Aukett Swanke Group Plc
Annual Report
For the year ended 30 September 2023
Registered number 02155571
Aukett Swanke Group Plc
Contents
Pages
Five year summary ................................................................................................................... 2
Corporate information ................................................................................................................ 2
Chairman’s statement ........................................................................................................... 3 - 4
Chief Executive’s Report .................................................................................................... 5 - 11
Financial Review ............................................................................................................... 12 - 20
Strategic report ................................................................................................................. 21 - 24
Board of Directors ............................................................................................................. 25 - 26
Directors’ report ................................................................................................................ 27 - 40
Statement of directors’ responsibilities .................................................................................... 41
Independent auditor’s report ............................................................................................. 42 - 50
Financial statements
Consolidated income statement ........................................................................................... 51
Consolidated statement of comprehensive income .............................................................. 52
Consolidated statement of financial position ........................................................................ 53
Company statement of financial position .............................................................................. 54
Consolidated statement of cash flows .................................................................................. 55
Company statement of cash flows ........................................................................................ 56
Consolidated statement of changes in equity ....................................................................... 57
Company statement of changes in equity ............................................................................ 58
Notes to the financial statements ................................................................................ 59 - 124
Shareholder information ........................................................................................................ 125
Studio locations ..................................................................................................................... 126
Page 1
Aukett Swanke Group Plc
Five year summary
Years ending 30 September
2023
£’000
2022
£’000
2021
£’000
2020
£’000
2019
£’000
Total revenues under management1
32,460
24,033
26,426
28,534
31,505
Revenue (continuing operations)
14,335
8,645
9,192
7,343
7,970
Revenue less sub consultant costs1
(continuing operations)
Trading profit/(loss) from continuing
operations
14,103
7,127
6,305
7,214
7,811
28
(72)
(595)
426
361
(Loss) / profit before tax
(341)
(2,327)
(1,531)
(46)
292
Basic earnings per share (p)
0.04
(1.38)
(0.69)
0.00
0.21
Net assets
3,373
401
3,067
4,374
4,514
Cash and cash equivalents2
430
(204)
515
992
1,145
Secured bank mortgage and loans
(2,570)
(417)
(500)
(155)
(325)
Net (deficit)/funds3
(2,140)
(621)
15
837
820
1Alternative performance measures, refer to pages 19-20 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 25)
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
Introduction
It is now 12 months since we embarked on our strategy to expand both our traditional core
architecture businesses and also to become a significant force in the provision of smart building
services.
In these financial statements we are pleased to set out our progress.
Strategy
Architecture
Aukett Swanke and Veretec are well respected names in their respective architectural design
and executive architecture markets. We are looking to grow each of these businesses both
organically through the recruitment of additional architects and by the acquisition of existing
architecture practices.
In particular we are looking to use our status as the UK’s only listed architecture group to provide
owners of suitable architecture practices with the opportunity to exit.
Smart buildings
We are also looking to become a leading provider of smart buildings services. Success here
would significantly extend the period during which the Group generates income over the life of
a building without the upfront investment required in staff and support services that are required
in our traditional architecture businesses.
In particular we are looking to introduce SaaS revenues from the provision of services delivered
by smart systems rather than just billing for staff on an hourly or project rate.
In the past 12 months as set out in greater detail in the Chief Executive’s report we have
completed four smart buildings related acquisitions, the most recent of which, completed in
March 2024, adds 13 staff and developed software providing SaaS revenues.
We have also joined a consortium led by a university spin-out company alongside industrial
partners and a number of UK university research teams, to work on an Innovate UK funded
project developing the use of Responsible Artificial Intelligence (AI) in building energy
management.
One year in and it is clear to us from the reaction from our market that we are on the right track
in seeking to expand the use of technology to the delivery of building related services.
Corporate actions
Over the past two years we have also taken steps to increase the Group’s profitability. Long
standing investments in overseas offices in the Middle East, Turkey and Prague where we did
not have the critical mass to make a difference, have been sold or closed. We have also been
able to cease all links with our former Russian activities, which were sold in 2019.
Our international investments are now limited to the Berlin and Frankfurt offices which continue
to thrive.
Board appointments
Over the past 12 months we have put in place a board to take the Group forward to its next
stage.
Page 3
Aukett Swanke Group Plc
Management team.
Nick Clark, who founded Torpedo Factory Group Limited (“TFG”) acquired in March 2023, was
appointed Chief Executive in April 2023. Freddie Jenner, who was the Finance Director at TFG,
was appointed Group Chief Operating Officer in June 2023. Jason Brameld, Technical Director
at TFG, serves as the Group’s Chief Technical Officer in a non-board role. Nick, Freddie and
Jason join Antony Barkwith, the Group’s long standing Group Finance Director, to form the core
senior executive team.
Non-executive directors
In April 2023 Tandeep Minhas was appointed to the board. She is a vastly experienced
corporate lawyer, being head of corporate finance at Taylor Wessing.
I am also pleased to report that Robert Fry, a noted architect and a long standing executive
director who served as Interim CEO until Nick Clark’s appointment when he became Deputy
Chairman has agreed to become a non-executive director following the completion of the 2024
AGM.
Trading
As set out more fully in the Chief Executive’s report and the Financial Review, the Group, for
the year ended 30 September 2023, before exceptional items returned to an overall profit with
each of the continuing business units making a contribution to central costs.
Stock Market conditions
As shareholders will be well aware, for some time now the market in smaller and growth
companies has failed to operate at anywhere near the levels seen in previous periods with
reduced liquidity generally, evidenced by low company valuations and an absence of new IPOs.
While we cannot choose the market conditions in which we seek to grow the Group’s value we
do recognise that at the current share price meaningful dilution to finance acquisitions would
only be justifiable for exceptional opportunities such as the Vanti acquisition completed in March
2024.
Groupwide share schemes
Shortly after the year end, the Group introduced a number of innovative employee share and
option schemes designed to encourage all staff to become shareholders. Interest from staff has
been encouraging with approximately 40% now signed up to make regular share purchases.
Outlook
The accompanying Chief Executive’s report and financial review provide details on trading in
the period under review and subsequently.
While the market for our traditional architecture businesses inevitably mirrors the uncertain UK
economy with potential financially related pauses on new developments, our leading brands
and the quality of our architecture stands us in good stead for these businesses continuing to
make a positive financial contribution to the Group as a whole.
The market however for smart buildings services looks more promising as competition is less
developed and once a building is up it needs to be managed.
We look forward to updating shareholders with our progress in the coming months.
Clive Carver
Chairman
27 March 2024
Page 4
Aukett Swanke Group Plc
Chief Executive’s Report
Introduction
I became Chief Executive in April 2023 and am pleased to present my first annual report, which
comes after twelve months of significant change in the scale and nature of the Group’s
activities, encompassing four acquisitions and two disposals.
In the first six months of the period under review the Group’s focus was on its core architecture
businesses and completing the acquisition of Torpedo Factory Group. In the second six months
and subsequently, we have been implementing our new strategy.
With the new management team now firmly bedded in and four completed acquisitions we have
made an encouraging start.
Our plan
Architecture
In the UK we have two established architecture businesses, Aukett Swanke, a traditional full
design business with roots going back to 1906, and Veretec, an executive architecture business
working with designers from other firms.
These businesses are well established in their chosen markets and our plan is to grow them
organically by the recruitment of additional architects, and by acquisition.
As the UK’s only listed architecture group we have a unique advantage in being able to use our
shares to fund the acquisition of successful architecture practices where the traditional exit for
owners of selling out to the next generation typically no longer exists.
Smart buildings
By contrast we are a new entrant in the provision of smart building services, but acquisitions
allow us to bring in new technology, proprietary software, relevant case studies and the staff
whose expertise delivered those case studies. In this manner we are able to demonstrate our
credentials in this new area, using the existing contacts of the architecture businesses to
accelerate our progress.
Our plan here is to become a leading provider of Smart Building services. Breaking this down
we plan to become:
• Smart Building Systems Designers
• Smart Building Systems Integrators
• Smart Building Systems Operators
We will do this via a buy and build strategy - but having completed four acquisitions our short
term focus will be getting our businesses sharing skills, resources, and technologies. We hope
the stock market will reward us for progress in this area, allowing us to consider further
acquisitions on better terms for our investors.
Commercial rationale for Smart Buildings
In contrast to a traditional architecture business, which has high fixed costs and where once
the project is completed there is no further income, under a Smart Buildings business model,
there is more scope for revenues that contractually recur over the lifetime of a building.
Technology is used to its utmost; rapid growth is achievable without the often time consuming
and expensive recruitment of additional staff; and short term fluctuations in economic activity
do not dictate customer buying decisions.
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Aukett Swanke Group Plc
Smart buildings integrate advanced technologies, data analytics, and automation to create
vibrant ecosystems. They optimise energy consumption, streamline operations, and
personalise experiences for occupants. By leveraging the Internet of Things (IoT) and artificial
intelligence (AI), smart buildings offer real-time monitoring, energy savings, improved comfort,
proactive maintenance, and cost reduction.
The challenge of both the architecture and system integration business models is that revenue
is project based. We need to continually sell new products just to stand still and typically need
to add more people and more working capital in order to grow. By contrast under a SaaS
business model customers sign up for long-term contracts, and typically renew when those
contracts expire.
Such revenues do however take time to build – because today’s order is only recognised as
revenue over many years. When a SaaS business makes a new sale, however, the run rate of
revenues increases. They have as a result become highly prized and valued by investors.
We believe our strong architecture market presence will be a great help in building meaningful
SaaS revenues from smart building software.
Acquisitions
Torpedo Factory Group Limited
In March 2023 we acquired Torpedo Factory Group Limited (“TFG”) an audio, visual and stage
technology systems integrator to organisations in the UK and Europe by way of a share for
share exchange, under which the shareholders of TFG were issued 110,142,286 shares then
representing 40% of the enlarged Group. The enlarged Group has also issued 8,400,000
options to two TFG staff exercisable at a price of 1p per share to replace TFG options that were
cancelled as part of the transaction. I know the TFG business well, having founded it in 1997,
and I joined your Group’s board on completion of the acquisition.
TFG is a technology systems integrator and services business operating in the UK and
continental Europe in two principal areas:
•
Intelligent Environments, which designs, installs and maintains integrated audio-visual
systems for corporate and public sector clients, primarily working directly with
commercial property occupiers but also with main contractors on construction fit-out
projects;
• Stage Technology, which creates and maintains technologically powerful systems for
a wide range of performance spaces – typically theatres, and drama spaces in
education settings.
It also included a Live Events business, which was sold to its management, as it was not core
to the new strategy.
Anders + Kern U.K. Limited
In July 2023 we acquired Anders + Kern U.K. Limited (“A+K”), a business that we have known
for some time, from SmartSpace Software PLC for a cash consideration of approximately
£515,000.
A+K distributes smart workplace systems. Its revenues are principally derived from the
provision of hardware, software, and installation services for room and desk booking systems,
and the provision of Internet of Things (“IoT”) sensors to monitor environmental and occupancy
data. The data created can be analysed using Artificial Intelligence (AI) to get meaningful
actionable insights to improve occupier experience within the built environment.
A+K retains its status as a distributor of SpaceConnect, SmartSpace Software's workspace
optimisation SaaS product.
Page 6
Aukett Swanke Group Plc
For the year ended 31 January 2023 SmartSpace reported A+K revenues of £2.09 million and
a trading loss before tax of £169,000. During that period it employed an average of 11 people,
though by the time of acquisition this had been reduced to 7.
ecoDriver Ltd
In October 2023 we acquired TR Control Solutions Limited (TRCS), a developer of energy
management software and provider of energy efficiency services. On acquisition TRCS
changed its name to ecoDriver Ltd (“ecoDriver”).
ecoDriver’s revenues are derived from the provision of its proprietary energy monitoring
software, energy efficiency consultancy services, and the provision of IoT sensors, meters and
other hardware to monitor environmental and energy usage data.
ecoDriver operates in a high growth business segment, which we believe should grow rapidly
as part of the Group, by accessing the Group's wide customer base and contacts, and utilising
the Group's operational delivery capabilities.
The acquisition gives us scope to develop the use of Artificial Intelligence (AI) in building
management by using AI to deliver scalable decision-making around energy usage in the built
environment.
The consideration was £360,450, comprising the issue to the vendors of 17,800,000 shares at
1.525p per share and £89,000 in cash, half of which was paid on completion with the remaining
half due 12 months later. The consideration shares are subject to a 12-month lock-in, followed
by an orderly market arrangement for a further 12 months.
In the few months since its acquisition ecoDriver has secured in excess of £300,000 of new
orders. This is equivalent to approximately 60% of its prior year revenue and confirms our belief
in its prospects as part of the wider Group.
Vanti
On 20 March 2024 we acquired the assets of Vanti, a widely respected smart building
consultancy, master systems integrator, and smart building software developer. 13 previous
Vanti staff have joined us and their client base has been hugely supportive. Vanti was previously
an audio visual systems integrator and their visionary approach saw them make an early
transition to the role of Master Systems Integrator (“MSI”). Their experience and their expertise
will help accelerate TFG’s journey, making the same transition but on a larger scale. The profits
from their MSI activities were used to develop two software products. One, Kahu, is a workplace
technology platform of the kind A+K distribute.
The second, Smart Core, is potentially transformational for our Group. Smart Core is a Building
Operating System. This controls a building’s systems, and provides for the appropriate sharing
of data between landlord, tenants, and users through APIs. Smart Core is in the early stages
of development, but has been deployed across several buildings in a number of different
countries. It is primarily used as an open source Community Edition, but an Enterprise Edition
has been developed and is ready to be marketed.
Smart Core can be sold either as a SaaS model, where the customer pays monthly or annually
over the long term, or a Capex licence model, where a one-off licence sale is made, with a
lower annual maintenance fee to cover support and upgrades. We see attractions in both areas
– Capex sales lend themselves well to the existing model of procuring and delivering a new
building, where a main contractor manages a sizeable capital outlay, and the building owner
wants to keep a competitively low service charge. The SaaS model works well for the retrofit
market (where ecoDriver specialises), and where a Building Operating System can more than
pay for itself through savings from running the building better, and from improved reporting
across an entire portfolio of properties, which may be running a wide variety of Building
Management Systems from a number of different legacy providers.
Page 7
Aukett Swanke Group Plc
Synergies
The ecoDriver software provides our architects with a solution to their client’s needs. Also of
note is that much of TFG Stage Technology’s installed client base is in the education sector, a
key target for ecoDriver’s products.
The Vanti acquisition multiplies the number of synergies. ecoDriver can potentially be used to
share information with Kahu to provide a richer tenant experience, and Kahu could provide
information to ecoDriver to offer insight into required energy usage. Our AI efforts can help
Smart Core with its building management. The smart building consultants employed alongside
the Vanti acquisition broaden the range of services our architects can provide, while our
architects ensure that smart building considerations are higher priority than has been the case
hitherto.
The trading year in review
Basis of inclusion
The year to 30 September 2023 includes a full year of trading from our architecture businesses,
but only six months from the Torpedo Factory Group businesses, and less than three months
from Anders+Kern.
In July 2023 we were pleased to note that The Architects’ Journal recognised our UK
Architecture activities at 48th place in their AJ100 list of UK architects by practice size, up from
70th place in 2022.
Aukett Swanke Limited – traditional full service architecture
Aukett Swanke worked on a number of notable projects during the year:
• Orchard Wharf is a River Thames fed 80,000 square feet logistics building with
additional residential and public realm targeting planning submission in April 2024.
• SafeStore is an agile new generation 15,000 square feet warehouse just south of
London Bridge targeting planning submission in May 2024.
• We have created a 18.2 hectare multi-level and multi-use intensification masterplan for
Network Rail in South London.
• As part of the Kings Cross Knowledge Quarter, we have designed a mixed use 230,000
square feet hybrid scheme of life sciences, light industrial, public realm and with the
potential for residential due for planning in 2024.
• We are further developing our highly sustainable 100 year chassis design approach for
a 1m square feet riverside scheme that can accommodate a vast array of uses with
multi century potential.
Veretec Limited – executive architecture
Veretec, our executive architecture business completed the 15,000 square meter n2 Nova
building in Victoria in June 2023 for Landsec, working with Mace and Lynch Architects.
Projects in progress include:
• Holloway Park, the site of the former women’s prison, a residential development for
Peabody / London Square with AHMM; and
• London Dock for St George / The Berkeley Group with Patel Taylor.
Heritage projects under way include:
• Grade II listed 84 Moorgate for City of London with Osborne and Ben Adams;
• 41 Lothbury for Pembroke RE with Stiff +Trevillion, also Grade II listed;
• Greycoat Place in Westminster for Victoria Spaces with SPPAR; and
• West King Street Renewal Project (Hammersmith Town Hall) with Ardmore and RSHP
Architects.
84 Moorgate, 41 Lothbury and Greycoat Place are all due for completion in H1 2024.
Page 8
Aukett Swanke Group Plc
German investments
Our German investments continued to perform strongly.
We own a 25% interest in Aukett + Heese GmbH, a Berlin architecture practice, and have a
joint venture in Aukett + Heese Frankfurt GmbH, in which we own 50%. Collectively these
assets are valued in our accounts at £1,071,000 at 30 September 2023, reflecting our share of
the underlying balance sheets. We received management fees and dividends during the year
of £382,000 more than justifying the current accounting carrying value.
Torpedo Factory Group – Systems Integration
TFG’s results are only consolidated from the date of acquisition in March 2023.
The Intelligent Environments business, which during the period developed a particular niche in
London offices for international law firms, performed strongly from the date of acquisition.
The Stage Technology business also performed well from its acquisition, in part as it has a
seasonal bias with its best months over the summer when schools and colleges are closed and
in part as the result of a £2 million project to deliver the technical infrastructure of a new
entertainment venue in Manchester.
The TFG businesses also bedded in the new ERP system implemented in the previous year,
which is designed to make the business more scalable.
Anders + Kern
We acquired Anders+Kern two and a half months before the year end, and include its results
from that date.
The operational highlights included the migration of the A+K business to the Group’s ERP
systems and reshaping the sales team and product line-up, with the benefits expected to accrue
in future periods.
Employee Share Schemes
Before the TFG acquisition, a majority of the company’s shares were held by around two dozen
former directors of the Group and its architecture businesses, with almost no ownership by the
existing management and staff. Ownership is normal in professional services firms, and while
there was an eagerness from management to participate, there was no clear structure for it to
happen.
Following the year end, we have therefore implemented three routes to increase employee
ownership across the Group, as follows:
First, in November 2023, we implemented AESOP, a Share Incentive Plan. This is a tax efficient
method for all employees to build a base level of ownership from their monthly salary. I am
delighted to report that around 40% of the Group’s employees have chosen to become
shareholders. We now have around 70 current director/employee shareholders, up from 10 a
few months ago.
