London-headquartered architecture firm Aukett Swanke Group has posted a loss for 2014 in Russia, a situation it says is "unsustainable".
The listed group did very well in other parts of the world, with revenue up 106% and profit before tax up 155%, but it lost $527,600 (£350,000) in Russia for the year ending 30 September 2014. It said Russia’s "foreign policy" and falling oil prices had exacerbated the difficulties.
Russia was the "only negative aspect to report upon", said non-executive chairman Anthony Simmonds in announcing the year’s results on 28 January.
"The Board is mindful of this important market and the time taken to establish our credentials in it," the group stated. "However, such losses are unsustainable and we have given ourselves a short period in which to rectify the situation or consider alternative solutions.Â
"This process is further exacerbated by the recent troubles in the Russian financial markets brought about by Russian foreign policy and the collapse in the oil price. In the short term management’s strategy is to concentrate on local Russian commissions where there is limited exposure to third party sub consultant costs and hard currency liabilities."
The company added: "Given the continuing losses the remaining goodwill balance of £125,000 relating to the pre acquisition Russian operation, ZAO Aukett Fitzroy Vostok, has been impaired."
In September the firm’s chief architect, Alexander Nikulshin, told Building magazine: "Our target clients are normally branches of international firms in Moscow and they are double checking their operations in Moscow now."
Otherwise, 2014 was a very good year for the group, with profit before tax increasing by 155% to $2.1m (£1.4m) and revenue more than doubling, to $26m (£17.3m).
The company got a boost in December 2013 when it acquired Swanke Hayden Connell Europe Limited, which is when its name changed from Aukett Fitzroy Robinson Group to Aukett Swanke. (The group stresses that it has it has no ownership connection with Swanke Hayden Connell Limited and Swanke Hayden Connell & Partners LLP of New York, who have recently filed for Chapter 11 bankruptcy protection.)
The group posted strong performance in Turkey, the Middle East, Germany and the UK.
Photograph: Moscow skyline (Dmitry Azovtsev/Wikimedia Commons)