Aukett Swanke Group Plc
Annual Report
For the year ended 30 September 2022
Registered number 02155571
Aukett Swanke Group Plc
Contents
Pages
Five year summary ................................................................................................................... 2
Corporate information ................................................................................................................ 2
Chairman’s statement ........................................................................................................... 3 - 6
Board of Directors ................................................................................................................. 7 - 8
Chief Executive’s Report .................................................................................................... 9 - 11
Financial Review ............................................................................................................... 12 - 18
Strategic report ................................................................................................................. 19 - 23
Directors’ report ................................................................................................................ 24 - 36
Statement of directors’ responsibilities .................................................................................... 37
Independent auditor’s report ............................................................................................. 38 - 46
Financial statements
Consolidated income statement ........................................................................................... 47
Consolidated statement of comprehensive income .............................................................. 48
Consolidated statement of financial position ........................................................................ 49
Company statement of financial position .............................................................................. 50
Consolidated statement of cash flows .................................................................................. 51
Company statement of cash flows ........................................................................................ 52
Consolidated statement of changes in equity ....................................................................... 53
Company statement of changes in equity ............................................................................ 54
Notes to the financial statements ................................................................................ 55 - 109
Shareholder information ........................................................................................................ 110
Studio locations ..................................................................................................................... 111
Page 1
Aukett Swanke Group Plc
Five year summary
Years ending 30 September
2022
£’000
2021
£’000
2020
£’000
2019
£’000
2018
£’000
Total revenues under management1
24,033
26,426
28,534
31,505
31,950
Revenue (continuing operations)
8,645
9,192
7,343
7,970
7,561
Revenue less sub consultant costs1
(continuing operations)
Trading loss from continuing
operations
7,127
6,305
7,214
7,811
7,242
(72)
(595)
426
361
(1,336)
(Loss) / profit before tax
(2,327)
(1,531)
(46)
292
(2,544)
Basic earnings per share (p)
(1.38)
(0.69)
0.00
0.21
(1.42)
Net assets
401
3,067
4,374
4,514
4,136
Cash and cash equivalents2
(204)
515
992
1,145
710
Secured bank loans
(417)
(500)
(155)
(325)
(553)
Net (deficit)/funds3
(621)
15
837
820
157
1Alternative performance measures, refer to page 18 for definition
2Cash and cash equivalents includes cash at bank and in hand less bank overdrafts
3Net (deficit)/funds includes cash at bank and in hand less bank loans and overdrafts (see note 22)
Corporate information
Company secretary
Registered office
Antony Barkwith
cosec@aukettswanke.com
10 Bonhill Street
London
EC2A 4PE
Registered number
Website
England & Wales 02155571
www.aukettswankeplc.com
Share registrars
Equiniti
www.equiniti.com
0121 415 7047
Auditors
Nominated adviser
Strand Hanson Limited
www.strandhanson.co.uk
Broker
Moore Kingston Smith LLP
www.mooreks.co.uk
Zeus Capital Ltd
www.zeuscapital.co.uk
Investor / Media enquiries
Bankers
Chris Steele 07979 604687
Solicitors
Fox Williams www.foxwilliams.com
Coutts & Co
www.coutts.com
Page 2
Aukett Swanke Group Plc
Chairman’s statement
I am pleased to present the financial statements for the year ended 30 September 2022.
Leadership changes
Nicholas Thompson
After 28 years with the Group, of which the last 17 years were as Chief Executive, Nicholas
Thompson retired at the end of December 2022.
Nicholas masterminded the 2005 merger between Aukett and Fitzroy Robinson and the 2013
merger between Aukett Fitzroy Robinson and Swanke Hayden Connell to form the current
Aukett Swanke Group. He then led the integration of these businesses and was instrumental in
the Group’s international expansion.
In recent years he led the Group through difficult times, succeeding in preserving for
shareholders what might otherwise have been a casualty to either the Global Financial Crisis
or the Covid inspired downturn.
Nicholas will act as a consultant to the Group and continue to play a leading role at the WREN,
the industry’s leading professional indemnity insurer.
Raul Curiel
Raul joined the Group in 1978 retiring in 2015. He returned as Non-Executive Chairman in early
2019 until 8 December 2022, when he relinquished the Chairman role but continued as a Non-
Executive Director.
Raul was one of the Group’s most prominent and award winning architects and responsible for
numerous notable buildings. More recently as Non-Executive Chairman he led the board in
helping set and oversee the Group’s strategic plans.
Raul has informed the board that he does not propose to seek re-election at the AGM scheduled
for 21 April 2023 and will therefore leave the board at that time.
The acquisition of Torpedo Factory Group (“TFG”) and the expansion of the Group’s activities
into Smart Buildings was conceived under the leadership of Nicholas and Raul and will be
actively pursued by the current board.
The Investment Case
Background
The past few years have been difficult, and the board’s focus was principally to preserve the
Group as intact as possible to form the base for future growth.
As is set out more fully in the Chief Executive’s Report, this now has largely been achieved,
with the continuing businesses trading better than for some time and those businesses and
offices not deemed to be long term either sold, closed, or being moved onto a licence basis
where the responsibility for profit rests with the local office concerned rather than the Group.
UK Businesses
Aukett Swanke Limited (“ASL”) (design and architecture) and Veretec Limited (“Veretec”)
(executive architecture) are core and key to the Group’s future.
These businesses can trace their roots back to 1906 and currently employs over 80 FTE
technical staff of which 54 are qualified architects or architects in training.
Page 3
Aukett Swanke Group Plc
The Group has enjoyed notable success across a range of building types, including some of
the most iconic in the UK. In recent years this success has continued for buildings in the
commercial office, research and education, mixed use hybrid and hospitality sectors. A feature
of these businesses is the number of repeat instructions from leading developers.
German investments
We also have meaningful investments in two successful German architecture businesses.
These are a 25% interest in the Berlin based Aukett + Heese GmbH and a 50% interest in the
Frankfurt based Aukett + Heese Frankfurt GmbH.
As we account for these investments under IFRS rules, which do not separately show revenues,
shareholders may not fully realise the strength of these investments.
The Berlin business employed an average of 90 FTE technical staff with revenue of £12.20m
in the year to 30 September 2022. The Frankfurt business employed an average of 11 FTE
technical staff with revenue of £1.65m in the year to 30 September 2022. In aggregate, the
dividends received in the past two financial years were £656,000.
These businesses are well positioned for further success.
Discontinued Businesses
In recent years we have exited by sale or closure from the international offices in which trading
was difficult.
Public Company Status
We are the UK’s only listed architecture business and with the costs involved in maintaining the
listing this could be seen as an unnecessary burden. Alternatively, it could be seen as a
differentiating feature that can help fuel further growth. We believe the latter is the case and are
working hard to make use of the listing.
That said there is little benefit in operating as a public company with a market capitalisation
below £4 million, as has been the case recently. We also have infrastructure in place that could
handle operations significantly greater than at present. We therefore need to grow.
Growth
To increase the Group’s share price, and hence market capitalisation, we need to be profitable
and to grow that profit. Some improvement can be expected from actions already taken. In part
from growth in the existing core businesses, which have the capacity to do better as markets
improve, and in part from the savings related to no longer being involved in the discontinued
businesses.
Growth in the architecture businesses is expected to come from further investment in the core
business through additional staffing and from targeted mergers.
We recognise that growth from the core architecture businesses solely through additional
staffing will take time. The UK businesses have been actively recruiting for the past 9 months
which represents a significant upfront investment, the benefits of which will take time to be
seen.
A characteristic of our industry is the changing nature of ownership. In previous decades
successful architects in their thirties and forties would typically transition to ownership via the
partnership structures in place at most firms, which was good for renewal and motivation but
also provided an exit to older architects looking to sell.
The younger generation of architects seem now less inclined or less able to take on the large
financial commitments required to become owners, leaving a growing number of firms without
viable ownership succession plans. As the UK’s only listed architecture business, we are able
to offer our shares to the owners of such practices and will be looking to use this competitive
advantage to our benefit.
Page 4
Aukett Swanke Group Plc
We are also looking to broaden the Group’s exposure to the property market by moving into
closely allied fields but where the business model is more favourable than with a traditional
architecture business and in particular with recurring revenues and where growth is not solely
a function of staff numbers.
A traditional architecture business has high fixed costs (principally staff, office space,
technology and insurance) and where each project has to be won in competition with others
who may not be bidding at economic rates and where once the project is completed there is no
further income until the next project is won.
This provides a high barrier to entry, which deters new entrants. However, as we already have
these fixed costs, we propose to make the most of them by spreading them over a wider pool
of architecture staff and in particular staff at the director / project leader level, which effectively
determines how many projects can be worked on.
A different business model, but one still focused on the property sector, is one where revenues
are generated monthly throughout the lifetime of a building; where technology is used to its
utmost; where rapid growth is achievable without the often time consuming and expensive
recruitment of additional staff; and where short-term fluctuations in economic activity do not
dictate customer buying decisions.
We have therefore identified extending our property related activities via the deployment of new
technologies. The first venture relates to developing a market presence in the provision of
technical systems in buildings.
Torpedo Factory Group
The acquisition of TFG in March 2023 is the first step in broadening the Group’s activities.
Further details of the acquisition are detailed in the Post balance sheet event note 35.
In comparison with the traditional architecture business model, which has high fixed costs and
where almost all of the income from a building is at the start of its life with little or no recurring
income, smart buildings can generate predictable income over the lifetime of the building and
is a business that is scalable without adding proportionately to staff numbers.
TFG has a foothold in the provision of smart buildings with further acquisition opportunities
identified to extend the enlarged Group’s smart buildings offering. As such we believe it to be
an ideal complement to the traditional architecture business.
Additionally, having a significant portion of the Group revenues from recurring payments on
longer term contracts is also expected to result in a re-rating of the enlarged Group’s shares.
New board
While the extent of the senior management changes are greater in number than typical, these
have been a combination of inter alia, long-term succession planning, making the current
transition easier to manage, and the recent TFG acquisition.
The changes allow the board to be refreshed to not only assist in the direction of the Group but
also to acknowledge prevailing corporate governance, as is appropriate for the Group, at its
current stage.
Chairman
My first contact with the Group was in 2006 as the Group’s nominated adviser and broker, since
when I followed the Group’s progress with great interest, becoming a Non-Executive Director
in 2019.
Page 5
Aukett Swanke Group Plc
Executive management team
Robert Fry, who is another of the Group’s leading and longstanding architects, and who became
Interim Chief Executive following the retirement of Nicholas Thompson, leads the management
team.
Nick Clark, the founder and CEO of TFG joined the board on 20 March 2023 on completion of
the TFG acquisition and will take the lead in developing the Group’s presence in the smart
building sector.
Nick founded the TFG business in 1997. Prior to that he studied physics at Imperial College
followed by an MPhil in Microelectronic Engineering and Semiconductor Physics at the
University of Cambridge.
Robert’s appointment as interim CEO is scheduled to end at the conclusion of the annual
general meeting, when it is proposed that Nick become permanent Group Chief Executive, with
Robert becoming a part time Executive Director and Deputy Chairman with principal
responsibility for the Group’s architecture businesses.
Antony Barkwith, who has been Group Finance Director since 2019, continues in that role for
the enlarged Group.
Non-Executive directors
As noted above Raul Curiel has informed the board that he does not propose to offer himself
for re-election at the forthcoming Annual General Meeting.
We are in advanced stages on the appointment of a new independent Non-Executive Director
and look forward to updating on this in due course.
Further biographical details of the board are set out on pages 7-8.
Outlook
The Group’s UK architecture businesses and its German investments are high quality
operations with strong brands and a history of delivering outstanding buildings.
The effective stewardship of the Group in recent years has provided the firm base for
meaningful and scalable growth in the coming years. The acquisition of TFG is the first step on
this path.
We will now look for further growth in the UK architecture business and work towards becoming
a master systems integrator in the Smart Buildings arena, where scalability is not dependent
solely on headcount.
Clive Carver
Chairman
27 March 2023
Page 6
Aukett Swanke Group Plc
Board of Directors
Clive Carver (Non-Executive Chairman) *+ #
FCA FCT Aged 62
Clive became Chairman in December 2022 having joined the board in May 2019 as a Non-
Executive Director.
He has been the Chairman of AIM listed Caspian Sunrise PLC since 2006, and over the past
decade has been on the boards of 8 companies listed on the London Stock Exchange, often in
the role of Chairman.
He 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.
Raúl Curiel (Non-Executive Director and former Non-Executive Chairman) *+ #
BA(Hons) MArch Aged 76
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 the 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.
In December 2022 Raúl passed the Group Chairman role to Clive Carver, and has since
continued as a Non-Executive Director.
Robert Fry (Chief Executive Officer) #
BA(Hons) DipArch MA RIBA Int’l AIA Aged 66
Robert was appointed CEO of the Aukett Swanke Group Plc Board in January 2023 having
joined the Board in March 2018 as Executive Director and 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 Chairman and Group Finance Director in the setting and
development of the Group’s overall strategy. His considerable property and construction
experience has been used to allow the development of ASG’s businesses.
Robert’s appointment as interim CEO is scheduled to end when a permanent Group Chief
Executive is appointed, at which point Robert will become a part time Executive Director and
Deputy Chairman with principal responsibility for the Group’s architecture businesses.
Page 7
Aukett Swanke Group Plc
Antony Barkwith (Group Finance Director & Company Secretary)
FCA MPhys (Hons) Aged 43
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 in 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.
Nick Clark (Executive Director)
BSc(Hons), MPhil Aged 48
Nick was appointed as an executive director of the Group in March 2023 following the
acquisition of TFG.
Nick is chief executive of TFG. He founded the business in 1997 and has grown it through a
combination of acquisitions and organic growth. In June 2022, Nick was appointed a non-
executive director at Drumz plc, the AIM-listed investing company focused on investing in and
acquiring established technology businesses. Prior to starting TFG Nick studied physics at
Imperial College graduating with a BSc Hons 2(i) followed by an MPhil in Microelectronic
Engineering and Semiconductor Physics at the University of Cambridge.
Board committees
The board has the following committees
• Audit Committee
• Remuneration Committee
• Nomination Committee
However, in recent times given the relatively small size of the board it has been the board as a
whole that has taken the lead in the work otherwise delegated to the committees.
Following the appointment of additional Non-Executive Directors, the composition of the
committees will be reviewed.
* Member of the Audit Committee
+ Member of the Remuneration Committee
# Member of the Nomination Committee
Page 8
Aukett Swanke Group Plc
Chief Executive’s Report
I am pleased to present my first report as Chief Executive.
Business Review
Overview
During the period under review and subsequently, market conditions improved across the full
range of the Group’s continuing businesses, although the improvements were generally seen
towards the end of that period.
We continue to receive repeat and new business instructions that have resulted in an improved
confirmed order book, which is approximately 23% higher than the same time last year.
In addition, we have taken action to deal with those parts of the Group that your board did not
consider to be in shareholders’ interests to continue with over the longer term.
United Kingdom
Notable Projects
Our architectural design business, Aukett Swanke Limited, saw the completion of the
STEAMhouse development for Birmingham City University which has been shortlisted for a
BCO award. Both the EQ Office Headquarters building in Bristol for CEG and an office building
extension in Westminster for Asticus have started on site.
Planning consents were granted for a mixed use office and residential development in
Maidenhead, and 7 Princes Street in the City of London, the latter being a significant office strip
back-to-frame refurbishment of a Fitzroy Robinson designed 1970s office building.
Interior design projects under way for prestigious clients include a new workplace strategy for
a major international bank and a 196 key luxury hotel in London.
Veretec, our executive architecture business, completed the 21,300 sqm Featherstone building
for Derwent working with Skanska and Morris + Company. Projects in progress include
Holloway Park, the site of the former women’s prison, a residential development for Peabody
with AHMM and two prominent buildings on Moorgate for Osborne with Ben Adams. Heritage
projects under way include the Grade ll Listed 41 Lothbury for Pembroke RE with Stiff +
Trevellion and Greycoat Place in Westminster for Victoria Spaces with SPPARC.
Investing in the future
We have also continued to focus upon retaining our existing staff and recruiting new staff to
service this workload.
Significant investments have also been made in business resilience measures to facilitate
effective remote working, improving Revit 3D modelling and rendering capability whilst
simultaneously mitigating cybersecurity threats.
German Investments
The Continental group of operations were once again the best performing of the group’s
geographic operations this year with profits (excluding Group management charges) of £0.42m
(2021: £0.33m).
Page 9
Aukett Swanke Group Plc
The main contributor was our associate office Aukett + Heese in Berlin, which with its sister
joint venture company in Frankfurt, continued to navigate around the now post-pandemic era
for the third year running.
Berlin celebrated two major topping-out ceremonies on the 140m tall, 34 storey Edge East Side
Tower, let to Amazon and the tallest building in Berlin and the residential complex of BUWOG
Bauträger GmbH, consisting of three new high-quality buildings and a renovated old building of
109 apartments. The 57,000 m² Forum Stieglitz refurbishment of Berlin’s oldest shopping centre
was completed, and the newly renovated 40,000 m² shopping centre formerly known as the
“Potsdamer Platz Arkaden”, has re-opened as “The Playce”.
In Frankfurt, completions included further landlord upgrades and fit-outs for corporate and
financial sector tenants in the iconic Messeturm building. A first project in the Main Tower,
another well-known landmark, has cemented the office’s status as a significant architect of
record for tall buildings. New BIM/Revit projects have begun with a 14,000m² tenant fit-out in
Berlin and 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.
Other International activities
Istanbul
Our operation in Istanbul, a wholly owned subsidiary, recorded a small loss this year of £0.05m
(2021: loss £0.02m) in another turbulent year of political and economic instability in Turkey.
The Istanbul office completed the first of two major fit-out projects for Vakifbank at Tower A in
Istanbul and three concept design stage completions for Bayer Insaat on a 63,000 sqm mixed-
use urban regeneration project in the Beşiktaş district of Istanbul, a prototype concept design
for four separately located reception areas for Eczacibasi, a prominent Turkish industrial
products group and a 7,000 sqm. concept design for Beycelik Gestamp A.S, an international
automotive industry supplier for their HQ building in Bursa.
Middle East
Mid-way through the trading year (29 April 2022) the Group concluded the disposal of its interest
in John R Harris & Partners Limited (“JRHP”) to its local management team operating out of the
Middle East.
The disposal provided an initial inflow of cash consideration along with a deferred consideration
sum payable over 5 years, for a total £1.1m (AED 5.0m). The Group entered into a Marketing
Agreement as a part of this transaction, covering the use of the Group’s project portfolio and
associated materials, over the deferred consideration period for an additional sum.
Torpedo Factory Group
The acquisition of TFG completed after the period under review. Nevertheless, it underpins our
strategy of broadening the services offered by the Group by looking to become a master
systems integrator in the smart buildings arena.
TFG comprises three separate businesses:
Intelligent Environments
Intelligent Venues
•
•
• Live Events
Page 10
Aukett Swanke Group Plc
It will be through an extension of the operations of the Intelligent Environments and the
Intelligent Venues business and by focused acquisition that we will build out our smart building
capabilities.
The acquisition adds approximately 60 new staff, and also provides additional financial
resources.
