through a mixture of the release of agency and freelance staff on short notice periods, a limited number of
redundancies, and some temporary utilisation of the UK government furlough scheme for payroll employees. Thereafter through a sustained period of
reducing staff furlough combined with recruitment, staff numbers grew every month up to 71 in September 2021. The continued management of staff
numbers enabled UK hub to maintain revenue at £104k 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) £522k down on the prior year (on revenue less subconsultants costs £927k lower).
One off costs in the year included destruction costs of archives held in offsite 3rd party storage locations. Annual archive storage costs were £132k in the
year to September 21. Costs in the year to September 2021 totalled £233k but include significant retrieval and destruction costs to rationalise retained
archives. The completion of this process means budgeted archive storage costs for the year to September 2022 are just £12k.
n Middle East
Revenue
Revenue less sub consultant costs 1
FTE technical staff1
Net revenue per FTE technical staff 1
Loss before tax (excluding Group management charges) 1
Loss before tax (including Group management charges)
1 Alternative performance measures, refer to pages 21-22 for definition
2021
£’000
2,822
2,517
36
69
(538)
(936)
2020
£’000
4,823
4,122
52
79
(23)
(472)
Revenues decreased 41.5% from £4.82m to £2.82m in the year (revenues less subconsultant costs similarly reduced by 38.9%), due to the continued
effect of the general slowdown in construction investment in the region combined with further economic contraction related to the COVID-19 pandemic
sustained through the year.
Following on from measure taken in the second half of the previous financial year in the first 6 months of the COVID-19 pandemic, throughout the
current year Management undertook further cost cutting measures both in 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. Measures to
simplify the organisational structure and further consolidate and co-locate the entities’ operations into common buildings which commenced in the
prior year made a material difference in limiting further losses from the decrease in revenue.
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19
Average technical staff FTE numbers reduced to 36 (2019: 52) and net revenue per FTE technical staff dropped from £79k to £69k.
Whilst the reduction in revenue less subconsultant costs was £1.61m, the increase in the hub’s loss before management charges was limited to £515k,
and increase in the loss before tax limited to £464k. This also includes the one-off charge of £249k impairing the balance of Shankland Cox Limited
intangible assets at year end. Excluding this non trading charge, the loss before tax increased just £215k compared to the prior year.
n Continental Europe
Revenue
Revenue less sub consultant costs 1
FTE technical staff 1
Net revenue per FTE technical staff 1
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 costs 1
FTE technical staff 1
Net revenue per FTE technical staff 1
2021
£’000
321
242
8
30
330
149
14,733
10,471
127
82
2020
£’000
237
224
7
33
657
511
16,605
11,646
129
90
1 Alternative performance measures, refer to pages 21-22 for definition
Reported revenues, comprise the Turkey subsidiary. Turkey reported revenues for the year of £321k (2020: £237k), with revenue less subconsultant
costs increasing to £242k (2020: £224k). the stronger earnings was despite a further devaluation of the Turkish Lira across the period, with the average
TRY to GBP rate in the year at 11.07 (2020: 8.32). With some international clients and contracts denominated in USD and EUR, the subsidiary recorded
further foreign exchange gains and recorded a small local loss (including Group management charges) of £17k and profit (excluding Group management
charges) of £35k.
The hub 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 £149k (2020: £511k).
Continental Europe’s result is materially dominated by the associate Berlin and joint venture in Frankfurt. Whilst both remained profitable throughout
the year the combined profit was down on the prior year with the effects the COVID pandemic enduring leading to project program slowdowns and
delays in new instructions. They together contributed £182k (2020: £418k) profit (including Group management charges) to the Continental Europe
result.
After a strong year in 2020, the Czech Republic joint venture suffered from few new instructions in the first half of the year in a subdued market. Local
directors in agreement with the Plc board implemented an orderly closure of the operation resulting in a loss for the year of £16k.
Total revenues under management decreased 11.3%, whilst revenue less sub consultant costs decreased 10.1% due to the effects of a full year of the
economic impact of COVID-19.
Staff numbers decreased only slightly to 127 (2020: 129) leading to lower efficiencies and therefore the reduced profitability. As a result, earnings per
FTE technical staff reduced to £82k (2019: £90k).
n Financing
Taking account of the year’s result and movements on the foreign exchange translation reserve, total equity is now £3.07m (2020: £4.37m).
Net funds (see note 21) at year end were significantly down on the prior year as a result of the loss in the year, being £15k (2020: £837k), comprising
cash of £515k (2020: £992k), and a CBILS loan of £500k (2020: £nil) drawn in May 2021. The prior year loan balance of £155k (in respect of the
acquisition of Shankland Cox Limited (“SCL”)) was fully paid off in the year.
The CBILS loan set out in note 20 was arranged with Coutts & Co in response to the challenges of the losses incurred in the 18 months since the COVID
pandemic started impacting trade. The loan is repayable over 3 years with the first instalment in June 2022 and paid back in 24 monthly instalments
through to May 2024.
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 2022, with a review in May 2022. In February
2022 the group request and Coutts & Co granted a temporary waiver of the net gearing covenant from February to the end of April 2022. The Group
similarly agreed to temporarily reduced the overdraft to £250k from February to May 2022. This is discussed further in note 1.
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 are capitalised as right of use assets and finance lease liabilities. The lease liability (see note 14) as at 30 September 2021 was £133k (2020:
£207k).
The Group recognises 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 lease liability
as at 30 September 2021 was £2,756k (2020: £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 a number of years, and continued
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. It
then experienced a significant slowdown and rationalised staff numbers. Since April 2020 Veretec has been increasing earnings and re-growing
its technical staff base. We consider the COVID-19 downturn to have been a temporary slowdown and the company to continue its rebound into
the 2021/22 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 however the impact of project instruction delays meant month on month earnings fluctuated through the year and
earnings per technical staff were below desired levels. The company is still somewhat affected from the lingering delays on projects to progress
past planning and clients committing to fund and commence construction.
The Middle East: Previously the hub focussed on Aukett Swanke Architectural Design Limited targeted winning larger, longer-term projects which
underpin its workload and in part that of SCL, with John R Harris & Partners Limited (“JRHP”) and SCL also pursuing and winning smaller projects
which they deliver individually. As reported last year with the onset of the COVID-19 pandemic 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.
This continued through the year to September 2021 with the bulk of new work being won and delivered by JRHP Going forwards, Management
are implementing a reduction of licenses across the hub to simplify the business and make significant savings in property, license and sponsorship
costs, and other overheads. The hubs’ staff and expertise will be combined into JRHP as the hub continues to work on projects across the emirates
in conjunction with our long history of trusted subconsultant partners.
•
Continental Europe remains mixed across the portfolio. The German businesses are strongest, and Berlin and Frankfurt have strong forward order
books targeting to rebuilt their profitability back up to pre-covid levels. Turkey continues to try and build strength locally, whilst 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 and 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;
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21
•
•
•
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 to 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 to 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
30 March 2022
EQ - FACADE STUDY, BRISTOL
The Directors present their Strategic Report on the Group for the year ended 30 September 2021.
Strategic report
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 some 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 geographies 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.
Similarly, the current conflict in Ukraine 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 a main office in Dubai; and
Continental Europe with three offices in Berlin, Frankfurt and Istanbul; 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 marketed under the 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. Following an internal review of the future cost structure relating to the
underlying entities the business will operate under a single company in the region.
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 256 (2020: 291) throughout our organisation which includes
both wholly owned and joint venture operations. We are ranked by professional staff in the 2022 World Architecture 100 at number 63 (2021 WA100
number 54).
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.
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23
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.
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.
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. We are conscious that the Ukraine conflict will have some negative impact on the supply of
farming and industrial products. Where relevant this may have an adverse impact in delays to projects where they are supply dependent.
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. The roll out of vaccines and boosters throughout 2021 and high uptake by the populations of
the countries in which our offices are located appear to be curbing the levels of seriously ill people even at times of record high positive tests with the
spread of the Omicron variant, such that health services are managing to cope with hospitalisation rates. Our expectation for the next 12 months is that
we are entering a new normal where COVID-19 becomes endemic, travel restrictions begin to ease and the services we provide are determined by the
market economics that we were previously accustomed to.
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 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 2022.
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, monthly forecasting and 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 2021 renewed the Group’s overdraft facility until November 2022, at the existing
£500k level. This has been temporarily reduced to £250k for February to May 2022, combined with a waiver of the net gearing covenant from February
to April 2022. In May 2021 a £500k CBILS loan was also offered and drawn down. Repayments on this loan Commence monthly from June 2022 to May
2024.
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;
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25
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.
Under performing 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 30 March 2022 and signed on its behalf by
Antony Barkwith
Group Finance Director
ST GEORGE’S HOUSE EAST, WIMBLEDON
Directors’ report
The Directors present their report for the year ended 30 September 2021.
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 two independent non-executive directors who bring a wide range of experience and skills
to the Company.
The Board considers 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 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 currently comprises Clive Carver and Raúl Curiel with Raul Curiel 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 comparable market remuneration, 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.
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27
The Nomination Committee is chaired by Raúl Curiel with the other current members being Nicholas Thompson and Clive Carver.
