Rok bucks trends to set seventh record
Builders Rok defied the national trend for downbeat results in the construction industry today by reporting a seventh successive year of record results.
Profit before tax was up 42% to £31.7m on revenue up 38% to £950.1m, giving shareholders a healthy 21% increase in dividends for the builder, which employs more more than 220 people in the region.
With a record order book which grew 17% to £610m to the year ending December 31, the group said it was hoping for similar growth during the next year and is seeking acquisitions across the North-east and Cumbria to consolidate its position.
Mitchell Smith, Rok’s regional director for the North-east, said difficult trading conditions provided an ideal opportunity for the group to buy struggling companies.
He said: “Our growth plan is split roughly half and half between organic growth and strategic acquisitions. As the market tightens, it presents an opportunity for us to bring companies within the Rok model and strengthen them.
“We have been selective with our markets. Our long-term order book has secured our markets for a number of years,” he said.
He added that the group’s ability to manage risk across new-build projects and refurbishment and maintenance services had enabled it to withstand tough trading conditions.
Analysts, too, credited the company's strong performance with having a broad portfolio which cushioned it from the worst effects of a downturn.
Andrew Priestley, a stockbroker for Middlesbrough-based Redmayne-Bentley, said: “The housebuilding sector has been affected badly during the last six months and builders that have managed to get repeat remedial and maintenance work from councils and housing associations will be better placed in the current market.
“Currently, there is more demand for refurbishment work than for new-builds. As the credit squeeze hits home, 100% mortgages are becoming less common as lenders tighten their belts and homeowners are choosing to make improvements to their homes rather than move into new ones.”
Mr Priestley said the results were testimony to the strength of Rok’s business model, which would enable it to remain resilient in tough conditions in the year ahead.
“The strong order book and solid financials justify the board’s confidence and should give comfort to investors in a sector which has suffered badly in recent months”, he said.
Currently new-build work, planned repairs and refurbishment and response maintenance represent around 90% of the group's profits.
Rok works across the Tees Valley on projects for Lingfield Point in Darlington, Middlesbrough-based Erimus Housing and at NetPark at Wynyard.
Martin Donnachie, Rok’s managing director for the North of England, said: “The quality of work on such projects as the new visitors’ centre at Hardwick Park, Sedgefield, children’s centres in Fishburn and Kelloe, the Malthouse in Alnwick and the swimming pool in Killingworth has played a real part in Rok’s success in 2007.
“The acquisition of Avonside Services has also provided a boost, while the efforts of the existing Rok teams working out of our Tyneside and Tees Valley centres can also not be underestimated when it comes to the contribution they have made to these excellent results.
“We continue to look to the public sector and framework opportunities in the region. With turnover of staff well below the industry averages and a focus on a directly employed workforce operating within and with their local communities, we look forward to building on these results in the future.”
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