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Aukett Swanke Group Plc
Second, we are implementing MSOP, our Management Share Ownership Plan. Under this, the
directors of the Group’s businesses have been asked to commit to invest sums equivalent to at
least 5% of their gross salary in purchasing the Group’s shares on the open market. Purchases
are expected to be made approximately quarterly. The executive directors on the plc board will
invest 8% of their gross salary, and a small number of senior management just below subsidiary
director level have been asked to invest 2.5% of their gross salary. The commitment becomes
optional once the director in question owns at least 0.5% of the Group’s share capital (0.25%
for non directors). Participation has been strong, with 32 members of the management team
making commitments, out of 34 members who were invited.
Third, a Company Share Option Plan allows for the grant of share options in a tax efficient
manner. Our intention is that option grants will be made annually, but only to those employees
who make the commitment under the MSOP to invest in the business. This will build into a
portfolio of options, acting as an employee retention tool, as at any point those granted within
the past three years cannot ordinarily be exercised.
Collectively I expect these employee share schemes will provide a natural and persistent
demand for our shares to the benefit of the staff concerned aligning their interests with those of
shareholders. More importantly they are already changing the culture of the Group, as staff
become owners. It enables so many people who are key to our future start to build meaningful
ownership stakes. I believe they also give us the best employee ownership package in the
market, and I am confident we can use this to attract and retain the best talent available.
Current Trading & Outlook
It is difficult to predict with confidence how the current year will unfold. We have a strong
pipeline of projects but more so than in previous years the starting point for these projects, and
the dates from which we can charge, are at risk of delay.
As was the case in the year under review there is likely to be a loss in the first half of the year
with the position improving in the second half.
The combination of pressure on cashflow from continuing to pay down the Coronavirus
Business Interruption Loan Scheme loans, project delays, and the freehold property mortgage
expiring in February 2025 leads the Board to give careful consideration in the assessment of
going concern. The material uncertainty, the measures taken by the Board, and other mitigating
options which could be taken are discussed at length in the Financial Review, the Directors’
Report and note 1. This only serves to underline the need to balance the nature of the Group’s
revenue streams.
Aukett Swanke Ltd designed the world’s first Smartscore accredited smart building in 2021, and
the recent acquisition of Vanti allows the Group to expand its smart building consultancy work.
It is too early in the Group’s Smart Buildings operations to speak of the likely outcome for the
current year with confidence. However, TFG was already starting to deliver Master Systems
Integration activities and the recent Vanti acquisition will accelerate this.
Smart buildings will clearly require artificial intelligence to take decisions on how sites should
best be run. We announced on 19 February 2024 that we are participating in a consortium
between 6 industrial and 3 research university partners to develop AI for energy saving. This
project is backed by an Innovate UK grant. Our staff have completed AI courses at Oxford
University and we are exploring opportunities to further develop our AI capabilities.
While our smart building activities are at an early stage we seem to be on the right track with
growth expected across all our smart buildings offerings.
Page 10
Aukett Swanke Group Plc
Our team
December 2023 saw the retirement of Keith Morgan, Veretec chairman, after 39 years with the
Group. We are grateful for all he did to help Veretec become one of the best respected and
successful firms in its specialist field. In connection with its acquisition by ASG, TFG also lost
two longstanding directors – Keith McCullagh, who retired as its non-executive chairman at
acquisition, and John-David Papworth, who departed with the disposal of the Live Events
business. I have worked with both of them since the 1990s and wish them well.
There are however many new faces to welcome as we begin what I hope will be a phase of
rapid growth, to create a larger UK architecture business that operates as part of a successful
smart buildings group.
Rapid growth means rapid change, and change is often unsettling. I am delighted at how well
our people have responded to the changes so far, and would like to thank all of them for their
support. They make our business what it is, and more importantly, they shape what it will
become.
We have an exciting year ahead and I look forward to reporting on our progress.
Nicholas Clark
Chief Executive
27 March 2024
Page 11
Aukett Swanke Group Plc
Financial review
The headline financial results of the Group were:
Total revenues under management1
32,460
24,033
2023
£’000
2022
£’000
Continuing operations
Revenue
Revenue less sub consultant costs1
Cost of sales
Net operating expenses
Other operating income
Net finance costs
Share of results of associate and joint ventures
Trading profit/(loss) from continuing operations
Acquisition costs
Goodwill impairment
14,335
14,103
(2,627)
8,645
7,127
-
(11,869)
(7,757)
326
(246)
341
28
(379)
326
(95)
327
(72)
-
-
(1,752)
Loss before tax from continuing operations
(351)
(1,824)
Tax credit
Profit/(loss) from continuing operations
Profit/(loss) from discontinued operations
Profit/(loss) for the year
1Alternative performance measures, refer to pages 19-20 for definition
433
82
10
92
45
(1,779)
(503)
(2,282)
The result for the year is split between continuing operations and the discontinued Middle East
operations.
The Group reported a small trading profit of £28k (2022: loss £72k) with a significant
contribution from TFG and A+K post-acquisition, and an improvement in the result of the United
Kingdom architecture operation, partially offset by higher central Group costs.
The result of the discontinued Middle East operations was a nominal profit before tax of £10k
(2022: loss £0.50m) with nominal activity.
Revenues for the year from continuing operations were £14.34m, an increase of 65.8% on the
previous year (2022: 8.65m). Revenues less sub consultants increased by 97.9% to £14.10m
(2022: £7.13m), with subconsultant costs falling by 84.7% to £0.23m (2022: £1.52m), due to
growth in the UK hub combined with revenue from the Torpedo Factory Group and Anders +
Kern acquisitions.
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Aukett Swanke Group Plc
UK architectural hub, revenue less sub consultant costs increased 24.6% to £8.69m (2022:
£6.98m), their highest level in over 6 years, as the UK operations further recovered following
the lows experienced during the COVID-19 pandemic.
In Continental Europe, another strong performance from the Berlin associate and Frankfurt joint
venture producing a combined share of profits of £0.34m (2022: £0.33m), however performance
in Turkey was below expectations as the operation struggled with ongoing high inflation and
stop start workloads. The Turkey operation was sold to one of the local directors post year end.
Operating expenses in the year increased by £4.11m due to the operating costs of TFG and
A+K post-acquisition, combined with higher personnel related costs in UK architecture as the
group recruited to meet staffing needs for new projects won.
Other operating income was unchanged from the prior year at £326k, due to post acquisition
sub-let rental income from TFG’s London office, being offset by lower property rental income
from the London Bonhill Street office as the subtenant occupied less space with the growth in
UK architectural technical staff headcount taking up the available space.
The Group increased technical staff numbers (UK net revenue per FTE technical staff was down
marginally at £102k, whilst the UK average FTE technical staff increased by 18 to 85).
The Group incurred significant one-off acquisition costs totalling £379k relating to the TFG
and A+K acquisitions turning the small trading profit into a loss before tax. Tax Credits then
bring the post tax position back into profit.
The profit after tax at £92k gives an EPS of 0.04 pence per share (2022: loss 1.38 pence per
share),
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 pages 19-20 for definition
2023
£’000
8.858
8,692
85
102
201
(93)
2022
£’000
8.465
6,975
67
104
211
(329)
The UK’s revenue increased 4.6%, however stripping on pass through subconsultant costs
revenue increased 24.6% year on year to its highest level in over 6 years. The prior year
revenue included projects that Veretec executive architecture acted on as the lead consultant,
as these progressed into later stages sub consultant expertise reduced to nominal levels.
The first half of the year saw 11.4% growth in the UK business compared to the prior year
second half, with revenue less subconsultant costs of £4.09m (2022: H2: £3.67m) as the
business continued to win new work and rebound post the lows of the COVID affected years.
Veretec was awarded and commenced £5.85m of new orders being a mixture of residential and
commercial projects, providing significant revenue growth through H2 and a stronger order
book leading into the year commencing 1 October 2023.
With the higher workload, recruitment enabled staff numbers (FTE technical staff) being 77 in
October 2022 to grow month on month through the year to 94 FTE’s by 30 September 2023.
Net revenue per FTE was £102k for the full year a touch down on the £104k in the prior year
primarily due to the timing of project pauses.
Page 13
Aukett Swanke Group Plc
The improvement in revenue particularly in H2, was partially offset by inflationary pressures on
staffing, utility and IT costs and the one off costs of recruitment fees, whilst our net revenue per
FTE was marginally lower. This translated into the year on year segmental result being static
compared to the prior year, with the hub to recording a profit before tax (excluding Group
management charges) of £0.20m. This represented a year of transition with the hub positioned
with a larger order book and stronger staff offering to be able to improve margins in the coming
year.
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 pages 19-20 for definition
2023
£’000
194
128
6
21
423
277
18,317
12,491
121
103
2022
£’000
180
152
7
22
422
275
14,025
10,594
108
98
The hub result before tax (including Group management charges), including the joint venture
and associate in Germany, was a profit of £277k (2022: £275k).
Continental Europe’s result is materially dominated by the associate Berlin and joint venture in
Frankfurt. The year to September 2023 represented another profitable year. They together
contributed £341k (2022: £328k) profit (including Group management charges) to the
Continental Europe result.
Reported revenues, comprise the Turkish subsidiary. Turkey reported revenues for the year of
£194k (2022: £180k), with revenue less subconsultant costs decreasing to £128k (2022:
£152k). The reduction in earnings was due to a further devaluation of the Turkish Lira across
the period, with the average TRY to GBP rate in the year at 26.29 (2022: 18.44). However,
whilst the year on year revenue increased modestly in local currency, clients pausing projects
led to sub optimal efficiency of staff time with large gaps in workloads, and the very high levels
of inflation in Turkey increased operating costs of the company whilst the rates on existing
projects were not able to fully absorb the increased costs that followed. As a result, Turkey
recorded another year of local losses (including Group management charges) of £64k (2022:
£52k) and loss (excluding Group management charges) of £53k (2022: £36k).
With ongoing high inflation and uncertainty in the Turkish economy and no clear path to turn
the losses around, management commenced a process to sell the operation to the local
directors which was completed after the year end (note 28).
Total revenues under management increased 30.6%, whilst revenue less sub consultant costs
increased 17.9%. Staff numbers increased to 121 FTE’s (2022: 108), due to growth in the Berlin
office. The growth in Germany also led to an increase in net revenue per FTE technical staff to
£103k (2022: £98k) and with it slightly improved profitability.
Page 14
Aukett Swanke Group Plc
Middle East – discontinued operation
Revenue
Revenue less sub consultant costs1
FTE technical staff1
Net revenue per FTE technical staff1
Profit/(loss) before tax (excluding Group management
charges)1
Profit/(loss) before
charges)
tax (including Group management
1Alternative performance measures, refer to pages 19-20 for definition
2023
£’000
2
-
-
N/A
10
10
2022
£’000
1,543
1,256
18
68
(399)
(503)
Following the disposal of JRHP in April 2022, and management’s decision to take on no new
projects and transition to cease activities in the region, revenue and costs were nominal in the
year. Minor gains on costs settled below the levels of prior year accruals and a small gain on
the movement of IFRS 9 loss allowance provisions enabled the hub to record a profit before
tax of £10k.
The Middle East hub continues to be treated as a discontinued operation.
Torpedo Factory Group
Revenue
Gross Profit
FTE technical staff1
Net revenue per FTE technical staff1
Profit before tax (excluding Group management charges)1
Profit before tax (including Group management charges)
1Alternative performance measures, refer to pages 19-20 for definition
2023
£’000
4,816
2,503
14
344
467
401
2022
£’000
-
-
-
-
-
-
The results shown above relate only to the performance from the date of acquisition on 20
March 2023, when its results were consolidated into the Group, to the new year end on 30
September 2023. TFG performed strongly delivering revenues and profit in excess of its own
internal budgets. The profits are delivered by its two trading subsidiaries - at an entity level
Torpedo Factory Group Ltd continued to make losses while it holds on to its freehold property
and associated mortgage. The footprint of the building means it is no longer a strategic fit for
the underlying business after the disposal of Torpedo Factory Ltd.’s Live Events business
announced in April 2023, and the property is being marketed for sale.
The subsidiary TFG Stage Technology Ltd contributed the majority of the TFG profit with an
excellent performance in its projects department, internal teams utilised the relatively new ERP
system to help deliver its largest ever project which contributed revenues in excess of £2m.
While Torpedo Factory Ltd did not perform as strongly as the Stage Technology business it still
delivered small profits after internal management charges. Recurring revenue within the service
department has continued to increase making the company less reliant on projects wins
although this is still the majority of the revenue within the entity.
Page 15
Aukett Swanke Group Plc
Anders + Kern
Revenue
Gross Profit
FTE technical staff1
Net revenue per FTE technical staff1
Profit before tax (excluding Group management charges)1
Profit before tax (including Group management charges)
1Alternative performance measures, refer to pages 19-20 for definition
2023
£’000
467
153
1
467
62
62
2022
£’000
-
-
-
-
-
-
Anders + Kern U.K. Ltd performed marginally ahead of internal budgets for the period from
acquisition on 17 July 2023 to the year end, and results for that brief period are shown above.
The company transitioned well to new premises with a more streamlined team to deliver its
revenues and planned the changes that have been implemented following the year end.
Financing
The net deficit (see note 25) at the year end was significantly higher than the prior year as a
result of the mortgage and secure bank Coronavirus Business Interruption Loan Scheme
(“CBILS”) loans consolidated into the Group on acquisition of TFG in the year. This gave a
deficit of £2,140k (2022: £621k), comprising cash of £522k (2022: £28k), cash included in
assets held for sale (see note 28) of £30k (2022: £nil), a net overdraft of £122k (2022: £232k),
the Coutts CBILS loan which reduced to £167k (2022: £417k), a NatWest CBILS loan of £992k,
and a mortgage of £1,411k both consolidated into the Group from the acquisition with TFG.
The Group’s £250k overdraft facility from its bankers Coutts & Co and was renewed in
December 2022.
In December 2023, Coutts & Co confirmed the renewal of the £250k overdraft facility for an
initial period to 31 March 2024, and subsequently has agreed to extend this renewal to 30
September 2024, continuing to provide working capital flexibility and to support the UK
business. This is discussed further in note 1.
The Coutts CBILS loan set out in note 24 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 2023, the first 16 instalments had been
made on time as planned, as have all subsequent scheduled payments.
The mortgage and the NatWest CBILS bank loan set out in note 24 were arranged by National
Westminster Bank plc (NatWest) and are secured by way of a first legal charge over The Old
Torpedo Factory freehold property, a debenture and cross guarantee from Torpedo Factory
Group Limited, Torpedo Factory Limited and TFG Stage Technology Limited. The bank loan
initially drawn at £1.75m is being repaid at £29k per month. The loan is at a fixed rate of interest
of 3.66%pa.
The mortgage that subsisted during the year was initially drawn in 2018 at £1.73m with a
duration of 5 years and was extended for a year during the pandemic, so was due to expire in
February 2024, and is therefore wholly shown due for settlement within 12 months. The
mortgage carried interest at base rate + 1.93%. The mortgage has recently been renewed for
a further 12 month period to February 2025 carrying a higher interest rate of base rate +
5.00%pa pending a disposal of the associated freehold property.
Page 16
Aukett Swanke Group Plc
The Group had four leases taken out by Aukett Swanke Limited (“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 16) as at 30
September 2023 was down to £1k (2022: £55k), and has been fully paid off post year end.
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 2023 was
£1,961k (2022: £2,364k).
With the acquisition of TFG, the Group now recognises right of use assets and lease liabilities
on two further buildings and a number of motor vehicles. The aggregate lease liability of these
assets as at 30 September 2023 was £275k.
There are no office leases remaining in the UAE. The office lease in Turkey is short term and
responsibility for it left us as part of the disposal.
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 prior 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. The acquisition of TFG on 20 March 2023
improved short term available cash, which was partly (£515k) utilised in the consideration for
the acquisition of A+K in July 2023.
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
Excluding the freehold property held for sale, net current liabilities as at 30 September 2023
were approximately £3.0 million, and in the period following the year end so far, project billing
and cash collection has been lower than we originally budgeted resulting in an overdue
quarterly VAT balance due in February 2024 and an overdue balance of PAYE due to HMRC.
As such the assessment of going concern needs careful consideration. The Board has therefore
produced cash flow forecasts for a period of at least 12 months from the approval of the financial
statements, which comprise detailed income statements, statements of the financial position
and cash flow statements for each of the Group’s operations. The Board has also considered
the risks and uncertainties associated with the principal operations and the funding position in
general, including the consideration of a number of differing scenarios based on varying trading
performance across the Group.
The Group’s forecasts are prepared using information on secure contracted work and potential
work which is deemed to have a greater than 50% chance of being undertaken, with the income
figures suitably discounted, and on new work based on historical experience.
As part of this review the Directors note that for the year ended 30 September 2023 both the
core UK architecture businesses reported stronger performance than in the previous financial
year with each making an improved contribution to central costs. The Directors also note the
continued strong performance and cash contribution from the Group’s German investments but
more importantly that the Group has now successfully exited from all its unprofitable and cash
consuming overseas investments.
Page 17
Aukett Swanke Group Plc
In the financial year ended 30 September 2023, the net cash position of the Group, largely as
the result of the TFG acquisition, improved by more than £500,000. The Group has continued
to invest in growth, most notably with the acquisition of Anders+Kern in July 2023 which had a
cash cost before expenses of £515,057. Since the end of the financial year the Group acquired
TR Control Solutions Limited (later renamed ecoDriver Limited) with an initial cash cost of
£44,500 (with a further £44,500 deferred for a year) and some working capital support paid into
the company.
With the ever increasing costs associated with being a quoted company, which the Board
estimates to be currently in excess of £1 million annually, there is no point in staying as we are.
The Board’s stated intention is to achieve a leading presence in the provision of smart buildings
services through a combination of organic growth and targeted acquisitions. Inevitably this
requires an element of cash, as part of the purchase consideration and for the associated
professional fees.
To date, including the acquisition of TFG, the Group has made four Smart Building related
acquisitions and plans to make others in the coming months and years. In connection with this
assessment of going concern the Directors note that each such acquisition is a discretionary
event as is the proportion of the consideration paid in cash. The Board’s plan is to avoid placing
undue stress on the Group’s cashflows from expanding at a pace faster than can be sensibly
funded.
Whilst we continue to pay down the mortgage and CBILS loans, lower than originally budgeted
project billings and cash collection in the period after the year end so far due to a combination
of project instruction delays and cash to invest in strengthening staffing in the recent
acquisitions which will take time to convert into generating higher revenues, has resulted in the
Group delaying payment on the UK architecture quarterly VAT balance due in February 2024
and an overdue balance of PAYE due to HMRC. The Group’s forecasts, indicate that this
shortfall is a temporary position which will improve during the 12-month period following the
approval of the financial statements, and we are actively engaging in communications with
HMRC and will seek to agree a short term repayment plan if required.
A prime issue when considering the Group’s cashflows over the next 12 months is that the
mortgage on the freehold property (balance of £1.39m as at Jan 2024) is due to be renewed
before the end of the 12 month assessment period in February 2025. Although it is the Board’s
intention to sell the underlying property and repay the mortgage well before renewal is due,
there is no certainty this will be the case or that if required the mortgage would be renewed.