During the year the Committee reviewed the effectiveness of the Board and the matrix of its skill sets. It met on three occasions.
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.
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, Clive Carver, Raúl Curiel, Robert Fry and Nicholas Thompson all served as Directors of the Company throughout the year ended 30
September 2021. On 29 March 2021 John Bullough resigned as a Director of the Company.
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
7
13
13
13
13
13
7
13
13
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 2021
30 September 2020
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.
n Substantial shareholdings
At 30 March 2022 the Company had been informed of the following notifiable interests of three per cent or more in its share capital:
Shareholder
Notes
Number of ordinary shares
Nicholas Thompson
Director of the Company
Jeremy Blake
Former employee of the Group
Andrew Murdoch
Former director of the Company
Begonia 365 SL
Controlled by a former director of the Company
Raúl Curiel
Non-Executive Director of the Company
Stephen Atkinson
Former employee of the Group
Trevor Brown
John Vincent
Private Investor
Former director of the Company
16,802,411
13,030,638
12,478,486
9,515,192
9,240,018
7,634,922
5,850,000
5,791,394
Percentage of
ordinary shares
10.17%
7.89%
7.56%
5.76%
5.59%
4.62%
3.54%
3.51%
n Share price
The mid-market closing price of the shares of the Company at 30 September 2021 was 2.00 pence and the range of mid-market closing prices of the
shares during the year was between 1.15 pence and 2.10 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 77 ‘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.
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Based on forecasts prepared and reviewed for the period to 30 September 2023 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 and with the global economic impact of the ongoing Ukraine conflict difficult to assess, 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 2022, 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 has been issued on the 7th of March 2022.
A separate notice of an extraordinary general meeting with the purpose to receive and adopt the annual report 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 30 March 2022 and signed on its behalf by
Antony Barkwith
Company Secretary
Aukett Swanke Group Plc
Registered number 02155571
GOOGLE, ISTANBUL
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
Measures taken around the world to restrict the spread of the COVID-19 virus have had a significant impact on the Group for the past 18 months of
trading and post year end.
Despite action taken in this time, management have only been able to partially mitigate the financial impact of the above on the Group which resulted
in the loss for the year and reduction in net assets of the Group. The Group has continued to operate within its banking limits, and has agreed a waiver
of the facility net gearing covenant for an initial 3 month period from Feb to Apr-22.
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 £3.07m (Sep-20: £4.37m), and total current assets less current liabilities of approximately
£0.27m (Sep-20: £0.51m).
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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.
Independent auditor’s report to the members of
Aukett Swanke Group Plc
n Opinion on the financial statements
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 2021 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.
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 2021 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 notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in the preparation of the Group and Parent Company financial statements is applicable law
and international 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.
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 believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remain 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.
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 light of the recent 3 month
covenant waiver received to avoid the risk of breaches from February 2022, the Group is reliant on the ongoing support of its principal banker. In
addition, the Group may find itself requiring additional financing because of unexpected levels of delay on project work beyond its control. 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.
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation of the financial
statements is appropriate. Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to continue to adopt the going
concern basis of accounting has been highlighted as a key audit matter based on our assessment of the significance of the risk and the effect on our
audit strategy.
As disclosed in note 1, the Group has continued to manage it’s liquidity risk through prudent management of cash and effectively using the UK
government relief schemes. However the performance of the Group continues to put strain on cash reserves.
The Group has taken a £0.5m loan through the Coronavirus Business Interruption Loans Scheme (CBILS) which is subject to passing covenants. The loan
carries no interest or repayments for the first 12 months but is repayable in 3 years. The Group also has support by way of the overdraft facility which
is also subject to passing covenants.
There is a risk posed to going concern of these balances falling due on demand due to a breach of a covenant. Cash balances at year end total £0.5m, so
if the loan became repayable on demand, the Group would have no liquid cash. From initial going concern assessments, cash flow of the Group for the
next few months stands at a net debt until November 2022 with the business reliant on the overdraft facility for operations once the CBILS loan becomes
repayable from June 2022. This position is expected to change from December 2022, with operational debt recovery and R&D tax claims.
With the impact the loss for the year has had on net assets and working capital, the Directors are considering a range of options regarding their strategy
for the Group structure and geographic footprint to stabilise and improve the Groups’ underlying financial position.
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33
Our evaluation of the Directors’ assessment of the Group and the Parent Company’s ability to adopt the going concern basis of accounting and our
response to the key audit matter included:
•
•
•
•
•
•
•
•
•
Agreeing the forecasts to the plans agreed by the Board of Directors for approval, checking that the cash flow forecast and net funds represent an
accurate extraction of the future plans;
Reviewing the cash flow forecasts of the Group to check that they were mathematically accurate, including linkage to covenant calculations built
into the forecast;
Understanding the relative contribution of the business segments to the Group’s going concern analysis. The Group is made up of predominantly
3 mains areas being the UK, UAE and Europe. Each business operation’s contribution to the Group cash flows has been reviewed by BDO by
forming expectations based on historic data and challenging management around the feasibility of cash flows to conclude on reliability of business
segments performance. The focus of the analysis has been on the UK segment by management;
Corroborating 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;
Challenging the future revenue pipeline and enquired about the status of outstanding bids, agreeing to submitted proposal documents and newly
won contracts where appropriate;
Reviewing the current year actuals against the budget for the year to determine the accuracy of budgeting in management’s forecasts;
Checking 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 overdraft facility by challenging management on conversations held with the Group’s bankers from the latest
facility update, in addition to reviewing 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
Challenging 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.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
n Overview
Coverage 1
Key audit matters
Materiality
97% of Group profit before tax
89% of Group revenue
87% of Group total assets
Valuation of contract assets and completeness of contract liabilities
Annual impairment review of business combinations
Presentation of financial statements as a going concern
2021
2020
Group financial statements as a whole
£200k (2020: £191k) based on 1.7% of revenue (2020: 1.5% of three year average net earnings) for the year.
1 These are areas which have been subject to a full scope audit by the group engagement team
n An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group’s system of internal control, and
assessing the risks of material misstatement in the financial statements. 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.
We determined there to be 5 significant components to the Group, which were Aukett Swanke Group Plc, Aukett Swanke Limited, Veretec Limited, John
R Harris & Partners and Shankland Cox Limited. There were all subject to full scope audits.
100 BROADGATE, LONDON EC2 - VERETEC WERE DELIVERY ARCHITECTS FOR THIS PROJECT WHICH WAS WINNER OF A CIVIC TRUST AWARD IN 2022
The full scope audits of Aukett Swanke Group Plc, 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.
Whilst not considered significant components, specific procedures were performed around certain elements of the associate Aukett + Heese GmBh
(Berlin) and joint venture Aukett + Heese Frankfurt GmbH due to their contribution to the Group’s result before tax. Specific procedures around material
balances were completed for Aukett Fitzroy Robinson International Limited and Aukett Swanke Architectural Design Limited as are non-significant
components of the Group. All other 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.
Our involvement with component auditors
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, significant 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.
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) that 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.
34
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
35
Key audit matter
Valuation of
contract assets and
completeness of
contract liabilities for
long term-architectural
service contracts
Refer to the accounting
policies in note 1 on
pages 54 to 55 and note
3 in the Group financial
statements.
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.
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 therefore considered this to be a Key audit matter.
How the scope of our audit addressed the
key audit matter
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.
We selected a sample of contracts from the whole
population 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 customers.
-
-
-
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.
Agreed 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, the rele-
vant 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.
- 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 deliv-
erables 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 observations:
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.
Key audit matter
Annual impairment
review of the UK,
Shankland Cox
Limited (‘SCL’) and
John R Harris &
Partners (‘JRHP’) Cash
Generating Units
Refer to the accounting
policies in note 1 on
page 53 and
Notes 11 and 12 for key
judgements in the Group
financial statements.
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 allocated to the Turkey CGU. While no
goodwill is allocated to the SCL CGU (also in the UAE
operating segment), £0.3m of other intangible assets are
situated within the SCL 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. Based on recent trading performance there
is 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.
How the scope of our audit addressed the
key audit matter
Our audit work included the following procedures:
-
Completed an assessment of the grouping of
defined CGUs in the impairment models to de-
termine whether appropriate for the purposes
of determining value in use.
- We assessed the value in use models for each
CGU to test compliance with the requirements
of applicable accounting standards and mathe-
matical 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 computa-
tion by our BDO internal valuations specialists.
The revenue cash flows within the model were
challenged. Future earnings potential was
checked to secured pipeline through agree-
ment of significant balances to contracts. Po-
tential wins were assessed for progress in bids
by review to correspondence. Future earnings
were assessed through a combination of the
CGUs historic conversion of new work and
determined whether achievable based on es-
timates by management.
The cost base was critically assessed for poten-
tial omissions or unrealistic targets based on
prior years actuals and potential future chang-
es in the business. We challenged management
where this fell outside of our expectations and
checked that these were accurately stated,
reasonable and achievable in the light of the
economic environment and future pipeline of
work.
