Profitable repair and maintenance work helps offset steep drop in new build activity
Contractor Rok saw turnover decline by almost a third in 2009, but nevertheless managed to increase pre-tax profits nearly threefold to £17m.
Turnover fell from £1.01bn to £714.8m as revenue from new build activities dropped by 45% and the business refocused around repair and maintenance work.
The business, which incurred exceptional charges in 2009 of just £2.1m, down from the £12.2m reported in 2008, said it already had 85% of its 2010 revenue “secured or probable.” Chief executive Garvis Snook said the firm’s maintenance and improvement businesses now accounted for 58% of Rok’s revenues and 83% of its profits.
The company spent £5.m restructuring the business in 2009, but said it would reap savings of £18m per annum. However, this charge was off-set by a reprovision of £3m to the company because fines under the OFT’s investigation for bid-rigging proved to be lower than expected.
Snook said: “There is no doubt the poor economic climate of the last 18 months created some of the most challenging trading conditions any of us can remember, particularly for our industry."
"In the last year we have shifted the focus of the group’s operations on to the more profitable and more resilient repair, maintenance and improvement markets as we believe they provide attractive growth potential for Rok."
"In sizing the construction business for this current economic environment we have scaled back our capacity by more than half and as a result have avoided the temptation to target these higher risk volumes at the expense of profitability.”