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Share Name Share Symbol Market Type Share ISIN Share Description
Aukett Swanke Group Plc LSE:AUK London Ordinary Share GB0000617950 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.00 0.0% 1.225 1.15 1.30 1.225 1.225 1.225 100,000 08:00:00
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Support Services 15.5 0.3 0.2 5.8 2

Aukett Swanke Group PLC Interim Results

24/06/2020 7:00am

UK Regulatory (RNS & others)


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Aukett Swanke Group PLC

24 June 2020

Aukett Swanke Group Plc

Interim results

For the six months ended 31 March 2020

Aukett Swanke Group Plc (the "Group"), the international practice of architects, interior designers and engineers, is pleased to announce its interim results for the six month period ended 31 March 2020.

Highlights

The management's restructuring and reorganisation produced further substantial progress in the first half.

Group profit before tax was GBP136k reversing a loss of GBP371k in the same period in 2019.

All operations showed improved profit performance before central costs.

In the final month of the period a series of actions were rapidly taken to mitigate Covid-19 impact:

   --      Salaries and other costs reduced or deferred 
   --      Rapid and effective instigation of remote working across the Group 
   --      Work on existing projects was soon back in progress after initial disruption 

Commenting on the interim results, CEO Nicholas Thompson said:

"It is pleasing to see the investment made over the past few years, to improve the business model, resulting in a return to operational profitability.

The early action taken to mitigate the impact of the Covid-19 virus has helped protect the business.

While the immediate future is less than certain, the level of new business enquires in the circumstances remains encouraging."

Enquiries

Aukett Swanke Group Plc - 020 7843 3000

Nicholas Thompson, Chief Executive Officer

Antony Barkwith, Group Finance Director

finnCap - 020 7220 0500

Corporate Finance: Julian Blunt; Giles Rolls / Corporate Broking: Alice Lane

Investor/Media enquiries

Chris Steele 07979 604687

Interim statement

Overview

The results for the six months to 31 March 2020 show a progressive return to underlying profitability. Whilst revenue rose by a modest GBP74k to GBP7.37m (2019: GBP7.30m) our focus on efficient working resulted in a pre-tax profit of GBP136k, reversing the loss in 2019 of GBP371k by GBP507k - a significant turnaround.

All geographies were in profit before recharged central costs and all reported an improvement over the prior period result.

Covid-19

The Covid-19 pandemic had little impact on our results in the period under review.

Over a 10 working day period in late March we moved to remote working without any significant disruption. Much of this was down to the various IT teams around the Group supporting the transition and all staff committing to this new way of working in a positive and comprehensive way.

Whilst we initially experienced some delays in collecting cash due, resulting in period end cash falling to GBP183k at 31 March (GBP1.1m 30 September 2019) with a small net debt position of GBP11k (2019: net cash GBP820K); the position has since reversed with cash and net debt at the end of May 2020 standing at GBP692k and GBP498k, respectively.

In the UK and UAE we have reduced salaries and other costs. In particular, the Plc Directors have taken a 20% pay reduction. All operations, including the Group, were successful in deferring some operational cash flows into the next financial year to provide short term support to our working capital and therefore avoid any new external borrowings and limited use of existing facilities.

As the longer term nature of Covid-19 remains uncertain, our planning is based on each operation trading on earnings from near term secure income and contract extensions. This ensures that we sustain a cost base at the minimum level, which we can supplement with temporary or returning staff as project conversions are achieved. We have taken a number of steps to achieve this including: furloughing permanent staff; releasing temporary or freelance staff; encouraging unpaid leave and part time working; and pay cuts of varying percentages and durations - all of which provides management with a range of tools that can be implemented at short notice and with immediate effect. We have also sought to remove non-essential or deferrable expenditure.

United Kingdom

The UK operation improved its half year revenues by GBP362k to GBP4.09m (2019: GBP3.73m) and its profit by GBP56k to GBP311k (2019: GBP255k) based on a number of continuing projects plus a growing number of new instructions. At the half way stage and, as the coronavirus took hold the UK had 18 projects on site, all of which suffered some form of temporary closure immediately after the half year end; but this was all short-lived as sites are now operating at between 30% to 50% capacity.

The UK won its largest project for some time being a 290,000ft(2) speculative new build office in South London for an existing client. In addition our work in the hybrid market continued to expand with a commission to planning comprising 90,000ft(2) of wharf and residential use in a protected area at Orchard Wharf for Regal London and, three further hybrid commissions for Segro were won; a significant interior design project for a major banking dynasty and; the EQ building in Bristol for CEG continued apace.