Additionally, given the Group’s current cash balances and the nature of the Group’s activities,
which remain largely project based with the inherent risks that projects are not won; are won at
too low a fee; do not start on time; stall; or that the client fails to pay on time or at all, the
Directors consider that there is a material uncertainty over the going concern assessment,
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 Group has recently agreed with Coutts to extend the £250,000 overdraft through to 30
September 2024, announced it is raising £425,000 through the issue of new equity (see note
39), and Torpedo Factory Limited has received a fully approved offer for a £500,000 loan which
can be drawn down whenever needed, subject only to the approval of the proposed guarantors
(Nick Clark and Freddie Jenner).
Should either the cash generation from the Group’s existing business units further decline and
/ or the push for growth in the smart buildings arena lead to a prolonged shortfall in cash the
Board has the following funding or mitigating options beyond the typical cost cutting in the face
of declining activities:
Page 18
Aukett Swanke Group Plc
• The Group continues to seek a buyer for the freehold property acquired as part of the
TFG acquisition in March 2023. The Board believes the commercial value of the
building very comfortably exceeds its commercial mortgage of £1.41 million as at 30
September 2023. Additionally, the Group’s property agent has confirmed that it is
reasonable to expect offers well in excess of the mortgage liability.
• The Board believes the commercial value of its German investments is substantial in
relation to the Group as a whole and if necessary could be realised by a sale for in
excess of book value.
• The Board also believes that in the event of the introduction of invoice discounting the
Group, which typically has in excess of £3.0 million tied up in trade debtors at each
month end, could release a significant proportion of this amount. In this regard, Torpedo
Factory Limited has received updated indicative terms from a leading provider of sales
ledger finance of an invoice discounting line to the value of 50% of eligible debtors or
£600,000, whichever is lower. Formal approval of this facility would be subject to an
audit of the Torpedo Factory Limited systems by the lender. For 18 years from 2003-
2021 Torpedo Factory Limited had an invoice discounting facility so is fully familiar with
the processes.
• The Group is currently paying off its liabilities in respect of state funding provided during
the Covid pandemic. The balance of the CBILS drawn by the Group in May 2021 will
be fully repaid in May 2024. The CBILS loan drawn by TFG will be fully repaid by July
2026. By replacing this debt with a new facility repayable over a longer period the
annual cash costs associated with this debt would fall.
• As a company with shares listed on the London Stock Exchange there is the option to
seek additional equity investment from the issue of new shares, as was demonstrated
by the recent share subscription in connection with the Vanti transaction.
The recently announced proposal to sell the Old Torpedo Factory freehold would pay off the
remaining balance on the mortgage, prepay a portion of the NatWest CBILS loan, and provide
a significant balance of cash to the Group eliminating the net deficit. Other funding and
mitigating options available to the board are also discussed in note 1.
Notwithstanding the material uncertainty described above, after making enquiries and
assessing the progress against the forecast, projections and the feasibility of the mitigating
actions referred to above, which if not achieved 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 Directors have
a reasonable expectation that the Group and the Parent Company will continue in operation
and meet its commitments as they fall due over the going concern period.
For this reason, the Board considers it appropriate to prepare the financial statements on a
going concern basis.
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.
Page 19
Aukett Swanke Group Plc
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 18; and ii) double the share of revenue in joint ventures
disclosed in note 19;
• 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 16;
• 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
16;
• Result before taxation (excluding Group management charges), and result before
taxation (including Group management charges), which are further assessed on pages
13 to 16;
• 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 8 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 8. Full time equivalent technical members of staff are given for each hub on
pages 13 to 16.
Antony Barkwith
Group Finance Director
27 March 2024
Page 20
Aukett Swanke Group Plc
Strategic report
The Directors present their Strategic Report for the Group for the year ended 30 September
2023.
Strategy
For most of the Group’s existence we have been a professional services group that principally
provides architectural design services along with specialisms in master planning, interior
design, executive architecture; audio visual and stage technology; smart workplace systems
and energy management software.
Our strategic objective is to become a leading provider of Smart Building services as Smart
Building Systems designers, integrators and operators, while maintaining our status as leading
architects in the UK.
We aim to create shareholder value over the longer term by increasing profits and at the same
time provide an attractive and rewarding working environment for our staff.
Business Model
Architecture
Our architecture and interior design businesses operate in the UK and Germany. Our operation
in Turkey was sold to local management post year end, and along with other locations will
continue to operate through licence based arrangements where the responsibility for profit rests
with local management and owners.
The United Kingdom hub comprises two 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.
Additionally, we have equity interest in leading architecture practices in Berlin and Frankfurt
and brand licence arrangements in the UAE and Turkey.
Our architecture business model is to charge on a time or project basis for the work of our
professional staff.
Smart Buildings
We are looking to establish a leading presence in the delivery of smart buildings services in the
UK building on the experience from the Torpedo Factory Group’s operations, the three
subsequent acquisitions, and by future targeted acquisitions and organic development.
As this side of the Group’s activities develops and as we come to own our own systems, we will
look to charge on a SaaS basis for the services provided. In so doing this element of the Group’s
business will be far more scalable than the traditional architecture model where growth
generally requires the recruitment of additional staff and once a project is completed there is
no further revenue.
As a Group, we now have a total average full time equivalent (“FTE”) staff contingent of 303
(2022: 223) throughout our organisation which includes both wholly owned and joint venture
operations. We are ranked by professional staff in the 2024 World Architecture 100 at number
60 (2023 WA100 number 61).
Page 21
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.
The Ukraine conflict and global inflationary pressure and interest rate rises have 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.
UK architecture 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
operation. Payment terms are typically:
• Aukett Swanke Limited and Veretec: 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);
• Torpedo Factory Ltd, TFG Stage Technology Ltd, Anders + Kern U.K. Ltd: Standard
payment terms for all companies are 30 days for smaller works completed. It is usual
on larger projects to agree in advance with the client at the start of the project a monthly
billing schedule which generally leads to relatively low levels of contracts assets (and
consequentially higher levels of contract liabilities). These larger projects tend to be 30
days although certain JCT contracts may extend to 60 day terms. Service Contracts as
standard are billed annually in advance for a 12 month period.
Page 22
Aukett Swanke Group Plc
The losses sustained in the prior three years during the COVID-19 pandemic and in the
recovery period since, tightened the free cash available within the Group. However, the
acquisition of TFG in March 2023 provided a significant boost to the net assets and cash
balance of the Group, but adding further CBILS loan and a mortgage liability.
The month end timing of UK architecture debtor receipts in September 2023 meant that the
Group was in a position of utilising part of its overdraft facility at the year end, though having
net cash in the accounts of other Group subsidiaries.
Dividends were received from the Berlin associate during the year, however 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 2023 renewed the Group’s
overdraft facility for an initial period until 31 March 2024, and subsequently have agreed to
extend this renewal to 30 September 2024 at the existing £250k level.
The mortgage on the Old Torpedo Factory freehold has been extended for another year to
February 2025, while the Group are actively marketing it for sale.
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 architecture 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, 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 23
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.
Future developments
An indication of likely future developments in the business of the Group is contained in the Chief
Executive’s Report on page 10.
The Strategic Report was approved by the Board on 27 March 2024 and signed on its behalf
by
Nicholas Clark
Chief Executive
Page 24
Aukett Swanke Group Plc
Board of Directors
Clive Carver (Non-Executive Chairman)
FCA FCT Aged 63
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 served 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.
Clive chairs the Audit committee and is a member of the Remuneration and Risk Committees.
Robert Fry (Deputy Chairman)
BA(Hons) DipArch MA RIBA Aged 67
Robert was appointed interim CEO of Aukett Swanke Group Plc 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 and becoming Managing Director of the UK
and Europe group in 2005.
Following Nick Clark’s appointment as Group Chief Executive in April 2023 Robert became a
part time executive director and Deputy Chairman with responsibly for the Group’s UK
architecture and international operations. Robert will become a non-executive director following
the conclusion of the 2024 AGM, which is expected to take place at the end of April 2024.
Robert is Chairman of the board’s Risk committee and following the 2024 AGM will become a
member of both the Remuneration and Audit Committees.
Nick Clark (Chief Executive)
BSc(Hons), MPhil Aged 49
Nick was appointed as an executive director of the Group in March 2023 following the
acquisition of TFG and became Chief Executive in April 2023.
He founded the TFG business in 1997 and has grown it through a combination of acquisitions
and organic growth. Nick is also a non-executive director at Acuity RM Group plc, the AIM-listed
provider of risk management software.
Prior to starting TFG Nick studied physics at Imperial College, followed by an MPhil in
Microelectronic Engineering and Semiconductor Physics at the University of Cambridge.
Nick is a member of the Remuneration Committee.
Page 25
Aukett Swanke Group Plc
Antony Barkwith (Group Finance Director)
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.
Freddie Jenner (Group Chief Operating Officer)
FCCA BSc(Hons) Aged 40
Freddie was appointed to the Board in June 2023 as Chief Operating Officer.
Freddie joined the finance team at what is now Torpedo Factory Ltd in 2007, becoming Finance
Director of the parent company Torpedo Factory Group Limited when he qualified as a
chartered certified accountant in 2012. He was instrumental in driving growth in value of TFG
through acquisitions and upgrading systems and processes over the following decade, prior to
the acquisition of TFG by the Group in March 2023.
Tandeep Minhas (Non-executive director)
LLB (Hons), LPC, CF (Aged 53)
Tandeep was appointed to the board as a non-executive director in April 2023.
Tandeep is a partner in international law firm Taylor Wessing LLP, where she heads the
Corporate Finance practice. She advises on all aspects of corporate finance M&A work,
including public takeovers, fundraisings and IPOs, company and business acquisitions and
disposals, joint ventures and reorganisations.
She has specialist knowledge of the public markets in the UK and has advised on numerous
flotations and secondary fundraisings on both the Main Market and AIM, acting for both
companies and corporate finance/broking houses, nomads and sponsors.
She has particular experience in advising international companies across a wide variety of
sectors and is lead corporate partner in Taylor Wessing’s India Business Group. She also sits
on the Board of the Corporate Finance Faculty of the Institute of Chartered Accountants in
England & Wales.
Tandeep chairs the Remuneration Committee and is a member of the Audit and Risk
Committees.
Board committees
The board has the following committees
• Audit Committee
• Remuneration Committee
• Risk Committee
Page 26
Aukett Swanke Group Plc
Directors’ report
The Directors present their report for the year ended 30 September 2023.
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 21.
Our strategic objective is to improve the performance of our architecture activities and create
shareholder value over the longer term by developing the group into a quoted holding company
for an ecosystem of smart buildings businesses. The cyclical nature of the markets in which we
currently 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 will reduce this effect by developing
business streams that have a high degree of contractually recurring long term revenues, which
can be scaled without a proportionate scaling of costs.
We operate a structure covering the United Kingdom with sites in London, Manchester, and
East Anglia; Continental Europe with significant investments in Berlin and Frankfurt; along with
a Licensee operation in Istanbul and a Marketing Agreement with an operation in the Middle
East with an office in Dubai.
The UK Architecture hub comprises two principal service offerings: comprehensive architectural
design including master planning, interior design and fit-out capability under the ‘Aukett
Swanke’ brand, and an executive architectural delivery service operating under the ‘Veretec’
brand.
Our Continental European Architecture operations provide services offered that are consistent
with those of the UK Architecture operation.
Our Licence Agreement is marketed under the ‘Aukett Swanke’ brand. The service offers within
the regions they operate within include architectural and interior design, post contract delivery
services including architect of record and project execution stage services.
Page 27
Aukett Swanke Group Plc
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 plcenquiries@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 Nick Clark, Chief Executive.
PRINCIPLE 3
Corporate Social Responsibility & Stakeholder Engagement
The About section of the Company’s website sets out our vision and explains how we engage
with our clientele and related stakeholders. 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 recognized in the websites for each entity in the Awards sections of each 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 proptech industries. 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.
Page 28
Aukett Swanke Group Plc
PRINCIPLE 5
Board structure and composition
The Board comprises two Non-Executive Directors (NED’s) and four Executive directors. The
Board believes that the optimal structure is balanced between NEDs 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 33 to 34.
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.
PRINCIPLE 6
Directors’ experience and capabilities
The biographies of each current board member can be found on pages 25-26.
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.
Nick Clark (Chief Executive) is a non-executive director of an AIM-quoted SaaS business,
Antony Barkwith (Group Finance Director) is a member of the Architect’s Financial
Management Group (AFMG), Clive Carver (Chairman and NED) holds also chairs another AIM
company, and Robert Fry (Deputy Chairman) is a member of the RIBA and is a regular
contributor and awards judge for World Architecture News (WAN). Tandeep Minhas (NED) is
head of Corporate Finance at a leading law firm.
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 2006 to promote the success of the company.
Day to day and operational management is delegated to the Chief Executive, Group Finance
Director, Chief Operating Officer, Chief Technical Officer and the subsidiary directors. Each
business in the group has its own management team and its own board. At least two of the
Chief Executive, COO, CTO 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 formally at least quarterly, and informally more frequently. 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. Directors are required to complete CPD in accordance with their
professional qualification where relevant.
Page 29
Aukett Swanke Group Plc
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.
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.
The Chairman carries out appraisals of each board member on an annual basis. The NEDs
appraise the Chairman. As a result of these meetings, any mentoring and training needs are
established.
Board attendance & Effectiveness
Microsoft Teams or similar online meeting technologies 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 Board meets formally on a bi-monthly basis.
The attendance record for the year is included in the Directors’ Report on page 35.
Board remit
The Board is a balanced team of executives and non-executives with the remit to ensure good,
appropriate, safe governance and compliance with 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 Remuneration 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.
NEDs 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 Chief Executive. Two Plc Board members form a part of the H&S Steering Committee
which meets quarterly and reports into the Plc Board meetings.
Page 30
Aukett Swanke Group Plc
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 sites, 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, share dealing and modern slavery
policies.
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.
Page 31
Aukett Swanke Group Plc
PRINCIPLE 9
Roles
Chairman – 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 – provides guidance and information to inform the strategic direction of the
company and its operations. Along with the senior management team the Chief Executive 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 held on the Company’s website:
• Annual Report and Accounts
Interim Announcements
•
• General Meeting notices (where separately issued and not contained in the Report and
Accounts).
• Trading updates
• Memorandum and Articles of Association
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
Page 32
Aukett Swanke Group Plc
Board of Directors
The Group is headed by a Board of Directors which leads and controls the Group, and which is
accountable to shareholders for good corporate governance of the Group.
The Board currently comprises four Executive Directors and two independent Non-Executive
Directors who bring a wide range of experience and skills to the Company.
The Board considers Clive Carver and Tandeep Minhas 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 Tandeep Minhas, and
they report to the Board on matters discussed at the Committee meetings.
During the year the Committee met on three occasions to review, in addition to the above,
budgets, monthly management accounts and working capital requirements by reference to the
Company’s financial strategy. It also reviewed through a sub-committee the management of
risk inherent in the business.
Page 33
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
Tandeep Minhas, as Chair and Clive Carver. 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.
Risk Committee
The Risk 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 Risk Committee currently comprises Robert Fry, as Chairman, Clive Carver and Tandeep
Minhas plus other members with specialist knowledge drawn from the Group’s staff.
Directors
Antony Barkwith, Clive Carver, and Robert Fry all served as Directors of the Company
throughout the year ended 30 September 2023.
On 31 December 2022 Nicholas Thompson resigned as a Director of the Company.
On 20 March 2023 Nick Clark was appointed as a Director of the Company.
On 21 April 2023 Raúl Curiel resigned as a Director of the Company.
On 24 April 2023 Tandeep Minhas was appointed as a Director of the Company.
On 26 June 2023 Freddie Jenner was appointed as a Director of the Company.
Biographical details of the current Directors are set out on pages 25 and 26.
The Company maintains directors’ and officers’ liability insurance.
Page 34
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
3
14
14
8
4
8
14
6
3
13
14
8
4
8
14
6
Executive Directors
Nicholas Thompson
Robert Fry
Antony Barkwith
Nick Clark
Freddie Jenner
Non-executive Directors
Raúl Curiel
Clive Carver
Tandeep Minhas
Directors’ interests
Directors’ interests in the shares of the Company were as follows:
Number of ordinary shares
Nicholas Thompson
Raúl Curiel
Nick Clark
Freddie Jenner
Tandeep Minhas
Clive Carver
Antony Barkwith
Robert Fry
Directors’ service contracts
30 September
2023
16,802,411
9,240,018
40,531,539
6,064,817
-
-
-
2,150,000
30 September
2022
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, Robert Fry, Nick
Clark and Freddie Jenner 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 35
Aukett Swanke Group Plc
Substantial shareholdings
At 27 March 2024 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 Plc
Nicholas Thompson
Philip J Milton &
Company Plc
John-David Papworth
Jeremy Blake
Former chairman of TFG
Director of the Company
Institutional Investor
Former Director of the Company
Institutional Investor
Former employee of the Group
Former employee of the Group
Number of
ordinary
shares
41,339,142
40,531,539
28,782,351
21,129,111
20,832,048
16,274,624
13,030,638
Percentage
of ordinary
shares
12.89%
12.64%
8.98%
6.59%
6.50%
5.08%
4.06%
* Keith McCullagh and Nick Clark’s shares are included within a Concert Party holding a total
of 89,159,484 shares representing 27.81% of the number of ordinary shares.
Share price
The mid-market closing price of the shares of the Company at 30 September 2023 was 1.825
pence and the range of mid-market closing prices of the shares during the year was between
1.80 pence and 2.80 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 or traded on the main market of the LSE. The company is therefore not required to
disclose energy and carbon information.
Page 36
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 Chairman’s statement on pages 3-4 (in relation to decision-
making), in the Strategic report on pages 21-24 (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 37
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 80 ‘Excellent’ or ‘Very Good’ BREEAM (Building
Research Establishment Environmental Assessment Method) ratings awarded to buildings
designed or carried out 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 38
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
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.
Financial instruments
Information concerning the use of financial instruments by the Group is given in notes 32 to 36
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 3 & 1/2 years of trading.
During the year, the Group has consolidated its architectural operations to focus on the larger
and more profitable key markets in the UK and Germany, significantly increased the total equity
of the Group, acquired TFG, A+K, and post year end ecoDriver, diversifying its income streams
into new markets and enabling the start of the Group’s strategy to build its Smart Buildings
offering.
The Group reports a small trading profit of £28k for the year, and a trading profit in the second
half of the year of £315k (compared to the unaudited interim results to 31 March 23 half year
trading loss of £287k).
The Group continued to operate within its banking limits, and has paid each of the monthly
instalments on the Coutts CBILS loan and the NatWest CBILS loan and mortgage consolidated
into the Group with the TFG acquisition on time.
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.
Page 39
Aukett Swanke Group Plc
Whilst we continue to pay down the mortgage and CBILS loans, lower than originally budgeted
project billings and cash collection in the period after the year end so far due to a combination
of project instruction delays and cash to invest in strengthening staffing in the recent
acquisitions which will take time to convert into generating higher revenues, has resulted in the
Group delaying payment on the UK architecture quarterly VAT balance due in February 2024
and an overdue balance of PAYE due to HMRC. The Group’s forecasts, indicate that this
shortfall is a temporary position which will improve during the 12-month period following the
approval of the financial statements, and we are actively engaging in communications with
HMRC and will seek to agree a short term repayment plan if required.
