RNS Number:5428I
Rok property solutions PLC
11 March 2003
Date: 11 March 2003
On behalf of: Rok property solutions plc ("Rok")
Embargoed until: 0700hrs
ROK PROPERTY SOLUTIONS PLC
Preliminary Results for the year ended 31 December 2002
Financial Highlights
* Operating profit* up 67% to #7.39 million (2001: #4.42 million)
* Profit before tax up 18% to #4.5 million (2001: #3.8 million)
* Turnover up 77% to #221 million (2001: #125 million)
* Adjusted earnings per share* up 22% to 23.81p (2001: 19.56p)
* Proposed final dividend of 3.9p per share, making a total for the
year of 5.5p (2001: 5.0p)
* before goodwill amortisation and exceptional charge
Operational Highlights
* Acquisition of Llewellyn has more than doubled the scale of the
Group's activities - Rok now operates across the majority of Southern
England.
* Both Llewellyn and City Estates acquired in 2002 have been
restructured and integrated into Rok.
* Placing and Open offer in September raised #6 million to fund
acquisition of Llewellyn, increasing the number of shares in circulation
and our shareholder base.
Commenting on the results, Bob Carlton-Porter, Chairman of Rok property
solutions, said:
"I am pleased to report record results from what has been an extremely exciting
and busy year. Over the last financial year, the Group has made substantial
progress and these results reflect the benefits that are now being consistently
delivered through our unique property solutions approach.
Record forward orders stand at #256m and trading during the first two months of
the current year is in line with expectations.
We are extremely proud of what we have achieved over the last year; Rok is now
exceptionally well positioned and we look forward to building on our success
with confidence."
Garvis Snook, Chief Executive of Rok property solutions, added:
"2002 is a year in which we made a significant step towards achieving our goal
of offering property solutions across the whole of the UK. Our acquisition of
Llewellyn, and its successful integration into Rok, has more than doubled the
scale of the Group's activities. It will also lead to a substantial increase in
revenues in 2003 and will provide a base for more acquisitive and organic growth
in future years."
Enquiries:
Garvis Snook, Chief Executive Tel: 020 7955 1410 (on 11.03.03)
Rok property solutions plc Tel: 01392 354004 thereafter
Emma Kane/Katharine Sharkey Tel: 020 7955 1410
Redleaf Communications Ltd Mob: 07876 338339
Chairman's Statement
I am pleased to report record results for what has been an extremely exciting
and busy year. Over the last financial year, the Group has made substantial
progress and these results reflect the benefits that are now being consistently
delivered through our unique property solutions approach - property development,
building and facilities management services implemented by people dedicated to
exceeding clients' expectations.
At the heart of our success has been the creation of a new market sector
offering specially tailored services designed to meet any organisation's
property needs and our ability to develop long term relationships with our
clients by providing cost effective ways of enhancing their performance through
the premises they occupy.
Our focus over the last year has been to replicate the success of our highly
effective business model across a broader geographic range. Today Rok operates
across the majority of Southern England. This has been achieved through our
acquisitions in March of City Estates in Southampton for #862,000 and, in
September 2002, of the Llewellyn group of companies in Milton Keynes, East
London, Brighton and Eastbourne for #16.25m. Both companies have now been
restructured and integrated into Rok.
I am pleased to report that the quantum leaps we have made in the size and
geographic reach of our operations has not been to the detriment of the
performance of our existing business. Organic growth contributed an additional
22% of turnover on last year. This was achieved as more clients became aware of
the advantages that our bespoke property solutions offering has over traditional
procurement methods.
Despite significant and continuing stockmarket turbulence, strong investor
appetite for the Company's shares was demonstrated when the Group successfully
issued 3.6m new shares via a placing and open offer to raise #6m to fund the
Llewellyn acquisition. This has had the effect of increasing both the number of
shares in circulation and our shareholder base.
Results
Turnover reached #221m, 77% up on the previous year. Operating profit before
goodwill amortisation and exceptional charge was #7.39m (2001: #4.42m) and
profit before tax for the year was #4.5m (2001: #3.8m). As a result of our
investment made in acquisitions, the overall net debt position at the year end
was #7.6m (2001: #4.2m). Adjusted earnings per share were up 22% to 23.81p
(2001: 19.56p).