A sensitivity analysis was performed by man-
agement to assess the impact of the movement
in key variables in the model which would lead
to an impairment. BDO reviewed this sensitivity
analysis and concluded on whether such sce-
narios were likely to occur. Based on our review
of inputs into the model and differences in ex-
pectations, a revised headroom was recalculat-
ed with no impairment noted.
Key observations:
Based on the procedures performed, consider that the
assumptions and the methodology used by management
in preparing the value in use calculations are appropriate.
36
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
37
n Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect 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.
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.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Materiality
Basis for determining
materiality
Rationale for the
benchmark applied
Group financial statements
Parent company financial statements
2021
£200,000
2020
£191,000
2021
£108,000
2020
£91,000
1.7% of revenue
1.5% of 3 year average net
earnings
3.5% of net assets
3% of net assets
This benchmark was
considered to be
appropriate as it fairly
reflected the activity of the
Group in a lossmaking
environment.
This benchmark is
considered to be
most appropriate as it
represents the principal
purpose of the company
as a holding entity to the
subsidiaries of the Group.
This benchmark was
considered to be
most appropriate as it
represented the principal
purpose of the company
as a holding entity to the
subsidiaries of the Group.
Revenue has been
selected as the benchmark
as opposed to net
earnings, as the Group is
responsible for the entirety
of its signed contracts. This
benchmark is considered
to be appropriate as this
fairly reflects the activity of
the Group in a loss making
environment.
Performance materiality
£120,000
£133,000
£64,800
£63,700
Basis for determining
performance materiality
60% of Group Materiality
(see below)
70% of Group Materiality
(see below)
60% of Parent Materiality
(see below)
70% of Parent Materiality
(see below)
Performance materiality
Performance materiality benchmark has been selected based off the following considerations:
- Cumulative identification of errors noted in previous years that have been posted by management
- There are a number of with locations for the Group but not extensive
- Controls testing is completed for a number of financial statement areas with less reliance on sample procedures
- There are a number of areas open to deterministic adjustments in relation to the revenue recognition on contracts and also the doubtful debt
provisioning, in addition to the valuation of goodwill and other balances at group level. This suggests a level that should be lower and hence the
decrease in percentage for 2021.
Component materiality
We set materiality for each component of the Group based on a percentage of between 2% and 70% (2020: 2% and 70%) of Group materiality
dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from £4,000 to
£155,800 (2020: £6,000 to £119,000). In the audit of each component, we further applied performance materiality levels of 60% (2020: 70%) of the
component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of £7,000 (2020: £6,600). We also agreed
to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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 Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required by the Companies Act 2006 and
ISAs (UK) to report on certain opinions and matters as described below.
Strategic report and
Directors’ report
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.
In the light of the knowledge and understanding of the Group and 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.
Matters on which we are
required to report by
exception
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, 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.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities,
outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of
detecting irregularities, including fraud is detailed below:
•
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements, including
how fraud may occur by enquiring of management of its own consideration of fraud. In particular, we looked at where management made
subjective judgements, for example in respect of significant accounting estimates that involved making assumptions and considering future events
that are inherently uncertain. We also considered potential financial or other pressures, opportunity and motivations for fraud, most notably as
38
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
39
Consolidated income statement
For the year ended 30 September 2021
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
Impairment of intangibles
Share of results of associate and joint ventures
Loss before tax
Tax credit
Loss for the year
(Loss) / profit attributable to:
Owners of Aukett Swanke Group Plc
Non-controlling interests
Basic and diluted earnings per share for (loss)/profit attributable
to the ordinary equity holders of the Company:
From continuing operations
Total (loss)/profit per share
Note
3
3
4
5
12
9
10
2021
£’000
12,014
(3,192)
8,822
(7,806)
(1,238)
(1,492)
360
(1,354)
(94)
(1,448)
-
(249)
166
(1,531)
395
(1,136)
(1,123)
(13)
(1,136)
(0.69p)
(0.69p)
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
TERRACE, EQ, BRISTOL
part of our going concern assessment. As part of this discussion we identified the internal controls established to mitigate risks related to fraud
or non-compliance with laws and regulations and how management monitor these processes. Procedures included the review and testing of
manual journals, key estimates and judgements made by management and evaluation of whether there was evidence of bias by the directors that
represented a risk of material misstatement due to fraud.
•
Communication of risks of fraud and non-compliance with laws & regulations for the Group has been actioned throughout the audit process. Initial
discussions were had at the planning stage with both Management and with the component auditors. Communication of such risks were raised
in our planning report, component audit instructions and discussed in remote conference calls. Our working papers have documented enquiries
made of all parties throughout the audit process and final confirmations obtained from Management and the Component auditors.
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the Group and Parent Company and determined that
the most significant frameworks which are directly relevant to specific assertions in the financial statements are those that relate to the reporting
framework, the Companies Act 2006 and relevant tax compliance regulations.
• We considered provisions of other laws and regulations that do not have a direct effect on the financial statements but compliance with may be
fundamental to the Group’s ability to operate. These include Money Laundering Regulations 2007 and Proceeds of Crime Act, the Data Protection
Act and UAE Labour Law.
• We made enquiries of management at the Group and local component level with regards to compliance with the above laws and regulations and
corroborated any necessary evidence to relevant information, for example, minutes of the Group and Parent Company meetings, legal reports
provided and correspondence between the Group and Parent Company and its solicitors.
•
•
Our tests included agreeing the financial statements disclosures to underlying supporting documentation and enquiries with management.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements, recognising that the risk of not
detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate
concealment by, for example, forgery, misrepresentations or through collusion. There are inherent limitations in the audit procedures performed
and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the
less likely we are to become aware of it.
A further description of our responsibilities is available 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.
Sarah Applegate (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
Bristol, UK
30 March 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
40
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
41
Consolidated statement of comprehensive income
For the year ended 30 September 2021
Consolidated statement of financial position
Company registration number 02155571
At 30 September 2021
Loss for the year
Currency translation differences
Other comprehensive loss for the year
Total comprehensive loss for the year
Total comprehensive loss for the year is attributable to:
Owners of Aukett Swanke Group Plc
Non-controlling interests
2021
£’000
(1,136)
(157)
(157)
(1,293)
(1,280)
(13)
(1,293)
2020
£’000
(20)
(38)
(38)
(58)
(33)
(25)
(58)
STEAMHOUSE, EASTSIDE LOCKS, BIRMINGHAM
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
2021
£’000
2,370
324
155
2,546
587
209
241
6,432
3,975
982
515
5,472
11,904
(3,747)
(829)
(83)
(539)
(5,198)
(417)
(2,350)
(40)
(832)
(3,639)
(8,837)
3,067
1,652
1,176
(173)
(1,082)
1,494
3,067
-
3,067
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
42
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
43
The financial statements on pages 41 to 91 were approved and authorised for issue by the Board of Directors on 30 March 2022 and were signed on
its behalf by:
Nicholas Thompson
Chief Executive Officer
Antony Barkwith
Group Financial Director
Company statement of financial position
Company registration number 02155571
At 30 September 2021
Consolidated statement of cash flows
For the year ended 30 September 2021
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
2021
£’000
11
3,290
5
3,306
449
211
660
3,966
(1,750)
(83)
(1,833)
(2)
(417)
(419)
(2,252)
1,714
1,652
(2,608)
1,176
1,494
1,714
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
The result for the year contained within the parent company’s income statement is a loss of £1,179k (2020: loss £1,815k).
The financial statements on pages 41 to 91 were approved and authorised for issue by the Board of Directors on 30 March 2022 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 (expended by) / generated from operations
Income taxes received
Net cash (outflow)/inflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Sale of property, plant and equipment
Purchase of investments
Dividends received from associates & joint ventures
Net cash received in / (expended on) investing activities
Net cash (outflow)/inflow before financing activities
Cash flows from financing activities
Principal paid on lease liabilities
Interest paid on lease liabilities
Proceeds from bank loans
Repayment of bank loans
Interest paid
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
2021
£’000
(896)
262
(634)
(33)
16
(123)
528
388
(246)
(455)
(91)
500
(155)
(3)
(204)
(450)
992
(27)
515
515
515
2020
£’000
151
218
369
(245)
16
-
211
(18)
351
(211)
(103)
-
(154)
(9)
(477)
(126)
1,145
(27)
992
992
992
44
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
45
Company statement of cash flows
For the year ended 30 September 2021
Consolidated statement of changes in equity
For the year ended 30 September 2021
Note
26
Cash flows from operating activities
Cash (expended by) / generated from operations
Interest paid
Net cash (outflow)/inflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of investments
Dividends received from associates & joint ventures
Net cash generated from investing activities
Net cash (outflow)/inflow before financing activities
Cash flows from financing activities
Proceeds from bank loans
Repayment of bank loans
Net cash inflow/(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
2021
£’000
(702)
(1)
(703)
-
(123)
528
405
(298)
500
(155)
345
47
164
211
211
211
2020
£’000
45
(9)
36
(17)
-
211
194
230
-
(154)
(154)
76
88
164
164
164
Foreign
currency
translation
reserve
£’000
Retained
earnings
£’000
Other
distributable
reserve
£’000
22
36
1,494
Share
capital
£’000
1,652
Merger
reserve
£’000
1,176
At 1 October 2019
Profit/(loss) for the year
Acquisition of minority
interest
Other comprehensive
income
Total comprehensive
income
5
-
-
5
-
-
-
-
-
-
-
-
41
1,494
1,176
4,347
-
-
-
-
-
-
(38)
(38)
(16)
-
-
(157)
At 30 September 2020
1,652
Loss for the year
Acquisition of minority
interest
Other comprehensive
income
Total comprehensive
income
-
-
-
-
(1,123)
-
-
(157)
(1,123)
-
-
-
-
-
-
-
-
Non-
controlling
interests
£’000
133
(25)
(81)
-
Total
equity
£’000
4,513
(20)
(81)
(38)
(106)
(139)
27
(13)
(14)
4,374
(1,136)
(14)
Total
£’000
4,380
5
-
(38)
(33)
(1,123)
-
(157)
-
(157)
(1,280)
(27)
(1,307)
At 30 September 2021
1,652
(173)
(1,082)
1,494
1,176
3,067
-
3,067
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.
