Aukett Swanke turns on the style

Fast-growing architect and interior designer Aukett Swanke doubled revenue last year and profit surged by an impressive 155%. And the results would have been even better had the Russian business not stalled and Swanke Hayden Connell Europe (SHCH), bought in December 2013, not suffered delays both in Russia and the UK.

Pre-tax profit jumped from £550,000 in 2013 to £1.4 million in the year to 30 September on revenue up from £8.4 million to £17.3 million. Aukett's cash pile ballooned, too. And integrating SHCE meant all the cost and none of the benefit is seen in 2014. This year will be different, and the full benefit should be obvious in the numbers.

It was an "excellent" year for the UK where SCHE made a big contribution to a doubling of revenue and 90% surge in profit to £1.8 million, helped by work for Imperial College and at 10 Trinity Square in the City. In Berlin, "a veritable jewel in the crown," Aukett made £1.5 million, partly from work on Berlin Airport, while the Deutsche Bank contract gave the Frankfurt office a boost. There was a small profit in the Middle East, too.

Clearly, business in Russia has been hit by the conflict in Ukraine, and losses hit £304,000. "Such losses are unsustainable and we have given ourselves a short period in which to rectify the situation or consider alternative solutions," says the firm.

Broker finnCap expects adjusted pre-tax profit of £1.8 million in 2015, giving adjusted earnings per share (EPS) of 0.9p, up 29% from 0.7p last year. That puts Aukett shares, currently at 7.75p, on a prospective earnings multiple of only 8.6, which includes 1p per share of cash.

However, Aukett should trade on 12.2 times earnings estimates, reckons finnCap, given potential for cyclical earnings recovery and corporate growth. That explains the price target of 11p.

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