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 鈥渘o immediate sign鈥� of a sustainable domestic recovery.

The group posted a pre-tax loss of 拢358,000 for the six months to 31 March, on overall turnover for the first half down 9% to 拢9.1m. Revenues in the UK fell by 31% to 拢4.6m, a situation described by the firm as 鈥渄isappointing鈥�, and reflecting a lack of new market instructions as existing projects were finished.

Cost savings of 拢1.4m across the UK operation had not matched the decline in revenue, with a loss of 拢211,000, compared with a profit in the same period last of 拢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. 鈥淗owever 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,鈥� it said.

In Continental Europe, where its activity is through joint ventures, wholly-owned subsidiaries and an associate, revenues fell 24% to 拢331,000, while in the United Arab Emirates they rose 45% following last year鈥檚 acquisition of Shankland Cox, which operates in the region, although profits halved to 拢121,000.

The firm said it believed it had reached the bottom of the cycle in the UK, but recent events meant there was 鈥渘o immediate sign of a strong sustainable recovery鈥� in the market.

鈥淲e 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.鈥�

It said the UAE offered the best opportunity for profitable growth in the second half, 鈥渁nd we will focus on that鈥�, 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.

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