Robert Fry
Chief Executive Officer
27 March 2023
Page 11
Aukett Swanke Group Plc
Financial review
The headline financial results of the Group were:
Total revenues under management1
24,033
26,426
2022
£’000
2021
£’000
Continuing operations
Revenue
Revenue less sub consultant costs1
Net operating expenses
Other operating income
Net finance costs
Share of results of associate and joint ventures
Trading loss from continuing operations
Goodwill impairment
Loss before tax from continuing operations
Tax credit
Loss from continuing operations
Loss from discontinued operations
8,645
7,127
9,192
6,305
(7,757)
(7,330)
326
(95)
327
(72)
(1,752)
(1,824)
45
(1,779)
(503)
358
(94)
166
(595)
-
(595)
395
(200)
(936)
Loss for the year
1Alternative performance measures, refer to page 18 for definition
(2,282)
(1,136)
The result for the year is split between continuing operations and the discontinued Middle East
operations.
The trading loss was just £72k (2021: £595k) with significant improvements in the results of
both the United Kingdom and Continental European operations.
The result of the discontinued Middle East operations was a loss before tax of £0.50m (2021:
£0.94m). JRHP was sold in in April 2022 and the remaining subsidiaries underwent a process
to cease trade and recover outstanding balances, incurring significant one off closure costs,
and provisions on outstanding trade debtors and guarantees. The Middle East operations are
shown in the financial statements as a discontinued operation.
The £1.75m goodwill impairment relates almost entirely to the acquisitions of Fitzroy Robinson
Limited in 2005 and Swanke Hayden Connell Europe Limited in 2013. Further details are
provided in note 12.
Page 12
Aukett Swanke Group Plc
Revenues for the year from continuing operations were £8.65m, a decrease of 6.0% on the
previous year (2021: 9.19m). However, and more importantly, revenues less sub consultants
increased by 13.0% to £7.13m (2021: £6.31m), with subconsultant costs falling by 47.4% to
£1.52m (2012: £2.89m).
Both the Group’s key hubs experienced better performance and results. In the UK, revenue
less sub consultant costs increased 15.0% to £6.98m (2021 £6.06m) as the UK operations
continued to rebuild following the reductions experienced during the COVID-19 pandemic.
In Continental Europe, stronger performance from the Berlin associate and Frankfurt joint
venture producing a combined share of profits of £0.33m (2021: £0.18m), resulted in a
significant increase in the year-on-year profit for the segment.
Performance in Turkey was below expectations.
Operating expenses in the year increased by £0.43m, within which personnel related costs
increased by £0.64m, as the group recruited to meet staffing commitments from projects won,
partially offset by a £0.21m reduction in other operating expenses.
Other operating income reduced by £32k, primarily due to the end of government grants from
the UK government furlough scheme £nil (2021: £59k).
During the year under review, deferrals from previous periods, UK VAT and rent holidays taken
during the Covid-19 pandemic and amounting in aggregate to £172k were repaid according to
their terms.
The Group managed technical staff numbers (UK net revenue per FTE technical staff was
maintained at £104k, whilst the UK average FTE technical staff increased by 9 to 67), with the
UK still in a transition period of growth following the COVID-19 slow down and not yet up to an
optimum size for the fixed costs of the operation.
The loss after tax at £2,282k gives an EPS loss of 1.38 pence per share (2021: 0.69 pence
per share), split as 1.08 pence from continuing operations (of which 1.06 pence is due to the
Goodwill impairment) and 0.30 pence from discontinued operations.
United Kingdom
Revenue
Revenue less sub consultant costs1
FTE technical staff1
Net revenue per FTE technical staff1
Profit/(loss) before tax (excluding Group management
charges)1
Loss before tax (including Group management charges)
1Alternative performance measures, refer to page 18 for definition
2022
£’000
8.465
6,975
67
104
211
(329)
2021
£’000
8.871
6,063
58
104
(308)
(848)
The UK’s revenue less sub consultant costs increased 15.0% year on year as the hub started
to rebound from the COVID-19 slowdown. Revenue decreased 4.6% as the projects that
Veretec executive architecture acted on as the lead consultant progressed into later stages,
requiring lower volumes of sub consultant expertise.
The first half of the year saw the UK business unable to grow beyond the prior year second half
with revenue less subconsultant costs of £3.31m (2021: H2: £3.47m), however significant
improvements came in H2 with the award of a number of projects most noticeably in the hotels
sector in Aukett Swanke Limited with projects with total fees in excess of £3.5m awarded, and
in Veretec a mixture of residential and commercial projects with total fees in excess of £4.2m
awarded. This enabled both companies to begin to grow through the second half of the year
Page 13
Aukett Swanke Group Plc
with revenue less subconsultant costs totalling £3.67m, and a stronger order book leading into
the year commencing 1 October 2022.
Staff numbers (FTE technical staff) started the year at 70 in October 2021, but with lower
workloads during the 2nd quarter of the year numbers were reduced to a low point of 60. With
the successes of project wins in the second half of the year the necessary recruitment enabled
the UK to regrow to 77 FTE’s by 30 September 2022.
This pro-active management of staffing resources enabled the UK to report net revenue per
FTE at £104k for the full year, comparable with the prior year result.
The improvement in revenue particularly in H2, translated into a reduction in the current year
loss by £0.52m compared to the prior year, and enabled the hub to record a profit before tax
(excluding Group management charges).
Continental Europe
The principal components of the Continental Europe hub are the two German investments, for
which under the prevailing accounting rules we do not show revenue and costs but only report
our share of profits.
Revenue
Revenue less sub consultant costs1
FTE technical staff1
Net revenue per FTE technical staff1
Profit before tax (excluding Group management charges)1
Profit before tax (including Group management charges)
Including 100% of associate & joint ventures
Total revenues under management1
Revenue less sub consultant costs1
FTE technical staff1
Net revenue per FTE technical staff1
1Alternative performance measures, refer to page 18 for definition
2022
£’000
180
152
7
23
422
275
14,025
10,594
108
98
2021
£’000
321
242
8
30
330
149
14,733
10,471
127
82
The hub result before tax (including Group management charges), including the joint venture
and associate in Germany and the joint venture in the Czech Republic (in the prior year, now
liquidated), was a profit of £275k (2021: £149k).
Continental Europe’s result is materially dominated by the associate Berlin and joint venture in
Frankfurt. Having remained profitable in the prior year but with lower levels of profit than has
been historically the case due to the effects of the COVID pandemic, the year to September
2022 saw trading return back closer to the expected pre pandemic levels of profitability. They
together contributed £328k (2021: £182k) profit (including Group management charges) to the
Continental Europe result.
Reported revenues, comprise the Turkish subsidiary. Turkey reported revenues for the year of
£180k (2021: £321k), with revenue less subconsultant costs decreasing to £152k (2021:
£242k). The reduction in earnings was principally due to a further devaluation of the Turkish
Lira across the period, with the average TRY to GBP rate in the year at 18.44 (2021: 11.07).
However, whilst the year on year revenue was comparable in local currency, clients pausing
projects led to sub optimal efficiency of staff time and the very high levels of inflation in Turkey
increased operating costs of the company whilst the existing projects were priced at rates which
were not able to fully absorb the increased costs that followed. As a result, Turkey recorded a
local loss (including Group management charges) of £52k and loss (excluding Group
management charges) of £36k.
Page 14
Aukett Swanke Group Plc
The liquidation of the Czech Republic joint venture was completed early in the year under
review with nominal residual costs of £1k (2021: loss for the year of £16k).
Total revenues under management decreased 4.8%, whilst revenue less sub consultant costs
increased 1.2%. Staff numbers decreased to 108 (2021: 127), partially due to the closure of the
Czech Republic office, but also with a reduction in average staff numbers in Germany. However,
more efficient working post COVID-19 and more profitable projects in Germany led to a
significant increase in net revenue per FTE technical staff to £98k (2021: £82k) and with it
improved profitability.
Middle East – discontinued operation
Revenue
Revenue less sub consultant costs1
FTE technical staff1
Net revenue per FTE technical staff1
Loss before tax (excluding Group management charges)1
Loss before tax (including Group management charges)
1Alternative performance measures, refer to page 18 for definition
2022
£’000
1,543
1,256
18
68
(399)
(503)
2021
£’000
2,822
2,517
36
69
(538)
(936)
Revenues decreased 45.3% from £2.82m to £1.54m in the year (revenues less subconsultant
costs similarly reduced by 50.1%), due to the continued effect of the slowdown in construction
investment in the region during the COVID-19 pandemic combined with the disposal of JRHP
in April 2022.
Average technical staff FTE numbers reduced to 18 (2021: 36) and net revenue per FTE
technical staff was relatively similar at £68k (2021: £69k).
Whilst the loss was significantly lower than in the prior year, the loss for the year included costs
in the process of terminating Shankland Cox Limited (“SCL”) licenses and commencing the
process to reclaim associated guarantees.
The hub had no remaining Middle East based employees as at 30 September 2022.
With no further material revenue forecast post year end, the Middle East hub has been treated
as a discontinued operation.
Financing
The net deficit (see note 22) at the year end was significantly down on the prior year as a result
of the loss in the year combined with the timing of UK debtor receipts. This gave a deficit of
£621k (2021: net funds £15k), comprising cash of £28k (2021: £515k), a net overdraft of £232k
(2021: nil), and a CBILS loan of £417k (2021: £500k) drawn in May 2021.
The CBILS loan set out in note 21 was arranged with Coutts & Co in response to the challenges
impacting trade incurring losses during the COVID pandemic. The loan is repayable over 3
years with the first instalment made in June 2022, to be paid back in 24 monthly instalments
through to May 2024. As at 30 September 2022, the first 4 instalments had been made on time
as planned.
The Group’s overdraft facility from its bankers Coutts & Co started the year at £500k and was
renewed in November 2021. In February 2022 the Group requested 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 reduce the overdraft to £250k from February to May 2022.
In May 2022, the Group and Coutts & Co agreed to remove the covenants from the facility
agreement, and to maintain the overdraft at £250k up to renewal in November 2022. This is
discussed further in note 1.
Page 15
Aukett Swanke Group Plc
In November 2022, Coutts & Co confirmed the renewal of the £250k overdraft facility for another
year, continuing to provide working capital flexibility and to support the UK business. This is
renewable annually and will remain in place until November 2023.
The Group has four leases taken out by ASL to fund the purchase of fit-out costs of the London
office in June & November 2018 on 5 year terms, which are capitalised as right of use assets
and lease liabilities. The lease liability (see note 15) as at 30 September 2022 was down to
£55k (2021: £133k).
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 2022 was
£2,364k (2021: £2,756k). There are no office leases remaining in the UAE and the office lease
in Turkey is short term. 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. Whilst covenants may have been removed from
the Coutts & Co facility during the year, management continue to review monthly management
account measurements indicating whether the former covenants would be adhered to if they
had been in force.
The overdraft was utilised throughout the year. Following the acquisition of TFG on 20 March
2023 which significantly improves short term available cash, utilisation of the facility is expected
to be very occasional and backed by other available cash within the Group through the going
concern period.
The Plc continues to act as the Group’s central banker, and it continued to seek 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.
Going Concern
We expect the coming year to present significantly more opportunities to the Group than has
been the case over the past few years.
The losses incurred during the pandemic and sustained by the Middle East during the period
of discontinuing the remaining offices, and the cost of administering the listed company
structure, has meant the main challenge post year end continued to be maintaining working
capital which has reduced over the period along with Group net assets.
During the second half of the financial year, we saw our revenues in the United Kingdom grow
and both UK trading entities began a period of recruitment to meet the needs of new client
instructions which has continued post year end. Management of cash flow therefore continues
to be key with the associated costs of increasing staff numbers not perfectly aligned with initial
payments from clients.
In December 2022 the Group renewed its £250k overdraft facility with Coutts & Co and
continues to repay the CBILS loan drawn during the pandemic.
The recently announced acquisition of TFG immediately adds a significant available cash
balance, as well as a significant boost to the net assets of the Group, which will provide the
Directors a more stable platform to grow the existing combined business and undertake future
opportunities for acquisition and growth.
Page 16
Aukett Swanke Group Plc
The TFG acquisition brings into the Group a freehold property independently valued at £3.02m
in July 2021 with a mortgage balance of £1.48m as at December 2022, giving a loan to value
percentage of just 48%.
However, as the mortgage renewal date is less than 12 months from the signing date of these
accounts, the Board must consider the remote possibility that if the mortgage could not be
renewed, then the Group may need to raise cash to repay the full balance of the mortgage
through alternative borrowing facilities, asset sales or fund raising which are not wholly within
the Group’s control.
Based on forecasts prepared and reviewed for the period to 31 March 2024 the Directors have
a reasonable expectation that the Group will have adequate resources to continue in
operational existence for the foreseeable future.
However, while the Board is confident of either being able to re-mortgage the building or selling
it should the need arise, the requirement to refinance the building within the going concern
period indicates the possible existence of a material uncertainty which may cause significant
doubt on the Group's and the Parent Company’s ability to continue as a going concern.
The financial statements therefore do not include the adjustments that would result if the Group
or the Parent Company was unable to continue as a going concern.
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.
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 hubs, there are differing profiles:
• The UK trades as two businesses: Veretec Limited and Aukett Swanke Limited.
Following the significant slowdown and rationalisation of staff numbers during the
COVID-19 pandemic, Veretec has been re-growing its technical staff base. From a low
of 26 FTE equivalent technical staff in March 2021, Veretec grew to average 36 FTE
technical staff in the year, finishing September 2022 with over 43 FTE technical staff.
Aukett Swanke Limited maintained a more steady core staff number starting October
2021 at 32 FTE technical staff, averaging 30 FTE technical staff across the year, and
ending September 2022 at 33 FTE technical staff. With both companies experiencing
increasing bid activity and improved conversion of new projects in the second half of
the year and in the first quarter after the year end, both companies target further growth
in staff numbers and revenue in the coming year to achieve a closer to optimum
capacity to cover the fixed cost base of the London studio.
• The Middle East: Following the sale of JRHP in April 2022, Management took the
decision to allow the remaining trade licences in SCL to expire and then undertake an
orderly wind down of the Middle East operations. As at September 2022 the remaining
Group Middle East subsidiaries no longer employed any UAE staff, and future
expectations are limited to clearing the balance sheets of the companies by collecting
the remaining debtor balances and paying off associated creditors.
Page 17
Aukett Swanke Group Plc
• Continental Europe remains mixed across the portfolio. Having made profits through
the COVID-19 pandemic, the German businesses continued to be strongest. Berlin in
particular recorded profits back to pre-covid levels in the year to September 2022 and
has an even stronger order book commencing the year to September 2023. Turkey
starts the coming year with a stronger order book than the prior year but the ongoing
very high levels of inflation and uncertainty in the local economy will make returning to
consistent profitability challenging in the short term.
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 venture in Frankfurt and associate in Berlin. This is used as a measurement
of the overall size and reach of the Group and is disclosed on pages 12 and 14. 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 14. Consolidated Group revenue
can be reconciled to total revenues under management by adding i) the revenue of the
associate disclosed in note 17; and ii) double the share of revenue in joint ventures
disclosed in note 18;
• 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 12 to 15;
• 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 13 to
15;
• Result before taxation (excluding Group management charges), and result before
taxation (including Group management charges), which are further assessed on pages
13 to 15;
• Cash at bank and in hand and net funds / (debt), which is assessed further on page 2.
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 numbers, 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 13 to 15.
Antony Barkwith
Group Finance Director
27 March 2023
Page 18
Aukett Swanke Group Plc
Strategic report
The Directors present their Strategic Report on the Group for the year ended 30 September
2022.
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. With the acquisition of TFG we are also looking to become a Smart
Buildings master systems integrator.
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 an attractive and rewarding working environment for our staff. In addition, we
undertake to deliver projects throughout the technical drawing stages 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.
The 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.
Business Model
Our architecture and interior design businesses operate in the UK, Germany and Turkey with
other locations operating through licence based arrangements where the responsibility for profit
rests with local management and owners.
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 Continental European operations provide services offered that are consistent with those in
the UK.
The Group entered into a marketing agreement with JRHP following the sale of the Dubai based
operation in April 2022 maintaining the Group’s interest in this market. without the financial risk
of ownership.
As a Group, we now have a total average full time equivalent (“FTE”) staff contingent of 223
(2021: 256) throughout our organisation which includes both wholly owned and joint venture
operations. We are ranked by professional staff in the 2023 World Architecture 100 at number
61 (2022 WA100 number 63).
Page 19
Aukett Swanke Group Plc
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. Due to lack of information in the relevant market
places, we have to adapt to the information flow that is available.
In addressing this risk, the Group considers which markets and which clients to focus upon
based on the strength of their financial covenant so that there is clear ability to provide both
project seed capital and geared funding to complete the delivery process. This avoids the dual
risk of delays between stages and deferrals of projects.
Geo-political factors
Political events and decisions, or the lack thereof, can seriously affect the markets and
economies in which the Group operates, leading to a lack of decisions by government bodies
and also by clients. In turn this directly impacts workload and can even delay committed
projects.
We believe the main shocks of Brexit and Covid-19 are behind us, although there are likely to
be continued consequences for the foreseeable future. We are conscious that the Ukraine
conflict has affected business sentiment and is likely to continue to do so until the conflict ends.
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 continues to maintain a balance in the mix of permanent vs. contract and agency staff
to give flexibility to respond to fluctuation in revenue as has been experienced in recent years.
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.
Page 20
Aukett Swanke Group Plc
The losses sustained in the prior two years, the decline in revenue in the Middle East, the final
repayments of residual UK deferred rent and VAT agreed during the COVID-19 pandemic and
the commencement of monthly repayments of the CBILS loans, tightened the free cash
available to be remitted to the Plc during the year but was largely offset by the proceeds of the
disposal of JRHP. Furthermore, the month end timing of UK debtor receipts in September 2022
meant that the Group was in a position of utilising part of its overdraft facility at the year end.
Dividends were received from the Berlin associate during the year, but at lower levels than in
prior years, as the Berlin associate only remits dividends on the basis of local GAAP accounting,
which restricts the recognition of profits until the final completion of individual projects, and as
such there is a lag between recognising distributable reserves vs IFRS profits.
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.
The Group’s principal bankers remain supportive and in December 2022 renewed the Group’s
overdraft facility until November 2023, at the existing £250k level. In May 2021 a £500k CBILS
loan was also offered and drawn down. Repayments on this loan commenced monthly from
June 2022, with the last instalment scheduled for May 2024.
The acquisition of TFG on 20 March 2023 provides a significant boost to the net assets and
cash balance of the Group, reducing immediate cash pressures on the business, but adding a
mortgage liability to be renewed in February 2024.
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 an attractive 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 until recently parts 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.
Page 21
Aukett Swanke Group Plc
Contract pricing
All mature markets are subject to downward pricing pressures as a result of the wide spectrum
of available suppliers to each project. This pressure is increased if activity levels are low such
as in the economic downturns and global recession. Additionally, architects may be under
pressure to work without fees (for a time) in order to win a project or retain sufficient qualified
staff to complete the project if won. The Group mitigates this risk by focusing on markets where
it has clear skills that are well above average, or avoids it by not lowering prices, thus risking
the loss of such work.