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47
CAMPUS FEASIBILITY STUDY, ISTANBUL
Company statement of changes in equity
For the year ended 30 September 2021
Share capital
£’000
1,652
-
1,652
-
Retained
earnings
£’000
386
(1,815)
(1,429)
(1,179)
At 30 September 2019
Loss and total comprehensive
income for the year
At 30 September 2020
Loss and total comprehensive
income for the year
At 30 September 2021
1,652
(2,608)
Other
distributable
reserve
£’000
1,494
-
1,494
-
1,494
Merger reserve
£’000
1,176
Total Equity
£’000
4,708
-
(1,815)
1,176
2,893
-
(1,179)
1,176
1,714
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 2021, a number of new or amended standards became applicable:
•
•
•
•
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);
Interest Rate Benchmark Reform – IBOR ‘phase 2’ (Amendments to IFRS 9, IAS 39 and IFRS 7); and
Revised Conceptual Framework for Financial Reporting
The other distributable reserve was created in September 2007 during a court and shareholder approved process to reduce the capital of the Company.
The Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards.
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.
LIFE SCIENCES CLUSTER
n New accounting standards, amendments and interpretations not yet applied
There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future
accounting periods that the group has decided not to adopt early.
The following amendments are effective for the period beginning 1 January 2022:
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
i)
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
ii)
iii) Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
iv) References to Conceptual Framework (Amendments to IFRS 3).
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 were originally effective for annual
reporting periods beginning on or after 1 January 2022.However, in May 2020, the effective date was deferred to annual reporting periods beginning
on or after 1 January 2023.
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.
During the year the Group repaid the final £155k ($200k) balance of the USD Dollar loan.
The Group currently meets its day to day working capital requirements through its cash balances. It maintains an overdraft facility for additional financial
flexibility and foreign currency hedging purposes.
In May 2021 the Group also secured additional funding by way of £500k from the Coronavirus Business Interruption Loan Scheme (“CBILS”), which is in
addition to the overdraft facility. The arrangement fees for this loan and the first year of interest are paid for by the UK Government and the funds will
mainly be used instead of the current bank overdraft facility as and when it is necessary. The loan has a duration of three years with interest at 4.05%
over the Coutts base rate (currently 0.75%) in years two and three. We expect to repay the CBILS loan before the expiry of the term.
The overdraft facility is renewed annually and was renewed for a further 12 months in November 2021, with a review in May 2022.
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49
186
The facility was initially renewed at £500k (unchanged from the prior year). However, as in prior years, the facility includes a net gearing covenant which
assesses the ratio of financial indebtedness (cash at bank, less overdraft balances, loans and finance lease liabilities, excluding the UK office lease
capitalised on adoption of IFRS16) to tangible net worth (net assets less goodwill and other intangible assets). This covenant is measured at each month
end. The reduction in tangible net worth following the loss in the year means that the Group is unable to fully utilise the overdraft and CBILS loan at the
end of each month without breaching the covenant.
In February 2022 the Group made a request to Coutts & Co, which was accepted, to waiver the net gearing covenant for the February, March and April
2022 month ends. The Group similarly agreed to temporarily reduce the overdraft facility to £250k until the end of May 2022. This provides the Group
greater freedom in the short term to utilise the £500k CBILS loan and reduced £250k overdraft. The Group will then attend the scheduled 6 monthly
review with Coutts & Co in May 2022 to discuss the Groups’ financing needs whilst reviewing the preliminary half year management accounts and 12
month cashflow forecast.
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 through to the end of March 2023, 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 continued to affect all of the territories in which the Group operates to varying
extents and other countries in which the Group has clients and projects. Having moved to remote working without any significant disruption in the prior
financial year, in the year to September 2021, the Group adapted flexibly on an office-by-office basis in accordance with local government advice. All of
the offices re-opened with varying levels occupancy as staff continued to operate on a mix of office, project site and home based working.
As economic uncertainty surrounding the pandemic continued, the Groups’ operational management took measures including encouraging unpaid
leave and part time working in the UAE operations for staff not fully utilised, furloughing UK permanent staff; flexing the number of temporary or
freelance staff based on project workload and a limited number of technical and admin staff redundancies. These provided management with a range
of tools implemented at short notice and with immediate effect.
The Group continued to remove non-essential expenditure. Deferred operational cash flows from the prior financial year began to unwind through
the year to September 2021, and as a result the Group felt it was appropriate to drawdown the £500k CBILS loan to offset the impact of these catch-
up payments. In the UK the most significant of these deferrals had been 1 quarter of VAT deferred in the prior financial year in accordance with UK
government support. In the year to September 2021 the UK operation began repaying this in monthly instalments. The last instalment has since been
repaid on time in January 2022.
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 have temporarily waived the gearing covenant for
3 months. We have no reason not to expect that the overdraft facility would not be renewed again in November 2022.
Due to the uncertainty in forecasting profits during the COVID-19 pandemic Coutts & Co waived the debt servicing covenant from the facility agreement
for the year ending 30 September 2021. This has been reintroduced in the November 2021 renewal and is due for assessment following the year ending
30 September 2022 (assessed on completion of the annual audit, anticipated in January 2023).
The other covenant applicable relates to maintaining a level of UK eligible debtors.
The Group has managed cash flow within its facilities so far. During the course of the next 12 month going concern review period, our forecast
assumes that no additional external financing is received when measuring the Groups ability to continue to operate and that the CBILS loan instalments
commence their 24 monthly repayments from June 2022.
The Groups’ assessment of going concern is therefore focussed on its ability to operate within the £250k overdraft limit to the end of May 2022, then
assuming a return to the £500k overdraft limit thereafter.
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.
The risk of short term recessions and delays in clients making financial investment decisions due to the COVID-19 pandemic appear to have now largely
abated. Across the Groups’ business units the forecasts assessed by the Directors therefore assume the businesses continue to operate much as they
have done in recent months and without the reintroduction of any new COVID-19 government support mechanisms.
However we note that the recent conflict in the Ukraine, rising energy prices and inflation globally will have macro-economic implications and could be
a trigger for recession in the short to medium term, and will have significant impact on clients decision making, albeit as yet we have not experienced
any material indication to this effect.
The forecasts 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 11.7% 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 11.7% 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 includes 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
14.2% of income for 3 months, then followed by the same reductions in workload from the 12 month model (averaging out to over 14.1% across 12
months). In this case the Group would consistently fail the net gearing covenant and the eligible debtor covenant and could exceed the limits of the
assumed £500k overdraft. This would necessitate the Group moving a level of cash from the investments in joint ventures and associates into the Group,
improved debtor collection rate (which is reliant on client processes and therefore not wholly within the Group’s control) than we normally forecast to
remain within the limits of our facilities, and then might require additional funding.
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. With vaccine roll outs largely completed and booster programs ongoing, we see the
industry now well positioned to reduce the risks of impact from further COVID-19 spikes.
With the impact the loss for the year has had on net assets and working capital, the Directors are considering a range of options regarding our strategy
for the Group structure and geographic footprint to stabilise and improve the Groups’ underlying financial position. With this in mind, 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 if the COVID-19 environment worsened or the Ukraine conflict lead to macro-economic uncertainty, the Group may
find itself as the result of unexpected levels of delays on project work beyond its control requiring additional external 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 (in liquidation) 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.
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51
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.
n Dividends
Dividend payments are recognised as liabilities once they are no longer at the discretion of the Company.
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.
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:
Dividend income from investments is recognised in the income statement when the shareholders’ rights to receive payment have been established.
(a) There is an identified asset;
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.
(b) The Group obtains substantially all the economic benefits from use of the asset; and
(c) 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.
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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.
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:
n 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% (2020: 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 £0.27m, (2020: £1.03m) trade receivables provision primarily against
Middle East and some UK 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.
n Impairment of goodwill
Details of the impairment reviews undertaken in respect of the carrying value of goodwill are given in note 11.
n 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.
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55
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:
n 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 2021.
n 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.