Veretec, our executive architecture company, continued with instructions on a range of projects including Nova East (Lynch Architects), a 260,000ft(2) new build office for Land Securities in London's West End; the 112,500ft(2) Featherstone Building (Morris & Co) for Skanska and long standing client Derwent; a 32,000ft(2) entertainment centre for Labtech at Hawley Wharf; the final stage of Regent House, a mixed-use residential and office development for Osborne, designed by Stiff & Trevillion/MSMR and; increased instructions on Labtech Holborn new commercial offices - a project designed by DSDHA.

The impact of Covid-19 on the UK had little impact in H1 as much of the current work was in the pre-construction phases. As we progress through H2, sites remain open and we have adjusted our role accordingly with limited or no physical presence, the use of video cameras for inspections, and concentrating on those activities that can be done remotely. The transition to remote working (which was already being trialled) was achieved in less than one week and to date there seems to have been no real loss in overall efficiency in this new mode. However, new instructions with new clients will be sparse for a while and it is that factor that will influence our H2 result. We have tempered our outlook as Q3 reflects the full impact of the lockdown and is prior to any form of return to normal working practices which we do not anticipate before Q4.

We have taken temporary cost reductions into our business model and have reduced salaries across the board in order to limit the forward position as much as possible.

Middle East

Our United Arab Emirates operations were around six months behind the UK in their recovery plans. As such the impact of Covid-19 has had a more significant impact particularly in cash recoveries at the period end.

For the first half revenues were down by GBP201k at GBP3.14m (2019: GBP3.34m) but, prior period losses of GBP151k had been reversed and a profit of GBP103k achieved. Much of this improvement was based on a range of smaller projects in the site works stage and continuation of the reduction in expenditure.

The Lesso Mall (Samanea Market) reached tender stage shortly before the lockdown and The Grove project was about to be launched. As such these two larger projects are on hold. Elsewhere we are supporting the US and Australia Pavilions and completing the Expo Media Centre.

More regular income came from completion of the Atlantis The Palm refurbishment of 1,539 suites; completion of the Mercure hotel refurbishment; continuing work at two cultural projects in Al Ain: the Al Ain Museum and Sheikh Khalifa House; The Viva City, Sports Society Mall in Dubai continued on site; newer instructions came from Etisalat for new store openings, the Du Al Qudra broadcasting station, and a number of post contract commissions.

For Miral the exciting zip wire rides and Ferrari World roof walkway neared completion and the refurbishment of the corporate offices for the F1 Marina reached tender stage, both on Yas Island, Abu Dhabi.

Whilst we can see the site works continuing (and there is daily personnel testing in place) there is a dearth of new and larger instructions. Given the steep fall in the oil price, little or no tourism and a potential exodus of labour once travel restrictions are lifted, we see this geography taking some time to recover and as such we have re-structured our three operations to assume a much lower level of income in the aftermath of Covid-19.

It is too early to predict how the year will end for our Middle East operations.

Continental Europe

With only one wholly owned subsidiary remaining following the disposal of our Moscow operation last year, revenues fell to GBP147k (2019: GBP234k). However, profit before central costs increased to GBP247k (2019: GBP135k) - with all joint ventures and associates producing positive results.

Wholly owned operation

The Turkish operation has continued to build upon the success of the previous year having completed several interior fit-out projects for significant corporate clients, including LC Waikiki, Google, 3M and Credit Suisse. New projects include a series of architectural Villa designs for a new town masterplan site in Erbil, a fit-out in Ankara for the Turkish Trade Council TUSIAD, a private villa in Istanbul and a new two floor extension to the VM Ware HQ in Sofia completed last year.

Joint venture and associate operations

The operations in Berlin and Frankfurt have enjoyed buoyant market conditions.

Project completions for the Berlin office include the "Winx" tower in Frankfurt and the first phase of the KaDeWe-Department Store refurbishment in Berlin.

Newly won projects commencing shortly include the preliminary infrastructure measures for a 15,000m(2), 100 apartment, new-build housing development for local authority approval, the conversion of a heritage listed cinema to co-working offices and a concept study for a heritage listed-building refurbishment and new-build extension in central Hamburg totalling 12,000m(2). The construction of the 140m high EDGE tower has commenced with Amazon as the main tenant.