Dividend
Your Board is proposing a final dividend of 3.9p per share making a total
dividend of 5.5p for the year (2001: 5p). This will be paid to shareholders on
the register at 4th April 2003. The year-on-year growth is therefore 10% and
the Board's expectation, going forward, is to continue to grow the dividend at
approximately half the rate of growth in earnings per share, leaving the balance
retained in the business to fund both further growth and to strengthen the
balance sheet.
Strategy
The acquisitions we made in 2001 and 2002 have substantially broadened the
Group's geographic spread and we are delighted to have increased both market
share and profitability across the regions in which we operate. Over the next
year, we intend to focus on the development of Rokforce, our nationwide
facilities management operation, which provides us with a platform for low risk
revenue growth irrespective of macro economic circumstances. Over the last
year, we continued to build the calibre of our management team, in particular
through the high quality of individuals joining the Group through our
acquisitions. During the current financial year, it is our intention to
strengthen our executive team further in preparation for medium-term acquisitive
growth in areas of the UK where the Group is currently not represented.
People
In December 2002, the Board accepted the resignation of Peter Griffin due to ill
health. Peter made a substantial contribution to the Group during its
revitalisation and re-launch in 2001 and we wish him well for the future. It is
the Board's intention to recruit a non-executive director during 2003.
Prospects
The heralded slow down in commercial property activity appears to have focused
on London and the immediate M4 corridor, however, all our markets remain
buoyant. Record forward orders stand at #256m and trading during the first two
months of the current year is in line with expectations.
We are extremely proud of what we have achieved over the last year; Rok is now
exceptionally well positioned and we look forward to building on our success
with confidence.
Bob Carlton-Porter
Chairman
11 March 2003
Chief Executive's Review
2002 is a year in which we made a significant step towards achieving our goal of
offering property solutions across the whole of the UK. Our acquisition of
Llewellyn, and its successful integration into Rok, has more than doubled the
scale of the Group's activities. It will also lead to a substantial increase in
revenues in 2003 and will provide a base for more acquisitive and organic growth
in future years.
Rokeagle: commercial and industrial property development
When we acquired the Rokeagle team in 2001, we stated that commercial and
industrial property development was a long-term process and it would take time
to realise the value of this acquisition and provide a spread of activity that
would lead to increasing levels of return. The year just ended provided the
expected flow of successful developments and is continuing to do so in 2003.
Our strategy centres on holding well located land near major infrastructure
routes and adjacent to key towns and cities outside of London. The land always
has a minimum of outline planning permission but, where appropriate, we use our
skills to enhance the planning gain. Key to our success has been our strategy
of promoting client specific solutions. By doing so, the risk has been removed
through pre-letting or pre-selling agreements so that only a small amount of
speculative development is entertained where economies of scale make it
effective.
None of Rok's completed buildings are retained as investments with the smaller
developments being sold on occupation and completion. Larger developments such
as the project currently under construction for London Electricity (to provide a
regional management and call centre) are pre-sold with interim financing to
major institutions.
During the year, the sale of eight acres of land at our largest single land
holding, Matford Park in Exeter, to Makro for a cash & carry outlet and a range
of other smaller developments at this location has reduced our holding to 21
acres. This has enabled us to reinvest our resources over a wider area, most
notably Eagle Point at Segensworth near Southampton and Solent Business Park
where we are about to commence a small unit office scheme.
Our 68,000 sq ft retail development in Launceston was completed successfully in
November and was sold during the year. Whites Garage at Taunton has been
redeveloped as a health club (which was pre-let before redevelopment commenced)
and a small retail unit. The investment is currently under offer and is due to
complete during the first quarter of the current financial year.
In March, we acquired City Estates in Southampton which we expect will mirror
the contribution pattern of Rokeagle and therefore it has not contributed
significantly to the 2002 results. However, it has enabled projects in
Petersfield and Segensworth to commence and is expected to make a substantial
maiden contribution in 2003.
