Profit at contractor falls by three-quarters after turbulent second half of 2008
Pre-tax profit at repair and maintenance contractor Rok fell by 76% from £24.5m to £5.9m in 2008 after a poor second-half performance that saw the closure of its commercial property arm.
Despite the fall, the company broke the £1bn turnover barrier - rising 16% from £875m to £1bn.
In November, Rok's share price halved to 35p in one day after it issued a profit warning. At the time, chief executive Garvis Snook said: “The lights went out across the UK at the start of October.”
Despite the warning, chairman Stephen Pettit said the firm was well positioned, pointing to £2.7bn of “visible future revenue”. He said: “Whilst 2008 was a challenging year in many respects, we have responded swiftly to the changing economic climate and taken the necessary action to address our cost base accordingly. We have also accelerated the change in our business mix to a greater proportion of higher-margin repair and maintenance activities.”
Before the one-off charges, which included £8.3m from 700 redundancies and an £18.6m hit from the closure of the property business, pre-tax profit fell 25% from £27.2m to £20.4m.
The turnover breakdown was as follows:
New build £564m (2007: £526m)
Planned repairs and maintenance £329m (£255m)
Response maintenance £119m (£94m).
Snook added: “Our strategy has been to reposition 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 repositioning and the transition is now virtually complete.”