The Frankfurt office continues to complete ongoing phases of refurbishment of the iconic MesseTurm building including also fit-outs for incoming tenants such as GAC, Regus and Tata. Nearing completion is the Sparda Bank facade refurbishment and new commissions include the fit-out designs for an American bank in two locations in Germany.

The Prague office has recovered strongly after two challenging years and has completed the technical document stages of the OC Repy Shopping Centre refurbishment and has begun design work on the 16,000m(2) fit-out of the 1934 modern movement office building at Bubenska for WPP and the 14,000m(2) fit-out of Exxon Mobil's HQ. Technical due diligence is under way on the Chrpa Shopping Centre and Archa Plaza projects in Prague. Works on site include the DB Schenker logistics building and extension works successfully negotiated with the authorities.

Licensee operation

The licensee operation of Aukett Swanke Moscow in the Russian Federation completed a concept masterplan for a 730,000m(2) science and technology complex on an 80 hectare site in Surgut, Siberia and feasibility study for an 18,000m(2) mixed use development in Tyumen.

Group costs

We have continued to lower the organisation's central costs with direct costs reduced by GBP32k in the half year; the gain on disposal of the Moscow business (GBP53k) accounting for the balance of the reduction in Group costs.

We have adopted IFRS 16 within these results. This made a significant impact on the consolidated statement of financial position, in particular grossing up non current assets and non current liabilities, however has immaterial impact on the result for the 6 months to 31 March 2020

Prospects

At this stage it is impractical to predict with any certainty how the year will end.

We nevertheless remain confident that we have the right business model and that we have taken pro-active steps to protect the business from the obvious uncertainties in our markets.

Nicholas Thompson

Chief Executive Officer

23 June 2020

Consolidated income statement

For the six months ended 31 March 2020

 
                                     Note      Unaudited      Unaudited         Audited 
                                              six months     six months         year to 
                                             to 31 March    to 31 March    30 September 
                                                    2020           2019            2019 
                                                 GBP'000        GBP'000         GBP'000 
 Revenue                              3            7,375          7,301          15,492 
 
 Sub consultant costs                              (515)          (725)         (1,781) 
----------------------------------  -----  -------------  -------------  -------------- 
 Revenue less sub consultant 
  costs                                            6,860          6,576          13,711 
 
 Personnel related costs                         (5,430)        (5,644)        (11,294) 
 Property related costs                            (650)          (812)         (1,542) 
 Other operating expenses                          (867)          (725)         (1,294) 
 Other operating income               4              142            154             371 
----------------------------------  -----  -------------  -------------  -------------- 
 Operating profit / (loss)                            55          (451)            (48) 
 
 Finance costs                                      (78)           (14)            (42) 
----------------------------------  -----  -------------  -------------  -------------- 
 Loss after finance costs                           (23)          (465)            (90) 
 
 Gain on disposal of subsidiary                       53              -               - 
 Share of results of associate 
  and joint ventures                                 106             94             382 
----------------------------------  -----  -------------  -------------  -------------- 
 Profit / (loss) before tax           3              136          (371)             292 
 
 Tax (charge) / credit                              (34)             17              40 
----------------------------------  -----  -------------  -------------  -------------- 
 
 Profit / (loss) for the period                      102          (354)             332 
----------------------------------  -----  -------------  -------------  -------------- 
 
 Profit / (loss) attributable 
  to: 
    Owners of Aukett Swanke Group 
     Plc                                              96          (315)             346 
    Non-controlling interests                          6           (39)            (14) 
----------------------------------  -----  -------------  -------------  -------------- 
 Profit / (loss) for the period                      102          (354)             332 
----------------------------------  -----  -------------  -------------  -------------- 
 
 Basic and diluted earnings 
  per share for profit/(loss) 
  attributable to the ordinary 
  equity holders of the Company: 
   From continuing operations                      0.06p        (0.19)p           0.21p 
----------------------------------  -----  -------------  -------------  -------------- 
 Total profit / (loss) per 
  share                               5            0.06p        (0.19)p           0.21p 
----------------------------------  -----  -------------  -------------  -------------- 
 
 
 

Consolidated statement of comprehensive income

For the six months ended 31 March 2020

 
                                         Unaudited      Unaudited         Audited 
                                        six months     six months         year to 
                                       to 31 March    to 31 March    30 September 
                                              2020           2019            2019 
                                           GBP'000        GBP'000         GBP'000 
 Profit / (loss) for the period                102          (354)             332 
 
 Other comprehensive income: 
 Currency translation differences                4           (16)              46 
-----------------------------------  ------------- 
 Other comprehensive income for 
  the period                                     4           (16)              46 
 