The Group has recently agreed with Coutts to extend the £250,000 overdraft through to 30
September 2024, announced it is raising £425,000 through the issue of new equity (see note
39), and Torpedo Factory Limited has received a fully approved offer for a £500,000 loan which
can be drawn down whenever needed, subject only to the approval of the proposed guarantors
(Nick Clark and Freddie Jenner).
The recently announced proposal to sell The Old Torpedo Factory freehold would pay off the
remaining balance on the mortgage, prepay a portion of the NatWest CBILS loan, and provide
a significant balance of cash to the Group eliminating the net deficit. Other funding and
mitigating options available to the board are discussed in note 1.
Notwithstanding the material uncertainty described above, after making enquiries and
assessing the progress against the forecast, projections and the feasibility of the mitigating
actions referred to above, which if not achieved 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 Directors have
a reasonable expectation that the Group and the Parent Company will continue in operation
and meet its commitments as they fall due over the going concern period.
For this reason, the Board considers it appropriate to prepare the financial statements on a
going concern basis.
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 26 April 2024, will be
issued alongside this report and accounts and posted to shareholders contemporaneously.
The Directors’ report was approved by the Board on 27 March 2024 and signed on its behalf
by
Antony Barkwith
Company Secretary
Aukett Swanke Group Plc
Registered number 02155571
Page 40
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 41
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 2023 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 state of the Group’s and of the
parent Company’s affairs as of 30 September 2023 and of the Group’s profit 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 of £250,000 will be renewed in October 2024 whilst making their
assessment of the Group’s and parent Company’s going concern status. Whilst there are no
indications that the overdraft will not be renewed, it is not guaranteed. The Directors have also
assumed that a debt factoring facility can be put in place over its Trade Receivables and that
the loan facility of £500,000 will be available when required to fund a short-term cash deficit.
The Directors have given clear indication that they are actively willing to sell the property
currently held in current assets as an asset held for sale if required to realise cash to meet its
liabilities as they fall due.
The renewal of the £1.36m mortgage will only be reviewed later in 2024, 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.
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Aukett Swanke Group Plc
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.
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 matter 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 have factored the ongoing impact of unpaid HMRC liabilities
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 enquired 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.
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
seven significant components to the Group, which were Aukett Swanke Group Plc, Aukett
Swanke Limited, Veretec Limited, Shankland Cox Limited, Torpedo Factory Group Limited,
Torpedo Factory Limited and TFG Stage Technology Limited. They were all subjected to full
scope audits.
Page 43
Aukett Swanke Group Plc
Also, we have performed full scope audit on Aukett Fitzroy Robinson International Limited,
Swanke Hayden Connell International Limited, Swanke Hayden Connell Europe Limited and
Anders + Kern Limited for the purpose of coverage and to cover specific identified risk. All full-
scope audits were conducted by the group audit engagement team.
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 for 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 £0.3 Million (2022: £2.3 Million). The
Group has continued to incur further losses
subsequent to the year end. Discussion with
management and review of the post year
end cashflow forecasts indicates a material
uncertainty on going concern.
Given the performance in the year, including
the matters explained in Note 1 and the
to going
‘Material uncertainty
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
pages 67 to 68 and Note 4 in the Group
financial statements.
The measurement of revenue earned on
contracts with
architectural
services
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.
We evaluated the Group’s accounting policy
in respect of revenue recognition to ensure it
is compliant with IFRS 15.
Page 44
Aukett Swanke Group Plc
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 2023 the group has
recognised contract assets of £0.8 Million
(2022: £1.1 Million) and contract liabilities of
£ 1.4 Million (2022: £1.2 Million).
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
comparable on-going
expected on
projects
the accuracy of
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
completed contracts with customers at the
Statement of Financial Position date to be
appropriate and did not identify any material
misstatements in revenue recognition.
Page 45
Aukett Swanke Group Plc
Annual impairment review of goodwill
Refer to the accounting policies in note 1 on
page 64 and Notes 13 and 14 for key
judgements
financial
statements.
the Group
in
in
In the financial statements goodwill arising
from current year acquisitions is valued at
£1.5 Million. Acquisitions
the year
comprise of Torpedo Factory Group Cash
Generating Unit (CGU) in March 2023 giving
(at
to Goodwill of £1.24 Million
rise
acquisition £1.46 Million and subsequent
impairment of £0.22 Million, and
the
acquisition of Anders + Kern UK Limited
(CGU) in July 2023 giving rise to Goodwill of
£0.26 Million.
the value
for assessing whether
The process
International
impairment exists under
Accounting Standard IAS 36 ‘Impairment of
is complex. The process of
Assets’
determining
through
forecasting cash flows (primarily revenue
the
less
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
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.
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.
• Challenging
the revenue cash
flows
within the model. Future revenue was
checked to secure pipeline via contract
Potential wins were
verification.
in bids by
assessed
verification of correspondence. Future
earnings were assessed by verification of
historic conversion of new work.
for progress
• Critically assessed the cost base for
potential omissions or unrealistic targets
based on actual and potential future
changes in the business. We challenged
management where this fell outside our
expectation and checked that these were
accurately
reasonable and
achievable in the light of the economic
environment and future pipeline of work.
stated,
• 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.
Key observation:
Based on the procedures performed and
and
considering
in
methodology used by management
preparing the VIU model, the calculations are
appropriate.
assumptions
the
Page 46
Aukett Swanke Group Plc
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 2023 financial
statements as a whole and performance materiality as follows:
Group financial statements
Materiality
Basis for determining
materiality
£215,000
1.5% of gross revenue
a
in which
professional
primary measure
The gross revenue has been used
as
of
performance which is a measure of
demand for its services and the
different sectors
it
operates. The “sub-consultants”
i.e.,
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
indemnity
insurance covers the gross fees
chargeable to the customers which
includes the subconsultants costs.
The Group is responsible for the
entire 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
the
to
benchmark
performance of
the company
rather than Net Revenue.
£107,500
check
Rationale
benchmark applied
for
the
Performance
materiality
Basis for determining
performance
materiality
for
Parent company financial
statements
£163,000
3% of net assets before
intercompany
adjusting
balances.
Due to the nature of the
parent
we
considered net assets to be
the focus for the readers of
the
statements,
accordingly this consideration
influenced our judgement of
materiality.
company,
financial
£81,500
50% of Group materiality
50% of Parent company
materiality
Page 47
Aukett Swanke Group Plc
Performance materiality:
The performance materiality benchmark has been selected based of the
considerations:
following
•
cumulative identification of errors noted in the previous years that has been posted by
management
• 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 £90,700 to £17,600. 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 £10,750 for the Group and £8,150 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 48
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 41, the
directors are responsible for the preparation of the financial statements and for being satisfied
that they give a true and fair view, and for such internal control as the directors determine is
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s
and the parent company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the group or the parent company or to cease operations, or
have no realistic alternative but to do so.
Auditor’s Responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as
a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect
a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in 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 49
Aukett Swanke Group Plc
• 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
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 2024
Page 50
Aukett Swanke Group Plc
Consolidated income statement
For the year ended 30 September 2023
Note
2023
£’000
2022
£’000
Continuing operations
Revenue
Sub consultant costs
Revenue less sub consultant costs
Cost of sales
Gross profit
Personnel related costs
Property related costs
Other operating expenses
Distribution costs
Other operating income
Operating loss
Finance income
Finance costs
Loss after finance costs
Share of results of associate and joint ventures
Trading profit/(loss) from continuing operations
Acquisition costs
Goodwill impairment
Loss before tax from continuing operations
Tax credit
Profit/(loss) from continuing operations
Profit/(loss) from discontinued operations
Profit/(loss) for the year
Profit/(loss) attributable to:
Owners of Aukett Swanke Group Plc
Non-controlling interests
4
4
5
6
13
10
12
14,335
8,645
(232)
14,103
(2,627)
11,476
(9,031)
(1,322)
(1,375)
(141)
326
(67)
9
(255)
(313)
341
28
(379)
-
(351)
433
82
10
92
92
-
92
(1,518)
7,127
-
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)
Basic and diluted earnings per share for
profit/(loss) attributable to the ordinary equity
holders of the Company:
From continuing operations
From discontinued operations
Total profit/(loss) per share
11
0.04p
0.00p
0.04p
(1.08p)
(0.30p)
(1.38p)
Page 51
Aukett Swanke Group Plc
Consolidated statement of comprehensive income
For the year ended 30 September 2023
Profit/(loss) for the year
Revaluation of freehold property
Deferred tax movement on revaluation
Goodwill impairment on fair value adjustment of
share options (notes 13 and 30)
Currency translation differences
Currency
recycled
operation (note 12)
Currency translation differences on translation of
discontinued operations (note 12)
Other comprehensive loss for the year
translation differences on disposal
to gain on disposal of discontinued
2023
£’000
92
60
(15)
(222)
26
-
-
(151)
2022
£’000
(2,282)
-
-
-
(7)
(209)
(168)
(384)
Total comprehensive loss for the year
(59)
(2,666)
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 profit/(loss) attributable to the
owners of Aukett Swanke Group Plc arises from:
Continuing operations
Discontinued operations
(59)
-
(59)
(69)
10
(59)
(2,666)
-
(2,666)
(1,786)
(880)
(2,666)
Page 52
Aukett Swanke Group Plc
Company registration number 02155571
Consolidated statement of financial position
At 30 September 2023
Non current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use assets
Investment in associate
Investments in joint ventures
Loans and other financial assets
Trade and other receivables
Deferred tax
Total non current assets
Current assets
Inventories
Trade and other receivables
Contract assets
Cash at bank and in hand
Assets in disposal groups classified as held for
sale
Total current assets
Total assets
Current liabilities
Trade and other payables
Contract liabilities
Borrowings
Lease liabilities
Liabilities directly associated with assets in
Disposal groups classified as held for sale
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
Revaluation reserve
Foreign currency translation reserve
Retained earnings
Other distributable reserve
Total equity attributable to
equity holders of the Company
Note
13
14
15
16
18
19
20
22
26
21
22
4
28
23
4
24
16
28
23
24
16
26
27
29
2023
£’000
1,502
404
238
2,132
786
285
89
100
625
6,161
372
3,847
790
522
5,531
3,208
8,739
14,900
(4,589)
(1,398)
(2,050)
(492)
(8,529)
(148)
2022
£’000
-
210
69
2,184
760
247
-
184
281
3,935
-
3,109
1,119
28
4,256
-
4,256
8,191
(3,169)
(1,227)
(482)
(457)
(5,335)
-
(8,677)
(5,335)
(87)
(642)
(1,750)
(161)
(210)
(2,850)
(44)
(167)
(1,962)
(33)
(249)
(2,455)
(11,527)
(7,790)
3,373
401
2,754
2,883
45
(531)
(3,272)
1,494
3,373
1,652
1,176
-
(557)
(3,364)
1,494
401
The financial statements on pages 51 to 124 were approved and authorised for issue by the Board of
Directors on 27 March 2024 and were signed on its behalf by:
Nicholas Clark
Chief Executive
Antony Barkwith
Group Financial Director
Page 53
Aukett Swanke Group Plc
Company registration number 02155571
Company statement of financial position
At 30 September 2023
Non current assets
Property, plant and equipment
Investments
Deferred tax
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
15
17
26
22
22
23
24
23
26
24
29
2023
£’000
1
5,406
203
100
5,710
168
1
169
2022
£’000
7
2,089
-
184
2,280
250
457
707
5,879
2,987
(2,556)
(167)
(2,723)
(1,594)
(250)
(1,844)
(87)
-
-
(87)
(44)
(1)
(167)
(212)
(2,810)
(2,056)
3,069
931
2,754
(4,062)
2,883
1,494
3,069
1,652
(3,391)
1,176
1,494
931
The result for the year contained within the parent company’s income statement is a loss of
£671k (2022: loss £783k).
The financial statements on pages 51 to 124 were approved and authorised for issue by the
Board of Directors on 27 March 2024 and were signed on its behalf by:
Nicholas Clark
Chief Executive
Antony Barkwith
Group Financial Director
Page 54
Aukett Swanke Group Plc
Consolidated statement of cash flows
For the year ended 30 September 2023
Note
31
Cash flows from operating activities
Cash generated from/(expended by) operations
Income taxes received
Net cash inflow/(outflow) from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Sale of property, plant and equipment
Sale of investments
Net cash received on acquisition of subsidiaries
Dividends received from associates & joint
ventures
Net cash received in investing activities
Net cash inflow before financing activities
Cash flows from financing activities
Principal paid on lease liabilities
Interest paid on lease liabilities
Proceeds from bank loans
Repayment of bank loans
Interest paid
Net cash outflow from financing activities
Net change in cash and cash equivalents
Cash and cash equivalents at start of year
Currency translation differences
Cash and cash equivalents at end of year
25
Cash and cash equivalents are comprised of:
Cash at bank and in hand
Net cash included in assets held for sale
Secured bank overdrafts
Cash and cash equivalents at end of year
2023
£’000
1,013
196
1,209
(154)
-
33
367
262
508
1,717
(496)
(72)
-
(459)
(93)
(1,120)
597
(204)
37
430
522
30
(122)
430
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)
Page 55
Aukett Swanke Group Plc
Company statement of cash flows
For the year ended 30 September 2023
Cash flows from operating activities
Cash generated from/(expended by) operations
Interest paid
Net cash inflow/(outflow) from operating activities
Cash flows from investing activities
Purchase of investments
Sale of investments
Dividends received from associates & joint ventures
Net cash (expended by)/generated from investing
activities
Note
31
2023
£’000
52
(24)
28
(515)
33
248
(234)
2022
£’000
(722)
(9)
(731)
-
927
133
1,060
Net cash (outflow)/inflow before financing activities
(206)
329
Cash flows from financing activities
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
(250)
(250)
(456)
457
1
1
1
(83)
(83)
246
211
457
457
457
Page 56
Aukett Swanke Group Plc
Consolidated statement of changes in equity
For the year ended 30 September 2023
£’000
3,067
(2,282)
(384)
(2,666)
401
92
(151)
(59)
-
-
-
-
-
-
45
45
Share
capital
£’000
1,652
Foreign
currency
translation
reserve
£’000
(173)
Retained
earnings
Other
distributable
reserve
Merger
reserve
Revaluation
reserve
Total
equity
£’000
£’000
(1,082)
£’000
1,494
£’000
1,176
-
-
-
-
(384)
(2,282)
-
(384)
(2,282)
-
-
-
-
-
-
At 1 October 2021
Loss for the year
Other comprehensive
income
Total comprehensive
income
At 30 September 2022
1,652
(557)
(3,364)
1,494
1,176
Profit for the year
Other comprehensive
income
Total comprehensive
income
Issue of ordinary shares
in relation to business
combination
Employee share
schemes - Value issued
in relation to business
combination (note 3)
-
-
-
1,102
-
-
26
26
-
-
92
-
92
-
-
-
-
-
-
-
-
(222)
(222)
1,707
-
2,809
222
-
222
At 30 September 2023
2,754
(531)
(3,272)
1,494
2,883
45
3,373
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.
This was then increased through a business combination in March 2023 representing the issue of
110,142,286 new ordinary shares at a price of 2.55 pence per share.
Page 57
Aukett Swanke Group Plc
Company statement of changes in equity
For the year ended 30 September 2023
Share
capital
Retained
earnings
£’000
1,652
£’000
(2,608)
Other
distributable
reserve
£’000
1,494
Merger
reserve
Total
Equity
£’000
1,176
£’000
1,714
-
(783)
-
-
(783)
At 1 October 2021
Loss and total
comprehensive income
for the year
At 30 September 2022
1,652
(3,391)
1,494
1,176
931
Loss for the year
Other comprehensive
income
Total comprehensive
income
Issue of ordinary shares
in relation to business
combination
Employee share schemes
- Value issued in relation
to business combination
(note 3)
-
-
-
(671)
-
(671)
1,102
-
-
-
-
-
-
-
-
-
(222)
(671)
(222)
(222)
(893)
1,707
2,809
222
222
At 30 September 2023
2,754
(4,062)
1,494
2,883
3,069
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.
This was then increased through a business combination in March 2023 representing the issue
of 110,142,286 new ordinary shares at a price of 2.55 pence per share.
Page 58
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 2023, the Group has applied the following amendments for
the first time:
(i) Property, Plant and Equipment: Proceeds before Intended Use – Amendments to IAS
16
(ii) Onerous Contracts – Cost of Fulfilling a Contract – Amendments to IAS 37
(iii) Annual Improvements to IFRS Standards 2018-2020, and
(iv) Reference to the Conceptual Framework – Amendments to IFRS 3.
The group also elected to adopt the following amendments early:
(i) Deferred Tax related to Assets and Liabilities arising from a Single Transaction –
amendments to IAS 12, and
(ii) Disclosure of Accounting Policies – Amendments to IAS 1 and IFRS Practice Statement
2.
The amendments listed above did not have any impact on the amounts recognised in prior
periods and are not expected to significantly affect the current or future periods.
New accounting standards, amendments and interpretations not yet applied
Certain new accounting standards, amendments to accounting standards and interpretations
have been published that are not mandatory for 30 September 2023 reporting periods and have
not been early adopted by the Group. These standards, amendments or interpretations are not
expected to have a material impact on the entity in the current or future reporting periods and
on foreseeable future transactions.
Page 59
Aukett Swanke Group Plc
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 36. 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 Group £250k Coutts overdraft facility is renewed annually and was renewed for an initial 4
months in December 2023 through to 31 March 2024, and subsequently Coutts has agreed to
extend this renewal to 30 September 2024. We have no reason not to expect that the overdraft
facility would not be renewed again in October 2024, however this is not guaranteed.
The £500k CBILS drawn in May 2021 has a duration of three years with interest at 4.05% over
the Coutts base rate (currently 5.25%) in years two and three. As at 30 September 2023 the
balance on the loan was £167k with the final monthly repayment due in May 2024.
The March 2023 acquisition of TFG provided a significant boost to Group equity. TFG have
interest bearing loans and borrowings being a CBILS loan and a mortgage with NatWest. The
CBILS loan was drawn in 2021 at £1.75m, the 30 September 2023 balance being £0.99m, and
being repaid at £29k per month. The loan is at a fixed rate of interest at 3.66%pa.
The Mortgage balance as at 30 September 2023 was £1.41m, with a variable interest at base
rate + 1.93%pa. The mortgage is secured against TFG’s freehold property in London. The
mortgage has recently been extended for a further 12 month period to February 2025 with a
variable rate of interest of base rate + 5.00%pa.
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 or to sell the property and repay
the mortgage before February 2025.
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.
