Aukett Swanke has crashed to a pre-tax loss with its latest results – and blamed Brexit for tumbling UK revenues.
The practice, which has studios in Bristol and Southampton and is set to relocate to cheaper premises in London, revealed a pre-tax loss of £325,000 in the 12 months to 30 September 2017.
This compares with a £927,000 profit in the previous year.
Revenue dropped almost 12 per cent to £18.4 million in the latest period, with UK income down by more than a quarter to under £9 million.
Chairman Anthony Simmonds said the practice ‘experienced a variety of adverse conditions’ over the year.
‘In the UK we suffered from the wait-and-see climate for businesses, especially developers of commercial property, created by the continuing uncertainties over the outcome of Brexit,’ he said, adding that ‘new starts were few’.
The results statement said ‘a number’ of projects were on hold, including a series of commercial buildings in Birmingham, a headquarters scheme in Bristol, a residential scheme in Hertfordshire, and a building at Cambridge Science Park.
‘The converted order book for 2018 has continued to decline and [the UK] operation will need to reflect this in its cost structure going forward,’ said the statement.
‘Our UK operation works primarily in the commercial development market which is currently in the downward part of the property cycle. Our lease expiry in July 2018 should alleviate part of our fixed cost base and provide an opportunity to reduce longer-term cash outflows.’
The report was also gloomy about the current year.
‘Considering all of the exogenous economic and political issues facing the group, and particularly in the UK, the board feels that the overall group outcome is unlikely to be profitable in the 2018 financial year.’
Simmonds sounded a stark warning of things to come, saying: ‘We believe it will take the UK more than one year to recover its previous profitability at reduced revenue levels.’
Speaking about the company’s plans to relocate its London base, Aukett Swanke chief executive Nicholas Thompson said: ‘We are in King’s Cross, which is pretty hot on rents and rates. We tend to be on the edgy parts of town and 10 years ago we came here - but since then rents are up 50 per cent and rates 150 per cent. For our type of business it is too expensive.
‘[So] we are looking at the possibility of moving and there are some good deals out there. Hopefully we can find the same size building at better rents and maybe get a deal.’
And on the impact of the UK’s planned departure form the EU, Thompson added: ’Clients are still uncertain about the outcome of Brexit. We have had a lot of start-up meetings in the calendar that are cancelled the night before. That is still occurring – cancellation of meetings where we’ve won a project and done some feasibility and concept work but the serious moment of a client committing to six months’ work from consultants is delayed.’
AJ reported last week that Aukett Swanke’s curved Bradfield Centre had opened at Cambridge Science Park.