The addition of the Llewellyn land and property portfolio in September led to a
number of disposals in the last quarter and will provide significant
opportunities in 2003 to enhance values and extend Rokeagle's activities across
the South East.
In this manner we have now spread our development activities across the whole of
Southern England and are not tied to the vagaries of any localised economy to
any significant degree.
Rokbuild: our building operation
Our building activities range from 'small ticket' building repairs to large
capital projects. These are delivered through locally based teams, focused on
schemes where they can use their skills to add value. They provide client
specific solutions that command a premium whilst avoiding unnecessary risk and
conflict.
The cultural change we embarked upon two years ago is delivering a marked
improvement in performance within our building activities. Significantly, we
have delivered an increase in operating margins to 2.1% on continuing operations
up from 1.8% last year, at the same time as increasing market share. Organic
growth has increased by 14% within the continuing Rokbuild activities. We are
confident that this trend will continue in 2003.
This result has been achieved whilst making considerable investment in
developing our Central region. Rokbuild commenced the year operating from nine
outlets; following the acquisition of Llewellyn and growth through the addition
of new branches in Oxford and Crawley, the total number of outlets is now
fifteen.
Llewellyn's building activities were merged into Rokbuild on 1 January 2003.
Our key focus is to improve returns. This will be achieved through margin
performance to mirror that of Rokbuild's and the structural and the cultural
change embarked upon in the final quarter to deliver returns similar to those
achieved in the original group. We also intend to develop the considerable
expertise brought into the Group through the Llewellyn team in social housing
and urban regeneration in order to maximise the full potential of these
operations at a time when the Government is committed to investing heavily in
this sector. We shall look to spread knowledge and expertise in this area
across the whole Group.
Rokforce: our nationwide facilities management operation
We differentiate our response and planned property maintenance offering on a
national scale by being focused on the quality of service we provide and will
not compete purely on price for high volume relationships. Services are
promoted via our Rokforce sales team and through Rokbuild outlets.
During 2002, we have focused on preparing Rokforce for the next stage in its
development. Investment in our Call Centre facility, management systems and the
Rokforce management team has contributed to a growth in volumes and returns.
Our primary focus for the coming financial year will be to exploit fully the
tremendous potential within this area of our business now that we have the
systems and teams in place.
Llewellyn: our recently acquired South East operation
In August we announced our intended acquisition of this long established and
respected name in the construction industry, operating across South East England
from depots in Eastbourne, Brighton, Milton Keynes and East London. Following
this, we were given the opportunity to meet in small groups with many of the
employees. This exercise confirmed our impression of a company staffed by
hard-working, dedicated professionals hampered by a complex management system
and under-utilised tangible assets, much in the way EBC had been prior to its
regeneration as Rok.
Immediately following the EGM on 16 September, at which the acquisition was
approved, we appointed Neal Hunt as Managing Director of the larger part,
leaving John Dance, our Central region Managing Director, to take responsibility
for the transformation of the Milton Keynes unit. During October, whilst the
senior management team worked to prepare for the change to a de-layered,
empowered structure in the Rok style some 25% of employees were prepared as
champions of the change that was to come.
Regrettably, but inevitably, some 150 employees were made redundant in November
as the restrictive management structure was removed and a number of premises
have since been vacated or altered to reflect the open culture that Rok
espouses, including the opening of a new regional office in Crawley.
Collectively these various changes are expected to generate annualised net
savings of #3m whilst creating working environments that motivate people to
enhance their individual performance in pursuit of team goals allied to the
Group's property solutions strategy.
All remaining Llewellyn employees are currently undertaking a development
programme aimed at equipping them with the knowledge and understanding of how to
use their technical and trade skills to their full potential in an empowered and
values driven environment.
Various businesses within Llewellyn were considered non-core to the Rok property
solutions offering. The loss making joinery business has been closed and Forge
Llewellyn and the timber engineering businesses have been sold. The plant hire
business has been reshaped with the objective of capitalising on our position
during 2003. Property assets acquired were transferred as trading stock to
Rokeagle who disposed of 27% before the year-end. A further 20% has since been
sold or is contracted and by the end of 2003 we confidently expect to have made
further disposals, with the proceeds re-invested into trading stock for
Rokeagle.