 Total comprehensive profit / 
  (loss) for the period                        106          (370)             378 
-----------------------------------  -------------  -------------  -------------- 
 
 Total comprehensive profit / 
  (loss) is attributable to: 
    Owners of Aukett Swanke Group 
     Plc                                       100          (343)             392 
    Non-controlling interests                    6           (27)            (14) 
-----------------------------------  -------------  -------------  -------------- 
 Total comprehensive profit / 
  (loss) for the period                        106          (370)             378 
-----------------------------------  -------------  -------------  -------------- 
 

Consolidated statement of financial position

At 31 March 2020

 
                                   Note   Unaudited   Unaudited      Audited 
                                              at 31       at 31        at 30 
                                              March       March    September 
                                               2020        2019         2019 
                                            GBP'000     GBP'000      GBP'000 
 Non current assets 
 Goodwill                                     2,403       2,374        2,412 
 Other intangible assets                        714         773          762 
 Property, plant and equipment                  314          91          590 
 Right-of-use assets                8         2,882           -            - 
 Investment in associate and 
  joint ventures                              1,009         793          988 
 Deferred tax                                   155         391          193 
--------------------------------  -----  ----------  ----------  ----------- 
 Total non current assets                     7,477       4,422        4,945 
 
 Current assets 
 Trade and other receivables                  5,157       4,049        4,904 
 Contract assets                                716         980          663 
 Cash at bank and in hand           7           315         705        1,145 
--------------------------------  -----  ----------  ----------  ----------- 
 Total current assets                         6,188       5,734        6,712 
 
 Total assets                                13,665      10,156       11,657 
 
 Current liabilities 
 Trade and other payables                   (3,194)     (4,209)      (4,528) 
 Contract liabilities                       (1,012)       (748)        (836) 
 Current tax                                      -           -            - 
 Borrowings                         7         (326)       (322)        (331) 
 Lease liabilities                  8         (537)           -            - 
 Total current liabilities                  (5,069)     (5,279)      (5,695) 
 
 Non current liabilities 
 Borrowings                         7             -       (184)        (272) 
 Lease liabilities                  8       (3,099)           -            - 
 Deferred tax                                  (48)        (56)         (53) 
 Provisions                                   (865)       (871)      (1,123) 
 Total non current liabilities              (4,012)     (1,111)      (1,448) 
 
 Total liabilities                          (9,081)     (6,390)      (7,143) 
 
 Net assets                                   4,584       3,766        4,514 
--------------------------------  -----  ----------  ----------  ----------- 
 
 
 Capital and reserves 
 Share capital                                1,652       1,652        1,652 
 Merger reserve                               1,176       1,176        1,176 
 Foreign currency translation 
  reserve                                        26        (52)           22 
 Retained earnings                               97       (624)           37 
 Other distributable reserve                  1,494       1,494        1,494 
--------------------------------  -----  ----------  ----------  ----------- 
 Total equity attributable 
  to 
  equity holders of the Company               4,445       3,646        4,381 
--------------------------------  -----  ----------  ----------  ----------- 
 
 Non-controlling interests                      139         120          133 
--------------------------------  -----  ---------- 
 Total equity                                 4,584       3,766        4,514 
--------------------------------  -----  ----------  ----------  ----------- 
 

Consolidated statement of cash flows

For the six months ended 31 March 2020

 
                                     Note      Unaudited      Unaudited         Audited 
                                              six months     six months         year to 
                                             to 31 March    to 31 March    30 September 
                                                    2020           2019            2019 
                                                 GBP'000        GBP'000         GBP'000 
 Cash flows from operating 
  activities 
 Cash (expended by) / generated 
  from operations                     6            (836)            (4)             647 
 Interest paid                                      (15)           (14)            (42) 
 Income taxes credits received 
  / (paid)                                           218            (1)             (1) 
----------------------------------  -----  -------------  -------------  -------------- 
 Net cash (outflow) / inflow 
  from operating activities                        (633)           (19)             604 
 
 Cash flows from investing 
  activities 
 Purchase of property, plant 
  and equipment                                    (214)            (5)            (90) 
 Sale of property, plant and 
  equipment                                            -              -               2 
 Dividends received                                   86             66             186 
----------------------------------  -----  -------------  -------------  -------------- 
 Net cash (paid) / received 
  in investing activities                          (128)             61              98 
 
 Net cash (outflow) / inflow 
  before financing activities                      (761)             42             702 
 