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 continue to have macro-economic
implications, and continue to have significant impact on decision making. To date we have seen
some clients in specific construction sectors pause decision making on commencing and
committing to future stages of development, but many developers are continuing with projects
and some sectors as yet do not appear to be materially affected. Delays in clients making
financial investment decisions due to economic uncertainty may result in the net earnings and
cash flows of the Group not being realised if sufficient alternative work is not secured to offset
delays. However, the Group’s order book for the current year is stronger than a year ago.
Page 60
Aukett Swanke Group Plc
Whilst we continue to pay down the mortgage and CBILS loans, lower than originally budgeted
project billings and cash collection in the period after the year end so far due to a combination
of project instruction delays and cash to invest in strengthening staffing in the recent
acquisitions which will take time to convert into generating higher revenues, has resulted in the
Group delaying payment on the UK architecture quarterly VAT balance due in February 2024
and an overdue balance of PAYE due to HMRC. The Group’s forecasts indicate that this
shortfall is a temporary position which will improve during the 12-month period following the
approval of the financial statements, and we are actively engaging in communications with
HMRC and will seek to agree a short term repayment plan if required.
This shortfall would also be mitigated by the sale of the freehold property. The Board believes
the commercial value of the building very comfortably exceeds its commercial mortgage of
£1.41 million as at 30 September 2023. Additionally the Group’s property agent has confirmed
that it is reasonable to expect offers well in excess of the mortgage liability.
The Group has recently agreed with Coutts to extend the £250,000 overdraft through to 30
September 2024, announced it is raising £425,000 through the issue of new equity (see note
39), and Torpedo Factory Limited has received a fully approved offer for a £500,000 loan which
can be drawn down whenever needed, subject only to the approval of the proposed guarantors
(Nick Clark and Freddie Jenner).
Other funding or mitigating options available to the Board beyond the typical cost cutting in the
face of declining activities include:
• The Board believes the commercial value of its German investments is substantial in
relation to the Group as a whole and if necessary could be realised by a sale for in
excess of book value.
• The Board also believes that in the event of the introduction of invoice discounting the
Group, which typically has in excess of £3.0m tied up in trade debtors at each month
end, could release a significant proportion of this amount. In this regard, Torpedo
Factory Limited has received updated indicative terms a a leading provider of sales
ledger finance of an invoice discounting line to the value of 50% of eligible debtors or
£600,000, whichever is lower. Formal approval of this facility would be subject to an
audit of the Torpedo Factory Limited systems by the lender. For 18 years from 2003-
2021 Torpedo Factory Limited had an invoice discounting facility so is fully familiar with
the processes.
• The Group is currently paying off its liabilities in respect of state funding provided during
the Covid pandemic. The balance of the CBILS drawn by the Group in May 2021 will
be fully repaid in May 2024. The CBILS loan drawn by TFG will be fully repaid by July
2026. By replacing this debt with a new facility repayable over a longer period the
annual cash costs associated with this debt would fall.
• As a company with shares listed on the London Stock Exchange there is the option to
seek additional equity investment from the issue of new shares, as was demonstrated
by the recent share subscription in connection with the Vanti transaction.
Notwithstanding the material uncertainty described above, after making enquiries and
assessing the progress against the forecast, projections and the feasibility of the mitigating
actions referred to above, which if not achieved 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 Directors have
a reasonable expectation that the Group and the Parent Company will continue in operation
and meet its commitments as they fall due over the going concern period.
For this reason, the Board considers it appropriate to prepare the financial statements on a
going concern basis.
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.
Page 61
Aukett Swanke Group Plc
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.
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 venture.
Associate
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 venture
The Group has a joint venture in Frankfurt where ownership is contractual and the agreements
require unanimous consent from all parties for relevant activities. The entity is considered a
joint venture.
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.
Page 62
Aukett Swanke Group Plc
Current Taxation
Current taxes are based on the results shown in the financial statements and are calculated
according to local tax rules, using tax rates enacted or substantially enacted by the statement
of financial position date.
Deferred taxation
Deferred income tax is provided in full, using the statement of financial position liability method,
on temporary differences arising between the tax bases of assets and liabilities and their
carrying amount in the financial statements, and measured at an undiscounted basis.
Deferred income tax is determined using tax rates (and laws) that have been enacted or
substantively enacted by the date of the statement of financial position and are expected to
apply when the related deferred income tax asset is realised or the deferred income tax liability
is settled.
Deferred income tax 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.
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Aukett Swanke Group Plc
Government Grants
Government grants are recognised when there is reasonable assurance that the entity will
comply with grant conditions and that the grant will be received.
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.
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.
Inventories
Inventories as designated at the lower of cost and net realisable value, after making due
allowance for obsolete and slow moving items.
Freehold property
The directors have considered the fair value of the freehold property of The Old Torpedo
Factory, taking into account current rental yields and the market value of similar properties in
the area they consider they consider that the fair value is materially different to the depreciated
historical cost of the property. As a result of this they have adopted the accounting policy to
value freehold property at the fair value.
Page 64
Aukett Swanke Group Plc
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.
The listed investments are traded in an active market, therefore the unadjusted quoted prices
as at the period end date are used to determine the fair value of the investments.
Unlisted investments are carried at cost, as an approximation of the fair value, unless any
indications exist to suggest a material difference in the value of the investments as at the
reporting date.
Leases and asset finance arrangements
The majority of the Group’s accounting policies for leases are set out in note 16.
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 have previously been based on the geographical
areas in which its studios are located, as each reportable operating segment provided the same
type of service to clients, namely integrated professional design services for the built
environment. Internally the Group prepares discrete financial information for each of its
geographical professional design service segments.
With the acquisitions of TFG and A+K in the year the Group now further divides its business by
types of service, with reporting segments expanded as professional design service regions,
TFG and A+K.
Other operating expenses
Other operating expenses include legal and professional costs, professional indemnity
insurance premiums, marketing expenses and other general expenses.
Page 65
Aukett Swanke Group Plc
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 either the straight line method or on a reducing
balance and over the following number of years:
Leasehold improvements –
Office furniture
Office equipment
Computer equipment
Motor Vehicles
Unexpired term of lease
4 years
2-4 years
2-4 years
25%
straight line method
straight line method
straight line method
straight line method
reducing balance method
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 27).
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
Architectural Contracts
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.
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Aukett Swanke Group Plc
The basis on which this is the case is that the work performed by the Group has no alternative
use and the contracts contain provisions by which consideration can be recovered for part-
performance of obligations in the event that a contract is terminated. The revenue recoverable
in such an instance would approximate to compensating the Group for the selling price of the
services rendered to date.
The amount by which revenue exceeds progress billings is classified as contract assets. To the
extent progress billings exceed relevant revenue, the excess is classified as contract liabilities.
Audio Visual Systems
Revenue is recognised when the goods or services are provided, subject to the Group's specific
revenue recognition policy for services rendered detailed below.
Maintenance contracts, consultancy and revenue arising from contracts for the design, supply
and installation of audio visual systems to which there is a contractual commitment at the
balance sheet date are treated as long term contracts. Profit on these contracts is taken as the
work is carried out if the final outcome can be assessed with reasonable certainty. The profit
included is calculated on a prudent basis to reflect the proportion of the work carried out at the
year end, by recording turnover and related costs as contract activity progresses. Revenue is
calculated as that proportion of total contract value which costs incurred to date bear to total
expected costs for that contract. Revenues derived from variations on contracts are recognised
only when they have been accepted by the customer. Full provision is made for losses on all
contracts in the year in which they are first foreseen.
Distribution and Installation of Workplace Technology
The Group derives revenue from the transfer of goods and services over time and at a point in
time. Revenues from external customers come from the sale of hardware and systems
integration. The Group has a number of different types of contractual arrangements and
consequently applies a variety of methods of revenue recognition. The revenue and profit in
any period are based on the delivery of performance obligations and an assessment of when
control is transferred to the customer. In determining the amount of revenue and profits to
record and related balance sheet items (such as trade receivables, accrued income and
deferred income) to recognise in the period, management is required to form a number of
judgements and assumptions. Revenue is recognised when the performance obligation in a
contract has been performed (so ‘point in time’ recognition) or over time as the performance
obligation is transferred to the customer.
The transaction price, being the amount to which the Group expects to be entitled and has
rights to under the contract, is allocated to the identified performance obligations. For each
performance obligation, the Group determines if revenue will be recognised over time or at a
point in time. Where the Group recognises revenue over time for long-term contracts, this is in
general due to the Group performing and the customer simultaneously receiving and
consuming the benefits provided over the life of the contract. For each performance obligation
to be recognised over time, the Company applies a revenue recognition method that faithfully
depicts the Company’s performance in transferring control of the goods or services to the
customer. This decision requires assessment of the real nature of the goods or services that
the Group has promised to transfer to the customer. The Group applies the relevant output or
input method consistently to similar performance obligations in other contracts. If performance
obligations in a contract do not meet the over time criteria, the Group recognises revenue at a
point in time.
Page 68
Aukett Swanke Group Plc
Share based payments
The Group has issued share options to certain employees, in return for which the Group
receives services from those employees. The fair value of the employee services received in
exchange for the grant of the options is recognised as an expense other than where
management perceive the fair value to be immaterial.
The total amount to be expensed is determined by reference to the fair value of the options
granted including any market performance conditions (for example the Company’s share price)
but excluding the impact of any service or non market performance vesting conditions (for
example the requirement of the grantee to remain an employee of the Group).
The fair value of the options granted is estimated by management by utilising a Black-Scholes
option pricing model with reference to expected volatility, vesting period, exercise price, and
market share price at the time of grant.
Non market vesting conditions are included in the assumptions regarding the number of options
that are expected to vest. The total expense is recognised over the vesting period. At the end
of each period the Group revises its estimates of the number of options expected to vest based
on the non market vesting conditions. It recognises the impact of any revision in the income
statement with a corresponding adjustment to equity.
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 22.
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.
Page 69
Aukett Swanke Group Plc
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 design services, audio visual and stage technology, smart
workplace systems, energy management software 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 5% (2022: 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 £0.16m, (2022: £0.20m) trade receivables provision
primarily against historic Middle East trade receivables. Given the nature of these, there
remains the potential to collect these in future years. Further quantitative information
concerning trade receivables is shown in notes 22 and 34.
Impairment of goodwill and other intangible assets
Details of the impairment reviews undertaken in respect of the carrying value of goodwill and
other intangible assets are given in note 17.
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 17.
Inventories
Inventories are stated at the lower of cost and net realisable value. Cost comprises direct
materials and where applicable direct labour costs. When an inventory check is carried out
obsolete inventories identified are written off to cost of sales. The carrying value of inventories
at the year end was £372k (2022: £nil). No provision for inventories has been included in the
year end accounts as it was deemed that all inventories will realise in excess of its carrying
value.
Freehold property
Freehold property is stated at fair value, on periodic valuations by external independent valuers,
taking into account current rental yields and the market value of similar properties in the area.
Page 70
Aukett Swanke Group Plc
Useful lives of other intangible assets
The useful economic live of customer relationships acquired in the TFG business combination
is estimated to be at least 7 years based on analysis of the retention rate of recurring
maintenance contracts in recent years.
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 2023.
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 in May
2023, 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 a 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.
The lease of Torpedo Factory Limited’s Farnham premises, includes a break clause after 3
years in July 2025, and expires on 1 July 2027. The lease includes a break penalty of £5k
equivalent to 3 months rent.
Page 71
Aukett Swanke Group Plc
3
Business combinations
Torpedo Factory Group
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.
Consideration for the acquisition comprised:
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
issued to the participating option holders
Share options in Aukett Swanke Group Plc
Total acquisition cost
£’000
2,809
92
130
3,031
The TFG option holders were granted a 6 month option period after completion to exercise the
additional consideration shares. The options have not been exercised, and expired on 20
September 2023.
Goodwill
Property, plant and equipment
Right-of-use assets
Other intangible assets
Loans and other financial assets
Inventories
Contract assets
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
20 Mar-23
£’000
1,464
3,222
331
227
169
326
-
1,580
799
8,118
1,709
286
2,626
314
152
5,087
3,031
Property, Plant and Equipment included £3,020k net book value of freehold property, being the
Old Torpedo Factory building in London, previously revalued in July 2021.
Acquisition related costs of £354k are disclosed as acquisition costs in the consolidated income
statement.
Page 72
Aukett Swanke Group Plc
Significant estimate: contingent consideration
The 3,631,124 additional consideration shares were measured at the fair value based on an
issue price of 2.55p. This consideration was contingent on the participants exercising their
options by 20 September 2023. The participants did not exercise their options, and the options
expired. As at 30 September 2023 the contingent consideration has been derecognised
resulting in an impairment of £92k to goodwill (note 13) recorded as a loss of £92k in other
comprehensive income.
The 8,400,000 share options were measured at fair value of 1.55p per share being the
difference between the 1p exercise price and the 2.55p closing price of Aukett Swanke Group
Plc shares on 1 March 2023. The options (and therefore the consideration) are contingent on
the holders remaining in employment with the Group on the second anniversary of the date of
grant (being 20 March 2025), at which point they become exercisable. The options lapse on the
sixth anniversary of the date of grant. As at 30 September 2023 the contingent consideration
has been derecognised as explained in note 30 due to the reduction in the share Price of Aukett
Swanke Group Plc following the acquisition, resulting in an impairment of £130k to goodwill
(note 13) recorded as a loss of £130k in other comprehensive income.
Anders + Kern
On the 14 July 2023 the Group acquired 100% of the voting equity instruments in Anders +
Kern U.K. Limited, a distributor of smart workplace systems.
Consideration for the acquisition comprised: £515,057 payable in cash.
Goodwill
Property, plant and equipment
Deferred tax asset
Inventories
Contract assets
Trade and other receivables
Net cash
Assets
Trade and other payables
Contract liabilities
Liabilities
Total net assets
14 Jul-23
£’000
260
9
147
108
60
220
97
901
278
108
386
515
Acquisition related costs of £25k are disclosed as acquisition costs in the consolidated income
statement.
Page 73
Aukett Swanke Group Plc
4
Operating segments
The Group historically comprised a single business segment with separately reportable
geographical segments (together with a Group costs segment). Geographical segments being
based on the location of the operation undertaking each project.
The Group’s operating geographical segments consist of the United Kingdom, the Middle East
and Continental Europe. Turkey is included within Continental Europe together with Germany.
As set out in note 28, the board concluded the sale of the Turkey subsidiary Aukett Swanke
Mimarlik AS on 27 December 2023, and has classified the assets and liabilities of that
subsidiary as assets held for sale as at 30 September 2023. The Group identifies geographical
areas of operation aligned to its geographical segments. The Group retains its significant
investments in its joint venture and associate in Germany and considers the subsidiary sold to
have represented a small proportion of the geographical segment. Accordingly, Aukett Swanke
Mimarlik AS has not been re-presented as a discontinued operation.
The Middle East segment has been re-presented as a discontinued operation and is set out in
note 12.
With the acquisition of Torpedo Factory Group and Anders + Kern during the period, Torpedo
Factory Group and Anders + Kern operations have been disclosed as additional separate
business segments.
Income statement segment information
Segment revenue
United Kingdom
Torpedo Factory Group
Anders+Kern
Continental Europe
Revenue from continuing operations
Discontinued operations
Revenue
Segment revenue less sub consultant costs
United Kingdom
Torpedo Factory Group
Anders+Kern
Continental Europe
Revenue
continuing operations
Discontinued operations
Revenue less sub consultant costs
less sub consultant costs
from
2023
£’000
8,858
4,816
467
194
14,335
2
14,337
2023
£’000
8,692
4,816
467
128
14,103
-
14,103
2022
£’000
8,465
-
-
180
8,645
1,543
10,188
2022
£’000
6,975
-
-
152
7,127
1,256
8,383
Most 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 22 are in respect of the Group’s contracts with
customers.
Page 74
2023
£’000
(77)
(145)
-
-
(24)
(246)
2023
£’000
60
24
1
2
5
92
-
92
2023
£’000
403
63
-
-
466
-
466
2023
£’000
(94)
401
62
277
(997)
-
(351)
10
(341)
2022
£’000
(86)
-
-
-
(9)
(95)
2022
£’000
71
-
-
3
3
77
20
97
2022
£’000
398
-
-
398
15
413
2022
£’000
(329)
-
-
275
(18)
(1,752)
(1,824)
(503)
(2,327)
Aukett Swanke Group Plc
Segment net finance expense
Continuing operations
United Kingdom
Torpedo Factory Group
Anders+Kern
Continental Europe
Group costs
Net finance expense
Segment depreciation
United Kingdom
Torpedo Factory Group
Anders+Kern
Continental Europe
Group costs
Depreciation from continuing operations
Discontinued operations
Depreciation
Segment amortisation
United Kingdom
Torpedo Factory Group
Anders+Kern
Continental Europe
Amortisation from continuing operations
Discontinued operations
Amortisation
Segment result before tax
United Kingdom
Torpedo Factory Group*^
Anders+Kern
Continental Europe
Group costs*
Goodwill impairment
Loss before tax from continuing operations
Profit/(loss) from discontinued operations
Total loss before tax
Page 75
Aukett Swanke Group Plc
Segment result before tax
(before reallocation of group management
charges)
United Kingdom
Torpedo Factory Group * ^
Anders+Kern
Continental Europe
Group costs # *
Goodwill impairment
Subtotal
Group management charges charged to the
Middle East discontinued operation
Loss before tax from continuing operations
Profit/(loss) from discontinued operations
Total loss before tax
2023
£’000
2022
£’000
202
467
62
423
(1,505)
-
(351)
211
-
-
422
(809)
(1,752)
(1,928)
-
104
(351)
10
(341)
(1,824)
(503)
(2,327)
# Segmental results before tax include £25k of exceptional costs being transactional costs for
the acquisition of Anders + Kern allocated within Group costs.
* Segmental results before tax include £260k of exceptional costs being transactional costs for
the acquisitions of Torpedo Factory Group and Anders + Kern allocated as £210k within Group
costs, and £50k within Torpedo Factory Group.
^ TFG segmental result before tax includes £94k of one-off costs relating to the settlement of
TFG employees company share option costs and the loss on assets disposed of as part of the
Live Events disposal.
The Group’s share of results from associate and joint ventures included within the Continental
Europe segment result are shown in notes 18 and 19.
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
2023
£’000
790
-
790
1,398
1,398
2022
£’000
1,200
(1)
1,199
1,227
1,227
Contract assets have decreased as the Group provided lower amounts of services ahead of
invoicing. Most of the contract assets are derived from the TFG and A+K businesses acquired
in the year, combining to £614k. However, for UK architecture, the balance of contract assets
decreased significantly to £176k (September 2022: £1,012k). The prior year balance included
a project which had been paused as at September 2022 with a balance of WIP for UK
architecture and sub-consultants of £773k. Following the resumption of this project the WIP
balance fell significantly.
Page 76
Aukett Swanke Group Plc
Contract liabilities have increased as the Group has invoiced for higher amounts ahead of
providing services. The increase is primarily due to the TFG and A+K acquisitions in the year,
combining to £299k of contract liabilities as at September 2023. The remaining balance of
contract liabilities derive primarily from contracts in the UK architecture operating segment.