Building Components
2002 saw a substantial improvement in the performance of Spaceage. Following a
strategic review of the company in the Spring, we decided to focus the business
on the higher margin conservatory roof market with the wholesaling of plastic
building products as an adjunct to this activity. Following the review, a new
Managing Director was appointed, the business was rebranded and relaunched, the
Sales & Marketing team strengthened, and the Group's capital investment reduced.
Work has started on a new production facility due to come on stream in
September 2003 which will more than double the current conservatory roofing
capacity. Meanwhile operating profit increased by 35% on 2001 to #648,000.
People
We continually strive to be the Best Employer in our industry, in order to
attract and retain talented people. Our latest People Survey carried out in
December 2002 elicited a 70% response rate across the whole Group. This gave
confidence that our most important asset is in good shape but equally sets the
challenges for the current year and beyond to maintain our adherence to this key
aspiration. In October, we were pleased to attract to the Group management Team
Paul Wilkinson as People Director. His role is to facilitate the strengthening
of our organisational capability, through Group-wide human resource processes
which reinforce our culture of empowerment and service delivery.
The Group is committed to its responsibility to actively manage health and
safety. We were pleased to learn in Spring 2002 that we had been awarded a
President's Medal for occupational safety from RoSPA for the year 2001.
Similarly Llewellyn has gained their fourth gold award in succession,
emphasising the similarities of approach in the two businesses towards this most
important aspect of our work.
Pensions
We aspire to ensure that all employees of the Group, in partnership with the
Company, make adequate provision for their retirement. We currently have two
final salary pension schemes and a number of defined contribution arrangements.
Both of the final salary schemes are closed to new entrants and have a combined
FRS17 deficit, as at 31 December 2002, of #18.1m net of tax of which #10.3m has
been provided for as part of the Llewellyn fair value adjustments. The
disparity of provision across the Group is unfair and an unknown burden on
shareholders. We have therefore commissioned external specialist advice and
commenced discussions with the Trustees with a view to agreeing a solution that
meets both employees' and shareholders' needs. A decision will be announced
later in the year.
Prospects
This report is a result of the combined efforts of the whole 1,300 strong Rok
team. Every individual has played his or her part, bound by a company-wide
culture of delivering on promises and exceeding expectations. With this team, I
have every confidence that 2003 will be another record year.
Garvis D Snook
Chief Executive
11 March 2003
GROUP PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2002
2002 2002 2002 2001
Before Exceptional Total Total
exceptional items
items
#000 #000 #000 #000
TURNOVER:
Continuing operations 153,049 - 153,049 124,953
Acquisitions 67,988 - 67,988 -
221,037 - 221,037 124,953
Cost of Sales:
Continuing operations 131,731 - 131,731 109,226
Acquisitions 63,804 - 63,804 -
195,535 - 195,535 109,226
GROSS PROFIT:
Continuing operations 21,318 - 21,318 15,727
Acquisitions 4,184 - 4,184 -
25,502 - 25,502 15,727
Administrative expenses:
Continuing operations 15,683 - 15,683 11,696
Acquisitions 3,223 1,502 4,725 -
18,906 1,502 20,408 11,696
OPERATING PROFIT (LOSS)
BEFORE GOODWILL AMORTISATION:
Continuing operations 6,271 - 6,271 4,417
Acquisitions 1,117 (1,502) (385) -
7,388 (1,502) 5,886 4,417
OPERATING PROFIT (LOSS):
Continuing operations 5,635 - 5,635 4,031
Acquisitions 961 (1,502) (541) -
6,596 (1,502) 5,094 4,031
Net interest payable (592) - (592) (270)
PROFIT (LOSS) ON ORDINARY ACTIVITIES
BEFORE TAXATION 6,004 (1,502) 4,502 3,761
Tax charge on profit of ordinary activities 1,188 878
PROFIT ON ORDINARY ACTIVITIES
AFTER TAXATION 3,314 2,883
Dividends 1,304 978
RETAINED PROFIT FOR THE YEAR 2,010 1,905
EARNINGS PER ORDINARY 10p SHARE:
Basic 15.30p 17.25p
Goodwill amortisation 3.66p 2.31p
Exceptional items 4.85p -
Adjusted 23.81p 19.56p
Diluted 15.07p 17.02p
There were no other recognised gains or losses in either the current or the
preceding financial periods.
