TIDMAUK
RNS Number : 8494Q
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
IR FLFLRRDIVFII
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