All fee proposals to clients are prepared by experienced practice directors who will be
responsible for the delivery of the projects. Fee proposals are based on appropriate due
diligence regarding the scope and nature of the project, knowledge of similar projects previously
undertaken by the Group and estimates of the resources necessary to deliver the project. Fee
proposals for larger projects are subject to review and approval by senior Group management
and caveats are included where appropriate.
When acting as general designer for projects located outside the UK, the Group is usually
exposed to the risk of actual sub consultant costs varying from those anticipated when the
overall fee was agreed with the client. To mitigate this risk, fee proposals are usually sought
from sub consultants covering the major design disciplines as part of the process of preparing
the overall fee proposal.
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 derives a 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 typically
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.
Page 22
Aukett Swanke Group Plc
The Strategic Report was approved by the Board on 27 March 2023 and signed on its behalf
by
Antony Barkwith
Group Finance Director
Page 23
Aukett Swanke Group Plc
Directors’ report
The Directors present their report for the year ended 30 September 2022.
Corporate governance
In accordance with AIM Rule 26 the Company is required to apply a recognised corporate code.
The Board continues 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 in 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.
PRINCIPLE 1
Strategy and business model
The current strategy and business model for the Group is set out in the Strategic Report on
page 19.
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. The cyclical nature of the
markets in which we operate gives rise to peaks and troughs in our financial performance.
Management is cognisant that our business model needs to reflect this variable factor in both
our decision making and expectation of future performance.
We operate a structure covering: the United Kingdom with our office in London; Continental
Europe with three offices in Berlin, Frankfurt and Istanbul; along with a marketing agreement
with an operation in the Middle East with an office in Dubai.
The United Kingdom hub comprises three principal service offerings: comprehensive
architectural design including master planning, interior design and fit-out capability and an
executive architectural delivery service operating under the ‘Veretec’ brand.
Our Continental European operations provide services offered that are consistent with those of
the UK operation.
PRINCIPLE 2
Share capital and shareholders
Information about the Company’s shares, listing information, significant shareholders; Directors’
shareholdings and share donations are set out within the Investor relations section of the
Company’s website and in the annual report.
The Executive Directors understand the importance of shareholder dialogue and regularly seek
to engage with shareholders at the time of results’ announcements, at the AGM or as requested.
In addition, there is a separate mailbox cosec@aukettswanke.com
The Directors also appreciate the value of a dividend policy and they endeavour to ensure that
the Company’s policy is clear.
The primary contact for investors is Robert Fry, Chief Executive Officer.
Page 24
Aukett Swanke Group Plc
PRINCIPLE 3
Corporate Social Responsibility & Stakeholder Engagement
The About section of the Company’s website sets out how we engage with our clientele and
related stakeholders in the practice of architecture, master planning, urban and interior design.
This also provides the contact and separate website details of each entity within the Group.
Our employees recognise that the professional services we offer have a significant impact on
not just our direct clientele but also on the public realm, society and the environment as a whole,
and this is recognised in the websites for each subsidiary entity in the Awards sections of each
entity’s website.
Client and stakeholder engagement and feedback are an integral and iterative part of the design
process undertaken on projects, as expressed in the Awards sections of the websites.
Alongside the contribution made to our clientele and others through the execution of our
services we actively participate as thought and practice leaders in initiatives and events in the
property and construction industry. We also undertake on occasion voluntary and charitable
endeavours that are featured in the News sections of the Company and subsidiaries websites,
internal Intranet sites and social media platforms.
PRINCIPLE 4
Risk Management
The Group’s risk management objective is to identify, document and monitor those factors that
represent risks to the Group in fulfilling its strategic objectives and to manage those risks
consistent with agreed risk tolerances.
The Business Risk Review (BRR) is the principal tool by which the Group carries out this
process and allows the Board to assess the business risks in the context of best practice
consistent with any codes of corporate governance. This tool sets out the level of risk incurred
and its probability of occurrence to establish a level of tolerance applicable to the business.
The BBR is structured to allow monthly reporting from all local businesses and elevated monthly
to the Plc Board with any significant risks given a ‘Red Flag’. These Red Flag items reflect the
key Risks and Uncertainties as set out in the Report and Accounts.
PRINCIPLE 5
Board structure and composition
The Board comprises two Non-Executive Directors (NED’s) and three Executive directors. The
Board believes that the optimal structure is balanced between NED’s and Executives such that
equal weighting is given to oversight and governance, and strategic development and
operational performance in order to promote the company.
Committees
These are set out in the Directors’ Report on pages 29 to 30.
Additionally, each year the relevant Sub Committee produces its own Business Plan for
inclusion in the Group Business Plan setting out any changes to its Terms of Reference and
the principal activities it is to undertake in the forthcoming financial period. External surveys and
internal analysis of implementation is provided to the relevant committee.
Page 25
Aukett Swanke Group Plc
PRINCIPLE 6
Directors experience and capabilities
The biographies of each current board member can be found on pages 7-8.
Other roles
Board members are encouraged to take on other roles that do not conflict with their membership
of the Board or are seen as supportive of their current role.
Robert Fry (Chief Executive Officer) is a member of the RIBA and is a regular contributor and
awards judge for World Architecture News (WAN), Antony Barkwith (Group Finance Director)
is a member of the Architect’s Financial Management Group (AFMG), Clive Carver (Chairman
and NED) holds various NED roles in the oil & gas and other industries, and Nick Clark
(Executive Director) is a NED in a technology investment company which is AIM-listed.
Group management structure
The ultimate management of the Group is by the Board and its committees. The role, remits
and reports of the committees are set out in the Directors report. Implicit within all remits is the
obligation of the Board under The Companies Act to promote the company at all times.
Day to day and operational management is delegated to the CEO, GFD and the Managing
Directors. Each business in the group has its own team under the Managing Director and its
own board. The CEO and GFD are represented on all boards.
Delegated responsibility is defined at each level and there are authority matrices which set out
limits of responsibility at specific levels and for specific actions and activities. Each individual
board meets every month. The Directors and senior members of staff review, mentor and
develop colleagues on an ongoing basis in a coaching and advisory capacity.
All members of the Board endeavour to keep up-to-date and attend seminars and training
courses as appropriate. Each Director is required to complete CPD in accordance with his/her
professional qualification.
PRINCIPLE 7
Evaluation of the Board
The Nomination Sub Committee of the Board reviews the skills of each board member on an
annual basis using a matrix grid of core requirements and level of each attribute achieved by
the board membership.
The Skills matrix covers 14 key skills identified as relevant to the operations of the listed
company and its key activities. Each skill is given a weighting factor of 1 to 3 and graded by
level of knowledge and experience on a scale of 1 to 4. This then provides a weighted ranking
of the skills provided by the current board and each member in relation to that ranking.
Following completion of the annual review the Nomination Committee makes recommendations
to the Board on further training or mentoring requirements as necessary.
Appraisals are carried out by the Chairman of each board member on an annual basis. The
NED’s appraise the Chairman. As a result of these meetings, any mentoring and training needs
are established.
Page 26
Aukett Swanke Group Plc
Board attendance & Effectiveness
Members are encouraged to personally attend all meetings and where this is not possible the
Board makes alternative provision through changing of dates or allowing attendance via video
conferencing (VC) facilities. The VC facilities are used consistently to permit Board members
to reduce travel in the Post-Covid 19 era. This has resulted in the high attendance record.
The attendance record for the year is included in the Directors’ Report on page 31.
Board remit
The Board is a balanced team of Executives and Non-Executives with the remit to ensure good,
appropriate. safe governance and compliance of the Group and to manage the staff and assets,
monitoring performance and developing and implementing strategy to deliver the best possible
results for the shareholders.
The principal matters reserved for the Board are set out within the Investor Relations section of
the Company’s website.
Succession planning
The Nomination Committee is responsible for managing the succession plan of the Board. This
is carried out by maintaining a succession planning matrix. This matrix contains information on:
the Role, Job Holder, Sub Committee membership, term and notice period, AGM re-election
dates, and alternatives for either temporary or permanent replacement.
NED’s hold office for no more than three successive terms of three years - in line with industry
norms.
Executives are on contracts of six months’ notice duration.
PRINCIPLE 8
Corporate Governance – External
Key corporate governance statements relating to the company and its operations are set out
within the Investor Relations section of the Company’s website.
Our strategic health & safety statement acknowledging our duties and responsibilities is signed
by the CEO. Two Plc Board members form a part of the H&S Steering Committee which meets
quarterly and reports into the Plc Board meetings.
Data Privacy (GDPR)
A data privacy notice outlines our policy and procedures covering how information is collected
and used whether via our website or by visiting our studios, an individual’s rights and the
measures to be adopted for reporting any breaches.
Corporate Governance – Internal
Our external statements are supported by other policy and procedural documents located on
our intranet site and in a Studio Handbook (UK) for the benefit of our employees.
The company’s intranet site provides details of our Group and internal management structure,
design culture, employment, sustainability, health & safety, data privacy, anti-corruption &
bribery, social media, whistle blowing, equality & diversity and modern slavery policies.
Page 27
Aukett Swanke Group Plc
The Studio Handbook is a separate printable document available on the intranet site which
contains more detailed operational information and requirements pertaining to the activities of
employees. It includes various sections covering Practice Profile, Studio wellbeing, health &
safety, fire evacuation, IT protocols, CPD, mentoring, training and office administration.
The Project Handbook is a separate section of the intranet site that covers the range of policy,
procedures, guidelines and templates for the application of our professional skills on the
projects we design and deliver for our clients. It includes project execution, drawing and
Revit/BIM protocols, guides and templates, a design review methodology and data
management tools.
Our business operation in the practice of architecture, master planning and interior design in
the UK is underpinned by accreditation and certification by the British Standards Institute for
our Environmental Management System ISO 14001:2015 and our Quality Management System
ISO 9001:2016. These standards are emulated in our overseas operations where relevant and
in relation to local standards and license requirements.
In addition, we have an extensive track record of peer recognition and reward through award
winning projects meeting exacting design, delivery and environmental performance
requirements such as the RIBA, British Council for Offices, BREEAM, LEED, SKA, Estidama
and DGNB.
Performance and rewards
The Remuneration Committee is responsible for assessing the Board on a performance and
rewards basis. The Committee uses industry available material to assess remuneration levels
and has undertaken external reviews of the level of reward for both executive and non-executive
directors. The most recent external review was undertaken in 2017 by UHY Hacker Young and,
the most recent AIM survey information was provided by BDO in 2018.
PRINCIPLE 9
Roles
Chairman – the Chair leads the Board at its regular meetings, sets the Agenda, oversees the
governance aspects of the internal control process and, monitors and challenges the strategic
direction of the company.
Chief Executive – the CEO provides guidance and information to inform on the strategic
direction of the company and its operations. Along with the senior management team the CEO
leads the delivery of the strategy.
Non-Executive Directors – act as independent voices on the Board and attend a maximum of
24 to 48 days per annum under their contracts.
PRINCIPLE 10
Corporate information
The following documents are posted and held on the Company’s website:
• Annual Report and Accounts
Interim Announcements
•
• AGM notices (where separately issued and not contained in the Report and Accounts).
• Trading updates
• Memorandum and Articles of Association
Page 28
Aukett Swanke Group Plc
Non-Compliance with Rule 26
The following requirements of the QCA code are not covered by our website or Report and
Accounts
8.3
8.5
Rewards reflecting company values
Rewarding ethical behaviour
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.
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 by
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 is also reviewed through a sub-committee the management of
risk inherent in the business.
Page 29
Aukett Swanke Group Plc
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 until 8 December 2022. 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.
Nomination Committee
The Nomination Committee is responsible for keeping under regular review the size, structure
and composition (including the skills, knowledge, experience and diversity) of the Board. This
includes considering succession planning for the senior management of the Group, taking into
account the skills and expertise expected to be needed in the future.
It is responsible for nominating new candidates for the Board, for which selection criteria are
agreed in advance of any new appointment.
The Nomination Committee was chaired by Raúl Curiel until 8 December 2022 with the other
current members being Robert Fry and Clive Carver.
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 2022.
Biographical details of the current Directors are set out on pages 7 and 8.
The Company maintains directors’ and officers’ liability insurance.
Page 30
Aukett Swanke Group Plc
Attendance at board meetings by members of the Board were as follows:
Number of meetings while
in office
Number of meetings
attended
11
11
11
11
11
11
11
11
11
11
Executive Directors
Nicholas Thompson
Robert Fry
Antony Barkwith
Non-executive Directors
Raúl Curiel
Clive Carver
Directors’ interests
Directors’ interests in the shares of the Company were as follows:
Number of ordinary shares
Nicholas Thompson
Raúl Curiel
Clive Carver
Antony Barkwith
Robert Fry
Directors’ service contracts
30 September
2022
16,802,411
9,240,018
-
-
2,150,000
30 September
2021
16,802,411
9,240,018
-
-
2,150,000
The Company’s policy is to offer service agreements to Executive Directors with notice periods
of not more than twelve months. Nicholas Thompson had a rolling service contract with the
Company which was subject to twelve months’ notice of termination by either party, however
since serving notice this expired on 31 December 2022. Antony Barkwith and Robert Fry have
rolling service contracts with the Company which are subject to six months’ notice of termination
by either party.
The remuneration packages of Executive Directors comprise basic salary, contributions to
defined contribution pension arrangements, discretionary annual bonus, discretionary share
options and benefits in kind such as medical expenses insurance.
Non-Executive Directors do not have service contracts with the Company, but the appointment
of each is recorded in writing. Their remuneration is determined by the Board. Non-Executive
Directors do not receive any benefits in kind and are not eligible for bonuses or participation in
either the share option schemes or pension arrangements.
Page 31
Aukett Swanke Group Plc
Substantial shareholdings
At 27 March 2023 the Company had been informed of the following notifiable interests of three
per cent or more in its share capital:
Shareholder
Notes
Investment
* Keith McCullagh
* Nick Clark
Braveheart
Group
Nicholas Thompson
John-David Papworth
Jeremy Blake
Begonia 365 SL
Raúl Curiel
Former chairman of TFG
Director of the Company
Institutional Investor
Former Director of the Company
Employee of the Group
Former employee of the Group
Controlled by a former Director of the
Company
Non-Executive Director of the
Company
Number of
ordinary
shares
41,339,142
40,531,539
35,332,351
16,802,411
16,274,624
13,030,638
9,515,192
Percentage
of ordinary
shares
15.01%
14.72%
12.83%
6.10%
5.91%
4.73%
3.46%
9,240,018
3.36%
* Keith McCullagh and Nick Clark’s shares are included within a Concert Party holding a total
of 89,159,484 shares representing 32.38% of the number of ordinary shares.
Share price
The mid-market closing price of the shares of the Company at 30 September 2022 was 2.40
pence and the range of mid-market closing prices of the shares during the year was between
1.45 pence and 2.40 pence.
Streamlined energy and carbon reporting (“SECR”)
Under the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013 (‘the
2013 Regulations’) and the Companies (Directors’ Report) and Limited Liability Partnerships
(Energy and Carbon Report) Regulations 2018 (‘the 2018 Regulations’), quoted companies and
large unquoted companies are required under part 13 of the companies Act 2006 to disclose
information relating to their energy usage and Greenhouse Gas (“GHG”) emissions.
For these purposes, quoted companies defined as those whose equity share capital is officially
listed on the main market of the London Stock Exchange (“LSE”); or is officially listed in an
European Economic Area State; or is admitted to dealing on either the New York Stock
Exchange or NASDAQ.
The Company is not large, and whilst the Company’s shares are traded on AIM, the Company
is not listed on traded on the main market of the LSE. The company is therefore not required to
disclose energy and carbon information.
Page 32
Aukett Swanke Group Plc
Statement by the Directors in performance of their statutory duties in
accordance with s172 (1) Companies Act 2006
The Board is mindful of the duties of directors under S.172 of the Companies Act 2006 to have
regard to the following six factors:
a)
b)
c)
d)
e)
f)
the likely consequences of any decisions in the long-term;
the interests of the Group’s employees;
the need to foster the Group’s business relationships with suppliers, customers and
others;
the impact of the Group’s operations on the community and environment;
the desirability of the Group maintaining a reputation for high standards of business
conduct; and
the need to act fairly as between shareholders of the Group.
Directors act in a way they consider, in good faith, to be most likely to promote the success of
the Group for the benefit of its shareholders. In doing so, they each have regard to a range of
matters when making decisions for the long term success of the Group.
Our culture is that of treating everyone fairly and with respect and this extends to all our principal
stakeholders. Through engaging formally and informally with our key stakeholders, we have
been able to develop an understanding of their needs, assess their perspectives and monitor
their impact on our strategic ambition.
As part of the Board’s decision-making process, the Board and its Committees consider the
potential impact of decisions on relevant stakeholders whilst also having regard to a number of
broader factors, including the impact of the Group’s operations on the community and
environment, responsible business practices and the likely consequences of decisions on the
long term.
Our objective is to act in a way that meets the long term needs of all our main stakeholder
groups. However, in so doing we pay particular regard to the longer term needs of shareholders.
We engage with investors on our financial performance, strategy and business model. Our
Annual General Meeting provided an opportunity for investors to meet and engage with
members of the Board.
The Board continues to encourage senior management to engage with staff, suppliers,
customers and the community in order to assist the Board in discharging its obligations.
Further details of how the Directors have had regard to the issues, factors and stakeholders
considered relevant in complying with s172 (1) (a)-(f), the methods used to engage with
stakeholders and the effect on the Group’s decisions during the year can be found throughout
this report and in particular in the Investment Case section of the Chairmans statement on
pages 3-5 (in relation to decision-making), in the Strategic report on pages 19-23 (where the
Group’s strategy, objectives and business model are addressed), the following Employees
statement (in relation to employees), and the following Environmental Policy (in relation to social
and environmental matters).
We seek to attract and retain staff by acting as a responsible employer. The health and safety
of our employees is important to the Company and is a standing item at all Group board
meetings.
We continue to provide support to communities and governments through the provision of
employment, and high quality sustainable design.
We have established long-term partnerships that complement our in-house expertise and have
built a network of specialised partners within the industry and beyond.
Page 33
Aukett Swanke Group Plc
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 79 ‘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.
Employees
As a professional services business, the Group’s ability to achieve its commercial objectives
and to service the needs of its clients in a profitable and effective manner depends upon the
contribution of its employees. The Group seeks to keep its employees informed on all material
aspects of the business affecting them through the operation of a structured management
system, staff presentations and an intranet site.
The Group’s employment policies do not discriminate between employees, or potential
employees, on the grounds of age, gender, sexual orientation, ethnic origin or religious belief.
The sole criterion for selection or promotion is the suitability of any applicant for the job.
It is the policy of the Group to encourage and facilitate the continuing professional development
of our employees to ensure that they are equipped to undertake the tasks for which they are
employed, and to provide the opportunity for career development equally and without
discrimination. Training and development is provided and is available to all levels and
categories of staff.
It is the Group’s policy to give fair consideration to application for employment for disabled
persons wherever practicable and, where existing employees become disabled, efforts are
made to find suitable positions for them.