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
2021
£’000
8,871
2,822
321
12,014
2021
£’000
6,063
2,517
242
8,822
2020
£’000
7,106
4,823
237
12,166
2020
£’000
6,990
4,122
224
11,336
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
Segment amortisation
United Kingdom
Middle East
Continental Europe
Amortisation
2021
Segment result
United Kingdom
Middle East
Continental Europe
Group costs
Loss before tax
2020
Segment result
United Kingdom
Middle East
Continental Europe
Group costs
Profit before tax
2021
£’000
(93)
-
-
(1)
(94)
2021
£’000
88
33
4
4
129
2021
£’000
399
40
3
442
Fair value gains
on deferred
consideration
and acquisition
settlement
£’000
-
-
-
-
-
Fair value gains
on deferred
consideration
and acquisition
settlement
£’000
-
-
-
-
-
Before goodwill
and acquisition
adjustments
£’000
(848)
(936)
149
104
(1,531)
Before goodwill
and acquisition
adjustments
£’000
(282)
(472)
511
197
(46)
Reallocation
of group
management
charges
£’000
540
398
181
(1,119)
-
Reallocation
of group
management
charges
£’000
496
449
146
(1,091)
-
Sub-total
£’000
(848)
(936)
149
104
(1,531)
Sub-total
£’000
(282)
(472)
511
197
(46)
2020
£’000
(104)
-
-
(8)
(112)
2020
£’000
29
40
3
2
74
2020
£’000
367
43
9
419
Total
£’000
(308)
(538)
330
(1,015)
(1,531)
Total
£’000
214
(23)
657
(894)
(46)
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.
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57
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
2021
£’000
988
(6)
982
829
829
2020
£’000
648
(20)
628
606
606
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 2020
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 2021
£’000
(606)
528
-
(751)
(829)
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
2021
£’000
2,413
1,427
85
3,925
1,547
6,432
11,904
2020
£’000
1,354
1,562
91
3,007
2,140
7,704
12,851
Segment liabilities
United Kingdom
Middle East
Continental Europe
Trade payables, contract liabilities and accruals
Other current liabilities
Non current liabilities
Total liabilities
n Geographical areas
Revenue
United Kingdom
Country of domicile
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
2021
£’000
3,067
781
57
3,905
1,293
3,639
8,837
2021
£’000
8,871
8,871
321
2,822
3,143
2020
£’000
2,168
1,052
25
3,245
1,388
3,844
8,477
2020
£’000
7,106
7,106
237
4,823
5,060
12,014
12,166
2021
£’000
4,594
4,594
9
787
43
758
1,597
6,191
241
6,432
2020
£’000
5,072
5,072
25
1,219
57
1,117
2,418
7,490
214
7,704
2020
£’000
877
* Non current assets include investments in associate and joint ventures.
The largest client revenues for 2021 relate to the United Kingdom operating segment (2020: United Kingdom operating segment).
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59
n Major clients
During the year ended 30 September 2021, the Group derived 10% or more of its revenues from one client (2020: no client).
Largest client revenues
2021
£’000
3,295
n Revenue by project site
The geographical split of revenue based on the location of project sites was:
7
EMPLOYEE INFORMATION
The average number of persons employed by the Group and Company during the year was as follows:
United Kingdom
Middle East
Continental Europe
Rest of the world
Revenue
4 OTHER OPERATING INCOME
Property rental income
Management charges to joint ventures and associates
Government grants (UK furlough scheme)
Other sundry income
Total other operating income
5
FINANCE COSTS
Payable on bank loans and overdrafts
Finance lease interest payable
Total finance costs
6
AUDITOR REMUNERATION
2021
£’000
8,528
2,955
490
41
12,014
2021
£’000
153
132
59
16
360
2021
£’000
3
91
94
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
2021
£’000
58
70
69
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.
2020
£’000
6,769
4,994
373
30
12,166
2020
£’000
148
122
158
27
455
2020
£’000
9
103
112
2020
£’000
53
Technical
Administrative
Total
Group
Company
2021
Number
104
29
133
2020
Number
129
32
161
2021
Number
2020
Number
-
7
7
-
7
7
In addition to the number of staff disclosed above, the Group’s associate and joint ventures employed an average of 146 persons (2020: 141 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
2021
£’000
5,874
444
253
6,571
2020
£’000
6,958
461
273
7,692
2021
£’000
534
65
44
643
2020
£’000
542
65
41
648
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.
8 DIRECTORS’ EMOLUMENTS
The Executive Directors and Non-executive Directors of Aukett Swanke Group (“ASG”) Plc, waived part of their emoluments in the prior year to reflect
difficult trading conditions. The total amounts waived were 2021: NIL (2020: £38k).
2021
Nicholas Thompson
John Bullough
Robert Fry
Clive Carver
Raúl Curiel
Antony Barkwith
Total
Aggregate
emoluments
£’000
Pension
contributions
£’000
Total
received
£’000
Waived
£’000
Total
entitlement
£’000
214
15
121
30
30
123
533
10
-
17
-
-
16
43
224
15
138
30
30
139
576
-
-
-
-
-
-
-
224
15
138
30
30
139
576
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61
2020
Nicholas Thompson
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
Benefits were accruing to three Directors (2020: three Directors) under defined contribution pension arrangements.
The aggregate emoluments of the highest paid Director were £214,000 (2020: £218,000) together with pension contributions of £10,000 (2020: £10,000).
9
TAX CHARGE
Current tax
Adjustment in respect of previous years
Total current tax
Origination and reversal of temporary differences
Adjustment in respect of previous years
Changes in tax rates
Total deferred tax (note 22)
Total tax credit
2021
£’000
-
(361)
(361)
(126)
92
-
(34)
(395)
The standard rate of corporation tax in the United Kingdom is applicable for the financial year was 19% (2020: 19%)
The tax assessed for the year differs from the United Kingdom standard rate as explained below:
Loss before tax
Loss before tax multiplied by the standard rate of corporation tax
in the United Kingdom of 19% (2020: 19%)
Effects of:
Other non tax deductible expenses/(credits)
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
2021
£’000
(1,531)
(291)
60
(32)
105
(361)
92
32
(395)
2020
£’000
-
-
-
(26)
-
-
(26)
(26)
2020
£’000
(46)
(9)
(12)
(84)
84
-
7
(12)
(26)
10 EARNINGS PER SHARE
The calculations of basic and diluted earnings per share are based on the following data:
Earnings
Continuing operations
(Loss)/profit for the year
Number of shares
Weighted average of ordinary shares in issue
Effect of dilutive options
Diluted weighted average of ordinary shares in issue
2021
£’000
(1,123)
(1,123)
2021
Number
2020
£’000
5
5
2020
Number
165,213,652
165,213,652
-
-
165,213,652
165,213,652
As explained in note 25 the Company has granted options over 2,500,000 of its ordinary shares. These have not been included above as the average
share price was below the exercise price in 2021 and they therefore do not have a dilutive effect.
11 GOODWILL
Group
Cost
At 1 October 2019
Addition
Disposal
Exchange differences
At 30 September 2020
Addition
Disposal
Exchange differences
At 30 September 2021
Impairment
At 1 October 2019
Disposal
Exchange differences
At 30 September 2020
Disposal
Exchange differences
At 30 September 2021
Net book value
At 30 September 2021
At 30 September 2020
At 30 September 2019
£’000
2,683
19
(271)
(39)
2,392
9
-
(31)
2,370
271
(271)
-
-
-
-
-
2,370
2,392
2,412
The disposal recorded in the prior year related to Goodwill on a Russian subsidiary which was sold during the prior year. As the Goodwill allocated to
that entity had previously been fully impaired no gain or loss was recognised on disposal of the goodwill.
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63
The addition recorded in the year related to Goodwill on the acquisition of an additional 5% shareholding in John R Harris & Partners Limited increasing
the Group’s shareholding from 95% to 100%.
The net book value of goodwill is allocated to the Group’s cash generating units (“CGU”) as follows:
At 30 September 2019
Addition
Exchange differences
At 30 September 2020
Addition
Exchange differences
At 30 September 2021
United Kingdom
£’000
Turkey
£’000
Middle East
£’000
1,740
-
-
1,740
-
-
1,740
37
-
(11)
26
-
(4)
22
635
19
(28)
626
9
(27)
608
Total
£’000
2,412
19
(39)
2,392
9
(31)
2,370
An annual impairment test is performed over the cash generating units (‘CGUs’) of the Group where goodwill and intangible assets are allocable to
those CGUs.
JRHP and SCL are identifiable as separate CGUs for the purposes of performing an impairment review under IAS 36. The goodwill relating to the Middle
East CGU for reference purposes in the disclosure table is wholly attributable to JRHP. Intangible assets relating to both JRHP and SCL are included in
the other intangible asset tables in note 12.
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 8.31% 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 return to economic health in the year to September 2022, with
assumption of a return to relative economic normality following the COVID-19 pandemic. The compound growth rate is higher than prior years
modelling assumptions as it bases the starting point on the lower earnings in the year 20/21 which were significantly lower than prior years, and
assumes an annualised inflation of earnings (and costs) of a higher CPI assumption of 4.6%. Compound growth used in the model compared to
the 19/20 year revenue is 4.37%.
•
long term growth rate - which has been assumed to be 2.0% (2020: 2.0%) 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 11.34% (2020: 12.66%).