GROUP BALANCE SHEET Group
As at 31 December 2002
2002 2001
#000 #000
FIXED ASSETS
Intangible assets 25,798 10,639
Tangible assets 13,309 3,321
Investments 427 192
39,534 14,152
CURRENT ASSETS
Work in progress and stocks 28,483 21,057
Debtors 49,785 17,840
Cash and short-term deposits 14,873 5,697
93,141 44,594
CREDITORS
Amounts falling due within one year 74,851 31,838
NET CURRENT ASSETS (LIABILITIES) 18,290 12,756
TOTAL ASSETS LESS
CURRENT LIABILITIES 57,824 26,908
CREDITORS
Amounts falling due after one year 13,065 6,186
PROVISIONS FOR LIABILITIES
AND CHARGES 14,641 1,135
NET ASSETS 30,118 19,587
CAPITAL AND RESERVES
Called up share capital 2,550 2,011
Share premium account 15,208 7,226
Capital redemption reserve 5,573 5,573
Profit and loss account 6,787 4,777
EQUITY SHAREHOLDERS' FUNDS 30,118 19,587
Included in debtors is a deferred tax asset of #4,153,000 due after more than
one year (2001: #nil)
MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 31 December 2002
2002 2001
#000 #000
Total recognised gains and losses for the financial year 3,314 2,883
Dividends (1,304) (978)
New share capital subscribed as a result of:
- exercise of options 137 273
- scrip dividend 84 -
- placing and open offer 5,850 3,303
- acquisition consideration 2,450 3,842
Net movement in shareholders' funds 10,531 9,323
Opening shareholders' funds 19,587 10,264
Closing shareholders' funds 30,118 19,587
GROUP CASH FLOW STATEMENT
For the year ended 31 December 2002
2002 2001
#000 #000
NET CASH INFLOW (OUTFLOW) FROM OPERATING ACTIVITIES 13,617 (7,814)
RETURNS ON INVESTMENTS AND SERVICING OF FINANCE
Interest received 60 62
Interest paid (652) (332)
Net cash outflow from returns on investments and servicing of finance (592) (270)
TAXATION
Corporation tax paid (1,618) (145)
CAPITAL EXPENDITURE
Purchase of tangible fixed assets (1,944) (1,069)
Sale of tangible fixed assets 2,212 3,585
Purchase of own shares (235) (192)
Net cash inflow for capital expenditure 33 2,324
ACQUISITIONS
Purchase of subsidiary undertakings (16,254) (1,420)
Debt acquired with subsidiary (3,187) (644)
Net cash outflow from acquisitions (19,441) (2,064)
EQUITY DIVIDENDS PAID (1,027) (615)
CASH OUTFLOW BEFORE THE USE OF LIQUID
RESOURCES AND FINANCING (9,028) (8,584)
FINANCING
Issue of shares net of expenses 6,071 3,576
Decrease in loan notes (1,147) -
Increase in bank loans 15,079 4,000
Net cash inflow from financing 20,003 7,576
INCREASE (DECREASE) IN CASH 10,975 (1,008)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET DEBT
Increase (decrease) in cash in the year 10,975 (1,008)
Cash outflow from change in debt (13,932) (4,000)
Change in net debt resulting from cash flows (2,957) (5,008)
Issue of loan notes and debt acquired on acquisition of subsidiary undertakings (492) (3,686)
Movement in net debt (3,449) (8,694)
Net (debt) funds at 1 January (4,199) 4,495
Net debt at 31 December (7,648) (4,199)
NOTES:
BASIS OF PREPARATION
The financial information for the years ended 31 December 2002 and 2001 set out
above does not constitute statutory accounts within the meaning of section 240
of the Companies Act 1985. The information has been extracted from the
statutory accounts of Rok property solutions plc for the year ended 31 December
2002, which have not yet been filed with the Registrar of Companies. Statutory
accounts for the year ended 31 December 2001 have been delivered to the
Registrar of Companies. Statutory accounts for the year ended 31 December 2002
were approved by the board of directors on 11 March 2003, are audited and will
be delivered to the Registrar of Companies following the annual general meeting
to be held on 17 April 2003. The Company's auditors, KPMG Audit Plc, have
reported on the 2002 and 2001 accounts under section 235(1) of the Act. These
reports were not qualified within the meaning of section 235(2) of the Act and
did not contain statements made under section 237(2) and section 237(3) of the
Act.