 Cash flows from financing 
  activities 
 Payments of lease liabilities                      (34)              -            (36) 
 Repayment of bank loans                           (123)          (123)           (250) 
 Net cash outflow from financing 
  activities                                       (157)          (123)           (286) 
 
 Net change in cash and cash 
  equivalents                                      (918)           (81)             416 
 
 Cash and cash equivalents 
  at start of period                               1,145            710             710 
 Currency translation differences                   (44)            (1)              19 
----------------------------------  -----  -------------  -------------  -------------- 
 Cash and cash equivalents 
  at end of period                    7              183            628           1,145 
----------------------------------  -----  -------------  -------------  -------------- 
 
 
 Cash and cash equivalents are comprised 
  of: 
 Cash at bank and in hand                     315    705   1,145 
 Secured bank overdrafts                    (132)   (77)       - 
 Cash and cash equivalents at end 
  of year                                     183    628   1,145 
-----------------------------------------  ------  -----  ------ 
 

Consolidated statement of changes in equity

For the six months ended 31 March 2020

 
                     Share        Foreign    Retained           Other     Merger      Total             Non      Total 
                   capital       currency    earnings   distributable    reserve                controlling     equity 
                              translation                     reserve                             interests 
                                  reserve 
                   GBP'000        GBP'000     GBP'000         GBP'000    GBP'000    GBP'000         GBP'000    GBP'000 
---------------  ---------  -------------  ----------  --------------  ---------  ---------  --------------  --------- 
 Balance at 30 
  September 
  2019 
  as originally 
  presented          1,652             22          37           1,494      1,176      4,381             133      4,514 
 
 Effect of 
  adoption 
  of IFRS16 
  (note 
  8)                     -              -        (36)               -          -       (36)               -       (36) 
 
 Restated total 
  equity at 1 
  October 
  2019               1,652             22           1           1,494      1,176      4,345             133      4,478 
 
 Profit for the 
  period                 -              -          96               -          -         96               6        102 
 Other 
  comprehensive 
  income                 -              4           -               -          -          4               -          4 
---------------  ---------  -------------  ----------  --------------  ---------  ---------  --------------  --------- 
 Total 
  comprehensive 
  profit                 -              4      96                   -          -        100               6        106 
 
 At 31 March 
  2020               1,652             26          97           1,494      1,176      4,445             139      4,584 
---------------  ---------  -------------  ----------  --------------  ---------  ---------  --------------  --------- 
 

For the six months ended 31 March 2019

 
                     Share        Foreign    Retained           Other     Merger      Total             Non      Total 
                   capital       currency    earnings   distributable    reserve                controlling     equity 
                              translation                     reserve                             interests 
                                  reserve 
                   GBP'000        GBP'000     GBP'000         GBP'000    GBP'000    GBP'000         GBP'000    GBP'000 
---------------  ---------  -------------  ----------  --------------  ---------  ---------  --------------  --------- 
 At 1 October 
  2018               1,652           (24)       (309)           1,494      1,176      3,989             147      4,136 
 
 Loss for the 
  period                 -              -       (315)               -          -      (315)            (39)      (354) 
 Other 
  comprehensive 
  income                 -           (28)           -               -          -       (28)              12       (16) 
---------------  ---------  -------------  ----------  --------------  ---------  ---------  --------------  --------- 
 Total 
  comprehensive 
  loss                   -           (28)     (315)                 -          -      (343)            (27)      (370) 
 
 At 31 March 
  2019               1,652           (52)       (624)           1,494      1,176      3,646             120      3,766 
---------------  ---------  -------------  ----------  --------------  ---------  ---------  --------------  --------- 
 

For the year ended 30 September 2019

 
                     Share        Foreign    Retained           Other   Merger     Total                Non      Total 
                   capital       currency    earnings   distributable    reserve                controlling     equity 
                              translation                     reserve                             interests 
                                  reserve 
                   GBP'000        GBP'000     GBP'000         GBP'000    GBP'000    GBP'000         GBP'000    GBP'000 
---------------  ---------  -------------  ----------  --------------  ---------  ---------  --------------  --------- 
 At 1 October 
  2018               1,652           (24)       (309)           1,494      1,176      3,989             147      4,136 
 
 Profit for the 
  year                   -              -         346               -          -        346            (14)        332 
 Other 
  comprehensive 
  income                 -             46           -               -          -         46               -         46 
---------------  ---------  -------------  ----------  --------------  ---------  ---------  --------------  --------- 
 Total 
  comprehensive 
  income                 -             46         346               -          -        392            (14)        378 
 
 At 30 
  September 
  2019               1,652             22          37           1,494      1,176      4,381             133      4,514 
---------------  ---------  -------------  ----------  --------------  ---------  ---------  --------------  --------- 
 

Notes to the Interim Report

   1          Basis of preparation 

The financial information presented in this Interim Report has been prepared in accordance with the recognition and measurement principles of International Financial Reporting Standards ('IFRS') as adopted by the EU that are expected to be applicable to the financial statements for the year ending 30 September 2020 and on the basis of the accounting policies expected to be used in those financial statements.