Revenue recognised in relation to contract liabilities
The following table shows how much of the revenue recognised in the current reporting period
relates to carried-forward contract liabilities and how much relates to performance obligations
that were satisfied in a prior year:
Total contract liabilities as at 1 October 2022
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 2023
Statement of financial position segment information
Segment assets
United Kingdom
Torpedo Factory Group
Anders+Kern
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
Torpedo Factory Group
Anders+Kern
Middle East
Continental Europe
Trade payables, contract liabilities and accruals
Other current liabilities
Non current liabilities
Total liabilities
Page 77
2023
£’000
1,890
1,444
339
5
50
3,728
5,111
6,061
14,900
2023
£’000
2,637
1,602
346
198
72
4,855
3,822
2,850
11,527
£’000
(1,227)
1,217
2
(1,390)
(1,398)
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
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
2023
£’000
14,141
14,141
194
2
196
2022
£’000
8,465
8,465
180
1,543
1,723
14,337
10,188
2023
£’000
4,376
4,376
-
1,071
-
-
1,071
5,447
625
6,072
2022
£’000
2,453
2,453
-
1,007
10
-
1,017
3,470
281
3,751
During the year ended 30 September 2023, the Group derived 10% or more of its revenues
from one client (2022: one client).
Largest client revenues
2023
£’000
1,636
2022
£’000
2,009
The largest client revenues for 2023 relate to the United Kingdom operating segment (2022:
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
2023
£’000
13,831
2
479
25
14,337
2022
£’000
7,804
1,543
696
145
10,188
Page 78
Aukett Swanke Group Plc
5
Other operating income
Property rental income
Management charges to joint ventures and
associates
Other sundry income
Total other operating
operations
Discontinued operations
Total other operating income
income
from continuing
6
Finance costs
Continuing operations
Fair value movement on investments
Payable on bank loans and overdrafts
Finance lease interest payable
Other interest payable
Total finance costs
7
Auditor remuneration
2023
£’000
163
134
29
326
-
326
2023
£’000
80
89
74
12
255
2022
£’000
147
131
48
326
-
326
2022
£’000
-
19
76
-
95
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
2023
Additional fees paid to the Company’s previous auditor for the
audit of the Company’s annual accounts for the year ended
September 2022
2023
£’000
2022
£’000
135
-
59
33
Fees payable to the Company’s auditor and its associates
for other services
Audit of the Company’s subsidiaries pursuant to legislation
124
71
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.
Page 79
Aukett Swanke Group Plc
8
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
2023
Number
97
35
132
2022
Number
83
23
106
2023
Number
-
6
6
2022
Number
-
6
6
In addition to the number of staff disclosed above, the Group’s associate and joint ventures
employed an average of 153 persons (2022: 137 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
2023
£’000
6,471
703
331
2022
£’000
5,200
468
262
7,505
5,930
2023
£’000
550
67
47
664
2022
£’000
574
56
43
673
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.
Page 80
Aukett Swanke Group Plc
9
Directors’ emoluments
2023
Nicholas Thompson
Robert Fry
Clive Carver
Raúl Curiel
Tandeep Minhas
Nick Clark
Freddie Jenner
Antony Barkwith
Total
2022
Nicholas Thompson
Robert Fry
Clive Carver
Raúl Curiel
Antony Barkwith
Total
Aggregate
emoluments
£’000
39
90
77
20
14
73
34
138
485
Aggregate
emoluments
£’000
209
123
30
30
163
555
Pension
contributions
£’000
3
15
-
-
-
9
4
17
48
Pension
contributions
£’000
10
15
-
-
18
43
Total
received
£’000
42
105
77
20
14
82
38
155
533
Total
received
£’000
219
138
30
30
181
598
Waived
£’000
-
-
-
-
-
-
-
-
-
Waived
£’000
-
-
-
-
-
-
Total
entitlement
£’000
42
105
77
20
14
82
38
155
533
Total
entitlement
£’000
219
138
30
30
181
598
Benefits were accruing to five Directors (2022: three Directors) under defined contribution
pension arrangements.
The aggregate emoluments of the highest paid Director were £138,000 (2022: £209,000)
together with pension contributions of £17,000 (2022: £10,000).
Page 81
Aukett Swanke Group Plc
10
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 26)
Total tax credit
2023
£’000
-
(196)
(196)
(79)
(56)
(102)
(237)
(433)
2022
£’000
-
-
-
(45)
-
-
(45)
(45)
The standard rate of corporation tax in the United Kingdom that is applicable for the financial
year was 22% (2022: 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 22% (2022: 19%)
Effects of:
Other non tax deductible expenses
Associate and joint ventures reported net of tax
Tax losses not recognised
Impact on deferred tax of change in UK tax rate
Current tax adjustment in respect of previous years
Deferred tax adjustment in respect of previous years
(Losses)/Income not taxable
Total tax credit
2023
£’000
(330)
(73)
66
(75)
7
(102)
(196)
(56)
(4)
(433)
2022
£’000
(2,327)
(442)
279
(62)
104
-
4
2
70
(45)
11
Earnings per share
The calculations of basic and diluted earnings per share are based on the following data:
Earnings
Continuing operations
Discontinued operations
Profit/(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
2023
£’000
82
10
92
2022
£’000
(1,779)
(503)
(2,282)
2023
Number
223,915,859
-
223,915,859
2022
Number
165,213,652
-
165,213,652
Page 82
Aukett Swanke Group Plc
As explained in note 29 the Company has granted options over 10,400,000 of its ordinary
shares. These have not been included above as i) the average share price on 1,000,000 of the
options was below the exercise price in 2023 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 2023 but to the extent that the dilutive effect would be trivial. The remaining 8,400,000
options granted in the year are not exercisable until March 2025.
12
Discontinued operations
12 (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:
2023
£’000
33
(33)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2022
£’000
927
163
1,090
(9)
(112)
969
37
736
641
361
(954)
821
(209)
612
357
-
357
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
Page 83
Aukett Swanke Group Plc
12 (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
Profit/(loss) before tax
Tax credit / (charge)
Profit/(loss) from discontinued operations
Exchange differences on disposal recycled to
gain on disposal of subsidiary
Exchange differences on
discontinued operation
Other
discontinued operations
comprehensive profit/(loss)
translation of
from
2023
£’000
2
(2)
-
-
(2)
12
-
-
-
-
-
-
-
10
-
10
-
-
10
2022
£’000
1,543
(287)
1,256
(1,233)
(109)
(635)
(104)
-
(20)
(15)
-
357
-
(503)
-
(503)
(209)
(168)
(880)
Earnings per share from discontinued operations
2023
£’000
2022
£’000
Basic and diluted profit/(loss) per share
0.00p
(0.30p)
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 from investing activities
Foreign exchange movements
Net cash from discontinued operations
2023
£’000
-
-
-
-
2022
£’000
(53)
35
(204)
(222)
Page 84
Aukett Swanke Group Plc
13
Goodwill
Group
Cost
At 1 October 2021
Addition
Disposal
Exchange differences
At 30 September 2022
Additions
Disposal
Exchange differences
At 30 September 2023
Impairment
At 1 October 2021
Impairment
Disposal
Exchange differences
At 30 September 2022
Impairment
Disposal
Exchange differences
At 30 September 2023
Net book value
At 30 September 2023
At 30 September 2022
At 1 October 2021
£’000
2,370
-
(608)
(10)
1,752
1,724
-
-
3,476
-
1,752
-
-
1,752
222
-
-
1,974
1,502
-
2,370
The disposal recorded in the prior year related to goodwill on JRHP which was sold during the
prior 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 12 (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. In
the prior year, Management therefore took the decision to write off the full £1,740k balance of
Goodwill for the United Kingdom operations in the prior year.
Additions in the current year comprise the acquisition of TFG in March 2023 giving rise to
Goodwill of £1,464k, and the acquisition of Anders + Kern in July 2023 giving rise to Goodwill
of £260k as detailed in note 3.
As explained in note 3, £92k of the TFG goodwill relates to additional consideration shares,
which were not exercised and expired on 20 September 2023. Management have made an
impairment to goodwill matching this amount.
Page 85
Aukett Swanke Group Plc
As explained in note 3, £130k of the TFG goodwill relates to the fair value of share options
issued as part of the acquisition consideration of the business combination. For the reasons
detailed note 30, Management has taken the decision to impair the goodwill associated with
the fair value acquisition cost represented by these share options.
The net book value of goodwill is allocated to the Group’s cash generating units (“CGU”) as
follows:
Torpedo
Factory
Group
-
-
-
-
-
1,464
-
(222)
-
1,242
Anders +
Kern
United
Kingdom Turkey
Middle
East
£’000
£’000
£’000
£’000
-
-
-
-
-
260
-
-
-
260
1,740
-
(1,740)
-
-
-
-
-
-
-
22
-
(12)
(10)
-
-
-
-
-
-
608
(608)
-
-
-
-
-
-
-
-
Total
£’000
2,370
(608)
(1,752)
(10)
-
1,724
-
(222)
-
1,502
At 1 October 2021
Disposal
Impairment
Exchange differences
At 30 September 2022
Additions
Disposal
Impairment
Exchange differences
At 30 September 2023
An annual impairment test is performed over the cash generating units (‘CGUs’) of the Group
where goodwill and intangible assets are allocable to those CGUs. The net book values are
supported by the value in use calculations detailed further in note 17.
Page 86
Aukett Swanke Group Plc
14
Other intangible assets
Group
Cost
At 1 October 2021
Disposal
Exchange differences
At 30 September 2022
Acquired through business
combinations
Exchange differences
At 30 September 2023
Amortisation
At 1 October 2021
Disposal
Charge
Exchange differences
At 30 September 2022
Disposal
Impairment
Charge
Exchange differences
At 30 September 2023
Net book value
At 30 September 2023
At 30 September 2022
At 1 October 2021
Trade
name
£’000
Customer
relationships
£’000
IT assets
£’000
Trade
licence
£’000
655
(21)
56
690
-
(36)
654
427
(21)
13
61
480
-
-
13
(34)
459
195
210
228
354
(183)
(11)
160
152
(12)
300
285
(125)
11
(11)
160
-
-
11
(12)
159
141
-
69
-
-
-
-
75
-
75
-
-
-
-
-
-
-
7
-
7
68
-
-
Total
£’000
1,082
(277)
45
850
227
(48)
1,029
758
(196)
28
50
640
-
-
31
(46)
625
73
(73)
-
-
-
-
-
46
(50)
4
-
-
-
-
-
-
-
-
-
27
404
210
324
Amortisation is included in other operating expenses in the consolidated income statement.
Disposal
The disposal in the prior year related to the sale of JRHP in April 2022.
Impairment
An annual impairment test is performed over the cash generating units (‘CGUs’) of the Group
where goodwill and intangible assets are allocable to those CGUs. The net book values are
supported by the value in use calculations detailed further in note 17.
Page 87
Aukett Swanke Group Plc
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 16 years.
Customer relationships
Customer relationships were acquired as part of the acquisition of SHC in December 2013, on
the acquisition of JRHP in June 2015. 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 prior year with the sale of JRHP.
In the year to 30 September 2023, the assets acquired were part of the acquisition of Torpedo
Factory Group in March 2023 (note 3). This represents the value attributed to clients who
provided repeat business to the Group on the strength of these relationships. The fair value
was ascertained by analysing the net present value of recurring maintenance contracts
adjusted for retention rates based on historical customer retention data. The customer
relationships are being amortised on a straight line basis over a 7 year period from the
acquisition date.
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 prior year with the sale of
JRHP.
IT assets
The IT assets were acquired as part of the acquisition of Torpedo Factory Group in March
2023 (note 3) and consist of domain names, computer software and website development
costs.
Page 88
Aukett Swanke Group Plc
15
Property, plant & equipment
Group
Cost
At 1 October 2021
Additions
Disposals
Exchange differences
At 30 September 2022
Acquired through
business combinations
Additions
Disposals
Revaluation
Assets classified as held
for sale
Exchange differences
At 30 September 2023
Depreciation
At 1 October 2021
Charge
Disposals
Exchange differences
At 30 September 2022
Charge
Disposals
Exchange differences
At 30 September 2023
Net book value
At 30 September 2023
At 30 September 2022
At 1 October 2021
Company
Cost
At 1 October 2022
Additions
Disposals
At 30 September 2023
Depreciation
At 1 October 2022
Charge
Disposals
At 30 September 2023
Net book value
At 30 September 2023
At 1 October 2022
Freehold
Property
£’000
Leasehold
improvements
£’000
Furniture &
equipment
£’000
Motor
vehicles
£’000
11
-
-
(5)
6
41
-
(5)
-
-
-
42
11
-
-
(5)
6
3
(5)
(1)
3
39
-
-
-
-
-
-
-
60
-
(8)
-
-
-
52
-
-
-
-
-
9
(7)
-
2
50
-
-
733
48
(244)
(5)
532
110
102
(60)
-
-
(9)
675
578
97
(207)
(5)
463
80
(9)
(8)
526
149
69
155
Furniture &
equipment
£’000
17
-
(10)
7
10
5
(9)
6
1
7
-
-
-
-
-
3,020
-
-
60
(3,080)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 89
Total
£’000
744
48
(244)
(10)
538
3,231
102
(73)
60
(3,080)
(9)
769
589
97
(207)
(10)
469
92
(21)
(9)
531
238
69
155
Total
£’000
17
-
(10)
7
10
5
(9)
6
1
7
Aukett Swanke Group Plc
16
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 27).
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 90
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 2023, the lease of Torpedo Factory Limited’s Farnham premises, includes a
break clause after 3 years in July 2025, and expires on 1 July 2027. The lease includes a break
penalty of £5k equivalent to 3 months rent.
Page 91
Aukett Swanke Group Plc
Right-of-use Assets
At 1 October 2021
Additions
Amortisation
At 30 September 2022
Acquired through
business combinations
Additions
Amortisation
At 30 September 2023
Lease liabilities
At 1 October 2021
Additions
Interest expense
Lease payments
At 30 September 2022
Acquired through
business combinations
Additions
Interest expense
Lease payments
At 30 September 2023
Land and
buildings
£’000
Restoration
costs
£’000
Leasehold
improvements
£’000
Motor
vehicles
£’000
2,154
-
(324)
1,830
214
-
(351)
1,693
144
-
(22)
122
-
-
(22)
100
248
23
(39)
232
-
52
(44)
240
-
-
-
-
117
-
(18)
Total
£’000
2,546
23
(385)
2,184
331
52
(435)
Land and
buildings
£’000
Leasehold
improvements
£’000
Motor
vehicles
£’000
2,756
-
72
(464)
2,364
213
-
67
(494)
2,150
133
-
4
(82)
55
-
-
1
(55)
1
-
-
-
-
-
106
-
4
(19)
91
99
2,132
Total
£’000
2,889
-
76
(546)
2,419
319
-
72
(568)
2,242
£’000
37
20
-
33
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 2023
At 30 September 2022
Up to 3
months
£’000
122
118
Between 3
and 12
months
£’000
Between 1
and 2 years
£’000
Between 2
and 5 years
£’000
Over 5
years
£’000
370
339
508
415
1,242
1,316
-
231
Page 92
Aukett Swanke Group Plc
The Group acts as a lessor through the sub-let of part of the third floor at its Bonhill Street
studio, part of its North Acton studio, and its Farnham premises. The following is the aggregate
minimum future receivables under these leases.
Not later than one year
Later than one year and not later than five years
Later than five years
Total
17
Investments
Company
Subsidiaries
Cost
At 1 October 2021
Disposal
At 30 September 2022
Additions
At 30 September 2023
Provisions
At 1 October 2021
Charge
At 30 September 2022
Charge
At 30 September 2023
Net book value
At 1 October 2021
At 30 September 2022
At 30 September 2023
£’000
10,200
(1,021)
9,179
3,546
12,725
6,943
180
7,123
229
7,352
3,257
2,056
5,373
2023
£’000
71
16
-
87
2022
£’000
44
-
-
44
Joint
ventures
£’000
Associate
Total
£’000
£’000
21
-
21
-
21
-
-
-
-
-
21
21
21
12
-
12
-
12
-
-
-
-
-
12
12
12
10,233
(1,021)
9,212
3,546
12,758
6,943
180
7,123
229
7,352
3,290
2,089
5,406
The increase in cost of £3,546k during the year related to the acquisitions of a Torpedo Factory
Group Limited (£3,031k) and Anders + Kern U.K. Limited (£515k), see note 3.
The disposal in the prior year related to the disposal of the investment in JRHP (note 12).
A provision for impairment of £222k has been made to reduce the Company’s investment in
Torpedo Factory Group Limited. As explained in note 3, £92k of the TFG investment relates to
additional consideration shares, which were not exercised and expired on 20 September 2023.
Management have made an impairment to investments matching this amount. £130k of the
TFG investment relates to the fair value of share options issued as part of the acquisition
consideration of the business combination. For the reasons detailed note 30, Management has
taken the decision to impair the investment associated with the fair value acquisition cost
represented by these share options.
A provision for impairment of £7k (2022: £180k) 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.
Page 93
Aukett Swanke Group Plc
The current net book values of the investments in subsidiaries is £5,373k (2022: £2,056k) after
charges made in the current year, which is larger than the net assets of the consolidated
statement of financial position of £3,373k (2022: £401k). 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.
An annual impairment test is performed over cash generating units (‘CGUs’) of the Group. The
UK architectural operations (Aukett Swanke Limited and Veretec Limited) are considered to be
one CGU. Torpedo Factory Group Limited along with its subsidiaries Torpedo Factory Limited
and TFG Stage Technology 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
architectural operation are:
•
•
•
the future level of revenue, set at a compound growth rate of 8.12% (2022: 11.30%) 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 4.20% based on the Nov-23 annualise UK CPI index.
long term growth rate - which has been assumed to be 1.7% (2022: 1.5%) 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 18.13% (2022: 18.32%).
Based on the discounted cash flow projections, the recoverable amount of the UK CGU is
estimated to exceed carrying values by £6,498k (437%). An 8.4% 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
86%, would result in carrying amounts exceeding their recoverable amount. A decrease in the
effective compound growth rate of revenue to 5.98% instead of the 8.12% 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.
The same assumptions on CPI, the long term growth rate and the discount rate were also
applied for the reviews of the TFG and A+K operations.
• For Anders + Kern the future level of revenue, set at a compound growth rate of 9.49%
(2022: N/A) over the next five years – is based on two years of budgeted revenue targets,
with following years assuming annualised inflation of earnings (and costs) using a CPI
assumption of 4.20% based on the Nov-23 annualised UK CPI index.
Page 94
Aukett Swanke Group Plc
Based on the discounted cash flow projections, the recoverable amount of the A+K CGU is
estimated to exceed carrying values by £1,253k (243%). A 17.3% 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 A+K CGU, or an increase in the discount rate to over
50%, would result in carrying amounts exceeding their recoverable amount. A decrease in the
effective compound growth rate of revenue to 5.42% instead of the 9.49% noted above, without
a corresponding reduction in costs in the A+K 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.