Health and safety
The Group seeks to promote all aspects of health and safety at work throughout its operations
in the interests of employees and visitors.
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.
Page 34
Aukett Swanke Group Plc
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.
Independent Auditors
On the 12 October 2022, BDO LLP confirmed their resignation as auditors of Aukett Swanke
Group Plc.
The Directors appointed Moore Kingston Smith LLP as auditors of the Group on 19 October
2022 for the year ended 30 September 2022.
The auditors, Moore Kingston Smith LLP have indicated their willingness to continue in office
and a resolution concerning their reappointment will be proposed at the Annual General
Meeting.
Future developments
An indication of likely future developments in the business of the Group is contained in the
Strategic Report.
Financial instruments
Information concerning the use of financial instruments by the Group is given in notes 28 to 32
of the financial statements.
Dividends
The Board does not intend to pay a dividend in the forthcoming year.
Going Concern
Measures taken around the world to restrict the spread of the COVID-19 virus, followed by the
macro-economic implications of rising energy prices and inflation globally have had a significant
impact on the Company and the Group for the past 2 & 1/2 years of trading.
Despite action taken in this time, management were only able to partially mitigate the financial
impact of the above on the Group which resulted in a loss for the year, largely attributable to
the discontinued Middle East operation, and reduction in net assets of the Group.
The Group has continued to operate within its banking limits, a CBILS loan was agreed in May
2021, and subsequently the Gearing Covenant and Debt Servicing covenant were removed
from the facility agreements.
On 20 March 2023, the Group acquired 100% of TFG with consideration paid on a share for
share basis. This provided a significant boost to Group with approximately £1.7m of net tangible
assets including almost £1m of cash.
Page 35
Aukett Swanke Group Plc
More details of the actions taken, and the results of forecasting performed by the Group (upon
which the going concern assessment of the Company is dependent) in response to the global
macro-economic environment 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.
The TFG acquisition brings into the Group a freehold property independently valued at £3.02m
in July 2021 with a mortgage balance of £1.48m as at December 2022 giving a loan to value
percentage of just 48%.
However, as the mortgage renewal date is less than 12 months from the signing date of these
accounts, the Board must consider the remote possibility that if the mortgage could not be
renewed, then the Group may need to raise cash to repay the full balance of the mortgage
through alternative borrowing facilities, asset sales or fund raising which are not wholly within
the Group’s control.
Based on forecasts prepared and reviewed for the period to 31 March 2024, the Directors have
a reasonable expectation that the Group will have adequate resources to continue in
operational existence for the foreseeable future.
However, while the Board is confident of either being able to re-mortgage the building or selling
it should the need arise, the requirement to refinance the building within the going concern
period indicates the possible existence of a material uncertainty which may cause 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.
Annual General Meeting
Notice of the annual general meeting, which is expected to be held on 21 April 2023, will be
posted to shareholders in due course.
The Directors’ report was approved by the Board on 27 March 2023 and signed on its behalf
by
Antony Barkwith
Company Secretary
Aukett Swanke Group Plc
Registered number 02155571
Page 36
Aukett Swanke Group Plc
Statement of directors’ responsibilities
Directors’ responsibilities
The Directors are responsible for preparing the annual report and financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each financial year.
Under that law the Directors have elected to prepare the Group and Company financial
statements in accordance with UK adopted 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 UK adopted 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 Group and enable them to ensure that the
financial statements comply with the requirements of the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are
made available on a website. Financial statements are published on the Company's website in
accordance with legislation in the United Kingdom governing the preparation and dissemination
of financial statements, which may vary from legislation in other jurisdictions. The maintenance
and integrity of the Company's website is the responsibility of the directors. The Directors'
responsibility also extends to the ongoing integrity of the financial statements contained therein.
Page 37
Aukett Swanke Group Plc
Independent auditor’s report to the members of Aukett
Swanke Group Plc
Opinion
We have audited the financial statements of Aukett Swanke Group Plc (the ‘parent Company’)
and its subsidiaries (the ‘Group’) for the year ended 30 September 2022 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 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 UK adopted International Accounting
Standards and, as regards the parent Company financial statements, as applied in accordance
with the provisions of the Companies Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the Group’s and of the parent
Company’s affairs as of 30 September 2022 and of the Group’s loss for the year then
ended;
the Group financial statements have been properly prepared in accordance with UK
adopted International Accounting Standards;
the parent Company financial statements have been properly prepared in accordance
with UK adopted International Accounting Standards 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.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs
(UK)) and applicable law. Our responsibilities under those standards are further described in
the Auditor’s Responsibilities for the audit of the financial statements section of our report. We
are independent of the Group in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied
to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Material uncertainty related to going concern
We draw attention to Note 1 to the financial statements which indicates that the Directors have
assumed that the overdraft facility of £250,000 will be renewed in November 2023 whilst making
their assessment of the Group’s and parent Company’s going concern status. Whilst there are
no indications that the overdraft facility will not be renewed, it is not guaranteed.
The renewal of the £1.46m mortgage will only be reviewed later in 2023, and as such there is
a possibility that if the mortgage is not renewed then the Group would need to repay the full
balance of the mortgage within 12 months of the signing date of these accounts. In this case
the Group may need to raise cash through alternative borrowing facilities, asset sales or fund
raising which are not wholly within the Group’s control.
As stated in Note 1, these conditions and the economic uncertainty which exists, along with
other matters as set out in Note 1, indicate that a material uncertainty exists that may cause
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.
Page 38
Aukett Swanke Group Plc
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.
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 matters include:
• A critical assessment of the detailed cash flow projections prepared by the Directors,
which are based on future revenue pipelines and newly won contracts, we also
evaluated the sensitivities that the Directors performed against this forecast.
• We evaluated the key assumptions in the forecast, which were consistent with our
knowledge of the business and considered whether these were supported by the
evidence we obtained. We obtained an understanding of all relevant uncertainties,
including those arising because of the impact of the COVID-19 pandemic over the past
years. We have factored the ongoing impact of COVID-19 into our analysis of the risks
affecting the ability of the Group and parent Company to continue to trade and meet its
liabilities as they fall due for at least twelve months from the date of approval of the
Group and parent Company financial statements.
• We have inquired about revenue pipeline, and status of outstanding bids. We have
agreed submitted proposal documents and newly won contracts where appropriate.
• We have examined current year actual results against the budget for the year to
determine the accuracy of the budgeting and forecasting by management.
• We examined the disclosures relating to the going concern basis of preparation and
found that these provided an explanation of the Directors’ assessment that was
consistent with the evidence we obtained.
Our responsibilities and the responsibilities of the Directors with respect to going concern are
described in the relevant sections of this report.
Overview
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.
The components of the Group were evaluated by the Group audit team based on a measure of
materiality, considering each component as a percentage of the Group’s net assets, gross
revenue and results before tax, which allowed the Group audit team to assess the significance
of each component and determine the planned audit response. We determined there to be four
significant components to the Group, which were Aukett Swanke Group Plc, Aukett Swanke
Limited, Veretec Limited, and Aukett Swanke Architectural Design Limited. They were all
subjected to full scope audits.
Page 39
Aukett Swanke Group Plc
Also, we have performed a full scope audit on John R Harris & Partners Limited, Swanke
Hayden Connell International Limited, Aukett Fitzroy Robinson International Limited and
Shankland Cox Limited for the purpose of coverage and to cover specific identified risk. All full-
scope audits, excluding John R Harris & Partners Limited were conducted by the group audit
engagement team. The audit of John R Harris & Partners Limited was performed by a
component audit firm in Dubai, UAE.
For significant components requiring a full scope approach, we evaluated controls by
performing walkthroughs over the financial reporting systems identified as part of our risk
assessment, reviewed the accounts production process, and addressed critical accounting
matters. We then undertook substantive testing on significant transactions and material account
balances.
We have overall coverage of 100% of group profit before tax, 100% of Group revenue and
100% of Group total assets.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the financial statements of the current period and include the most
significant assessed risks of material misstatement (whether or not due to fraud) we identified,
including those which had the greatest effect on: the overall audit strategy, the allocation of
resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters. This
is not a complete list of all risks identified by our audit.
In addition to the matter described in the material uncertainty related to going concern section,
we have determined the matters described below to be the key audit matters to be
communicated in our audit report.
Key Audit Matters
Going Concern
How our scope addressed this matter
The Group has recognised a loss before tax
of £2.3 Million (2021: £1.5 Million). The cash
and cash equivalents balance were an
overdraft of £0.2 Million in the current year
(2021: £0.51 Million). The Group has
continued
losses
subsequent to the year end.
incurring
further
Given the performance in the year, including
the matter explained in Note 1 and the
‘Material uncertainty
to going
concern section of our audit report’ going
concern was considered to be a key audit
matter.
related
Revenue recognition, including valuation
and cut-off of contract assets and
liabilities :
Refer to the accounting policies in Note 1 on
page 62 to 63 and Note 3 in the Group
financial statements.
Our audit work and conclusion in respect of
going concern has been detailed in the
‘Material uncertainty related to going concern’
section of our audit report.
Our audit work
restricted to the following procedures:
included, but was not
We evaluated the operating effectiveness of
certain key controls identified in relation to
revenue.
Page 40
Aukett Swanke Group Plc
services
The measurement of revenue earned on
architectural
contracts with
customers is determined by reference to the
stage of completion of those contracts at the
Statement of Financial Position date. It is a
function of
the cost (fee earners and
subcontractors) incurred on the contract
compared to the total costs expected at the
culmination of the contract as a proportion of
agreed-upon contract revenue less any
invoices raised to date.
the above measurement
As
requires
Directors to assess the final costs expected
on a contract to determine the stage of
completion, there is inherent estimation
uncertainty. The significant
judgement
arising in the formulation of these estimates
could vary materially over time and is
dependent on customer activity. We
therefore considered this to be a key audit
matter.
As at 30 September 2022 the group has
recognised contract assets of £ 1.1 Million
and contract liabilities of £ 1.2 Million.
We evaluated the Group’s accounting policy
in respect of revenue recognition to ensure it
is compliant with IFRS 15.
We selected a sample of contracts and the
substantive testing procedures included the
following:
• Confirming revenue from the revenue
recognition model
the underlying
contract and where relevant, contract
variations were agreed between
the
Group and its customers.
to
to confirm
• Comparing historical margins achieved
on projects against the estimated margins
expected on
comparable on-going
the accuracy of
projects
management’s estimation of total project
costs. Also discussed with management
if there were material variances in this
estimate. Further, subsequent invoices
raised post the Statement of Financial
Position date and collections were tested
to compare the estimated margins to
actuals.
• Verifying
the chargeable
time costs
incurred to date for the selected projects
to a report generated from Timemaster, a
time recording system. A sample of
individual costs from the reports were
agreed through to supporting timecards
and charge rate agreed to group’s charge
rates to test the accuracy of the recorded
time.
• Confirming a sample of invoices recorded
the
the accounting system
in
supporting contract, a copy of physical
sales invoice raised, and cash received.
to
• Assessed and challenged the key stage
of completion judgments made by the
Directors. This involved testing the basis
of future costs expected to be incurred on
the project and obtaining a detailed
from
understanding of
management and the project director.
the project
• Reviewing material credit notes, invoices
and receipts post year end.
Key observations:
Based on the procedures performed, we
consider that the assumptions made by
management in recognising revenue on part
Page 41
Aukett Swanke Group Plc
Annual impairment review of goodwill
Refer to the accounting policies in note 1 on
page 59 and Notes 12 and 13 for key
judgements
financial
statements.
the Group
in
In the financial statements goodwill arising
from past acquisitions is valued at £1.75
Million. It exists predominantly within the UK
(£1.74 Million) and the residual £0.01M in
the Turkey Cash Generating Unit (CGU).
the
While no goodwill
Shankland Cox Limited (SCL) CGU £0.25
Million of other intangible assets are situated
within the SCL CGU. There is a risk that
these are impaired in the context of results
of the Group and the UK and UAE economic
operating environments.
is allocated
to
the value
The process
for assessing whether
International
impairment exists under
Accounting Standard IAS 36 ‘Impairment of
is complex. The process of
Assets’
determining
through
forecasting cash flows (primarily revenue
less
the
determination of the appropriate discount
rate and other assumptions to be applied, is
highly judgemental and can significantly
impact the results of the impairment review.
subcontract
in use,
costs)
and
Based on recent trading performance there
is uncertainty around future revenue less
and
subconsultant
consequent profitability of the CGUs.
pipelines
cost
There is significant management judgement
and estimation uncertainty involved in the
preparation of value in use models under
applicable accounting standards for the
group and as a result we consider this to be
a key audit matter.
completed contracts with customers at the
Statement of Financial Position date to be
appropriate and did not identify any material
misstatements in revenue recognition.
Our audit work
restricted to the following procedures:
included, but was not
• Obtained management’s assessment of
the Group CGU’s and critically assessed
Value In Use (VIU) model for each CGU
to test compliance with the requirement of
applicable accounting standards and
mathematical accuracy of the model.
•
The weighted average cost of capital
(WACC) of the models was re-computed
with reference to external data to test the
accuracy of computation.
flows
the revenue cash
• Challenging
within
the model. Future earnings
potential was checked to secure pipeline
via agreement verification. Potential wins
were assessed for progress in bids by
verification of correspondence. Future
earnings were assessed by verification of
historic conversion of new work.
• Critically assessed the cost base for
potential omissions or unrealistic targets
based on prior years actuals and
potential future changes in the business.
We challenged management where this
fell outside our expectation and checked
that
these were accurately stated,
reasonable and achievable in the light of
the economic environment and future
pipeline of work.
• Obtaining
the
sensitivity
analysis
performed by management to assess the
impact of the movement in key variables
in the model which would lead to an
impairment. We tested this sensitivity
analysis and concluded on whether such
scenarios were likely to occur.
the
assumptions
Key observation:
Based on the procedures performed and
and
considering
methodology used by management
in
preparing the VIU model, the calculations are
appropriate. Further, during the course of the
audit it was discussed with management that
the Goodwill arising at the time of these
acquisition was no longer reflective of the
current business, and it is impractical to be
Page 42
Aukett Swanke Group Plc
the
able to determine what proportion of cash flow
projections of the United Kingdom operations
acquisitions.
related
to
Management have
the
decision to write off the full £1.74M balance of
Goodwill for the United Kingdom operations
and an audit adjustment has been made to
that effect.
historic
therefore
taken
Our application of materiality
The scope and focus of our audit were influenced by our assessment and application of
materiality. We define materiality as the magnitude of misstatement that could reasonably be
expected to influence the readers and the economic decisions of the users of the financial
statements. We use materiality to determine the scope of our audit and the nature, timing, and
extent of our audit procedures and to evaluate the effect of misstatements, both individually
and on the financial statements as a whole. We apply the concept of materiality both in planning
and performing our audit, and in evaluating the effect of misstatements.
Based on our professional judgement we determined materiality for the 2022 financial
statements as a whole and performance materiality as follows:
Group financial statements
Materiality
Basis for determining
materiality
£153,000
1.5% of gross revenue
a
i.e.,
primary measure
The gross revenue has been used
of
as
performance which is a measure of
demand for its services and its
penetration into the geographic
hubs in which it operates. The
“sub-consultants”
the
specialists’ costs are agreed in the
bid and included as part of the fees
that is marked up to the client as
Group’s revenue. The professional
indemnity insurance covers the
the
gross
fees chargeable
customers which
the
subconsultants costs. The Group
for
is
the entire
responsible
contract with
their customer.
Based on the above factors the
Gross revenue i.e., including sub-
to be
consultant costs are
relevant
considered as most
benchmark
the
to
performance of
the company
rather than Net Revenue.
£78,000
to
includes
check
Rationale
benchmark applied
for
the
Performance
materiality
Basis for determining
performance
materiality
for
Parent company financial
statements
£183,000
3% of net assets before
adjusting
intercompany
balances.
Due to the nature of the
we
parent
considered net assets to be
the focus for the readers of
the
statements,
accordingly this consideration
influenced our judgement of
materiality.
company,
financial
£73,000
50% of Group materiality
40% of Parent company
materiality
Page 43
Aukett Swanke Group Plc
Performance materiality:
The performance materiality benchmark has been selected based of the following
considerations:
•
cumulative identification of errors noted in the previous years that has been posted by
management as per previous auditor file review
• our risk assessment, together with our assessment of the overall control environment
Component materiality:
We set materiality for each component of the Group based on a percentage of Group materiality
dependent on the size and our assessment of risk of material misstatements of that component.
Component materiality, other than the parent Company’s, ranged from £91,000 to £3,000. In
the audit of each component, we further applied performance materiality levels of 50% of the
component materiality to our testing to ensure that the risk of errors exceeding component
materiality was appropriately mitigated.
Trivial:
We agreed with the Audit Committee that we would report to them all individual audit differences
in excess of £7,800 for the Group and £7,600 for the parent Company. We also agreed to report
differences below this threshold that, in our view, warranted reporting on qualitative grounds.
We also reported to the Audit Committee on disclosure matters that we identified when
assessing the overall presentation of the financial statements.
Other information
The other information comprises the information included in the annual report, other than the
financial statements and our auditor’s report thereon. The Directors are responsible for the
other information contained within the annual report. 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 there is 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.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the Strategic Report and the Directors’ Report for the financial
year for which the financial statements are prepared is consistent with the financial
statements; and
the Strategic Report and the Directors’ Report have been prepared in accordance with
applicable legal requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the parent Company and their
environment obtained in the course of the audit, we have not identified material misstatements
in the Strategic Report or the Directors’ Report.
Page 44
Aukett Swanke Group Plc
We have nothing to report in respect of the following matters where the Companies Act 2006
requires us to report to you if, in our opinion:
•
• adequate accounting records have not been kept by the parent Company, or returns
adequate for our audit have not been received from branches not visited by us; 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.
Responsibilities of Directors
As explained more fully in the Directors’ responsibilities statement set out on page 37, the
Directors are responsible for the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s
and the parent company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the parent Company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s Responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
further description of our responsibilities
A
https://wwww.frc.org.uk/auditors/auditor-assurance/auditor-s-responsibilities-for-the-audit-of-
the-fi/description-of-the-auditor's-responsibilities-for
is available on
the FRC’s website at
This description forms part of our auditor’s report.
Explanation as to what extent the audit was considered 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.
The objectives of our audit in respect of fraud, are; to identify and assess the risks of material
misstatement of the financial statements due to fraud; to obtain sufficient appropriate audit
evidence regarding the assessed risks of material misstatement due to fraud, through designing
and implementing appropriate responses to those assessed risks; and to respond appropriately
to instances of fraud or suspected fraud identified during the audit. However, the primary
responsibility for the prevention and detection of fraud rests with both management and those
charged with governance of the company.
Page 45
Aukett Swanke Group Plc
Our approach was as follows:
• We obtained an understanding of the legal and regulatory requirements applicable to
the company and considered that the most significant are the Companies Act 2006, UK
adopted international accounting standards, the rules of the Alternative Investment
Market, and UK taxation legislation.
• We obtained an understanding of how the Group and parent Company complies with
these requirements by discussions with management and those charged with
governance.
• We assessed the risk of material misstatement of the financial statements, including
the risk of material misstatement due to fraud and how it might occur, by holding
discussions with management and those charged with governance.