   2          New accounting standards, amendments and interpretations applied 

A number of new or amended standards and interpretations to existing standards became applicable for the current reporting period and the Group had to change its accounting policies to correctly reflect the requirements of the following standards:

   -           IFRS 16 Leases, and 
   -           IFRIC 23 Uncertainty over income tax treatments 

The impact of the adoption of these standards and the new accounting policies are disclosed in note 8 below.

   3          Operating segments 

The Group comprises a single business segment and three separately reportable geographical segments (together with a Group costs segment). Geographical segments are based on the location of the operation undertaking each project. Turkey (and Russia in the comparative periods) are included within Continental Europe together with Germany and the Czech Republic.

 
 Segment revenue           Unaudited      Unaudited         Audited 
                          six months     six months         year to 
                         to 31 March    to 31 March    30 September 
                                2020           2019            2019 
                             GBP'000        GBP'000         GBP'000 
 United Kingdom                4,093          3,731           7,454 
 Middle East                   3,135          3,336           7,522 
 Continental Europe              147            234             516 
---------------------  ------------- 
 Total                         7,375          7,301          15,492 
---------------------  -------------  -------------  -------------- 
 
 
 
 Segment result before tax        Unaudited      Unaudited         Audited 
                                 six months     six months         year to 
                                to 31 March    to 31 March    30 September 
                                       2020           2019            2019 
                                    GBP'000        GBP'000         GBP'000 
 
 United Kingdom                          41           (15)            (89) 
 Middle East                          (165)          (438)            (69) 
 Continental Europe                     179             64             351 
 Group costs                             81             18              99 
----------------------------  -------------  -------------  -------------- 
 Total profit/(loss)                    136          (371)             292 
----------------------------  -------------  -------------  -------------- 
 
 
 
 Segment result before tax             Unaudited      Unaudited         Audited 
  (before reallocation of group       six months     six months         year to 
  management charges)                to 31 March    to 31 March    30 September 
                                            2020           2019            2019 
                                         GBP'000        GBP'000         GBP'000 
 
 United Kingdom                              311            255             451 
 Middle East                                 103          (151)             525 
 Continental Europe                          247            135             495 
 Group costs                               (525)          (610)         (1,179) 
---------------------------------  -------------  -------------  -------------- 
 Total profit /(loss)                        136          (371)             292 
---------------------------------  -------------  -------------  -------------- 
 
   4          Other operating income 
 
                                        Unaudited     Unaudited         Audited 
                                       six months    six months         year to 
                                            to 31         to 31    30 September 
                                            March         March            2019 
                                             2020          2019         GBP'000 
                                          GBP'000       GBP'000 
 Property rental income                        78            86             170 
 Management charges to associate 
  and joint ventures                           54            55             114 
 Licence fee income                             1             2               - 
 Other sundry income                            9            11              33 
 Fair value gain on the reduction 
  of deferred consideration                     -             -              54 
 Total other operating income                 142           154             371 
-----------------------------------  ------------  ------------  -------------- 
 
   5          Earnings per share 

The calculations of basic and diluted earnings per share are based on the following data:

 
 Earnings                              Unaudited      Unaudited         Audited 
                                      six months     six months         year to 
                                     to 31 March    to 31 March    30 September 
                                            2020           2019            2019 
                                         GBP'000        GBP'000         GBP'000 
 Profit / (loss) for the period               96          (315)             346 
---------------------------------  -------------  -------------  -------------- 
 
 
 Number of shares                         Unaudited      Unaudited         Audited 
                                         six months     six months         year to 
                                        to 31 March    to 31 March    30 September 
                                               2020           2019            2019 
                                               '000           '000            '000 
 Weighted average number of shares          165,214        165,214         165,214 
 Effect of dilutive options                       -              -               - 
-----------------------------------   -------------  -------------  -------------- 
 Diluted weighted average number 
  of shares                                 165,214        165,214         165,214 
------------------------------------  -------------  -------------  -------------- 
 