Based on the discounted cash flow projections, the recoverable amount of the UK CGU is estimated to exceed carrying values by £7,530k (546%). An
8% 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 50%, would result in carrying amounts exceeding their recoverable amount. A decrease
in the effective compound growth rate of revenue to 6.48% instead of the 8.31% 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 4.3% (for JRHP) over the next five years - which is based on knowledge of the current
and expected level of construction activity in the Middle East. For JRHP we assume earnings in the year to September 2022 of AED 8.9m with
earnings rising slowly to AED 9.9m from the year 2025/26.
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 10.1% (2020: 13.7%).
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 £2.43m (252%). A decrease in the effective compound growth rate of revenue to 2.2% instead of the 4.3% noted above, without a corresponding
reduction in costs in JRHP, would result in carrying amounts exceeding their recoverable amount. An increase in the discount rate to 29.2% would result
in carrying amounts exceeding their recoverable amount.
The carrying value of the Middle East CGU Goodwill is entirely attributable to JRHP, whereas Other Intangible Assets (note 12) includes both JRHP and
SCL. As the operations of SCL are in the process of being transferred across to JRHP, Management consider it appropriate to impair the remaining
balance of Other Intangible Assets associated with SCL and this is commented on further in note 12.
Management believe that the carrying value of goodwill remains recoverable for JRHP despite this sensitivity given the conservative nature of the
underlying forecasts prepared.
12 OTHER INTANGIBLE ASSETS
Group
Cost
At 30 September 2019
Disposal
Exchange differences
At 30 September 2020
Disposal
Exchange differences
At 30 September 2021
Amortisation
At 30 September 2019
Disposal
Charge
Exchange differences
At 30 September 2020
Disposal
Impairment
Charge
Exchange differences
At 30 September 2021
Net book value
At 30 September 2021
At 30 September 2020
At 30 September 2019
Trade name
£’000
Customer
relationships
£’000
Order book
£’000
Trade licence
£’000
701
-
(29)
672
-
(17)
655
152
-
26
(9)
169
-
236
25
(3)
427
228
503
549
404
-
(31)
373
-
(19)
354
237
-
45
(23)
259
-
13
26
(13)
285
69
114
167
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
80
-
(4)
76
-
(3)
73
34
-
8
(2)
40
-
-
8
(2)
46
27
36
46
Total
£’000
1,185
-
(64)
1,121
-
(39)
1,082
423
-
79
(34)
468
-
249
59
(18)
758
324
653
762
Amortisation is included in other operating expenses in the consolidated income statement.
n Impairment
Following the Group’s decision to restructure the UAE business, Shankland Cox Limited ongoing contracts have been or are in the process of being
reassigned into John R Harris & Partners Limited, with new work being contracted by John R Harris & Partners Limited, and the remaining licences held
by Shankland Cox Limited being allowed to expire. Management therefore took the view that remaining balance of intangible assets totalling £249k
should be impaired as at 30th September 2021. This impairment charge is presented separately to the amortisation charge for the year, on the face of
the Consolidated Income Statement.
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65
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.
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.
M&M STORE, BERLIN
13 PROPERTY, PLANT & EQUIPMENT
Group
Cost
At 30 September 2019
Reclassification due to adoption of IFRS 16
Additions
Disposals
Exchange differences
At 30 September 2020
Additions
Disposals
Exchange differences
At 30 September 2021
Depreciation
At 30 September 2019
Reclassification due to adoption of IFRS 16
Charge
Disposals
Exchange differences
At 30 September 2020
Charge
Disposals
Exchange differences
At 30 September 2021
Net book value
At 30 September 2021
At 30 September 2020
At 30 September 2019
Leasehold
improvements
£’000
Furniture &
equipment
£’000
597
(578)
-
-
(5)
14
-
-
(3)
11
131
(112)
-
-
(5)
14
-
-
(3)
11
-
-
466
1,473
-
245
(80)
(32)
1,606
33
(885)
(21)
733
1,349
-
74
(64)
(25)
1,334
129
(871)
(14)
578
155
272
124
Total
£’000
2,070
(578)
245
(80)
(37)
1,620
33
(885)
(24)
744
1,480
(112)
74
(64)
(30)
1,348
129
(871)
(17)
589
155
272
590
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67
Company
Cost
At 30 September 2020
Additions
At 30 September 2021
Depreciation
At 30 September 2020
Charge
At 30 September 2021
Net book value
At 30 September 2021
At 30 September 2020
14 LEASES
Furniture & equipment
£’000
Total
£’000
17
-
17
2
4
6
11
15
17
-
17
2
4
6
11
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.
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.
-
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:
-
-
- whether the location represents a new area of operations for the Group.
the length of the lease term;
the economic stability of the environment in which the property is located; and
At 30 September 2021 the leases recognised do not include any break clauses.
n Right-of-use Assets
At 1 October 2019
Additions
Adjustment to brought forward
amortisation
Amortisation
At 30 September 2020
Additions
Amortisation
At 30 September 2021
Land and buildings
£’000
Restoration costs
£’000
Leasehold
improvements
£’000
2,803
-
-
(325)
2,478
-
(324)
2,154
188
-
-
(22)
166
-
(22)
144
278
-
44
(37)
285
-
(37)
248
Total
£’000
3,269
-
44
(384)
2,929
-
(383)
2,546
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;
-
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69
n Lease liabilities
At 1 October 2019
Additions
Interest expense
Lease payments
At 30 September 2020
Additions
Interest expense
Lease payments
At 30 September 2021
Short-term lease expense
Low value lease expense
Land and buildings
£’000
Leasehold
improvements
£’000
3,277
-
92
(232)
3,137
-
83
(464)
2,756
278
-
11
(82)
207
-
8
(82)
133
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
3,555
-
103
(314)
3,344
-
91
(546)
2,889
£’000
94
16
-
61
Lease liabilities
At 30 September 2021
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
115
114
353
340
459
469
1,280
1,300
Over 5 years
£’000
682
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
2021
£’000
74
-
-
74
2020
£’000
74
-
-
74
15 INVESTMENTS
Company
Cost
At 30 September 2019
Addition
At 30 September 2020
Addition
At 30 September 2021
Provisions
At 30 September 2019
Charge
At 30 September 2020
Charge
At 30 September 2021
Net book value
At 30 September 2019
At 30 September 2020
At 30 September 2021
Subsidiaries
£’000
Joint ventures
£’000
Associate
£’000
10,077
100
10,177
23
10,200
4,596
2,266
6,862
81
6,943
5,481
3,315
3,257
21
-
21
-
21
-
-
-
-
-
21
21
21
12
-
12
-
12
-
-
-
-
-
12
12
12
Total
£’000
10,110
100
10,210
23
10,233
4,596
2,266
6,862
81
6,943
5,514
3,348
3,290
The increase in cost of £23k during the year (2020: £100k) relates to the acquisition of a further 5% equity (2020: 15%) shareholding in John R Harris &
Partners Limited.
A provision for impairment of £81k was made during the year to reduce the Company’s investment in Swanke Hayden Connell Europe Limited down to
the net book value of it’s balance sheet.
A provision for impairment of £2,141k was made in the prior year 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 was made in the prior year 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 is £3,257k (2020: £3,315k) after charges made in the current year, which is larger than
the net assets of the consolidated statement of financial position of £3,067k (2020: £4,374k). This is primarily due to the Company’s cost of investment
in JRHP being £315k higher than the Group’s carrying value of Goodwill and other intangible assets in JRHP.
The net book values are supported by the value in use calculations detailed further in note 11.
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71
n Subsidiary operations
The following are the subsidiary undertakings at 30 September 2021:
Name
Country of
incorporation and
registered office
address
(see table below)
Proportion of ordinary equity held
Nature of business
Subsidiaries
Aukett Swanke Limited
Aukett Fitzroy Robinson International Limited
Veretec Limited
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
Fitzroy Robinson West & Midlands Limited
(A)
(A)
(A)
(A)
(B)
(C)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
2021
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
2020
100%
100%
100%
100%
100%
95%
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 & Engineering
Architecture & design
Non-trading
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
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 engaged
through Aukett Swanke Architectural Design Limited.
Aukett Swanke Architectural Design Limited is incorporated in England & Wales, but operates principally in the United Arab Emirates. The trade licence
expired in March 2021 and we are in the process of freezing this licence.
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 was
a non-controlling interest. The proportion of equity and voting rights held by the Group was increased from 95% to 100% on the 9th August 2021, non-
controlling interests correspondingly decreased from 5% to 0%.
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, and Al Ain. These licenses expired/expire in January and April 2022, with ongoing projects being
reassigned to John R Harris & Partners Limited.