• We inquired of management and those charged with governance as to any known
instances of non-compliance or suspected non-compliance with laws and regulations.
• Based on this understanding, we designed specific appropriate audit procedures to
identify instances of non-compliance with laws and regulations. This included making
enquiries of management and those charged with governance and obtaining additional
corroborative evidence as required.
There are inherent limitations in the audit procedures described above. We are less likely to
become aware of instances of non-compliance with laws and regulations that are not closely
related to events and transactions reflected in the financial statements. Also, 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 or
intentional misrepresentations, or through collusion.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter
3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken for no purpose
other than to draw to the attention of the company’s members those matters which we are
required to include in an auditor’s report addressed to them. To the fullest extent permitted by
law, we do not accept or assume responsibility to any party other than the company and the
company’s members as a body, for our work, for this report, or for the opinions we have formed.
Mital Shah (Senior Statutory Auditor)
for and on behalf of Moore Kingston Smith LLP
Chartered Accountants
Statutory Auditor
6th Floor
9 Appold Street
London
EC2A 2AP
27 March 2023
Page 46
Aukett Swanke Group Plc
Consolidated income statement
For the year ended 30 September 2022
Note
2022
£’000
2021
£’000
Continuing operations
Revenue
Sub consultant costs
Revenue less sub consultant costs
Personnel related costs
Property related costs
Other operating expenses
Other operating income
Operating loss
Finance costs
Loss after finance costs
Share of results of associate and joint ventures
Trading loss from continuing operations
Impairment of intangibles
Goodwill impairment
Loss before tax from continuing operations
Tax credit
Loss from continuing operations
Loss from discontinued operations
Loss for the year
Loss attributable to:
Owners of Aukett Swanke Group Plc
Non-controlling interests
3
3
4
5
13
12
9
11
8,645
9,192
(1,518)
7,127
(6,237)
(1,037)
(483)
326
(304)
(95)
(399)
327
(72)
-
(1,752)
(1,824)
45
(1,779)
(503)
(2,282)
(2,282)
-
(2,282)
(2,887)
6,305
(5,594)
(1,041)
(695)
358
(667)
(94)
(761)
166
(595)
-
-
(595)
395
(200)
(936)
(1,136)
(1,123)
(13)
(1,136)
Basic and diluted earnings per share for loss
attributable to the ordinary equity holders of
the Company:
From continuing operations
From discontinued operations
Total loss per share
10
(1.08p)
(0.30p)
(1.38p)
(0.12p)
(0.57p)
(0.69p)
Page 47
Aukett Swanke Group Plc
Consolidated statement of comprehensive income
For the year ended 30 September 2022
Loss for the year
translation differences on disposal
to gain on disposal of discontinued
Currency translation differences
Currency
recycled
operation (note 11)
Currency translation differences on translation of
discontinued operations (note 11)
Other comprehensive loss for the year
2022
£’000
(2,282)
(7)
(209)
(168)
(384)
2021
£’000
(1,136)
(107)
-
(50)
(157)
Total comprehensive loss for the year
(2,666)
(1,293)
Total comprehensive loss for the year is attributable
to:
Owners of Aukett Swanke Group Plc
Non-controlling interests
Total comprehensive loss for the year
Total comprehensive loss attributable to the owners
of Aukett Swanke Group Plc arises from:
Continuing operations
Discontinued operations
(2,666)
-
(1,280)
(13)
(2,666)
(1,293)
(1,786)
(880)
(307)
(973)
(2,666)
(1,280)
Page 48
Aukett Swanke Group Plc
Company registration number 02155571
Consolidated statement of financial position
At 30 September 2022
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
Trade and other payables
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
Note
12
13
14
15
17
18
23
19
3
20
3
21
15
20
21
15
23
24
25
2022
£’000
-
210
69
2,184
760
247
281
3,751
3,293
1,119
28
4,440
2021
£’000
2,370
324
155
2,546
587
209
241
6,432
3,975
982
515
5,472
8,191
11,904
(3,169)
(1,227)
(482)
(457)
(5,335)
(44)
(167)
(1,962)
(33)
(249)
(2,455)
(3,747)
(829)
(83)
(539)
(5,198)
-
(417)
(2,350)
(40)
(832)
(3,639)
(7,790)
(8,837)
401
3,067
1,652
1,176
(557)
(3,364)
1,494
401
1,652
1,176
(173)
(1,082)
1,494
3,067
-
401
-
3,067
The financial statements on pages 47 to 109 were approved and authorised for issue by the
Board of Directors on 27 March 2023 and were signed on its behalf by:
Robert Fry
Chief Executive Officer
Antony Barkwith
Group Financial Director
Page 49
Aukett Swanke Group Plc
Company registration number 02155571
Company statement of financial position
At 30 September 2022
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
Trade and other payables
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
Note
14
16
19
19
20
21
20
21
25
2022
£’000
7
2,089
184
2,280
250
457
707
2021
£’000
11
3,290
5
3,306
449
211
660
2,987
3,966
(1,594)
(250)
(1,844)
(1,750)
(83)
(1,833)
(44)
(1)
(167)
(212)
-
(2)
(417)
(419)
(2,056)
(2,252)
931
1,714
1,652
(3,391)
1,176
1,494
931
1,652
(2,608)
1,176
1,494
1,714
The result for the year contained within the parent company’s income statement is a loss of
£783k (2021: loss £1,179k).
The financial statements on pages 47 to 109 were approved and authorised for issue by the
Board of Directors on 27 March 2023 and were signed on its behalf by:
Robert Fry
Chief Executive Officer
Antony Barkwith
Group Financial Director
Page 50
Aukett Swanke Group Plc
Consolidated statement of cash flows
For the year ended 30 September 2022
Note
27
Cash flows from operating activities
Cash expended by operations
Income taxes received
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Sale of property, plant and equipment
Purchase of investments
Sale of investments
Dividends received from associates & joint
ventures
Net cash received in investing activities
Net cash inflow/(outflow) 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
22
Cash and cash equivalents are comprised of:
Cash at bank and in hand
Secured bank overdrafts
Cash and cash equivalents at end of year
2022
£’000
(1,104)
99
(1,005)
(48)
-
-
927
140
1,019
14
(470)
(76)
-
(83)
(19)
(648)
(634)
515
(85)
(204)
28
(232)
(204)
2021
£’000
(896)
262
(634)
(33)
16
(123)
-
528
388
(246)
(455)
(91)
500
(155)
(3)
(204)
(450)
992
(27)
515
515
-
515
Page 51
Note
27
Aukett Swanke Group Plc
Company statement of cash flows
For the year ended 30 September 2022
Cash flows from operating activities
Cash expended by operations
Interest paid
Net cash outflow from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of investments
Sale of investments
Dividends received from associates & joint ventures
Net cash generated from investing activities
Net cash inflow/(outflow) before financing activities
Cash flows from financing activities
Proceeds from bank loans
Repayment of bank loans
Net cash (outflow)/inflow 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
2022
£’000
(722)
(9)
(731)
-
-
927
133
1,060
329
-
(83)
(83)
246
211
457
457
457
2021
£’000
(702)
(1)
(703)
-
(123)
-
528
405
(298)
500
(155)
345
47
164
211
211
211
Page 52
Aukett Swanke Group Plc
Consolidated statement of changes in equity
For the year ended 30 September 2022
Share
capital
£’000
1,652
Foreign
currency
translation
reserve
£’000
(16)
Retained
earnings
Other
distributable
reserve
Merger
reserve
Total
Non-
controlling
interests
Total
equity
£’000
41
£’000
1,494
£’000
1,176
£’000
4,347
£’000
27
£’000
4,374
-
-
-
-
-
-
(1,123)
-
(157)
-
(157)
(1,123)
-
-
-
-
-
-
-
-
(1,123)
-
(157)
(13)
(14)
(1,136)
(14)
-
(157)
(1,280)
(27)
(1,307)
At 1 October 2020
Loss for the year
Acquisition of minority
interest
Other comprehensive
income
Total comprehensive
income
At 30 September 2021
1,652
(173)
(1,082)
1,494
1,176
3,067
Loss for the year
Other comprehensive
income
Total comprehensive
income
-
-
-
-
(384)
(2,282)
-
(384)
(2,282)
-
-
-
-
-
-
(2,282)
(384)
(2,666)
At 30 September 2022
1,652
(557)
(3,364)
1,494
1,176
401
-
-
-
-
-
3,067
(2,282)
(384)
(2,666)
401
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.
Page 53
Aukett Swanke Group Plc
Company statement of changes in equity
For the year ended 30 September 2022
Share
capital
Retained
earnings
£’000
1,652
£’000
(1,429)
Other
distributable
reserve
£’000
1,494
Merger
reserve
Total
Equity
£’000
1,176
£’000
2,893
-
(1,179)
-
-
(1,179)
At 1 October 2020
Loss and total
comprehensive income
for the year
At 30 September 2021
1,652
(2,608)
1,494
1,176
1,714
Loss and total
comprehensive income
for the year
-
(783)
-
-
(783)
At 30 September 2022
1,652
(3,391)
1,494
1,176
931
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.
Page 54
Aukett Swanke Group Plc
Notes to the financial statements
1
Significant accounting policies
The principal accounting policies applied in the preparation of these financial statements are
set out below.
Basis of preparation
The financial statements for the Group and parent Company have been prepared in accordance
with UK adopted international accounting standards in conformity with the requirements of the
Companies Act 2006.
New accounting standards, amendments and interpretations applied
For the year ended 30 September 2022, one new standard became applicable:
- COVID-19-Related Rent Concessions beyond 30 June 2021 (Amendments to IFRS
16).
The Group did not have to change its accounting policies or make retrospective adjustments
as a result of adopting this standard.
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:
(i)
(ii)
(iii)
(iv)
Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
Property, Plant and Equipment: Proceeds before Intended Use (Amendments to
IAS 16);
Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1,
IFRS 9, IFRS 16 and IAS 41); and
References to Conceptual Framework (Amendments to IFRS 3).
The following amendments are effective for the period beginning 1 January 2023:
(i)
(ii)
(iii)
Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice
Statement 2);
Definition of Accounting Estimates (Amendments to IAS 8); and
Deferred Tax Related to Assets and Liabilities arising from a Single Transaction
(Amendments to IAS 12).
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.
Page 55
Aukett Swanke Group Plc
In response to feedback and enquiries from stakeholders, in December 2020, the IFRS
Interpretations Committee (IFRIC) issued a Tentative Agenda Decision, analysing the
applicability of the amendments to three scenarios. However, given the comments received and
concerns raised on some aspects of the amendments, in April 2021, IFRIC decided not to
finalise the agenda decision and referred the matter to the IASB. In its June 2021 meeting, the
IASB tentatively decided to amend the requirements of IAS 1 with respect to the classification
of liabilities subject to conditions and disclosure of information about such conditions and to
defer the effective date of the 2020 amendment by at least one year.
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.
Going concern
The Group’s business activities, the principal risks and uncertainties facing the Group, and the
financial position of the Group are described in the Strategic Report. The liquidity risks faced
by the Group are further described in note 32. These factors are all considered when assessing
the Group’s ability to operate as a going concern.
The Group currently meets its day to day working capital requirements through its cash
balances. It maintains an overdraft facility for additional financial flexibility and foreign currency
hedging purposes.
The overdraft facility is renewed annually and was renewed for a further 12 months in November
2022, with a review in May 2023.
The £500k Coronavirus Business Interruption Loan Scheme (“CBILS”) drawn in May 2021 has
a duration of three years with interest at 4.05% over the Coutts base rate (currently 4.25%) in
years two and three. The Group commenced paying the 24 monthly instalments in June 2022.
We expect to repay the CBILS loan before the expiry of the term.
In May 2022, the net gearing covenant and debt servicing covenants were removed from the
CBILS loan agreements. The covenant applicable to maintaining a level of UK eligible debtors
have been amended as an ‘Other condition’. The Group similarly agreed to reduce the overdraft
facility to £250k. The £250k overdraft was agreed to be maintained in the annual renewal in
November 2022. We have no reason not to expect that the overdraft facility would not be
renewed again in November 2023, however this is not guaranteed.
On 20 March 2023 the Group acquired 100% of TFG with consideration paid on a share for
share basis. This provided a significant boost to Group with approximately £1.7m of net tangible
assets including almost £1m of cash.
TFG have interest bearing loans and borrowings being a CBILS loan and a mortgage which
together totalled approximately £2.7m as at December 2022. The CBILS loan was drawn in
2021 at £1.75m, the December 2022 balance being £1.25m, and being repaid at £29k per
month. The loan is at a fixed rate of interest at 3.90%.
The Mortgage initially drawn in 2018 at £1.73m with a duration of 5 years has been extended
for a year and is due to expire in January 2024. The balance as at December 2022 was £1.46m,
with a variable interest at base rate + 1.93%. The mortgage is secured against TFG’s freehold
property in London. The Board’s review of going concern takes into account the need to re-
mortgage the property within 12 months of the signing date of the financial statements.
Forecasts for the Group have been prepared for a period of at least 12 months following the
approval of the financial statements, which comprise detailed income statements, statements
of financial position and cash flow statements for each of the Group’s operations.
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Aukett Swanke Group Plc
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 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
Entity’s decision making, albeit as yet we have not experienced any material indication to this
effect. The delays in clients making financial investment decisions due to the economic
uncertainty may result in the net earnings and cash flows of the Group not being realised.
The Group has managed cash flow within its facilities so far, and the acquisition of TFG
significantly enhances the Group’s short term available cash. During the next 12 month going
concern review period, the forecast assumes that no additional external financing is received
when measuring the Group’s ability to continue to operate. The Group’s assessment of going
concern is therefore focused on its ability to operate within the £250k overdraft limit.
The Group’s forecasts, indicate that, during the 12-month period following the approval of the
financial statements, the Group will maintain a positive net cash balance with the full overdraft
facility available to be drawn down.
The Group’s forecasts assume that the TFG mortgage is successfully renewed in January 2024.
The freehold property was last independently valued in July 2021 at £3.02m, and as at
December 2022 the balance of the mortgage at £1.46m gave it a loan to value percentage of
just 48%.
However, as the mortgage renewal date is less than 12 months from the signing date of these
accounts, the Board must consider the remote possibility that if the mortgage could not be
renewed, then the Group may need to raise cash to repay the full balance of the mortgage
through alternative borrowing facilities, asset sales or fund raising which are not wholly within
the Group’s control.
For this reason, the Board considers it appropriate to prepare the financial statements on a
going concern basis. However, the mortgage term ending less than 12 months from the signing
date of these accounts indicates the possible existence of a material uncertainty which may
cause significant doubt on the Group’s and 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.
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 statement of financial position respectively.
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Aukett Swanke Group Plc
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 an 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.
Borrowings
Borrowings are initially recognised at fair value, net of any transaction costs incurred.
Borrowings are subsequently stated at amortised cost. Any difference between the proceeds
(net of any transaction costs) and the redemption value is recognised in the income statement
over the period of the borrowings using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, bank current accounts held at call, bank
deposits with very short maturity terms and bank overdrafts where these form an integral part
of the group’s cash management process, for the purposes of the statement of cash flows.
Company income statement
The Company has taken advantage of the exemption provided by section 408 of the Companies
Act 2006 not to present its income statement for the year. The Company’s result is disclosed
at the foot of the Company’s statement of financial position.
Current Taxation
Current taxes are based on the results shown in the financial statements and are calculated
according to local tax rules, using tax rates enacted or substantially enacted by the statement
of financial position date.
Deferred taxation
Deferred income tax is provided in full, using the statement of financial position liability method,
on temporary differences arising between the tax bases of assets and liabilities and their
carrying amount in the financial statements, and measured at an undiscounted basis.
Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantively enacted by the date of the statement of financial position and are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability
is settled.
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Aukett Swanke Group Plc
Deferred income tax assets are recognised to the extent that it is probable that future taxable
profits will be generated against which the temporary differences can be utilised.
Dividends
Dividend payments are recognised as liabilities once they are no longer at the discretion of the
Company.
Dividend income from investments is recognised in the income statement when the
shareholders’ rights to receive payment have been established.
Equity instruments
Equity instruments issued by the Company are recorded as the proceeds received, net of direct
issue costs.
Foreign currency
Transactions in currencies other than the functional currency of each operation are recorded at
the rates of exchange prevailing on the dates of the transactions. At the date of each statement
of financial position, monetary assets and liabilities that are denominated in foreign currencies
are retranslated at the rates prevailing at the date of the statement of financial position. Gains
and losses arising on retranslation are included in the consolidated income statement for the
year.
On consolidation, the assets and liabilities of the Group’s overseas operations are translated
from their functional currencies at exchange rates prevailing at the date of the statement of
financial position. Income and expense items are translated from their functional currencies at
the average exchange rates for the year, which are materially consistent with the spot rates
observed in the year for those entities. Exchange differences arising are recognised directly in
equity and transferred to the Group’s foreign currency translation reserve. If an overseas
operation is disposed of then the cumulative translation differences are recognised as realised
income or an expense in the year disposal occurs.
Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as
assets and liabilities of the foreign entity and translated at the closing exchange rate. The Group
has elected to treat goodwill and fair value adjustments arising on acquisitions before the date
of transition to IFRS as sterling denominated assets and liabilities.
Goodwill
Goodwill arising on acquisitions represents the excess of the fair value of the consideration
given over the fair value of the identifiable assets and liabilities acquired. Where the net fair
value of the identifiable assets and liabilities of the acquiree is in excess of the consideration
paid, negative goodwill is recognised immediately in the income statement.
Goodwill is tested annually for impairment and an impairment loss would be recognised for the
amount by which the asset’s carrying amount exceeds its recoverable amount.
Impairment
At the date of each statement of financial position, a review of property, plant and equipment
and intangible assets (excluding goodwill) is carried out to determine whether there is any
indication that those assets have suffered any impairment. If any such indications exist, the
recoverable amount of the asset is assessed as the higher of fair value less costs to sell and
value in use, 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.
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Aukett Swanke Group Plc
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.
Other intangible assets
Intangible assets acquired in a business combination are recognised at fair value at the
acquisition date. Subsequently the intangible assets are carried at cost less accumulated
amortisation and accumulated impairment. Amortisation is charged on a straight line basis with
the useful economic lives attributed as follows:
Trade name – 25 years
Trade licence – 10 years
Customer relationships – 7 to 10 years
Order book – Over the life of the contracts
Amortisation is charged to other operating expenses within the consolidated income statement.
Investments
Investments in subsidiaries, associates and joint ventures are held in the statement of financial
position of the Company at historical cost less any allowance for impairment.
Leases and asset finance arrangements
The majority of the Group’s accounting policies for leases are set out in note 15.
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:
(a) There is an identified asset;
(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.
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.
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Aukett Swanke Group Plc
Each reportable operating segment provides the same type of service to clients, namely
integrated professional design services for the built environment and internally the Group does
not sub divide its business by type of service.
Other operating expenses
Other operating expenses include legal and professional costs, professional indemnity
insurance premiums, marketing expenses and other general expenses.
Property, plant and equipment
All property, plant and equipment is stated at historical cost of acquisition less depreciation and
any impairment provisions. Historical cost of acquisition includes expenditure that is directly
attributable to the acquisition of the items.