   6          Reconciliation of profit before tax to net cash from operations 
 
                                           Unaudited      Unaudited         Audited 
                                          six months     six months         year to 
                                         to 31 March    to 31 March    30 September 
                                                2020           2019            2019 
                                             GBP'000        GBP'000         GBP'000 
 Profit / (loss) before tax - 
  continuing operations                 136            (371)                    292 
 Finance costs                          78             14                        42 
 Share of results of associate 
  and joint ventures                    (106)          (94)                   (382) 
 Intangible amortisation                40             40                        81 
 Depreciation                           159            30                       150 
 Profit on disposal of property, 
  plant and equipment                   (2)            (1)                      (3) 
 (Increase) / decrease in trade 
  and other receivables                 (500)          711                      425 
 (Decrease) / increase in trade 
  and other payables                    (605)          (282)                     86 
 Change in provisions                   (38)           (58)                    (68) 
 Unrealised foreign exchange 
  differences                           2              7                         24 
-------------------------------------  -------------  -------------  -------------- 
 Net cash (expended by) / generated 
  from operations                       (836)          (4)                      647 
-------------------------------------  -------------  -------------  -------------- 
 
   7          Analysis of net funds 
 
                                  Unaudited      Unaudited         Audited 
                                at 31 March    at 31 March              at 
                                       2020           2019    30 September 
                                    GBP'000        GBP'000            2019 
                                                                   GBP'000 
 Cash at bank and in hand               315            705           1,145 
 Secured bank overdrafts              (132)           (77)               - 
----------------------------  -------------  -------------  -------------- 
 Cash and cash equivalents              183            628           1,145 
 
 Secured bank loan                    (194)          (429)           (325) 
----------------------------  ------------- 
 Net funds/(debt)                      (11)            199             820 
----------------------------  -------------  -------------  -------------- 
 
   8              Changes in accounting policies 

This note explains the impact of the adoption of IFRS 16 Leases on the Group's financial statements and discloses the new accounting policies that have been applied from 1 October 2019, where they are different to those applied in prior periods.

The Group has adopted IFRS 16 retrospectively from 1 October 2019, but has not restated comparatives for the 2018-19 reporting period, as permitted under the modified retrospective cumulative catch-up transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 October 2019.

8(a) Adjustments recognised on adoption of IFRS 16

 
                                                                GBP'000 
 
 Operating lease commitments disclosed as at 30 September 
 2019                                                             3,637 
 Adjustment for conditional rent free periods                       193 
 
 (Less): short-term leases recognised on a straight-line 
  basis as expense                                                (103) 
 (Less): low-value leases recognised on a straight-line 
  basis as expense                                                 (12) 
                                                              --------- 
                                                                  3,715 
 
 
 Discounted using the lessee's incremental borrowing 
  rate of at the date of initial application                      3,120 
 Add: finance lease liabilities recognised as at 
  30 September 2019                                                 488 
 
 Lease liability recognised as at 1 October 2019                  3,608 
------------------------------------------------------------  --------- 
 
 Of which are: 
  Current lease liabilities                                         303 
   Non-current lease liabilities                                  3,305 
                                                                  3,608 
------------------------------------------------------------  --------- 
 
 
 

The associated right-of-use assets for property leases were measured on a retrospective basis as if the new rules had always been applied. Other right-of-use assets were measured at the amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet as at 30 September 2019. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application.

The recognised right-of-use assets relate to the following types of assets:

 
                                                 31 March   1 October 
                                                     2020        2019 
                                                  GBP'000     GBP'000 
 
  Properties (operating lease type assets)          2,404       2,551 
 
   Leasehold improvements (finance lease 
   type assets)                                       478         466 
 
   Total right-of-use assets                        2,882       3,017 
---------------------------------------------   ---------  ---------- 
 
 

Impact on the financial Statements

The following table shows the adjustments recognised for each individual line item. Line items that were not affected by the changes have not been included. As a result, the sub-totals and totals disclosed cannot be recalculated from the numbers provided.