• For Torpedo Factory Group the future level of revenue, set at a compound growth rate of
4.51% (2022: N/A%) over the next five years – is based on two years of budgeted revenue
targets, with following years assuming annualised inflation of earnings (and costs) using a
CPI assumption of 4.20% based on the Nov-23 annualise UK CPI index.
Based on the discounted cash flow projections, the recoverable amount of the TFG CGU is
estimated to exceed carrying values by £2,832k (101%). A 13.0% 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 TFG CGU would result in carrying amounts exceeding
their recoverable amount. The base model is largely insensitive to discount rates as it assumes
the CGU is profitable, with an assumption of a sale of the freehold property at the balance sheet
carrying value which covers the investment carrying value. A decrease in the effective
compound growth rate of revenue to 1.64% instead of the 4.51% noted above, without a
corresponding reduction in costs in the TFG 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 95
Aukett Swanke Group Plc
Subsidiary operations
The following are the subsidiary undertakings at 30 September 2023:
Name
Subsidiaries
Aukett Swanke Limited
Aukett Fitzroy Robinson International
Limited
Veretec Limited
Swanke Hayden Connell International
Limited
Aukett Swanke Mimarlik AS (formerly
Swanke Hayden Connell Mimarlik AS)
Shankland Cox Limited
Aukett Swanke Architectural Design
Limited
Anders + Kern U.K. Limited
Torpedo Factory Group Limited
Torpedo Factory Limited
TFG Stage Technology Limited
Swanke Hayden Connell Europe
Limited
Fitzroy Robinson Limited
Swanke 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
Foresight Audio Visual Limited
Pinnerton Video Systems Limited
Orion Audio Visual Limited
Country of
incorporation and
registered office
address
(see table below)
Proportion
of ordinary equity
held
2023
2022
Nature of business
(A)
(A)
(A)
(A)
(B)
(A)
(A)
(A)
(C)
(C)
(C)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(A)
(C)
(C)
(C)
100%
100%
100%
100%
100% Architecture & design
100% Architecture & design
100% Architecture & design
100% Architecture & design
100%
100% Architecture & design
100%
100% Architecture &
100%
Engineering
100% Architecture & design
100%
0%
100%
100%
0%
0%
100%
0%
Distribution and
installation of
workplace
technology
Holding company
Design, supply and
installation of audio
visual systems
Design, supply and
installation of stage
technology, stage
engineering and
associated audio
visual systems
100%
100% Non-trading
100%
100%
100%
100%
100%
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
0%
0%
0%
Dormant
Dormant
Dormant
Aukett Fitzroy Robinson International Limited is incorporated in England & Wales. The entity
operated principally through its Middle East branch which was registered in the Abu Dhabi
emirate of the United Arab Emirates. The branch licence expired and was cancelled in July
2020, with new work engaged through Aukett Swanke Architectural Design Limited.
Page 96
Aukett Swanke Group Plc
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.
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 in January and April 2022, with ongoing projects
being reassigned to JRHP prior to the sale of JRHP.
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 2023. 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 + Heese GmbH
(D)
(E)
2023 2022
50%
50%
Joint venture Equity
25%
25% Associate
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)
Country of Incorporation
England & Wales
Turkey
England & Wales
Germany
Germany
Registered office address
10 Bonhill Street, London, EC2A 4PE, United Kingdom
Alkaranfil Sk. No:8 Levent, 34330, Istanbul, Turkey
The Old Torpedo Factory, St Leonard’s Road, London, NW10 6ST,
United Kingdom
Gutleutstrasse 163, 60327 Frankfurt am Main, Germany
Budapester Strasse 43, 10787 Berlin, Germany
Page 97
Aukett Swanke Group Plc
18
Investment in associate
As disclosed in note 17, 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
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
2023
£’000
213
7,883
8.096
2022
£’000
278
6,229
6,507
(4.953)
(4,953)
(3,465)
(3,465)
3,143
3,042
2023
£’000
3,041
1,194
(46)
(1,046)
3,143
25%
786
786
2023
£’000
16,460
(5,216)
11,244
(9,521)
1,723
(529)
1,194
(46)
1,148
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
The Group received dividends of £248,000 after deduction of German withholding taxes (2022:
£126,000) 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.
Page 98
Aukett Swanke Group Plc
19
Investments in joint ventures
Frankfurt
As disclosed in note 17, the Group owns 50% of Aukett + Heese Frankfurt GmbH which is
based in Frankfurt, Germany.
At 1 October 2021
Share of profits
Dividends paid
Exchange differences
At 30 September 2022
Share of profits
Dividends paid
Exchange differences
At 30 September 2023
£’000
201
40
-
6
247
42
-
(4)
285
The Group received dividends of £nil after deduction of German withholding taxes (2022: £nil)
from Aukett + Heese Frankfurt GmbH. The following amounts represent the Group’s 50% share
of the assets and liabilities, and revenue and expenses of Aukett + Heese Frankfurt GmbH.
Assets
Non current assets
Current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
Revenue
Sub consultant costs
Revenue less sub consultant costs
Operating costs
Profit before tax
Taxation
Profit after tax
2023
£’000
4
371
375
(90)
(90)
285
2023
£’000
832
(272)
560
(498)
62
(20)
42
2022
£’000
11
369
380
(133)
(133)
247
2022
£’000
824
(271)
553
(494)
59
(19)
40
The principal risks and uncertainties associated with Aukett + Heese Frankfurt GmbH are the
same as those detailed within the Group’s Strategic Report.
Page 99
Aukett Swanke Group Plc
Prague
The Group owned 50% of Aukett sro which is based in Prague, Czech Republic. The final
liquidation of this entity was completed during the prior year and a final distribution received.
At 1 October 2021
Share of losses
Liquidation dividend distribution paid
Exchange differences
At 30 September 2022 and at
30 September 2023
£’000
8
(1)
(7)
-
-
The following amounts represent the Group’s 50% share of the assets and liabilities, and
revenue and expenses of Aukett sro.
2023
£’000
2022
£’000
Assets
Current assets
Total assets
Liabilities
Current liabilities
Total liabilities
Net assets
Revenue
Sub consultant costs
Revenue less sub consultant costs
Operating costs
Loss before tax
Taxation
Loss after tax
-
-
-
-
-
2023
£’000
-
-
-
-
-
-
-
20
Loans and other financial assets
Group
Cost or valuation
At 1 October 2022
Acquisition of subsidiary (note 3)
Additions
Disposals
Revaluations
At 30 September 2023
Listed
investments
£’000
Unlisted
investments
£’000
-
119
-
-
(30)
89
-
50
-
-
(50)
-
Page 100
-
-
-
-
-
2022
£’000
-
-
-
(1)
(1)
-
(1)
Total
£’000
-
169
-
-
(80)
89
Aukett Swanke Group Plc
21
Inventories
Group
Goods for resale
2023
£’000
372
2022
£’000
-
The cost of inventories recognised as an expense within cost of sales amounted to £nil (2022:
£nil) in relation to obsolete stock.
22
Trade and other receivables
Group
Amounts due after more than one year
Other financial assets at amortised cost
Total amounts due after more than one year
Amounts due within one year
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 amounts due within one year
Total
Company
Amounts due after more than one year
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
2023
£’000
100
100
3,053
(167)
2,886
289
-
-
672
3,847
3,947
2023
£’000
100
100
11
111
-
34
12
168
268
2022
£’000
184
184
2,514
(199)
2,315
316
-
-
478
3,109
3,293
2022
£’000
184
184
24
163
-
46
17
250
434
The amounts owed by subsidiaries were secured in January 2013 by debentures over all the
assets of the relevant subsidiaries. These debentures rank after the debentures securing the
bank loan and overdraft.
During the year, the Company made provisions totalling £13k (2022: £298k) 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.
Page 101
Aukett Swanke Group Plc
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 architecture and Turkey have been immaterial
in the historical period reviewed in order to establish the expected loss rate at 30 September
2023. 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.
For Torpedo Factory Ltd, TFG Stage Technology Ltd and A+K, provisions on bad and doubtful
debts have been immaterial in the period post acquisition, and in the historical pre-acquisition
period reviewed. Standard payment terms for all companies are 30 days for smaller works
completed. It is usual on larger projects to agree in advance with the client at the start of the
project a monthly billing schedule which generally leads to relatively low levels of contracts
assets (and consequentially higher levels of contract liabilities). These larger projects tend to
be 30 days although certain JCT contracts may extend to 60 day terms. Service Contracts as
standard are billed annually in advance for a 12 month period. No loss allowance provision has
been made for trade receivables and contracts assets owed to these Group entities.
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. However, the Middle East operations
of the Group are currently not undertaking new work and are not expected to trade in the future.
No loss allowance has been made as at 30 September 2023. The balance of contract assets
as at 30 September 2023 was AED Nil, and the closing balance of trade receivables balance
comprised 1 outstanding immaterial debtor.
The total impairment allowance is down £32k compared to the prior year, primarily due to the
write-off of old provisions and low amounts of new provisions required in the year. Impairment
allowances as a percentage of gross trade receivables has therefore decreased to 5.0% (2022:
7.9%).
The comparative loss allowance for the Middle East operating segment as at 30 September
2022 was:
Page 102
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 loss allowance for the Middle East operating segment as at 30 September 2023 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 £nil
arises which is taken through the foreign currency translation reserve.
Opening loss allowance provision as at 1 October 2022
Loss allowance provision
Amounts restated through opening Foreign Currency
translation reserve
Loss allowance calculated based on ECL loss matrices
Additional provisions identified on a case by case basis
Total loss allowance as at 30 September 2023 - calculated
under IFRS 9
Contract
assets
£’000
Trade
receivables
£’000
-
-
-
-
-
-
4
(4)
-
-
167
167
The loss allowances decreased by £4k to nil for trade receivables and remained unchanged at
£nil for contract assets during the year to 30 September 2023.
A further allowance for impairment of trade receivables and contract assets is established on a
case-by-case basis amounting to £167k at 30 September 2023 and £195k at 30 September
2022 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.
Page 103
Aukett Swanke Group Plc
The movement on impairment allowances for trade receivables was as follows:
£’000
272
(38)
(32)
133
(162)
26
199
(4)
14
(29)
(13)
167
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
2023
£’000
87
87
1,808
1,086
118
1,577
4,589
4,676
2023
£’000
87
87
117
2,082
45
19
293
2,556
2,643
At 1 October 2021
Loss allowance provision
Disposal of JRHP
Charged
the
additional case by case provisions
Allowance utilised
Exchange differences
At 30 September 2022
to
income statement based on
income statement based on
Loss allowance provision
the
to
Charged
additional case by case provisions
Allowance written-off
Exchange differences
At 30 September 2023
23
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 38 for further details of the amounts due to subsidiaries.
Page 104
Aukett Swanke Group Plc
24
Borrowings
Group
Secured bank overdrafts
Mortgage
Secured bank loan (NatWest)
Secured bank loan (Coutts)
Total borrowings
Amounts due for settlement within 12 months
Current liability
Amounts due for settlement between one and two years
Amounts due for settlement between two and five years
Non current liability
Total borrowings
Company
Secured bank loan
Total borrowings
Instalments due within 12 months
Current liability
Instalments due between one and two years
Instalments due between two and five years
Non current liability
Total borrowings
2023
£’000
122
1,411
992
167
2,692
2,050
2,050
350
292
642
2,692
2023
£’000
167
167
167
167
-
-
167
167
2022
£’000
232
-
-
417
649
482
482
167
-
167
649
2022
£’000
417
417
250
250
167
-
167
417
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.
The mortgage and the bank loan (NatWest) are secured by way of a first legal charge over
freehold property, a debenture and cross guarantee from Torpedo Factory Group Limited,
Torpedo Factory Limited and TFG Stage Technology Limited. The bank loan initially drawn at
£1.75m is being repaid at £29k per month. The loan is at a fixed rate of interest of 3.66%pa.
The mortgage initially drawn in 2018 at £1.73m with a duration of 5 years was previously
extended for a year, and after the year end expired in February 2024, and is therefore wholly
shown due for settlement within 12 months. The mortgage carried interest at base rate +
1.93%pa. The mortgage has recently been extended for a further 12 month period to February
2025 with a variable rate of interest of base rate + 5.00%pa.
Page 105
Aukett Swanke Group Plc
25
Analysis of net deficit
Group
Cash at bank and in hand
Secured bank overdrafts (note 24)
Net cash included in assets held for sale (note 28)
Cash and cash equivalents
Mortgage (note 24)
Secured bank loan (note 24)
Secured bank loan (note 24)
Net deficit
2023
£’000
522
(122)
30
430
(1,411)
(992)
(167)
(2,140)
26
Deferred tax
Group
At 1 October 2021
Income statement
Exchange differences
At 30 September 2022
Acquired through
business combinations
Income statement
Revaluation reserve
Exchange differences
At 30 September 2023
Company
At 1 October 2021
Income statement
At 30 September 2022
Income statement
At 30 September 2023
Group
Deferred tax assets
Deferred tax liabilities
Net deferred tax balance
Company
Deferred tax assets
Deferred tax liabilities
Net deferred tax balance
Freehold
property
revaluation
-
-
-
-
(157)
-
(15)
-
(172)
Tax
depreciation
on plant and
equipment
£’000
33
4
1
38
Trading
losses
£’000
230
42
1
273
Other
temporary
differences
£’000
(62)
(1)
-
(63)
(10)
6
-
-
34
144
198
-
-
615
18
33
-
(1)
(13)
Tax
depreciation
on plant and
equipment
£’000
(2)
1
(1)
-
(1)
Trading
losses
£’000
-
-
-
204
204
Other
temporary
differences
£’000
-
-
-
-
-
2023
£’000
625
(161)
464
2023
£’000
203
-
203
Page 106
2022
£’000
28
(232)
-
(204)
-
-
(417)
(621)
Total
£’000
201
45
2
248
(5)
237
(15)
(1)
464
Total
£’000
(2)
1
(1)
204
203
2022
£’000
281
(33)
248
2022
£’000
-
(1)
(1)
Aukett Swanke Group Plc
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.
27
Provisions
Group
At 1 October 2021
Utilised
Charged to the income statement
On disposal of subsidiary
Exchange differences
At 30 September 2022
Utilised
Charged to the income statement
Reclassified as Liabilities directly
associated with assets in Disposal
groups classified as held for sale
Exchange differences
At 30 September 2023
Property lease provision
Property
lease
provision
£’000
210
Employee
benefit
obligations
£’000
622
-
-
-
-
210
-
-
-
210
(296)
78
(368)
3
39
(12)
2
(17)
(12)
-
Total
£’000
832
(296)
78
(368)
3
249
(12)
2
(17)
(12)
210
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 four 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 and 30 September 2023 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 2023 is therefore £nil (2022: £nil).
Page 107
Aukett Swanke Group Plc
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.
28
Assets and liabilities classified as held for sale
Non-current assets held for sale (i)
Current assets held for sale (ii)
Liabilities held for sale (ii)
Total assets held for sale
(i) Freehold Property
2023
£’000
3,080
128
(148)
3,060
Prior to the year end, the board decided to market the freehold property of The Old Torpedo
Factory in West London as the property is larger than is needed for the Group. Commercial
property agents were instructed in October 2023 and the property was valued in July 2023 by
a third party firm of surveyors at £3.08m.
(ii) Aukett Swanke Mimarlik AS (formerly Swanke Hayden Connell Mimarlik AS)
Prior to the year end, the board began discussions with the directors of Aukett Swanke Mimarlik
AS regarding a sale of the subsidiary to local management. The sale was concluded on 27
December 2023 for a nominal sum.
The following major classes of assets and liabilities relating to Aukett Swanke Mimarlik AS have
been classified as held for sale in the consolidated statement of financial position as at 30
September 2023:
Trade and other receivables
Contract assets
Net cash
Assets held for sale
Trade and other payables
Contract liabilities
Provisions
Liabilities held for sale
Total net liabilities
2023
£’000
65
33
30
128
(100)
(31)
(17)
(148)
(20)
Page 108
Aukett Swanke Group Plc
29
Share capital
Group and Company
Allocated, called up and fully paid
275,355,938 (2022: 165,213,652) ordinary shares of 1p each
At 1 October 2021
No changes
At 30 September 2022
Issue for acquisition of subsidiary (note 3)
At 30 September 2023
2023
£’000
2022
£’000
2,754
1,652
Number
165,213,652
-
165,213,652
110,142,286
275,355,938
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 TR Control Solutions Limited resulted in an increase in the
share capital of 17,800,000 new ordinary shares of 1p, as disclosed in note 39.
After the year end, in March 2024, the Group announced a share subscription raising an
aggregate up to £425,000 through the issue and allotment of a total of up to 42,500,000 new
ordinary shares of 1p, as disclosed in note 39.
Page 109
Aukett Swanke Group Plc
30
Share options
The Company has granted options over its Ordinary Shares to Group employees as follows:
At 1
October
2022
Number
500,000
1,000,000
1,000,000
Granted
6 March
2017
24 Aug
2020
29 Jun
2021
20 Mar
2023
Total
Granted
Number
Lapsed
Number
At 30
September
2023
Number
Exercise
price
Pence
Earliest
exercisable
date
Latest
exercisable
date
-
-
-
(500,000)
-
4.25
-
-
-
1,000,000
3.60
1,000,000
1.60
8,400,000
1.00
6 March
2019
24 Aug
2022
29 Jun
2023
20 Mar
2025
6 March
2023
24 Aug
2026
29 Jun
2027
20 Mar
2029
-
8,400,000
2,500,000
8,400,000
(500,000) 10,400,000
The 500,000 share options granted on 6 March 2017 related to Beverley Wright, a former
Director of the Company, 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 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.
The 8,400,000 share options granted on 20 March 2023 as part consideration for the acquisition
of Torpedo Factory Group (note 3) are i) 3,700,000 to Freddie Jenner, a current Director of the
Company; ii) 4,700,000 to Jason Brameld a current employee of the Company. These share
options vest after 2 years’ service and are exercisable between 2 and 6 years after grant.
The 8,400,000 options were initially valued at £130k based on a fair value of 1.55p per share
using the closing price of Aukett Swanke Group Plc shares on 1 March 2023 being 2.55p, and
recognised in the total acquisition cost of the business combination (note 3). As at the 30
September 2023 the closing share price of Aukett Swanke Group Plc was 1.825p, and following
a subsequent reduction in share price post year end Management took the decision to impair
the goodwill associated with the fair value acquisition cost represented by these share options.
In December 2023, all of the 10,400,000 share options were surrendered by the respective
recipients, replaced by the new options under a Company Share Option Plan. This is further
detailed in note 39.
Further details of transactions with related parties can be found in note 38.