Depreciation of property, plant and equipment is calculated to write off the cost of acquisition
over the expected useful economic lives using the straight line method and over the following
number of years:
Leasehold improvements – Unexpired term of lease
Office furniture – 4 years
Office equipment – 4 years
Computer equipment – 2 years
Provisions
Provisions are recognised when a present obligation has arisen as a result of a past event
which 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 24).
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.
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.
Rental Income
Rental income from sublet property is credited to the consolidated income statement in the year
in which it accrues.
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Aukett Swanke Group Plc
Revenue recognition
Revenue represents the value of services performed for customers under contracts (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.
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Aukett Swanke Group Plc
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.
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 19.
The Group endeavours to undertake work only for clients who have the financial strength to
complete projects but even so, much property development is financed by funds not
unconditionally committed at the commencement of the project. Problems with financing can
on occasion unfortunately lead to clients being unable to pay their debts either on a temporary
or more permanent basis.
The Group monitors receipts from clients closely and undertakes a range of actions if there are
indications a client is experiencing funding problems. The Group makes further loss allowances
if it is considered that there is a significant risk of non-payment. The factors assessed when
considering a loss allowance include the ownership of the development site, the general
financial strength and financial difficulties of the client, likely use / demand for the completed
project, and the length of time likely to be necessary to resolve the funding problems.
The Group strives to maintain good relations with clients, but on occasions disputes do arise
with clients requiring litigation to recover outstanding monies. In such circumstances, the
directors carefully consider the individual facts relating to each case (such as strength of the
legal arguments and financial strength of the client) when deciding the level of any further
impairment allowance.
2
Accounting estimates and judgements
Estimates and judgements are continually evaluated and are based on historical experience
and other factors, including expectations of future events that are believed to be reasonable
under the circumstances.
Accounting estimates
In preparing the financial statements, the directors make estimates and assumptions
concerning the future. The resulting accounting estimates, by definition, seldom equal the
related actual results. The estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and liabilities within the next financial
year are considered to be:
Impairment of trade receivables
The Group provides architectural, interior design and related services to a wide variety of clients
including property developers, owner occupiers and governmental organisations, both in the
United Kingdom and overseas.
An increase of 6% (2021: 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 £0.20m, (2021: £0.27m) 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 19 and 30.
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Aukett Swanke Group Plc
Impairment of goodwill
Details of the impairment reviews undertaken in respect of the carrying value of goodwill are
given in note 12.
Impairment of investments in subsidiaries, associate and joint ventures
The company’s investment in subsidiaries, associate and joint ventures is reviewed annually
for impairment. The recoverable amount is determined based on value in use calculations.
These calculations use pre-tax cash flow projections based on financial budgets and forecasts
covering a five year period. Cash flows beyond the five year period are extrapolated using long
term average growth rates.
The key assumptions made in these projections are the same as those given in relation to
impairment of goodwill in note 12.
Critical accounting judgements
Critical judgements represent key decisions made by management in the application of the
Group’s accounting policies. Where a significant risk of materially different outcomes exists due
to management assumptions, this will represent a critical accounting judgement. Accounting
judgements are continually reviewed in light of new information and are based on historical
experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances. The judgements which have a significant risk of causing
a material adjustment to the carrying amount of assets and liabilities are considered to be:
Recognition of fee claim revenue
The nature of the project work undertaken by the Group means sometimes the scale and scope
of a project increases after work has commenced. Subsequent changes to the scale and scope
of the work may require negotiation with the clients for variations.
Advance agreement of the quantum of variation fees is not always possible, in particular when
the timescale for project completion is changing or where the cost of variations cannot be
determined until the work has been undertaken.
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 2022.
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 Landlord’s 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.
Page 64
Aukett Swanke Group Plc
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 (in the comparative periods). The Middle East segment has been re-
presented as a discontinued operation and is set out in note 11.
Income statement segment information
Segment revenue
United Kingdom
Continental Europe
Revenue from continuing operations
Discontinued operations
Revenue
Segment revenue less sub consultant costs
United Kingdom
Continental Europe
Revenue
continuing operations
Discontinued operations
Revenue less sub consultant costs
less sub consultant costs
from
2022
£’000
8,465
180
8,645
1,543
10,188
2022
£’000
6,975
152
7,127
1,256
8,383
2021
£’000
8,871
321
9,192
2,822
12,014
2021
£’000
6,063
242
6,305
2,517
8,822
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 19 are in respect of the Group’s contracts with
customers.
Segment net finance expense
Continuing operations
United Kingdom
Continental Europe
Group costs
Net finance expense
Segment depreciation
United Kingdom
Continental Europe
Group costs
Depreciation from continuing operations
Discontinued operations
Depreciation
2022
£’000
(86)
-
(9)
(95)
2022
£’000
71
3
3
77
20
97
2021
£’000
(93)
-
(1)
(94)
2021
£’000
88
4
4
96
33
129
Page 65
Aukett Swanke Group Plc
Segment amortisation
United Kingdom
Continental Europe
Amortisation from continuing operations
Discontinued operations
Amortisation
2022
£’000
398
-
398
15
413
2021
£’000
399
3
402
40
442
2022
Segment result
United Kingdom
Continental Europe
Group costs
Goodwill
impairment
Subtotal
Group
management
charges charged to
the
Middle East
discontinued
operation
Loss before tax
from continuing
operations
Loss from
discontinued
operations
Loss before tax
Before
goodwill and
acquisition
adjustments
£’000
(329)
275
(18)
-
Goodwill
Sub-total
£’000
-
-
-
(1,752)
£’000
(329)
275
(18)
(1,752)
Reallocation
of group
management
charges
£’000
540
147
(791)
-
Total
£’000
211
422
(809)
(1,752)
(72)
(1,752)
(1,824)
(104)
(1,928)
-
-
-
104
104
(72)
(1,752)
(1,824)
-
(1,824)
(503)
-
(503)
-
(503)
(575)
(1,752)
(2,327)
-
(2,327)
Page 66
Aukett Swanke Group Plc
2021
Segment result
United Kingdom
Continental Europe
Group costs
Subtotal
Group
management
charges charged to
the
Middle East
discontinued
operation
Loss before
from
operations
Loss
discontinued
operations
Loss before tax
tax
continuing
from
Before
goodwill and
acquisition
adjustments
£’000
(848)
149
104
(595)
-
(595)
(936)
(1,531)
Goodwill
Sub-total
£’000
-
-
-
-
£’000
(848)
149
104
(595)
Reallocation
of group
management
charges
£’000
540
181
(1,119)
(398)
Total
£’000
(308)
330
(1,015)
(993)
-
-
-
-
-
398
398
(595)
(936)
-
-
(595)
(936)
(1,531)
-
(1,531)
The Group’s share of results from associate and joint ventures included within the Continental
Europe segment result are shown in notes 17 and 18.
Page 67
Aukett Swanke Group Plc
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
Significant changes in contract asset and liabilities
2022
£’000
1,200
(1)
1,199
1,227
1,227
2021
£’000
988
(6)
982
829
829
Contract assets have increased as the Group provided higher amounts of services ahead of
invoicing. Most of the contract assets are derived from contracts in the UK where the balance
of contract assets has increased to £1,012k (September 2021: £545k). This was partially due
to new projects undertaken where the first invoice had not been raised as at year end.
Contract liabilities have increased as the Group has invoiced for higher amounts ahead of
providing services. Contract liabilities derive primarily from contracts in the UK operating
segment.
Page 68
Aukett Swanke Group Plc
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 2021
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 2022
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
*Non current assets include investments in associate and joint ventures.
Segment liabilities
United Kingdom
Middle East
Continental Europe
Trade payables, contract liabilities and accruals
Other current liabilities
Non current liabilities
Total liabilities
2022
£’000
2,915
430
90
3,435
1,005
3,751
8,191
2022
£’000
3,114
598
68
3,780
1,555
2,455
7,790
£’000
(829)
813
-
(1,211)
(1,227)
2021
£’000
2,413
1,427
85
3,925
1,547
6,432
11,904
2021
£’000
3,067
781
57
3,905
1,293
3,639
8,837
Page 69
Aukett Swanke Group Plc
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
Major clients
2022
£’000
8,465
8,465
180
1,543
1,720
2021
£’000
8,871
8,871
321
2,822
3,143
10,188
12,014
2022
£’000
2,453
2,453
-
1,007
10
-
1,017
3,470
281
3,751
2021
£’000
4,594
4,594
9
787
43
758
1,597
6,191
241
6,432
During the year ended 30 September 2022, the Group derived 10% or more of its revenues
from one client (2021: one client).
Largest client revenues
2022
£’000
2,009
2021
£’000
3,295
The largest client revenues for 2022 relate to the United Kingdom operating segment (2021:
United Kingdom operating segment).
Revenue by project site
The geographical split of revenue based on the location of project sites was:
United Kingdom
Middle East
Continental Europe
Rest of the world
Revenue
2022
£’000
7,804
1,543
696
145
10,188
2021
£’000
8,528
2,955
490
41
12,014
Page 70
Aukett Swanke Group Plc
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
operations
Discontinued operations
Total other operating income
income
from continuing
5
Finance costs
Continuing operations
Payable on bank loans and overdrafts
Finance lease interest payable
Total finance costs
6
Auditor remuneration
2022
£’000
147
131
-
48
326
-
326
2022
£’000
19
76
95
2021
£’000
153
132
59
14
358
2
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, and to the Company’s previous auditor:
Fees payable to the Company’s auditor for the audit of the
Company’s annual accounts for the year ended September
2022
Additional fees paid to the Company’s previous auditor for the
audit of the Company’s annual accounts for the year ended
September 2021
2022
£’000
2021
£’000
59
33
58
-
Fees payable to the Company’s auditor and its associates
for other services
Audit of the Company’s subsidiaries pursuant to legislation
71
70
The figures presented above are for Aukett Swanke Group Plc and its subsidiaries as if they
were a single entity. Aukett Swanke Group Plc has taken the exemption permitted by United
Kingdom Statutory Instrument 2008/489 to omit information about its individual accounts.
7
Employee information
The average number of persons including directors employed by the Group and Company
during the year was as follows:
Technical
Administrative
Total
Group
Company
2022
Number
83
23
106
2021
Number
104
29
133
2022
Number
-
6
6
2021
Number
-
7
7
Page 71
Aukett Swanke Group Plc
In addition to the number of staff disclosed above, the Group’s associate and joint ventures
employed an average of 137 persons (2021: 146 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
2022
£’000
5,200
468
262
2021
£’000
5,874
444
253
5,930
6,571
2022
£’000
574
56
43
673
2021
£’000
534
65
44
643
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 24.
8
Directors’ emoluments
2022
Nicholas Thompson
Robert Fry
Clive Carver
Raúl Curiel
Antony Barkwith
Total
2021
Nicholas Thompson
John Bullough
Robert Fry
Clive Carver
Raúl Curiel
Antony Barkwith
Total
Aggregate
emoluments
£’000
209
123
30
30
163
555
Aggregate
emoluments
£’000
214
15
121
30
30
123
533
Pension
contributions
£’000
10
15
-
-
18
43
Pension
contributions
£’000
10
-
17
-
-
16
43
Total
received
£’000
219
138
30
30
181
598
Total
received
£’000
224
15
138
30
30
139
576
Waived
£’000
-
-
-
-
-
-
Waived
£’000
-
-
-
-
-
-
-
Total
entitlement
£’000
219
138
30
30
181
598
Total
entitlement
£’000
224
15
138
30
30
139
576
Benefits were accruing to three Directors (2021: three Directors) under defined contribution
pension arrangements.
The aggregate emoluments of the highest paid Director were £209,000 (2021: £214,000)
together with pension contributions of £10,000 (2021: £10,000).
Page 72
Aukett Swanke Group Plc
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 23)
Total tax credit
2022
£’000
-
-
-
(45)
-
-
(45)
(45)
2021
£’000
-
(361)
(361)
(126)
92
-
(34)
(395)
The standard rate of corporation tax in the United Kingdom that is applicable for the financial
year was 19% (2021: 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% (2021: 19%)
Effects of:
Other non tax deductible expenses
Associate and joint ventures reported net of tax
Tax losses not recognised
Current tax adjustment in respect of previous years
Deferred tax adjustment in respect of previous years
Income not taxable
Total tax credit
2022
£’000
(2,327)
2021
£’000
(1,531)
(442)
279
(62)
104
4
2
70
(45)
(291)
60
(32)
105
(361)
92
32
(395)
10
Earnings per share
The calculations of basic and diluted earnings per share are based on the following data:
Earnings
Continuing operations
Discontinued operations
Loss 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
2022
£’000
(1,779)
(503)
(2,282)
2021
£’000
(200)
(923)
(1,123)
2022
Number
165,213,652
-
165,213,652
2021
Number
165,213,652
-
165,213,652
As explained in note 26 the Company has granted options over 2,500,000 of its ordinary shares.
These have not been included above as i) the average share price on 1,500,000 of the options
was below the exercise price in 2022 and they therefore do not have a dilutive effect, and ii) the
average share price on the other 1,000,000 options was slightly above the exercise price in
2022 but to the extent that the dilutive effect would be trivial.
Page 73
Aukett Swanke Group Plc
11
Discontinued operations
11 (a) Description
In April 2022, the Group sold assets, as part of the Group’s disposal of JRHP constituting its
John R Harris & Partners Limited (Cyprus) subsidiary and John R Harris & Partners (Dubai)
entity, for a cash consideration of AED 5,000,000, comprising AED 4,250,000 cash upfront and
a further AED 750,000 deferred consideration paid over a 5 year period. This marked the sale
of the main trading operations in the Group’s Middle East segment. With closure costs incurred
in the period relating to the planned termination of a number of trading licenses in the Middle
East operations, the Middle East segment is presented as a discontinued operation in the
current period, and the comparative period represented accordingly.
The post-tax gain on disposal of the JRHP operation was determined as follows:
Cash consideration received
Deferred cash consideration
Total consideration received
Sale costs
Cash disposed of
Net cash inflow on disposal of discontinued
operation
Net assets disposed (other than cash)
- Property, plant and equipment
-
- Trade and other receivables
- Contract assets
- Trade and other payables
Intangibles
Currency translation differences recycled on
disposal
Pre-tax gain on disposal of discontinued
operation
Related tax expenses
Gain on disposal of discontinued operation
2022
£’000
927
163
1,090
(9)
(112)
969
37
736
641
361
(954)
821
(209)
612
357
-
357
2021
£’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 74
Aukett Swanke Group Plc
11 (b) Financial performance and cash flow information
Result of discontinued operations
Revenue
Sub consultant costs
Revenue less sub consultant costs
Personnel related costs
Property related costs
Expenses
Group management charges
Finance expenses
Depreciation
Amortisation
Other operating income
Gain on disposal of subsidiary
Impairment of intangibles
Loss before tax
Tax credit / (charge)
Loss from discontinued operations
Exchange differences on disposal recycled to
gain on disposal of subsidiary
Exchange differences on
discontinued operation
Other comprehensive loss from discontinued
operations
translation of
2022
£’000
1,543
(287)
1,256
(1,233)
(109)
(635)
(104)
-
(20)
(15)
-
357
-
(503)
-
(503)
(209)
(168)
(880)
2021
£’000
2,822
(305)
2,517
(2,212)
(197)
(326)
(398)
-
(33)
(40)
2
-
(249)
(936)
-
(936)
-
(50)
(986)
Earnings per share from discontinued operations
2022
£’000
2021
£’000
Basic and diluted loss per share
(0.30p)
(0.57p)
Statement of cash flows
The statement of cash flows includes the following amounts relating to discontinued operations:
Net cash outflow from operating activities
Net cash inflow/(outflow) from investing
activities
Foreign exchange movements
Net cash from discontinued operations
2022
£’000
(53)
35
(204)
(222)
2021
£’000
(485)
(2)
(39)
(526)
Page 75
Aukett Swanke Group Plc
12
Goodwill
Group
Cost
At 1 October 2020
Addition
Disposal
Exchange differences
At 30 September 2021
Addition
Disposal
Exchange differences
At 30 September 2022
Impairment
At 1 October 2020
Disposal
Exchange differences
At 30 September 2021
Impairment
Disposal
Exchange differences
At 30 September 2022
Net book value
At 30 September 2022
At 30 September 2021
At 1 October 2020
£’000
2,392
9
-
(31)
2,370
-
(608)
(10)
1,752
-
-
-
-
1,752
-
-
1,752
-
2,370
2,392
The disposal recorded in the year related to goodwill on JRHP which was sold during the year.
The gain on disposal of the goodwill is included within the loss from discontinued operations on
the Consolidated Income Statement and the gain on disposal of subsidiary in the result of
discontinued operations in note 11 (b).
Goodwill from the United Kingdom operation arose as £1,244k from the April 2005 acquisition
of Fitzroy Robinson Limited and £496k from the December 2013 acquisition of Swanke Hayden
Connell Europe Limited. In the years that have passed the UK operations have been merged
into the Aukett Swanke Limited and Veretec Limited companies. Swanke Hayden Connell
Europe Limited serves as a holding company for Swanke Hayden Connell International Limited
which no longer employs staff or engages in architectural work but in turn remains a holding
company for the Turkey subsidiary.
Management believe that the Goodwill arising at the time of these acquisitions is no longer
reflective of the current business, and it is impractical to be able to determine what proportion
of cash flow projections of the United Kingdom operations relates to the historic acquisitions.
Management have therefore taken the decision to write off the full £1,740k balance of Goodwill
for the United Kingdom operations.
Page 76
Aukett Swanke Group Plc
The net book value of goodwill is allocated to the Group’s cash generating units (“CGU”) as
follows:
At 1 October 2020
Addition
Exchange differences
At 30 September 2021
Disposal
Impairment
Exchange differences
At 30 September 2022
United
Kingdom
£’000
1,740
-
-
1,740
-
(1,740)
-
-
Turkey
Middle
East
£’000
£’000
26
-
(4)
22
-
(12)
(10)
-
626
9
(27)
608
(608)
-
-
-
13
Other intangible assets
Group
Trade
name
£’000
Customer
relationships
£’000
Order
book
£’000
Trade
licence
£’000
Cost
At 1 October 2020
Disposal
Exchange differences
At 30 September 2021
Disposal
Exchange differences
At 30 September 2022
Amortisation
At 1 October 2020
Disposal
Impairment
Charge
Exchange differences
At 30 September 2021
Disposal
Impairment
Charge
Exchange differences
At 30 September 2022
Net book value
At 30 September 2022
At 30 September 2021
At 1 October 2020
672
-
(17)
655
(21)
56
690
169
-
236
25
(3)
427
(21)
-
13
61
480
210
228
503
373
-
(19)
354
(183)
(11)
160
259
-
13
26
(13)
285
(125)
-
11
(11)
160
-
69
114
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
76
-
(3)
73
(73)
-
-
40
-
-
8
(2)
46
(50)
-
4
-
-
-
27
36
210
324
653
Amortisation is included in other operating expenses in the consolidated income statement.