 
 
 
                                          30 Sep                                                      1 Oct 
                                            2019       Finance   Restoration       Operating           2019 
                                                    lease type         costs           lease 
                                                        assets                   type assets 
                                   as originally 
                                       presented       IFRS 16       IFRS 16         IFRS 16    as restated 
                                         GBP'000       GBP'000       GBP'000         GBP'000        GBP'000 
 
 Property, plant & equipment                 590         (278)         (188)               -            124 
 Right-of-use assets                           -           278           188           2,551          3,017 
 Total non current assets                  4,945             -             -           2,551          7,496 
-------------------------------  ---------------  ------------  ------------  --------------  ------------- 
 Total assets                             11,657             -             -           2,551      14,208 
-------------------------------  ---------------  ------------  ------------  --------------  ------------- 
 
   Current liabilities 
 Trade and other payables                (4,528)             -             -             533        (3,995) 
 Borrowings                                (331)            71             -               -          (260) 
 Lease liabilities                             -          (71)             -           (232)          (303) 
-------------------------------  ---------------  ------------  ------------  --------------  ------------- 
 Total current liabilities               (5,695)             -             -             301        (5,394) 
-------------------------------  ---------------  ------------  ------------  --------------  ------------- 
 
   Non current liabilities 
 Borrowings                                (272)           207             -               -           (65) 
 Lease liabilities                             -         (207)         (210)         (2,888)        (3,305) 
 Provisions                              (1,123)             -           210               -          (913) 
-------------------------------  ---------------  ------------  ------------  --------------  ------------- 
 Total non current liabilities           (1,448)             -             -         (2,888)        (4,336) 
 
   Total liabilities                     (7,143)             -             -         (2,587)        (9,730) 
-------------------------------  ---------------  ------------  ------------  --------------  ------------- 
 
   Net assets                              4,514             -             -            (36)          4,478 
-------------------------------  ---------------  ------------  ------------  --------------  ------------- 
 
   Retained Earnings                          37             -             -            (36)              1 
-------------------------------  ---------------  ------------  ------------  --------------  ------------- 
 Total equity attributable 
  to equity holders of 
  the Company                              4,381             -             -            (36)      4,345 
-------------------------------  ---------------  ------------  ------------  --------------  ------------- 
 Total equity                              4,514             -             -   (36)                   4,478 
-------------------------------  ---------------  ------------  ------------  --------------  ------------- 
 

Practical expedients applied

In applying IFRS 16 for the first time, the group has used the following practical expedients permitted by the standard:

- the accounting for operating leases with a remaining lease term of less than 12 months as at 1 October 2019 as short-term leases.

The group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the group relied on its assessment made applying IAS 17 and IFRIC 4 Determining whether an Arrangement contains a Lease.

As the Group has applied the modified retrospective transition approach, for leases previously classified as finance leases the lease liability on transition is unchanged, being the carrying amount of the lease liability immediately before the date of initial application.

8(b) The group's leasing activities and how these are accounted for

The group leases various offices, leasehold improvements relating to office fit-out costs, and IT equipment. Rental contracts are typically made for fixed periods of 3 to 5 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.

Until the financial year ended 30 September 2019, leases of property, plant and equipment were classified as either finance or operating leases. Payments made under operating leases (net of any incentives received from the lessor) were charged to profit or loss on a straight-line basis over the period of the lease.

From 1 October 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

- fixed payments (including in-substance fixed payments), less any lease incentives receivable;

   -           variable lease payment that are based on an index or a rate; 
   -           amounts expected to be payable by the lessee under residual value guarantees; 

- the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and

- payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee's incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising the following:

   -           the amount of the initial measurement of lease liability; 

- any lease payments made at or before the commencement date less any lease incentives received;

   -           any initial direct costs; and 
   -           restoration costs. 

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT equipment with a value when new of GBP4,000 or less.

   9          Status of Interim Report 

The Interim Report covers the six months ended 31 March 2020 and was approved by the Board of Directors on 23 June 2020. The Interim Report is unaudited.

The interim condensed set of consolidated financial statements in the Interim Report are not statutory accounts as defined by Section 434 of the Companies Act 2006.

Comparative figures for the year ended 30 September 2019 have been extracted from the statutory accounts of the Group for that period.

The statutory accounts for the year ended 30 September 2019 have been reported on by the Group's auditors and delivered to the Registrar of Companies. The audit report thereon was unqualified, did not include references to matters to which the auditors drew attention by way of emphasis without qualifying the report, and did not contain a statement under Section 498 of the Companies Act 2006.

Where comparative figures have subsequently been restated following the adoption of new accounting policies as explained in notes 2 and 8, adjustments have not been audited by the Group's auditors.

   10         Further information 

An electronic version of the Interim Report will be available on the Group's website (www.aukettswanke.com).

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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