The UAE domiciled branches are consolidated into the Group principally based on profit sharing agreements in place.
n Interest in associate and joint ventures
Set out below are the associate and joint ventures of the Group as at 30 September 2021. 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 (in liquidation)
Aukett + Heese GmbH
(D)
(E)
(F)
Proportion
of ordinary equity held
Nature of
relationship
Measurement
method
2021
50%
50%
25%
2020
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)
Country of Incorporation
Registered office address
England & Wales
10 Bonhill Street, London, EC2A 4PE, United Kingdom
Turkey
Cyprus
Germany
Czech Republic
Germany
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
Gutleutstrasse 163, 60327 Frankfurt am Main, Germany
ADVOKÁTNÍ KANCELÁŘ JUDr. JAN JIŘÍČEK, Legionářů 947/2b, 182 00 Prague 8, Czech Republic
Budapester Strasse 43, 10787 Berlin, Germany
16 INVESTMENT IN ASSOCIATE
As disclosed in note 15, the Group owns 25% of Aukett + Heese GmbH which is based in Berlin, Germany. The table below provides summarised
financial information for Aukett + Heese GmbH as it is material to the Group. The information disclosed reflects Aukett + Heese GmbH’s relevant financial
statements and not the Group’s share of those amounts.
Summarised balance sheet
Assets
Non current assets
Current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
2021
£’000
289
4,693
4,982
(2,635)
(2,635)
2,347
2020
£’000
280
6,755
7,035
(3,329)
(3,329)
3,706
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73
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
The Group received dividends of £135,000 after deduction of German withholding taxes (2020: £106,000) 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.
2021
£’000
3,706
470
(185)
(1,644)
2,347
25%
587
587
2021
£’000
12,243
(3,492)
8,751
(8,078)
673
(203)
470
(185)
285
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
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
2021
£’000
12
288
300
(99)
(99)
201
2021
£’000
919
(267)
652
(541)
111
(46)
65
2020
£’000
18
500
518
(226)
(226)
292
2020
£’000
1,233
(451)
782
(610)
172
(55)
117
The Group received dividends of £393,000 after deduction of German withholding taxes (2020: £105,000) 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.
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 2019
Share of profits
Dividends paid
Exchange differences
At 30 September 2020
Share of profits
Dividends paid
Exchange differences
At 30 September 2021
£’000
277
117
(110)
8
292
65
(142)
(14)
201
The principal risks and uncertainties associated with Aukett + Heese Frankfurt GmbH are the same as those detailed within the Group’s Strategic Report.
n Prague
As disclosed in note 15, the Group owns 50% of Aukett sro which is based in Prague, Czech Republic.
At 30 September 2019
Share of profits
Exchange differences
At 30 September 2020
Share of losses
Exchange differences
At 30 September 2021
£’000
-
25
-
25
(16)
(1)
8
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75
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
Revenue
Sub consultant costs
Revenue less sub consultant costs
Operating costs
(Loss) / profit before tax
Taxation
(Loss) / profit after tax
2021
£’000
11
11
(3)
(3)
8
2021
£’000
165
(78)
87
(103)
(16)
-
(16)
2020
£’000
105
105
(80)
(80)
25
2020
£’000
347
(141)
206
(172)
34
(4)
30
In the prior year the carrying value of the investment in the joint venture brought forward was limited to £nil as the company had net liabilities at the
start of the prior year. The prior year share of profit was therefore reduced by £5k so that the carrying value of the investment in joint venture matched
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 receivable
Other current assets
Total
The corporate tax receivable of £99k relates to cash receivable from UK R&D tax claims.
2021
£’000
3,215
(272)
2,943
385
22
99
526
3,975
2020
£’000
3,410
(1,031)
2,379
419
41
-
688
3,527
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
Trade receivables
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
2021
£’000
5
5
5
381
17
-
46
449
454
2020
£’000
26
26
-
1,830
14
30
54
1,928
1,954
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.
During the year, the Company made provisions totalling £1,733k against amounts owed by subsidiaries. These are amounts owed by Aukett Fitzroy
Robinson International Limited, Aukett Swanke Architectural Design Limited and Shankland Cox Limited. Following the Group’s decision to restructure
the UAE business either freezing or allowing trade licenses in these companies to expire, Management took the decision to make a provision against
amounts owed by these companies to the Group.
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 2021. 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.
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.
The total impairment allowance is down £759k compared to the prior year, primarily due to the UAE entities formally writing off old debtors which
previously had carried an impairment allowance. Impairment allowances as a percentage of gross trade receivables has therefore decreased to 8.5%
(2020: 30%).
The loss allowance for the Middle East operating segment as at 30 September 2021 (excluding additional loss allowances measured on a case-by-case
basis) was determined as follows for both trade receivables and contract assets:
30 September 2021
Current
1-30 days past
due
More than 30
days past due
More than 60
days past due
More than 90
days past due
Expected loss rate (%)
Gross carrying amount (£’000)
Loss allowance (£’000) through CSOFP
2%
611
10
2%
136
3
3%
112
4
6%
65
4
10%
575
58
Total
1,499
79
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77
The comparative loss allowance for the Middle East operating segment as at 30 September 2020 was:
19 TRADE AND OTHER PAYABLES
30 September 2020
Current
1-30 days past
due
More than 30
days past due
More than 60
days past due
More than 90
days past due
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
Total
1,876
138
The loss allowance for the Middle East operating segment as at 30 September 2021 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 (£7k) arises which is taken through the foreign currency translation reserve.
Opening loss allowance provision as at 1 October 2020
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 2021 - calculated under IFRS 9
Contract assets
£’000
Trade receivables
£’000
20
(13)
(1)
6
-
6
118
(38)
(6)
74
198
272
The loss allowances decreased by £44k to £74k for trade receivables and decreased by £14k to £6k for contract assets during the year to 30 September
2021.
A further allowance for impairment of trade receivables and contract assets is established on a case-by-case basis amounting to £198k at 30 September
2021 and £913k at 30 September 2020 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 2019
Loss allowance provision
Charged to the income statement based on additional case by case provisions
Allowance utilised
Exchange differences
At 30 September 2020
Loss allowance provision
Charged to the income statement based on additional case by case provisions
Allowance written-off
Exchange differences
At 30 September 2021
£’000
1,022
(37)
105
(20)
(39)
1,031
(38)
198
(865)
(54)
272
Group
Trade payables
Other taxation and social security
Other payables
Accruals
Total
Company
Trade payables
Amounts owed to subsidiaries
Other taxation and social security
Other payables
Accruals
Total
See note 33 for further details of the amounts due to subsidiaries.
20 BORROWINGS
Group
Secured bank loan
Total borrowings
Amounts due for settlement within 12 months
Current liability
Amounts due for settlement between one and two years
Amounts due for settlement between two and five years
Non current liability
Total borrowings
2021
£’000
2,112
568
103
964
3,747
2021
£’000
44
1,551
32
31
92
1,750
2021
£’000
500
500
83
83
250
167
417
500
2020
£’000
1,713
549
145
926
3,333
2020
£’000
57
2,156
-
103
114
2,430
2020
£’000
155
155
155
155
-
-
-
155
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79
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
2021
£’000
500
500
83
83
250
167
417
500
2020
£’000
155
155
155
155
-
-
-
155
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 4.05% (loan) and 3% (overdraft) above the Coutts Base rate 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
22 DEFERRED TAX
Group
At 30 September 2019
Income statement
Exchange differences
At 30 September 2020
Income statement
Exchange differences
At 30 September 2021
Group
Deferred tax assets
Deferred tax liabilities
Net deferred tax balance
2021
£’000
515
515
(500)
15
2020
£’000
992
992
(155)
837
Total
£’000
140
26
1
167
34
-
201
2020
£’000
214
(47)
167
Tax depreciation
on plant and equipment
£’000
Trading losses
£’000
Other
temporary differences
£’000
84
(41)
-
43
(10)
-
33
117
68
-
185
45
-
230
(61)
(1)
1
(61)
(1)
-
(62)
2021
£’000
241
(40)
201
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 2019
Utilised
Charged to the income statement
Exchange differences
At 30 September 2020
Utilised
Charged to the income statement
Exchange differences
At 30 September 2021
Property lease
provision
£’000
Employee benefit
obligations
£’000
210
-
-
-
210
-
-
-
210
913
(205)
121
(47)
782
(213)
92
(39)
622
Total
£’000
1,123
(205)
121
(47)
992
(213)
92
(39)
832
Property lease provision
The provision arose from lease obligations in respect of the Company’s leased London premises.
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.
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
2021
5 years
1.74%
2.2%
2020
5 years
1.04%
1.5%
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.
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Impact on employee benefit obligation
26 CASH GENERATED FROM OPERATIONS
Change in assumption
Increase in assumption
Decrease in assumption
Group
Combined average length of service
Salary growth rate
Discount rate
1 year
1%
1%
1.01%
0.15%
(0.15)%
(3.78)%
(0.15)%
0.15%
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 (2020: 165,213,652) ordinary shares of 1p each
At 1 October 2019
No changes
At 30 September 2020
No changes
At 30 September 2021
2021
£’000
1,652
2020
£’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.
25 SHARE OPTIONS
The Company has granted options over its Ordinary Shares to Group employees as follows:
Granted
Number
Lapsed
Number
At 1 October
2020
Number
500,000
1,000,000
-
-
-
1,000,000
1,500,000
1,000,000
At 30
September
2021
Number
500,000
1,000,000
1,000,000
2,500,000
Exercise
price
Pence
4.25
3.60
1.60
Earliest
exercisable
date
Latest
exercisable
date
6 March 2019
6 March 2023
24 Aug 2022
24 Aug 2026
29 Jun 2023
29 Jun 2027
-
-
-
-
Granted
6 March 2017
24 Aug 2020
29 Jun 2021
Total
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, and the 1,000,000 share options granted on 29 June 2021 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.
