Architect says cost savings across the UK operation had not matched decline in revenue
Stock market-listed architect firm Aukett Swanke said a slump in new instructions in the UK were behind a downturn on first half revenues, and despite weathering the impact of Brexit there was “no immediate sign” of a sustainable domestic recovery.
The group posted a pre-tax loss of £358,000 for the six months to 31 March, on overall turnover for the first half down 9% to £9.1m. Revenues in the UK fell by 31% to £4.6m, a situation described by the firm as “disappointing”, and reflecting a lack of new market instructions as existing projects were finished.
Cost savings of £1.4m across the UK operation had not matched the decline in revenue, with a loss of £211,000, compared with a profit in the same period last of £498,000.
The firm said that with the construction market having previously peaked it did not expect to see higher volumes in the immediate future. “However recent enquiries both in London and the UK regions provide some confidence that that the general development market has adapted to a post-Brexit future,” it said.
In Continental Europe, where its activity is through joint ventures, wholly-owned subsidiaries and an associate, revenues fell 24% to £331,000, while in the United Arab Emirates they rose 45% following last year’s acquisition of Shankland Cox, which operates in the region, although profits halved to £121,000.
The firm said it believed it had reached the bottom of the cycle in the UK, but recent events meant there was “no immediate sign of a strong sustainable recovery” in the market.
“We feel more confident about the Brexit impact having been weathered. However, with the recent UK general election result creating a hung parliament it is more likely that this business may now face a longer period of uncertainty than was hitherto expected.”
It said the UAE offered the best opportunity for profitable growth in the second half, “and we will focus on that”, while Continental Europe was expected to return a positive result in the second half.
However it warned that it expected to report a loss for the current financial year.
Shares in the firm remained unchanged at 2.5p.