Page 110
Aukett Swanke Group Plc
31
Cash generated from operations
Group
Loss before tax
Finance income
Finance costs
Share of results of associate and joint ventures
Intangible amortisation
Intangible impairment
Depreciation
Goodwill impairment
Amortisation of right-of-use assets
Loss on disposal of property, plant & equipment
Decrease in trade and other receivables
Decrease in inventories
Decrease in trade and other payables
Change in provisions
Unrealised foreign exchange differences
Net cash generated from/(expended by) operations
Company
Loss before income tax
Dividends receivable
Finance costs
Depreciation
Provision on investments
Loss on disposal of fixed assets
Loss on disposal of subsidiary
Write off of amounts owed by subsidiary on disposal
Deferred consideration on disposal
Decrease in trade and other receivables
Increased/(decrease) in trade and other payables
Unrealised foreign exchange differences
Net cash generated from/expended by operations
2023
£’000
(341)
(9)
255
(341)
31
-
92
-
435
52
1,405
61
(617)
(10)
-
1,013
2023
£’000
(876)
(248)
24
5
7
1
-
-
-
134
1,005
-
52
2022
£’000
(2,327)
-
95
(327)
28
-
97
1,752
385
-
594
-
(815)
(586)
-
(1,104)
2022
£’000
(783)
(133)
9
4
180
-
418
(479)
163
20
(112)
(9)
(722)
Page 111
Aukett Swanke Group Plc
Changes in liabilities arising from financing activities including changes arising from
cash flows and non-cash changes
Group
At 1 October 2021
Cash flows
- Repayment of borrowings
- Payment of interest
- Receipt of bank overdraft
- 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
Cash flows
- Repayment of borrowings
- Payment of interest
- Receipt of bank overdraft
- Payment of lease liabilities
Non-cash flows
- Amounts recognised on business combinations
- Effects of foreign exchange
- Loans and borrowings classified as non-current
at 30 September 2023
- Interest accrued in period
At 30 September 2023
Non-
current
loans and
borrowings
£’000
2,767
Current
loans and
borrowings
£’000
622
-
-
-
-
-
(638)
-
2,129
-
-
-
-
1,044
-
(781)
-
2,392
(83)
(9)
232
(546)
-
638
85
939
(583)
(161)
-
(496)
1,901
-
781
161
2,542
Total
£’000
3,389
(83)
(9)
232
(546)
-
-
85
3,068
(583)
(161)
-
(496)
2,945
-
-
161
4,934
Page 112
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 2022
- Interest accrued in period
At 30 September 2022
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 2023
- Interest accrued in period
At 30 September 2023
Non-
current
loans and
borrowings
£’000
417
Current loans
and borrowings
£’000
83
-
-
-
-
(250)
-
167
-
-
-
-
(167)
-
-
(83)
(9)
-
-
250
9
250
(250)
(24)
-
-
167
24
167
Total
£’000
500
(83)
(9)
-
-
-
9
417
(250)
(24)
-
-
-
24
167
Page 113
Aukett Swanke Group Plc
32
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
Inventories
Cash at bank and in hand
Loans and receivables measured at amortised cost
Trade payables
Amount owed to associate and joint ventures
Other payables
Accruals
Lease liabilities
Secured bank loans and overdrafts
Financial liabilities measured at amortised cost
2023
£’000
2,886
790
389
-
372
522
4,959
(1,808)
(87)
(118)
(1,577)
(2,242)
(2,692)
(8,524)
2022
£’000
2,315
1,119
500
23
-
28
3,985
(1,354)
(44)
(101)
(1,199)
(2,419)
(649)
(5,766)
Net financial instruments
(3,565)
(1,781)
Company
Net trade receivables
Amounts owed by subsidiaries
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 to associate and joint ventures
Other payables
Accruals
Secured bank loan
Financial liabilities measured at amortised cost
2023
£’000
11
111
-
134
1
257
(117)
(2,082)
(87)
(19)
(293)
(167)
(2,765)
2022
£’000
24
163
11
230
457
885
(58)
(1,212)
(44)
(28)
(292)
(417)
(2,051)
Net financial instruments
(2,508)
(1,166)
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 114
Aukett Swanke Group Plc
Collateral
As disclosed in note 24 the Coutts bank loan and overdraft (£232k at 2022 and £122k at 2023
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
2023
£’000
1,900
128
2022
£’000
2,641
349
Other receivables in the consolidated statement of financial position include a £244k rent
security deposit (2022: £238k) 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.
33
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
EU Euro
Turkish Lira
UAE Dirham
UK Sterling
US Dollar
Net financial instruments held in foreign currencies
Company
EU Euro
Turkish Lira
US Dollar
UAE Dirham
Net financial instruments held in foreign currencies
2023
£’000
(155)
-
-
-
51
(104)
2023
£’000
(86)
-
1
-
(85)
2022
£’000
45
16
2,283
(12)
54
2,386
2022
£’000
46
16
18
113
193
Page 115
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
2023
Profit
£’000
(10)
(8)
Equity
£’000
(64)
-
2022
Profit
£’000
29
18
Equity
£’000
(29)
-
The following foreign exchange gains / (losses) arising from financial assets and financial
liabilities have been recognised in the income statement:
Group
Company
34
Counterparty risk
Group
2023
£’000
(57)
(46)
2022
£’000
258
280
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 32.
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
2023
£’000
2,065
373
371
77
2,886
Receivables
pre-allowance
2022
£’000
1,100
661
283
275
2,319
loss
allowance
£’000
-
-
-
-
-
loss
allowance
£’000
-
-
-
(4)
(4)
Receivables
post-allowance
2023
£’000
2,065
373
371
77
2,886
Receivables
post-allowance
2022
£’000
1,100
661
283
271
2,315
The processes undertaken when considering whether a trade receivable may be impaired are
set out in notes 2 and 22.
Page 116
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 22.
The concentration of counterparty risk within the £3,947k (2022: £3,434k) 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
2023
£’000
540
191
163
2022
£’000
640
295
252
The Group’s principal banker is Coutts & Co, a member of NatWest Group.
At 30 September 2023 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 £372k (£374k cash
less £2k overdrafts) with NatWest. (2022: the largest exposure to a single financial institution
represented by a net overdrawn position of £229k held with Coutts & Co.).
Company
The Company only has £11k trade receivables (2022: £24k) 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 37.
35
Interest rate risk
Group
Rent deposit
Mortgage
Secured bank loan (NatWest)
Secured bank loan (Coutts)
Secured bank overdrafts
Interest bearing financial instruments
Company
Secured bank loans
Interest bearing financial instruments
2023
£’000
278
(1,411)
(992)
(167)
(122)
(2,414)
2023
£’000
(167)
(167)
2022
£’000
278
-
(417)
(232)
(371)
2022
£’000
(417)
(417)
The property rent deposit earns variable rates of interest based on short-term interbank lending
rates.
Page 117
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 Coutts bank loan and overdraft carry interest at 4.05%pa (loan) and 3%pa (overdraft)
above the Coutts Base rate for the relevant currency. The NatWest bank loan carries interest
at a fixed rate of interest at 3.66%pa. The mortgage until expiry in February 2024 carried interest
at base rate + 1.93%pa. In February 2024 a new 1 year mortgage extension was agreed
carrying interest at base rate + 5%pa.
A 1% rise in 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 interest rates
would have an equal but opposite effect.
Group
Company
36
Liquidity risk
2023
£’000
(14)
(2)
2022
£’000
(4)
(4)
The Group’s cash balances are held at call or in deposits with very short maturity terms.
At 30 September 2023 the Group had £850,000 (2022: £850,000) of gross borrowing facility
and £250,000 net borrowing facility (2022: £250,000) under its United Kingdom bank overdraft
facility with Coutts & Co. In November 2023 and again in March 2024 Coutts & Co renewed the
overdraft facility maintaining the net overdraft facility at £250,000. It is now next due for review
in October 2024.
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
2022
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
2023
£’000
522
465
1,393
232
2,612
(193)
2,419
556
556
1,289
-
2,401
(159)
2,242
£’000
503
171
-
-
674
(25)
649
2,119
368
297
-
2,784
(92)
2,692
Page 118
Other
financial
liabilities
£’000
2,654
44
-
-
2,698
-
2,698
3,503
87
-
-
3,590
-
3,590
Total
£’000
3,679
680
1,393
232
5,984
(218)
5,766
6,178
1,011
1,586
-
8,775
(251)
8,524
Aukett Swanke Group Plc
Lease liabilities includes the finance lease on leasehold improvements and the land and
buildings office lease (see note 16).
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
2022
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
2023
£’000
271
171
-
442
(25)
417
Borrowings
£’000
172
-
-
172
(5)
167
Other
financial
liabilities
£’000
1,590
44
-
1,634
-
1,634
Other
financial
liabilities
£’000
2,511
87
-
2,598
-
2,598
Total
£’000
1,861
215
-
2,076
(25)
2,051
Total
£’000
2,683
87
-
2,770
(5)
2,765
37
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 24. At 30 September 2023 the overdrafts of
its United Kingdom subsidiaries guaranteed by the Company totalled £124,000 (2022:
£729,000).
The Company and certain of its United Kingdom subsidiaries are members of a group for Value
Added Tax (VAT) purposes. At 30 September 2023 the net VAT payable balance of those
subsidiaries was £406,000 (2022: £285,000).
At the year end, one of the Group’s Middle East subsidiaries had outstanding letters of
guarantee totalling £74,000 (2022: £74,000). 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.
Torpedo Factory Group Limited has provided an unlimited cross guarantee and debenture to
National Westminster Bank plc, for liabilities arising in Torpedo Factory Limited and TFG Stage
Technology Limited. The contingent liability at 30 September 2023 was £Nil.
Page 119
Aukett Swanke Group Plc
Prior to acquisition, Torpedo Factory Group Limited received a grant of £137k to assist in
expanding its operations into the ‘smart building infrastructure’ sector. As at the year end, not
all of the grant conditions had been satisfied and as such only £8k of the grant has been
recognised in income. If the grant conditions are not met then the grant could be repayable. No
provision has been made in the accounts as the directors consider that the grant conditions will
be satisfied.
38
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
2023
£’000
1,611
158
1,769
2023
£’000
543
49
592
2022
£’000
1,235
110
1,345
2022
£’000
613
43
656
Transactions and balances with associate and joint ventures
The Group makes management charges to Aukett + Heese Frankfurt GmbH. The amount
charged during the year in respect of these services amounted to £47,000 (2022: £46,000).
Dividends of £nil (2022: £nil) 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 (2022: £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 £87,000 (2022: £85,000).
Dividends of £248,000 (2022: £126,000) were received from Aukett + Heese GmbH during the
year. The Group received a loan from Aukett + Heese GmbH amounting to £43,000 (2022:
£44,000). The amount owed by the Group to Aukett + Heese GmbH at 30 September 2023 was
£87,000 (2022: £44,000).
As disclosed in note 17, 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.
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 17.
The Company made management charges to its subsidiaries for management services of
£373,000 (2022: £660,000) and paid charges to its subsidiaries for office accommodation and
other related services of £96,000 (2022: £84,000).
Page 120
Aukett Swanke Group Plc
At 30 September 2023 the Company was owed £111,000 (2022: £163,000) by its subsidiaries
and owed £2,082,000 (2022: £1,212,000) 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.
39
Post balance sheet events
Acquisition of ecoDriver
On 17 October 2023 the Group acquired 100% of the voting equity instruments in TR Control
Solutions Limited (“TRCS”), a developer of energy management software and provider of
energy efficiency services. Shortly after completing the acquisition Management changed the
name of the company to ecoDriver Ltd (“ecoDriver”).
The acquisition is a further step in the Group’s strategy to become a leading provider of Smart
Building technology.
The financial effects of this transaction have not been recognised at 30 September 2023. The
operating results and assets and liabilities of the acquired company will be consolidated from
17 October 2023.
Goodwill
Trade and other receivables
Assets
Trade and other payables
Contract liabilities
Net overdraft
Interest bearing loans and borrowings
Liabilities
Total net assets
Provisional
17 Oct-23
£’000
498
52
550
77
54
27
32
190
360
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.
Page 121
Aukett Swanke Group Plc
Fair value of consideration paid
Consideration for the acquisition comprises:
i)
ii)
17,800,000 Ordinary Shares in Aukett Swanke Group Plc at an issue price of
1.525p based on the closing price of Aukett Swanke Group Plc shares on 17
October 2023.
£89,000 in cash. Half the cash consideration was payable on completion, with the
remaining £44,500 payable on the first anniversary of completion.
Shares in Aukett Swanke Group Plc
Cash
Total acquisition cost
£’000
271
89
360
Whilst fair value adjustments will result in recognised goodwill of less than £498k, it is expected
that some goodwill will be recognised. The goodwill represents items, such as the assembled
workforce, which do not qualify as assets.
Acquisition of RTS Technology Solutions Limited
On 20 March 2024 Torpedo Factory Ltd, a wholly owned subsidiary of the Group, acquired
certain assets from the liquidator of RTS Technology Solutions Limited which formerly traded
as Vanti (“RTS”). RTS was a master systems integrator, and a developer of building operating
system software and Kahu workplace technology software and hardware.
The acquisition is an important step in the Group’s strategy to become a leading provider of
Smart Building technology, and in particular to develop Torpedo Factory Group as a Master
Systems Integrator, and for the Group to expand its range of smart building software.
The financial effects of this transaction have not been recognised at 30 September 2023. The
acquisition will affect the assets, liabilities, and financial performance of Torpedo Factory Ltd
from 20 March 2024.
Property, plant and equipment
Other intangible assets
Inventories
Assets
Total net assets
Provisional
20 Mar-24
£’000
20
66
1
87
87
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.
Page 122
Aukett Swanke Group Plc
Fair value of consideration paid
Consideration for the acquisition comprises £37,003 in cash which was payable on completion,
and contingent deferred consideration of up to £50,000 in cash payable over a period of up to
18 months.
Cash
Deferred consideration
Total expected acquisition cost
£’000
37
50
87
Whilst fair value assessments have not been completed, it is not expected that any goodwill will
be recognised.
Share subscription
On 20 March 2024 the Group announced that it is raising in aggregate up to £425,000 through
the issue of new equity, for the purposes of providing the Group with working capital for its
increased scale. £275,000 was raised by way of direct subscriptions by certain existing and
institutional investors (the “Investors”). In addition, certain directors and managers of the Group
indicated their intention to subscribe for up to £150,000 on the same terms as the Investors (the
“Subscription”).
In aggregate the Subscription will result in the issue and allotment of a total of up to 42,500,000
new ordinary shares of 1 penny each in the Company (the “Subscription Shares”) at an issue
price of 1 penny. Subscribers will receive warrants, exercisable for 3 years, to be issued (subject
to certain conditions) on the basis of one warrant for every one Subscription Share with an
exercise price of 1 penny. The Subscription Shares are being issued under the Company’s
existing share authorities; the warrants will require a specific authority to be sought at the
forthcoming annual general meeting.
Property Mortgage
The mortgage that subsisted during the year, with balance of £1,411k as at 30 September 2023,
expired in February 2024. The mortgage carried interest at base rate + 1.93%pa.
In February 2024, the mortgage was renewed for a further 12 month period to February 2025
carrying a higher interest rate of base rate + 5.00%pa.
Company Share Option Plans
All Employee Share Option Plan
In November 2023 the Company implemented an All Employee Share Option Plan (“AESOP”).
The AESOP entitles all eligible employees to invest between £10 and £150 per month in
purchasing shares in the Group from their pre-tax salary. The Group will match this contribution
pound-for-pound on the first £50 per month by purchasing matching shares for the relevant
employee as a staff retention tool. These are ordinarily forfeit if the relevant employee leaves
within 3 years.
Management Share Ownership Plan
In December 2023 the Company created a Management Share Ownership Plan (“MSOP”). The
Company recognises that the management of the Group’s businesses wish to build an
ownership stake. Therefore, it invited 34 members of the senior management of the Company
Page 123
Aukett Swanke Group Plc
and UK subsidiaries to commit to purchasing shares. 32 of the 34 have made a contractual
commitment to spend an amount equivalent to between 2.5% and 10% of their gross annual
salary on the purchase of Company shares, until such time as each of them own a minimum of
either 0.25% or 0.5% of the Company’s issued share capital – though they are free to acquire
larger stakes if they wish. Shares will be purchased on the open market subject to concert party
considerations.
All who have expressed an intent have indicated they will be purchasing their shares within
their pension plans, as their investments are intended to build long term stakes in the business.
Company Share Option Plan and surrender of existing EMI options
In December 2023 the Company created a Company Share Option Plan (“CSOP”). Pursuant
to the CSOP, an aggregate 25,591,666 options have been granted to the 32 members of the
senior management team of the company and UK subsidiaries who have made commitments
under the MSOP. The CSOP options vest between the third and tenth anniversary of grant, and
are exercisable at 1.0p, being the nominal value of each share and a 17.6% premium to the
closing mid-market price on 22 December 2023 (save for 1,000,000 CSOP replacement options
granted to Antony Barkwith, Director, as detailed below).
Additionally, the Company has agreed with option holders in the Company’s existing EMI option
scheme for the surrender of their options, comprising in aggregate 10.4m EMI options. These
replacement options are included within the CSOP grants detailed above.
A total of 8.4m CSOP options are being granted at an exercise price of 1.0p per share to Freddie
Jenner (Group COO) and Jason Brameld (Group CTO, a non-board PDMR) to replace 8.4m
EMI options that were issued on the purchase of Torpedo Factory Group Ltd (“TFG”). The EMI
options surrendered had an exercise price of 1p.
Antony Barkwith (Group Finance Director) has surrendered 1,000,000 EMI options with an
exercise price of 1.6p which are being replaced with 1,000,000 CSOP options with an exercise
price of 1.6p, and surrendered 1,000,000 EMI options with an exercise price of 3.6p which are
not being replaced.
Freddie, Jason and Antony are also each receiving CSOP options in their capacity as parties
who have made the MSOP commitment.
CSOP Options being granted to Directors/PDMRs are as follows:
Name
Number of
CSOP options
2,000,000
Nick Clark
4,700,000
Freddie Jenner
Jason Brameld (PDMR) 5,700,000
1,000,000
Tony Barkwith
1,000,000
Exercise Price Notes
1.0p
1.0p
1.0p
1.0p
1.6p
Replacing EMI
Of which 3.7m replace EMI
Of which 4.7m replace EMI
The total 25,591,666 CSOP options now in issue represent 8.73% of the shares in issue. There
are no EMI options outstanding.
40
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 126. A description of the Group’s
operations and principal activities is given within the Strategic Report.
Page 124
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).
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 125
Aukett Swanke Group Plc
Studio locations
10 Bonhill Street
London, EC2A 4PE
United Kingdom
T: +44 (0) 20 7843 3000
E: plcenquiries@aukettswanke.com
E: london@aukettswanke.com
E: london@veretec.co.uk
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
Anders+Kern UK Limited
Unit 4, Fordham House Estate
Newmarket Rd
Fordham
Ely
Cambridgeshire CB7 5LL
United Kingdom
T: +44 (0) 1638 510900
E: sales@anders-kern.co.uk
Torpedo Factory Group – Intelligent
Environments
The Old Torpedo Factory
St Leonard’s Road
London
NW10 6ST
T: +44 (0) 20 8537 1000
E: hello@tfg.com
Torpedo Factory Group – Stage
Technology
Trent Industrial Estate
Duchess Street
Greater Manchester
OL2 7UT
United Kingdom
T: +44 (0) 1706 849 469
E: hello@tfg.com
Page 126