Loss before tax – continuing operations
Finance costs
Share of results of associate and joint ventures
Intangible amortisation
Intangible impairment
Depreciation
Amortisation of right-of-use assets
Profit on disposal of property, plant & equipment
(Increase)/decrease in trade and other receivables
(Decrease) / increase in trade and other payables
Change in provisions
Unrealised foreign exchange differences
Net cash (expended by) / generated from operations
Company
Loss before income tax
Dividends receivable
Finance costs
Depreciation
Provision on investments
Decrease in trade and other receivables
Decrease in trade and other payables
Unrealised foreign exchange differences
Net cash (expended by) / generated from operations
2021
£’000
(1,531)
94
(166)
59
249
129
383
(2)
(843)
892
(160)
-
(896)
2021
£’000
(1,179)
(528)
1
4
81
1,499
(579)
(1)
(702)
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
n Changes in liabilities arising from financing activities including changes arising from cash flows and non-cash changes
Group
At 1 October 2020
Cash flows
- Repayment of borrowings
- Payment of interest
- Receipt of bank loan
- Payment of lease liabilities
Non-cash flows
- Effects of foreign exchange
- Loans and borrowings classified as non-current
at 30 September 2021
- Interest accrued in period
At 30 September 2021
Non- current loans and
borrowings
£’000
Current loans and
borrowings
£’000
2,805
-
-
500
-
-
(538)
-
2,767
694
(155)
(1)
-
(546)
-
538
92
622
Total
£’000
3,499
(155)
(1)
500
(546)
-
-
92
3,389
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83
Company
At 1 October 2020
Cash flows
- Repayment of borrowings
- Payment of interest
- Receipt of bank loan
Non-cash flows
- Effects of foreign exchange
- Loans and borrowings classified as non-current
at 30 September 2021
- Interest accrued in period
At 30 September 2021
27 FINANCIAL INSTRUMENTS
Non- current loans and
borrowings
£’000
Current loans and
borrowings
£’000
-
-
-
500
-
(83)
-
417
155
(155)
(1)
-
-
83
1
83
Total
£’000
155
(155)
(1)
500
-
-
1
500
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
Accrued income
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
2021
£’000
2,943
982
385
33
22
515
4,880
(2,112)
(103)
(964)
(2,889)
(500)
(6,568)
(1,688)
2020
£’000
2,379
628
419
-
41
992
4,459
(1,713)
(145)
(926)
(3,554)
(155)
(6,493)
(2,034)
Company
Net trade receivables
Amounts owed by subsidiaries
Amount owed by associate and joint ventures
Accrued income
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
2021
£’000
5
381
22
33
-
211
652
(44)
(1,551)
(31)
(92)
(500)
(2,218)
(1,566)
2020
£’000
-
1,830
40
-
30
164
2,064
(57)
(2,156)
(103)
(114)
(155)
(2,585)
(521)
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.
n Collateral
As disclosed in note 20 the bank loan and overdraft (undrawn at 2020 and 2021 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
2021
£’000
3,612
614
2020
£’000
3,052
1,025
Other receivables in the consolidated statement of financial position include a £230k rent security deposit (2020: £225k) 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.
MICROSOFT, MESSE TURM, FRANKFURT
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28 FOREIGN CURRENCY RISK
29 COUNTERPARTY 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:
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:
Group
Czech Koruna
EU Euro
UAE Dirham
UK Sterling
US Dollar
Net financial instruments held in foreign currencies
Company
Czech Koruna
EU Euro
US Dollar
UAE Dirham
Net financial instruments held in foreign currencies
2021
£’000
5
166
2,046
(7)
3
2,213
2021
£’000
5
130
3
254
392
2020
£’000
26
21
1,844
(3)
(11)
1,877
2020
£’000
26
20
(12)
999
1,033
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
2021
Profit
£’000
39
39
Equity
£’000
101
-
2020
Profit
£’000
25
103
Equity
£’000
132
-
The following foreign exchange gains / (losses) arising from financial assets and financial liabilities have been recognised in the income statement:
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
2021
£’000
1,210
923
143
741
3,017
Receivables
pre-allowance
2020
£’000
1,038
306
222
931
2,497
loss
allowance
£’000
(3)
(3)
(4)
(64)
(74)
loss
allowance
£’000
(13)
(3)
(11)
(91)
(118)
Receivables
post-allowance
2021
£’000
1,207
920
139
677
2,943
Receivables
post-allowance
2020
£’000
1,025
303
211
840
2,379
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 £3,925k (2020: £3,007k) of trade receivables and amounts due from customers for contract work is
illustrated in the table below showing the three largest exposures to individual clients at 30 September.
Group
Company
2021
£’000
(45)
(47)
2020
£’000
(12)
(19)
Largest exposure
Second largest exposure
Third largest exposure
The Group’s principal banker is Coutts & Co, a member of the Royal Bank of Scotland group.
At 30 September 2021 the largest exposure to a single financial institution represented 54% of the Group’s cash and cash equivalents held by various
Group entities with Coutts & Co. (2020: 55% held by John R Harris & Partners Limited with The National Bank of Ras Al-Khaimah (P.S.C).
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87
2021
£’000
646
240
240
2020
£’000
323
128
120
n Company
The Company only has £5k trade receivables (2020: NIL) and no 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.
31 LIQUIDITY RISK
The Group’s cash balances are held at call or in deposits with very short maturity terms.
At 30 September 2021 the Group had £850,000 (2020: £850,000) of gross borrowing facility and £500,000 net borrowing facility (2020: £500,000) under
its United Kingdom bank overdraft facility. In November 2021 Coutts & Co renewed the overdraft facility, maintaining it at £500,000, which is now next
due for review in November 2022, with an interim review in May 2022.
The maturity analysis of financial liabilities, including expected future charges through the Income Statement is as shown below.
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
2021
£’000
278
(500)
-
(222)
2021
£’000
(500)
(500)
2020
£’000
278
(155)
-
123
2020
£’000
(155)
(155)
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 4.05% (loan) and 3% (overdraft) above the Coutts Base rate for 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
2021
£’000
(2)
(5)
2020
£’000
1
(2)
EDGE EAST SIDE, BERLIN
Group
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
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 2021
Borrowings
£’000
157
-
-
-
157
(2)
155
90
263
169
-
522
(22)
500
Lease liabilities
£’000
547
547
1,450
1,161
3,705
(361)
3,344
547
522
1,394
697
3,160
(271)
2,889
Other financial
liabilities
£’000
2,784
-
-
-
2,784
-
2,784
3,179
-
-
-
3,179
-
3,179
Lease liabilities includes the finance lease on leasehold improvements and the land and buildings office lease (see note 14).
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 2020
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 2021
Borrowings
£’000
Other financial
liabilities
£’000
157
-
-
157
(2)
155
90
263
169
522
(22)
500
2,430
-
-
2,430
-
2,430
1,718
-
-
1,718
-
1,718
Total
£’000
3,488
547
1,450
1,161
6,646
(363)
6,283
3,816
785
1,563
697
6,861
(293)
6,568
Total
£’000
2,587
-
-
2,587
(2)
2,585
1,808
263
169
2,240
(22)
2,218
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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 £992,000 (2020: £971,000) and paid charges to its subsidiaries
for office accommodation and other related services of £91,000 (2020: £95,000).
At 30 September 2021 the Company was owed £381,000 (2020: £1,830,000) by its subsidiaries and owed £1,551,000 (2020: £2,156,000) 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 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.
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 2021 the overdrafts of its United
Kingdom subsidiaries guaranteed by the Company totalled £nil (2020: £nil).
The Company and certain of its United Kingdom subsidiaries are members of a group for Value Added Tax (VAT) purposes. At 30 September 2021 the
net VAT payable balance of those subsidiaries was £218,000 (2020: £376,000).
At the year end, one of the Group’s Middle East subsidiaries had outstanding letters of guarantee totalling £105,000 (2020: £111,000). 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 £900 (2020: 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 £900 (2020: £4,000).
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
2021
£’000
1,301
106
1,407
2021
£’000
600
43
643
2020
£’000
1,221
109
1,330
2020
£’000
585
42
627
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 (2020: £47,000). Dividends of £135,000 (2020: £106,000) 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 (2020: £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 £81,000 (2020: £63,000). Dividends of £393,000 (2020: £105,000) were received from Aukett + Heese GmbH during the year. The amount
owed to the Group by Aukett + Heese GmbH at 30 September 2021 was £17,000 (2020: £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 £3,000 (2020: £14,000) were made to Aukett sro in respect of these services. Separately, Aukett sro owed the Group and the Company £5,000
as at 30 September 2021 (2020: £40,000) relating to previously declared but not yet paid dividends, management fees and name licence charges.
None of the balances with the associate or joint ventures are secured.
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91
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.
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.”
STEAMHOUSE, EASTSIDE LOCKS, BIRMINGHAM
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021
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AUKETT SWANKE GROUP PLC / ANNUAL REPORT & ACCOUNTS 2021