Page 77
Total
£’000
2,392
9
(31)
2,370
(608)
(1,752)
(10)
-
Total
£’000
1,121
-
(39)
1,082
(277)
45
850
468
-
249
59
(18)
758
(196)
-
28
50
640
Aukett Swanke Group Plc
Disposal
The disposal in the year related to the sale of JRHP in April 2022.
Impairment
The prior year impairment of £249k related to SCL following the Group’s decision to restructure
the UAE business, SCL ongoing contracts were reassigned into JRHP, with new work being
contracted by JRHP, and the remaining licences held by SCL being allowed to expire.
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. The SHC trade name has a remaining amortisation period of 17 years.
The SCL trade name was fully impaired in the prior year.
Customer relationships
The customer relationships were acquired as part of the acquisition of SHC in December 2013,
on the acquisition of 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 were amortised over a 7 year period which ended in December 2020. The
customer relationships acquired in June 2015 were disposed of in the year with the sale of
JRHP. The customer relationships acquired in February 2016 relating to SCL were impaired in
the prior year.
Trade licence
The trade licence was acquired as part of the acquisition of JRHP in June 2015. This
represented 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. The residual balance was disposed of in the current year with the sale of
JRHP.
Page 78
Aukett Swanke Group Plc
14
Property, plant & equipment
Group
Cost
At 1 October 2020
Additions
Disposals
Exchange differences
At 30 September 2021
Additions
Disposals
Exchange differences
At 30 September 2022
Depreciation
At 1 October 2020
Charge
Disposals
Exchange differences
At 30 September 2021
Charge
Disposals
Exchange differences
At 30 September 2022
Net book value
At 30 September 2022
At 30 September 2021
At 1 October 2020
Company
Cost
At 1 October 2021
Additions
At 30 September 2022
Depreciation
At 1 October 2021
Charge
At 30 September 2022
Net book value
At 30 September 2022
At 1 October 2021
Leasehold
improvements
£’000
Furniture &
equipment
£’000
14
-
-
(3)
11
-
-
(5)
6
14
-
-
(3)
11
-
-
(5)
6
-
-
-
1,606
33
(885)
(21)
733
48
(244)
(5)
532
1,334
129
(871)
(14)
578
97
(207)
(5)
463
69
155
272
Furniture &
equipment
£’000
17
-
17
6
4
10
7
11
Total
£’000
1,620
33
(885)
(24)
744
48
(244)
(10)
538
1,348
129
(871)
(17)
589
97
(207)
(10)
469
69
155
272
Total
£’000
17
-
17
6
4
10
7
11
Page 79
Aukett Swanke Group Plc
15
Leases
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 24).
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.
Page 80
Aukett Swanke Group Plc
When the Group renegotiates the contractual terms of a lease with the lessor, the accounting
depends on the nature of the modification:
-
-
-
if the renegotiation results in one or more additional assets being leased for an amount
commensurate with the standalone price for the additional rights-of-use obtained, the
modification is accounted for as a separate lease in accordance with the above policy;
in all other cases where the renegotiated increases the scope of the lease (whether
that is an extension to the lease term, or one or more additional assets being leased),
the lease liability is remeasured using the discount rate applicable on the modification
date, with the right-of-use asset being adjusted by the same amount;
if the renegotiation results in a decrease in the scope of the lease, both the carrying
amount of the lease liability and right-of-use asset are reduced by the same proportion
to reflect the partial of full termination of the lease with any difference recognised in
profit or loss. The lease liability is then further adjusted to ensure its carrying amount
reflects the amount of the renegotiated payments over the renegotiated term, with the
modified lease payments discounted at the rate applicable on the modification date.
The right-of-use asset is adjusted by the same amount.
For contracts that both convey a right to the Group to use an identified asset and require
services to be provided to the Group by the lessor, the Group has elected to account for the
entire contract as a lease, i.e. it does allocate any amount of the contractual payments to, and
account separately for, any services provided by the supplier as part of the contract.
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 expose the Group
to excessive risk. Typically factors considered in deciding to negotiate a break clause include:
the length of the lease term;
the economic stability of the environment in which the property is located; and
-
-
- whether the location represents a new area of operations for the Group.
At 30 September 2022 the leases recognised do not include any break clauses.
Page 81
Aukett Swanke Group Plc
Right-of-use Assets
At 1 October 2020
Amortisation
At 30 September 2021
Additions
Amortisation
At 30 September 2022
Lease liabilities
At 1 October 2020
Additions
Interest expense
Lease payments
At 30 September 2021
Additions
Interest expense
Lease payments
At 30 September 2022
Land and
buildings
£’000
Restoration
costs
£’000
Leasehold
improvements
£’000
2,478
(324)
2,154
-
(324)
1,830
166
(22)
144
-
(22)
122
Land and
buildings
£’000
Leasehold
improvements
£’000
3,137
-
83
(464)
2,756
-
72
(464)
2,364
207
-
8
(82)
133
-
4
(82)
55
Total
£’000
2,929
(383)
2,546
23
(385)
285
(37)
248
23
(39)
232
2,184
Total
£’000
3,344
-
91
(546)
2,889
-
76
(546)
2,419
£’000
66
6
-
11
Short-term lease expense
Low value lease expense
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:
Lease liabilities
At 30 September 2022
At 30 September 2021
Up to 3
months
£’000
118
115
Between 3
and 12
months
£’000
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5
years
£’000
339
353
415
459
1,316
1,280
231
682
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.
Page 82
Aukett Swanke Group Plc
Not later than one year
Later than one year and not later than five years
Later than five years
Total
16
Investments
Company
Subsidiaries
Cost
At 1 October 2020
Addition
At 30 September 2021
Disposal
At 30 September 2022
Provisions
At 1 October 2020
Charge
At 30 September 2021
Charge
At 30 September 2022
Net book value
At 1 October 2020
At 30 September 2021
At 30 September 2022
£’000
10,177
23
10,200
(1,021)
9,179
6,862
81
6,943
180
7,123
3,315
3,257
2,056
2022
£’000
44
-
-
44
2021
£’000
74
-
-
74
Joint
ventures
£’000
Associate
Total
£’000
£’000
21
-
21
-
21
-
-
-
-
-
21
21
21
12
-
12
-
12
-
-
-
-
-
12
12
12
10,210
23
10,233
(1,021)
9,212
6,862
81
6,943
180
7,123
3,348
3,290
2,089
The increase in cost of £23k during the prior year related to the acquisition of a further 5%
equity shareholding in JRHP.
The disposal in the year related to the disposal of the investment in JRHP (note 11).
A provision for impairment of £180k (2021: £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 its balance sheet.
The current net book values of the investments in subsidiaries is £2,056k (2021: £3,257k) after
charges made in the current year, which is larger than the net assets of the consolidated
statement of financial position of £401k (2021: £3,067k). This is primarily due to the Company’s
cost of investment in the UK operations (Aukett Swanke Limited and Veretec Limited) being
higher than the Group’s carrying value of Goodwill and other intangible assets in these entities.
The net book values are supported by the value in use calculations.
Page 83
Aukett Swanke Group Plc
An annual impairment test is performed over cash generating units (‘CGUs’) of the Group. The
UK operations (Aukett Swanke Limited and Veretec Limited) are considered to be one CGU.
The recoverable amount of a CGU 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 in the discounted cash flow projections for the United Kingdom operation
are:
•
•
•
the future level of revenue, set at a compound growth rate of 11.30% (2021: 8.31%) over
the next five years – which is based on two years of budgeted revenue targets, with
following years assuming annualised inflation of earnings (and costs) using a CPI
assumption of 9.30% based on the Nov-22 annualise UK CPI index.
long term growth rate - which has been assumed to be 1.5% (2021: 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 18.32% (2021: 11.34%).
Based on the discounted cash flow projections, the recoverable amount of the UK CGU is
estimated to exceed carrying values by £4,475k (261%). An 7% fall in all future forecast
revenues (applied as a smooth reduction to the compound growth rate noted above) without a
corresponding reduction in costs in the UK CGU, or an increase in the discount rate to over
69%, would result in carrying amounts exceeding their recoverable amount. A decrease in the
effective compound growth rate of revenue to 9.50% instead of the 11.30% 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 the
investment remains recoverable despite this sensitivity given the conservative nature of the
underlying forecasts prepared.
Page 84
Aukett Swanke Group Plc
Subsidiary operations
The following are the subsidiary undertakings at 30 September 2022:
Name
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
Country of
incorporation and
registered office
address
(see table below)
Proportion
of ordinary equity
held
2022
2021
Nature of business
(A)
(A)
(A)
(A)
(B)
(C)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
100%
100%
100%
100%
100%
0%
100%
100%
100% Architecture & design
100% Architecture & design
100% Architecture & design
100% Architecture & design
100% Architecture & design
100% Architecture & design
100% Architecture &
Engineering
100% Architecture & design
100%
100% Non-trading
100%
100%
0%
100%
100%
100%
100%
100%
100%
100%
100% Dormant
100% Dormant
100% Dormant
100% Dormant
100% Dormant
100% Dormant
100% Dormant
100% Dormant
100% Dormant
100% 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 the
operation is no longer undertaking new work.
John R Harris & Partners Limited (JRHP) is incorporated in Cyprus and operates principally in
the Middle East. The group’s full shareholding was sold in April 2022.
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 JRHP prior to the sale of JRHP.
Page 85
Aukett Swanke Group Plc
The UAE domiciled branches are consolidated into the Group principally based on profit sharing
agreements in place.
Interest in associate and joint ventures
Set out below are the associate and joint ventures of the Group as at 30 September 2022. 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)
Proportion
of ordinary
equity held
Nature of
relationship
Measure-
ment
method
Aukett + Heese Frankfurt
GmbH
Aukett sro (liquidated)
Aukett + Heese GmbH
(D)
(E)
(F)
2022 2021
50%
50%
Joint venture Equity
0%
25%
50%
25% Associate
Joint venture 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
England & Wales
Turkey
Cyprus
Germany
Czech Republic
Germany
Registered office address
10 Bonhill Street, London, EC2A 4PE, United Kingdom
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
17
Investment in associate
As disclosed in note 16, 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
2022
£’000
278
6,229
6,507
2021
£’000
289
4,693
4,982
(3,465)
(3,465)
(2,635)
(2,635)
3,042
2,347
Page 86
Aukett Swanke Group Plc
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
2022
£’000
2,347
1,139
86
(531)
3,041
25%
760
760
2022
£’000
12,198
(2,861)
9,337
(7,708)
1,629
(490)
1,139
86
1,225
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
The Group received dividends of £126,000 after deduction of German withholding taxes (2021:
£395,000) from Aukett + Heese GmbH. The principal risks and uncertainties associated with
Aukett + Heese GmbH are the same as those detailed within the Group’s Strategic Report.
18
Investments in joint ventures
Frankfurt
As disclosed in note 16, the Group owns 50% of Aukett + Heese Frankfurt GmbH which is
based in Frankfurt, Germany.
At 1 October 2020
Share of profits
Dividends paid
Exchange differences
At 30 September 2021
Share of profits
Dividends paid
Exchange differences
At 30 September 2022
£’000
292
65
(142)
(14)
201
40
-
6
247
The Group received dividends of £nil after deduction of German withholding taxes (2021:
£135,000) 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.
Page 87
Aukett Swanke Group Plc
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
2022
£’000
11
369
380
(133)
(133)
247
2022
£’000
824
(271)
553
(494)
59
(19)
40
2021
£’000
12
288
300
(99)
(99)
201
2021
£’000
919
(267)
652
(541)
111
(46)
65
The principal risks and uncertainties associated with Aukett + Heese Frankfurt GmbH are the
same as those detailed within the Group’s Strategic Report.
Prague
As disclosed in note 16, the Group owned 50% of Aukett sro which is based in Prague, Czech
Republic. The final liquidation of this entity was completed during the year and a final distribution
received.
At 1 October 2020
Share of losses
Exchange differences
At 30 September 2021
Share of losses
Liquidation dividend distribution paid
Exchange differences
At 30 September 2022
£’000
25
(16)
(1)
8
(1)
(7)
-
-
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
2022
£’000
2021
£’000
-
-
-
-
-
11
11
(3)
(3)
8
Page 88
Aukett Swanke Group Plc
Revenue
Sub consultant costs
Revenue less sub consultant costs
Operating costs
Loss before tax
Taxation
Loss after tax
19
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
2022
£’000
-
-
-
(1)
(1)
-
(1)
2022
£’000
2,514
(199)
2,315
500
-
-
478
3,293
2021
£’000
165
(78)
87
(103)
(16)
-
(16)
2021
£’000
3,215
(272)
2,943
385
22
99
526
3,975
The corporate tax receivable of £99k relates to cash receivable from UK R&D tax claims.
Company
Amounts due after more than one year
Amounts owed by associate and joint ventures
Other financial assets at amortised cost
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
2022
£’000
2021
£’000
-
184
184
24
163
-
46
17
250
434
5
-
5
5
381
17
-
46
449
454
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.
Page 89
Aukett Swanke Group Plc
During the year, the Company made provisions totalling £298k (2021: £1,733k) against
amounts owed by subsidiaries. These are amounts owed by Aukett Fitzroy Robinson
International Limited, Aukett Swanke Architectural Design Limited and SCL. 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.
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 2022. 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 have been material in prior years,
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 £73k compared to the prior year, primarily due to the
UAE entities formally writing off old debtors which previously had carried an impairment
allowance, partially offset by new provisions being made against uncertain remaining debtor
balances as the Group continues the process of discontinuing the operations of the remaining
UAE entities. Impairment allowances as a percentage of gross trade receivables has therefore
decreased to 7.9% (2021: 8.5%).
The loss allowance for the Middle East operating segment as at 30 September 2022 (excluding
additional loss allowances measured on a case-by-case basis) was determined as follows for
both trade receivables and contract assets:
Whilst the Middle East operations of Aukett Fitzroy Robinson International Limited and Aukett
Swanke Architectural Design Limited have been in the process of closure as at 30 September
2022 there remained just 2 trade receivable balances to collect, which were collected shortly
after the year end. As at 30 September 2022 the loss allowance was applied to trade
receivables and contract assets in SCL.
Page 90
Aukett Swanke Group Plc
30 September 2022 Current
Expected loss rate
(%)
Gross carrying
amount (£’000)
Loss allowance
(£’000) through
CSOFP
2%
27
-
More
than 30
days
past due
More
than 60
days
past due
More
than 90
days
past due
1-30 days
past due
Total
2%
4%
9%
12%
-
-
-
-
-
-
34
61
4
4
The comparative loss allowance for the Middle East operating segment as at 30 September
2021 was:
30 September 2021 Current
Expected loss rate
(%)
Gross carrying
amount (£’000)
Loss allowance
(£’000) through
CSOFP
611
2%
10
More
than 30
days
past due
More
than 60
days
past due
More
than 90
days
past due
1-30 days
past due
Total
2%
136
3%
112
6%
65
10%
575
1,499
3
4
4
58
79
The loss allowance for the Middle East operating segment as at 30 September 2022 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 £5k
arises which is taken through the foreign currency translation reserve.
Opening loss allowance provision as at 1 October 2021
Loss allowance provision
Disposal of JRHP
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 2022 - calculated
under IFRS 9
Contract
assets
£’000
Trade
receivables
£’000
6
-
(6)
-
-
24
24
74
(38)
(32)
-
4
195
199
Page 91
Aukett Swanke Group Plc
The loss allowances decreased by £70k to £4k for trade receivables and decreased by £6k to
£nil for contract assets during the year to 30 September 2022.
A further allowance for impairment of trade receivables and contract assets is established on a
case-by-case basis amounting to £195k at 30 September 2022 and £198k at 30 September
2021 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 1 October 2020
Loss allowance provision
the
to
Charged
additional case by case provisions
Allowance utilised
Exchange differences
At 30 September 2021
income statement based on
to
Loss allowance provision
Disposal of JRHP
Charged
the
additional case by case provisions
Allowance written-off
Exchange differences
At 30 September 2022
income statement based on
£’000
1,031
(38)
198
(865)
(54)
272
(38)
(32)
133
(162)
26
199
Page 92
Aukett Swanke Group Plc
20
Trade and other payables
Group
Amounts due after more than one year
Amounts owed to associate and joint venture
Total amounts due after more than one year
Amounts due within one year
Trade payables
Other taxation and social security
Other payables
Accruals
Total amounts due within one year
Total
Company
Amounts due after more than one year
Amounts owed to associate and joint venture
Total amounts due after more than one year
Amounts due within one year
Trade payables
Amounts owed to subsidiaries
Other taxation and social security
Other payables
Accruals
Total amounts due within one year
Total
See note 34 for further details of the amounts due to subsidiaries.
21
Borrowings
Group
Secured bank overdrafts
Secured bank loan
Total borrowings
Amounts due for settlement within 12 months
Current liability
Amounts due for settlement between one and two years
Amounts due for settlement between two and five years
Non current liability
Total borrowings
2022
£’000
44
44
1,354
515
101
1,199
3,169
3,213
2022
£’000
44
44
58
1,212
4
28
292
1,594
1,638
2022
£’000
232
417
649
482
482
167
-
167
649
2021
£’000
-
-
2,112
568
103
964
3,747
3,747
2021
£’000
-
-
44
1,551
32
31
92
1,750
1,750
2021
£’000
-
500
500
83
83
250
167
417
500
Page 93
Aukett Swanke Group Plc
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
2022
£’000
417
417
250
250
167
-
167
417
2021
£’000
500
500
83
83
250
167
417
500
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.
22
Analysis of net (deficit) / funds
Group
Cash at bank and in hand
Secured bank overdrafts (note 21)
Cash and cash equivalents
Secured bank loan (note 21)
Net (deficit)/funds
2022
£’000
28
(232)
(204)
(417)
(621)
2021
£’000
515
-
515
(500)
15
Page 94
Aukett Swanke Group Plc
23
Deferred tax
Group
At 1 October 2020
Income statement
Exchange differences
At 30 September 2021
Income statement
Exchange differences
At 30 September 2022
Group
Deferred tax assets
Deferred tax liabilities
Net deferred tax balance
Tax
depreciation
on plant and
equipment
£’000
43
(10)
-
33
4
1
38
Trading
losses
£’000
185
45
-
230
42
1
273
Other
temporary
differences
£’000
(61)
(1)
-
(62)
(1)
-
(63)
2022
£’000
281
(33)
248
Total
£’000
167
34
-
201
45
2
248
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.
Page 95
Aukett Swanke Group Plc
24
Provisions
Group
At 1 October 2020
Utilised
Charged to the income statement
Exchange differences
At 30 September 2021
Utilised
Charged to the income statement
On disposal of subsidiary
Exchange differences
At 30 September 2022
Property lease provision
Property
lease
provision
£’000
210
Employee
benefit
obligations
£’000
782
-
-
-
210
-
-
-
-
210
(213)
92
(39)
622
(296)
78
(368)
3
39
Total
£’000
992
(213)
92
(39)
832
(296)
78
(368)
3
249
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.
As at 30 September 2022 the Group no longer employed any staff within its Middle East
subsidiaries. The Employee benefit obligation provision relating to Middle East subsidiaries as
at 30 September 2022 is therefore £nil. The balance of termination payments due to former
employees unpaid as at year end is recognised as a current liability included in trade and other
payables (note 20).