The annual report and accounts for the year ended 31 December 2002 will be
posted to shareholders on 21 March 2003.
Interim and preliminary announcements notified to the London Stock Exchange are
available on the internet at www.rokgroup.com/irelations. They, and copies of
annual and interim reports, are also available upon written request from the
Group Company Secretary at Rok property solutions plc, Rok Centre, Guardian
Road, Exeter Business Park, Exeter EX1 3PD.
SEGMENTAL INFORMATION
In the opinion of the directors, the Group's activities comprise one business
segment, construction. This segment has been analysed in the following table to
provide details of turnover and operating profit by division:
Turnover Continuing 2002 2001
operations Acquired Total Total
#000 #000 #000 #000
Development (Rokeagle) 27,466 6,046 33,512 14,297
Building (Rokbuild) 121,112 62,674 183,786 106,230
Facilities management (Rokforce) 10,088 - 10,088 2,347
Building components 6,889 - 6,889 6,517
165,555 68,720 234,275 129,391
Inter-company turnover 12,506 732 13,238 4,438
External turnover 153,049 67,988 221,037 124,953
Operating profit (loss) before goodwill Continuing 2002 2001
amortisation and exceptional items operations Acquired Total Total
#000 #000 #000 #000
Development (Rokeagle) 3,302 936 4,238 2,117
Building (Rokbuild) 2,548 181 2,729 1,921
Facilities management (Rokforce) 996 - 996 428
Building components 648 - 648 479
Central administration (1,223) - (1,223) (528)
6,271 1,117 7,388 4,417
Inter-company turnover stated above comprises mainly construction work or repair
and maintenance carried out by Rokbuild for Rokeagle or Rokforce respectively,
rent charges by Rokeagle in respect of Group occupied premises and plant hire
provided by acquired companies for Rokbuild.
All activities were conducted within the United Kingdom.
EXCEPTIONAL ITEMS 2002 2001
#000 #000
Redundancy and reorganisation costs 1,502 -
RESERVES
Share Capital Profit
premium Redemption and loss
account reserve account
#000 #000 #000
At 1 January 2002 7,226 5,573 4,777
Exercise of share options 117 - -
Premium on scrip dividends 79 - -
Issue of share capital 7,786 - -
Retained profit for year - - 2,010
At 31 December 2002 15,208 5,573 6,787
DIVIDENDS
2002 2001
#000 #000
Interim of 1.6p per ordinary 10p share (2001: 1.5p) 322 273
Proposed final of 3.9p per ordinary 10p share (2001: 3.5p) 995 711
Dividends waived on shares held by the Trustees of the Long Term Incentive Plan (13) (6)
1,304 978
Ex-dividend date 2 April 2003
Dividend record date 4 April 2003
Dividend payment date 9 May 2003
EARNINGS PER SHARE
Earnings per ordinary share have been calculated using the profit for the
financial year of #3,314,000 (2001: #2,883,000) and the average number of
ordinary shares in issue, excluding those held in the Long Term Incentive Plan,
during 2002 of 21,666,252 (2001: 16,710,146). Diluted earnings per share uses
an average number of 21,992,813 (2001: 16,942,187) ordinary shares in issue,
which takes account of the outstanding options granted under the share option
schemes, in accordance with FRS 14.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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