Rok makes overall loss on £1bn turnover

Rok had a particularly bad time last year. Now a £1bn-a-year turnover player, it made a mere £6m pre-tax profit on its continuing operations, though this was more than wiped out by a £19m pre-tax loss in the parts that Rok jettisoned during the year.

Rok’s latest annual results cover the 12 months to 31 December 2008.

Chief executive Garvis Snook said: “2008 was a challenging year as the downturn in business confidence led to a rapid slow down in demand for new capital works.

“This was compounded by the banking crisis in the autumn that led to a lack of liquidity for a number of our customers which impacted our trading performance in the second half of the year.

“For some time now our strategy has been to re-position the business away from its greater dependence on low-margin contracting into higher-margin repairs and maintenance activities where the business model is based on long-term framework agreements with good visibility of forward revenues.

“In response to the increasingly competitive market for new capital works we accelerated this re-positioning and the transition is now virtually complete.

“We also took the decision to close our property development operations during the year as we believe this market is unlikely to deliver adequate returns for the group in the foreseeable future.”

Rok’s new build division was restructured at a cost of £12m which includes £8m in respect of 700 redundancies and £4m for property related provisions. 

The closure of Rok Development, the group’s property development operation, resulted in a £16m loss, most of which related to non-cash charges for land and work in progress provisioning and goodwill impairment.

Together with the operating losses during the period, this discontinued activity resulted in a £19m hit.

Net debt ended the period at £44m, up from £5m at the previous year-end principally due to the acquisitions of:

• Richardson Projects - £23m paid
• Pitkerro - £3m paid

Average net debt during the year was £61m (comparable figure in 2007: £24m).

“We have renegotiated and extended our banking facilities under a club arrangement with three major banks and now have £90m of long term facilities expiring in March 2012,” said Snook.

Despite making an overall loss, shareholders will still receive a dividend.

New build

The new build division undertakes both public and private sector projects with a relatively low value which averaged £2.7m in 2008. Rok increased its exposure to public sector projects with local authorities and housing associations, many of which are operated under long-term framework agreements

Planned repairs and refurbishment

Rok’s planned repairs and refurbishment division provides building improvement works, repairs and maintenance and plumbing, heating and electrical services principally to housing associations, local authorities, and to the education, health, and the leisure sectors.

The division “experienced another strong year” with revenue increasing by 29% to £330m.

“Operating profit increased by 12% to £17m,” said Snook.

Plumbing Heating and Electrical

In September 2008 Rok formed Rok Plumbing Heating and Electrical (PHE) incorporating five companies, all of which had been acquired in the previous 24 months, including the January 2008 acquisition of Pitkerro.

Response maintenance

Revenue increased by 27% to £119m.