Page 96
Aukett Swanke Group Plc
The key actuarial assumptions used in the calculation are detailed below:
Combined average length of service
Discount rate
Salary growth rate
2022
N/A
N/A
N/A
2021
5 years
1.74%
2.2%
The Group determined discount rates on the basis of current yields on 5 year high quality
corporate bonds in the same currency as the liabilities. Forecast consumer price inflation (“CPI”)
in the region has been used as a proxy for forecast salary growth.
The sensitivity of the employee benefit obligation to changes in assumptions is set out below.
The effects of a change in assumption are weighted proportionally to the total plan obligations
to determine the total impact for each assumption presented.
Combined average length of service
Salary growth rate
Discount rate
Change in
assumption
1 year
1%
1%
Impact on employee benefit
obligation
Increase in
assumption
N/A
N/A
N/A
Decrease in
assumption
(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.
25
Share capital
Group and Company
Allocated, called up and fully paid
165,213,652 (2021: 165,213,652) ordinary shares of 1p each
At 1 October 2020
No changes
At 30 September 2021
No changes
At 30 September 2022
2022
£’000
2021
£’000
1,652
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.
After the year end, the acquisition of TFG resulted in an increase in the share capital as
disclosed in note 35.
Page 97
Aukett Swanke Group Plc
26
Share options
The Company has granted options over its Ordinary Shares to Group employees as follows:
At 1
October
2021
Number
500,000
1,000,000
1,000,000
2,500,000
Granted
6 March
2017
24 Aug
2020
29 Jun
2021
Total
Granted
Lapsed
Number Number
At 30
September
2022
Number
Exercise
price
Pence
Earliest
exercisable
date
Latest
exercisable
date
-
-
-
-
-
-
-
-
500,000
4.25
1,000,000
3.60
1,000,000
1.60
2,500,000
6 March
2019
24 Aug
2022
29 Jun
2023
6 March
2023
24 Aug
2026
29 Jun
2027
The 500,000 share options granted on 6 March 2017 related to Beverley Wright, a former
Director of the Company and after the year end lapsed on 6 March 2023.
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 34.
After the year end, the acquisition of TFG resulted in a further 8,400,000 share options being
granted as disclosed in note 35.
27
Cash generated from operations
Group
Loss before tax
Finance costs
Share of results of associate and joint ventures
Intangible amortisation
Intangible impairment
Depreciation
Goodwill impairment
Amortisation of right-of-use assets
Profit on disposal of property, plant & equipment
Decrease/(increase) in trade and other receivables
(Decrease) / increase in trade and other payables
Change in provisions
Unrealised foreign exchange differences
Net cash expended by operations
2022
£’000
(2,327)
95
(327)
28
-
97
1,752
385
-
594
(815)
(586)
-
(1,104)
2021
£’000
(1,531)
94
(166)
59
249
129
-
383
(2)
(843)
892
(160)
-
(896)
Page 98
Aukett Swanke Group Plc
Company
Loss before income tax
Dividends receivable
Finance costs
Depreciation
Provision on investments
Loss on disposal of subsidiary
Write off of amounts owed by subsidiary on disposal
Deferred consideration on disposal
Decrease in trade and other receivables
Decrease in trade and other payables
Unrealised foreign exchange differences
Net cash expended by operations
2022
£’000
(783)
(133)
9
4
180
418
(479)
163
20
(112)
(9)
(722)
2021
£’000
(1,179)
(528)
1
4
81
-
-
-
1,499
(579)
(1)
(702)
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
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 2022
- Interest accrued in period
At 30 September 2022
Non-
current
loans and
borrowings
£’000
2,805
Current
loans and
borrowings
£’000
694
-
-
500
-
-
(538)
-
2,767
-
-
-
-
-
(638)
-
2,129
(155)
(1)
-
(546)
-
538
92
622
(83)
(9)
-
(546)
-
638
85
707
Total
£’000
3,499
(155)
(1)
500
(546)
-
-
92
3,389
(83)
(9)
-
(546)
-
-
85
2,836
Page 99
Aukett Swanke Group Plc
Company
At 1 October 2021
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
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 2022
- Interest accrued in period
At 30 September 2022
Non-
current
loans and
borrowings
£’000
-
Current loans
and borrowings
£’000
155
-
-
500
-
(83)
-
417
-
-
-
-
(250)
-
167
(155)
(1)
-
-
83
1
83
(83)
(9)
-
-
250
9
250
Total
£’000
155
(155)
(1)
500
-
-
1
500
(83)
(9)
-
-
-
9
417
Page 100
Aukett Swanke Group Plc
28
Financial instruments
Risk management
The Company and the Group hold financial instruments principally to finance their operations
or as a direct consequence of their business activities. The principal risks considered to arise
from financial instruments are foreign currency risk and interest rate risk (market risks),
counterparty risk (credit risk) and liquidity risk. Neither the Company nor the Group trade in
financial instruments.
Categories of financial assets and liabilities
Group
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
2022
£’000
2,315
1,119
500
23
-
28
3,985
(1,354)
(101)
(1,199)
(2,419)
(649)
(5,722)
2021
£’000
2,943
982
385
33
22
515
4,880
(2,112)
(103)
(964)
(2,889)
(500)
(6,568)
Net financial instruments
(1,737)
(1,688)
Company
Net trade receivables
Amounts owed by subsidiaries
Amount owed by associate and joint ventures
Accrued income
Other financial assets at amortised cost
Cash at bank and in hand
Loans and receivables measured at amortised cost
Trade payables
Amounts owed to subsidiaries
Amount owed by associate and joint ventures
Other payables
Accruals
Secured bank loan
Financial liabilities measured at amortised cost
2022
£’000
24
163
-
11
230
457
885
(58)
(1,212)
(44)
(28)
(292)
(417)
(2,051)
2021
£’000
5
381
22
33
-
211
652
(44)
(1,551)
-
(31)
(92)
(500)
(2,218)
Net financial instruments
(1,166)
(1,566)
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.
Page 101
Aukett Swanke Group Plc
Collateral
As disclosed in note 21 the bank loan and overdraft (undrawn at 2021 and £232k at 2022 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
2022
£’000
2,641
349
2021
£’000
3,612
614
Other receivables in the consolidated statement of financial position include a £238k rent
security deposit (2021: £230k) 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.
29
Foreign currency risk
The Group’s operations seek to contract with customers and suppliers in their own functional
currencies to minimise exposure to foreign currency risk, however, for commercial reasons
contracts are occasionally entered into in foreign currencies.
Where contracts are denominated in other currencies the Group usually seeks to minimise net
foreign currency exposure from recognised project related assets and liabilities by using foreign
currency denominated overdrafts.
The Group does not hedge future revenues from contracts denominated in other currencies
due to the rights of clients to suspend or cancel projects. The Board has taken a decision not
to hedge the net assets of the Group’s overseas operations.
Financial instruments which are denominated in a currency other than the functional currency
of the entity by which they are held are as follows:
Group
Czech Koruna
EU Euro
Turkish Lira
UAE Dirham
UK Sterling
US Dollar
Net financial instruments held in foreign currencies
Company
Czech Koruna
EU Euro
Turkish Lira
US Dollar
UAE Dirham
Net financial instruments held in foreign currencies
2022
£’000
-
45
16
2,283
(12)
54
2,386
2022
£’000
-
46
16
18
113
193
2021
£’000
5
166
-
2,046
(7)
3
2,213
2021
£’000
5
130
-
3
254
392
Page 102
Aukett Swanke Group Plc
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
2022
Profit
£’000
29
18
Equity
£’000
(29)
-
2021
Profit
£’000
39
39
Equity
£’000
101
-
The following foreign exchange gains / (losses) arising from financial assets and financial
liabilities have been recognised in the income statement:
Group
Company
30
Counterparty risk
Group
2022
£’000
258
280
2021
£’000
(45)
(47)
No collateral is held in respect of any financial assets and therefore the maximum exposure to
credit risk at the date of the statement of financial position is the carrying value of financial
assets shown in note 28.
Counterparty risk is only considered significant in relation to trade receivables, amounts due
from customers for contract work, other receivables and cash and cash equivalents.
The ageing of trade receivables against which an IFRS 9 impairment loss allowance has been
made, as the directors consider their recovery is probable, was:
Not overdue
Between 0 and 30 days overdue
Between 30 and 60 days overdue
Greater than 60 days overdue
Total
Not overdue
Between 0 and 30 days overdue
Between 30 and 60 days overdue
Greater than 60 days overdue
Total
Receivables
pre-allowance
2022
£’000
1,100
661
283
275
2,319
Receivables
pre-allowance
2021
£’000
1,210
923
143
741
3,017
loss
allowance
£’000
-
-
-
(4)
(4)
loss
allowance
£’000
(3)
(3)
(4)
(64)
(74)
Receivables
post-allowance
2022
£’000
1,100
661
283
271
2,315
Receivables
post-allowance
2021
£’000
1,207
920
139
677
2,943
The processes undertaken when considering whether a trade receivable may be impaired are
set out in notes 2 and 19.
Page 103
Aukett Swanke Group Plc
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 19.
The concentration of counterparty risk within the £3,434k (2021: £3,925k) 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.
Largest exposure
Second largest exposure
Third largest exposure
2022
£’000
640
295
252
2021
£’000
646
240
240
The Group’s principal banker is Coutts & Co, a member of NatWest Group.
At 30 September 2022 the largest exposure to a single financial institution of the Group’s cash
and cash equivalents held by various Group entities was represented by a net overdrawn
position of £229k (£3k cash less £232k overdrafts) with Coutts & Co. (2021: the largest
exposure to a single financial institution represented 54% held with Coutts & Co.).
Company
The Company only has £24k trade receivables (2021: £5k) 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 33.
31
Interest rate risk
Group
Rent deposit
Secured bank loans
Secured bank overdrafts
Interest bearing financial instruments
Company
Secured bank loans
Interest bearing financial instruments
2022
£’000
278
(417)
(232)
(371)
2022
£’000
(417)
(417)
2021
£’000
278
(500)
-
(222)
2021
£’000
(500)
(500)
The property rent deposit earns variable rates of interest based on short-term interbank lending
rates.
Page 104
Aukett Swanke Group Plc
Cash and cash equivalents are generally held in instant access current accounts and 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
32
Liquidity risk
2022
£’000
(4)
(4)
2021
£’000
(2)
(5)
The Group’s cash balances are held at call or in deposits with very short maturity terms.
At 30 September 2022 the Group had £850,000 (2021: £850,000) of gross borrowing facility
and £250,000 net borrowing facility (2021: £500,000) under its United Kingdom bank overdraft
facility. In November 2021 Coutts & Co renewed the overdraft facility at £500,000. The Group
then agreed with Coutts & Co to reduce the net overdraft facility to £250,000 from February
2022 onwards. In November 2022 Coutts & Co renewed the overdraft facility maintaining the
net overdraft facility at £250,000. It is now next due for review in November 2023.
The maturity analysis of financial liabilities, including expected future charges through the
Income Statement is as shown below.
Group
Borrowings
Lease
liabilities
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
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
2022
£’000
90
263
169
-
522
(22)
500
503
171
-
-
674
(25)
649
£’000
547
522
1,394
697
3,160
(271)
2,889
522
465
1,393
232
2,612
(193)
2,419
Other
financial
liabilities
£’000
3,179
-
-
-
3,179
-
3,179
2,654
44
-
-
2,698
-
2,698
Total
£’000
3,816
785
1,563
697
6,861
(293)
6,568
3,679
680
1,393
232
5,984
(218)
5,766
Lease liabilities includes the finance lease on leasehold improvements and the land and
buildings office lease (see note 15).
Page 105
Aukett Swanke Group Plc
Company
Borrowings
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
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
2022
£’000
90
263
169
522
(22)
500
Borrowings
£’000
271
171
-
442
(25)
417
Other
financial
liabilities
£’000
1,718
-
-
1,718
-
1,718
Other
financial
liabilities
£’000
1,590
44
-
1,634
-
1,634
Total
£’000
1,808
263
169
2,240
(22)
2,218
Total
£’000
1,861
215
-
2,076
(25)
2,051
33
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 21. At 30 September 2022 the overdrafts of
its United Kingdom subsidiaries guaranteed by the Company totalled £729,000 (2021: £nil).
The Company and certain of its United Kingdom subsidiaries are members of a group for Value
Added Tax (VAT) purposes. At 30 September 2022 the net VAT payable balance of those
subsidiaries was £285,000 (2021: £218,000).
At the year end, one of the Group’s Middle East subsidiaries had outstanding letters of
guarantee totalling £74,000 (2021: £105,000). These guarantees are secured by matching cash
on deposit, which is included within trade and other receivables.
In common with other firms providing professional services, the Group is subject to the risk of
claims of professional negligence from clients. The Group maintains professional indemnity
insurance in respect of these risks but is exposed to the cost of excess deductibles on any
successful claims. The directors assess each claim and make accruals for excess deductibles
where, on the basis of professional advice received, it is considered that a liability is probable.
The Group has contractual commitments totalling £nil (2021: £900) 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 £nil (2021: £900).
Page 106
Aukett Swanke Group Plc
34
Related party transactions
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
2022
£’000
1,235
110
1,345
2022
£’000
613
43
656
2021
£’000
1,301
106
1,407
2021
£’000
600
43
643
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 £46,000 (2021: £47,000).
Dividends of £nil (2021: £135,000) 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 (2021: £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 £85,000 (2021: £81,000).
Dividends of £126,000 (2021: £393,000) were received from Aukett + Heese GmbH during the
year. The Group received a loan from Aukett + Heese GmbH amounting to £44,000 (2021:
£nil). The amount owed by the Group to Aukett + Heese GmbH at 30 September 2022 was
£44,000 (2021: £nil).
As disclosed in note 16, the Group owns 50% of Aukett + Heese Frankfurt GmbH and 25% of
Aukett + Heese GmbH. The remaining 50% of Aukett + Heese Frankfurt GmbH and 75% of
Aukett + Heese GmbH are owned by Lutz Heese, a former director of the Company.
The Group charged name licence fees and management fees to Aukett sro, a joint venture in
which the Group had a 50% interest until the joint venture was liquidated in the year. During the
year, charges of £nil (2021: £3,000) were made to Aukett sro in respect of these services.
Separately, Aukett sro owed the Group and the Company £nil as at 30 September 2022 (2021:
£5,000) 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.
Transactions and balances with subsidiaries
The names of the Company’s subsidiaries are set out in note 16.
The Company made management charges to its subsidiaries for management services of
£660,000 (2021: £992,000) and paid charges to its subsidiaries for office accommodation and
other related services of £84,000 (2021: £91,000).
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Aukett Swanke Group Plc
At 30 September 2022 the Company was owed £163,000 (2021: £381,000) by its subsidiaries
and owed £1,212,000 (2021: £1,551,000) 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.
35
Post balance sheet event
On the 20 March 2023 the Group acquired 100% of the voting equity instruments in Torpedo
Factory Group Limited, an audio visual and stage technology provider to organisations in the
UK and Europe.
The principal reason for this acquisition, is to become a master systems designer, integrator
and operator in the provision of smart buildings technology, in addition to developing the
Group’s core architecture businesses. Extending the Group’s offering to its clients to include
such smart solutions is expected to provide a competitive advantage to the Group’s core
business and to add new income streams.
The financial effects of this transaction have not been recognised at 30 September 2022. The
operating results and assets and liabilities of the acquired company will be consolidated from
20 March 2023.
As the acquisition was completed a short time before the authorisation date of these financial
statements, it was not practical to disclose the book value of the net assets acquired as at 20
March 2023. The following figures presented represent Torpedo Factory Group Limited
unaudited management accounts for 31 December 2022:
Goodwill
Property, plant and equipment
Other intangible assets
Loans and other financial assets
Inventories
Trade and other receivables
Net cash
Assets
Trade and other payables
Contract liabilities
Interest bearing loans and borrowings
Lease liabilities
Deferred tax liability
Liabilities
Total net assets
Provisional
31 Dec-22
£’000
679
3,501
78
243
285
1,524
1,138
7,448
1,824
79
2,718
300
125
5,046
2,402
Page 108
Aukett Swanke Group Plc
At the date of authorisation of these financial statements a detailed assessment of the fair value
of the identifiable net assets has not been completed.
Fair value of consideration paid
Consideration for the acquisition comprises:
i)
ii)
iii)
110,142,286 Ordinary Shares in Aukett Swanke Group Plc at an issue price of
2.55p based on the closing price of Aukett Swanke Group Plc shares on 1 March
2023.
Up to 3,631,124 additional consideration shares proposed to be issued to
participating TFG Option Holders, at an issue price of 2.55p.
8,400,000 share options in Aukett Swanke Group Plc exercisable at 1p. Fair value
calculated at 1.55p per share based on the closing price of Aukett Swanke Group
Plc shares on 1 March 2023.
Shares in Aukett Swanke Group Plc
Maximum number of additional consideration shares to be
issues to the participating option holders
Share options in Aukett Swanke Group Plc
Total acquisition cost
£’000
2,809
92
130
3,031
Whilst fair value adjustments will result in recognised goodwill of less than £629k, it is expected
that some goodwill will be recognised. The goodwill represents items, such as the assembled
workforce, which do not qualify as assets.
36
Corporate information
General corporate information regarding the Company is shown on page 2. The addresses of
the Group’s principal operations are shown on page 111. A description of the Group’s
operations and principal activities is given within the Strategic Report.
Page 109
Aukett Swanke Group Plc
Shareholder information
Listing information
The shares of Aukett Swanke Group Plc are listed on the Alternative Investment Market (AIM)
of the London Stock Exchange.
Tradable Instrument Display Mnemonic (TIDM formerly EPIC): AUK
Stock Exchange Daily Official List (SEDOL) code: 0061795
International Securities Identification Number (ISIN): GB0000617950
Share price
The Company’s share price is available from the website of the London Stock Exchange
(www.londonstockexchange.co.uk).
The Company’s mid-market share price is published daily in The Times and The Financial
Times newspapers.
Registrars
Enquiries relating to matters such as loss of a share certificate, dividend payments or
notification of a change of address should be directed to Equiniti who are the Company’s
Registrars at Aspect House, Spencer Road, Lancing, West Sussex, BN99 6DA - 0371 384 2030
(lines are open 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.
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.
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.
Page 110
Aukett Swanke Group Plc
Studio locations
10 Bonhill Street
London, EC2A 4PE
United Kingdom
T: +44 (0) 20 7843 3000
E: london@aukettswanke.com
Budapester Strasse 43
10787 Berlin
Germany
T: +49 (0) 30 230994 0
E: mail@aukett-heese.de
Gutleutstrasse 163
60327 Frankfurt am Main
Germany
T: +49 (0) 69 2475277 0
E: mail@aukett-heese-frankfurt.de
Esentepe Mahallesi Kore Şehitleri Caddesi
34/6 Deniz İş Hanı
34394 Zincirlikuyu
Istanbul
Turkey
T: +90 212 318 0400
E: istanbul@aukettswanke.com
1 Lonsdale Gardens
Tunbridge Wells
Kent, TN1 1NU
United Kingdom
T: +44 (0) 20 7843 3000
E: plcenquiries@aukettswanke.com
Page 111