RNS Number:5602O
Rok property solutions PLC
12 August 2003
Date: 12 August 2003
On behalf of: Rok property solutions plc ("Rok")
Embargoed until: 0700hrs
Rok property solutions plc
Interim Results for the six months to 30 June 2003
Rok, the listed providers of specially tailored property solutions, today
announced another record set of results in line with market expectations. The
highlights of the interim results were:
* Turnover up 157% to #171.8m (2002: #66.8m)
* Operating profit before goodwill up 101% to #4.59m (2002: #2.28m)
* Pre-tax profits up 94% to #3.43m (2002: #1.77m)
* Earnings per share, excluding goodwill amortisation, up 57% to 11.84p
(2002: 7.56p)
* Interim dividend up 9% to 1.75p (2002: 1.6p)
* Llewellyn, acquired September 2002, exceeded expectations
* Appointment of Ashley Martin as Group Finance Director effective 5
September 2003
Commenting on the Company's interim results, Bob Carlton-Porter, Chairman of
Rok, said:
"The Group has made excellent progress during the half year under review
demonstrating the Group's outstanding ability to rationalise and integrate major
acquisitions successfully, whilst continuing to drive greater, sustainable value
from existing operations. Our record forward order book has been maintained in
excess of #250 million, including #129 million in respect of Llewellyn's
activities. This also includes #80 million in respect of social housing and
urban regeneration work.
"The strengthening of the Group Executive Team continues with the appointment of
Ashley Martin as Group Finance Director, enabling us to prepare for the next
stage in Rok's growth strategy."
Enquiries to:
Emma Kane/James White Tel: 020 7955 1410
Redleaf Communications Mob: 07876 338339
Notes:
* Rok property solutions plc is fully listed on the London Stock
Exchange
* The Company was founded in 1939 and joined the Official List in 1988
* Rok's principal activities are to develop, build and maintain
specially tailored solutions to meet each client's specific property
needs.
CHAIRMAN'S STATEMENT
I am pleased to report that the Group has once again made excellent progress
during the half year under review. This period has delivered results in line
with expectations, demonstrating the Group's outstanding ability to rationalise
and integrate major acquisitions successfully, whilst continuing to drive
greater, sustainable value from existing operations.
Results
Turnover for the six months ended 30 June 2003 was up 157% to #171.8 million
(2002: #66.8 million). Operating profit before goodwill amortisation advanced
by 101% to #4.59 million (2002: #2.28 million) and the pre-tax profit by 94% to
#3.43 million (2002: #1.77 million). Earnings per share, adjusted to exclude
goodwill amortisation, increased 57% to 11.84p (2002: 7.56p).
These increases were contributed to by Llewellyn, acquired in September 2002,
whose performance has exceeded our expectations. Llewellyn's construction
turnover and operating profit before goodwill for the first half were driven to
#76.1 million and #1.2 million respectively.
Dividend
The solid start to the year is reflected in your Board's decision to propose a
9% increase in the interim dividend to 1.75p per share (2002: 1.6p), which will
be paid on 10 October 2003 to shareholders on the register at 5 September 2003.
There is also a scrip alternative, the procedure for which is explained more
fully in note 7.
Borrowings
Rok's cash control continues to be well disciplined. Net debt was #9.0 million
(2002: #9.8 million), representing 28% of shareholders' funds with net interest
being covered 8.2 times by operating profits. Notwithstanding the ongoing
investment in property assets for Rokeagle's stock in trade, overall debt
gearing remains lower than anticipated reflecting our success in achieving
property and peripheral business disposals.
Strategy
Rok challenges the traditional ways the construction industry operates - it
treats every customer as an individual and, using its core skills, has created a
new niche within its market through its ability to develop, build and maintain
specially tailored solutions to meet each client's specific property needs.
Market share has increased in all our regional operations with overall operating
margins among the best in the industry. The platform we have successfully built
in Southern England is the basis we will use to replicate the formula in other
regions of the United Kingdom through the acquisition of further
under-performing businesses.
Rokeagle - Develop
Rokeagle continues to enjoy high levels of activity due to the regional nature
of our business, which shields it from the slow down in commercial property
activity affecting London.
During the first half, we continued with the rationalisation of the property
portfolio acquired with Llewellyn in September of last year and all disposals
have been sold at a premium to their valuation. The resulting funds are
available for reinvestment in development opportunities, such as Eastside
Business Park, Newhaven (6 acres) and Cynergy Park, Sittingbourne (16 acres).
Continuing buoyancy in the South West economy is providing a number of
opportunities. For example, we recently obtained full planning permission for a
residential scheme at Pottery Quay, Plymouth, which we now expect to sell on to
a specialist house builder. Eden Park at Bristol continues to attract
occupiers. The health club at Taunton mentioned in our last report has been
completed and sold. In Exeter, Matford Park continues to attract a range of
smaller occupiers, whilst on the northern fringes of the City the first phase
80,000 sq ft development for EDF Energy (formerly known as London Electricity)
is on target for completion in the late autumn. Alongside, we have commenced
construction of a 45,000 sq ft headquarters for leading regional lawyers, Bevan
Ashford EPL.
Our confidence in Rokeagle's prospects and the region has led us to commit to
opening a new branch in central Bristol during the second half.
Our Southampton office is continuing to experience strong occupier demand and
the Vision Park Office development at Petersfield has now been developed and
sold. We are currently marketing a number of schemes in the area.
Overall, the value of Rokeagle's land bank and development portfolio included in
work in progress and stock totalled #25.1 million at 30 June 2003, by comparison
with #23.2 million at the end of 2002. In addition to this, we also hold #7.2
million of property as fixed assets that will be sold or redeveloped in due
course.
Rok - Build
The effects of the restructuring, heavy investment in culture change and new
working environments in Llewellyn are producing returns ahead of our
expectations at this stage, whilst the original building activities of the Group
continue to increase market share and enhance operating margins to 2.2% (2002:
1.9%). The Central Regional team has now firmly established a presence in
Oxford and is expected to make a contribution during the second half.
Llewellyn, in the South East, opened a new regional office at Crawley in the
second quarter of the year. This new regional office acts both as the base for
the regional management team to oversee operations in Eastbourne, Brighton and
East London and to develop new business streams focused on the needs of the
local community. The local brand of Llewellyn is already firmly established in
these areas but its reputation and performance are being significantly enhanced,
both within and without, as a result of the modern, Rok-inspired culture.
The rationalisation of Llewellyn was completed during the first half, with the
sale of the plant hire business. Since the period end we have also completed the
sale of the cabin hire business.
Rokforce - Maintain
Rokforce is being reorganised to create the country's leading premium service
provider of property, repair and maintenance, the first phase of which has been
to consolidate the Group's maintenance activities under the Rokforce brand. By
the end of the year, we expect to be able to deliver Rokforce-branded, premium
property building maintenance via dedicated teams of trained service personnel
through every Rok outlet. These services are sold at a local, regional and
national level to reflect each client's purchasing preferences.
The changes we are implementing are reflected in Rokforce's first half
performance. Sales have increased 86% and the operating margin of 6% reflects
the first phase reorganisation combined with the particularly mild spring
weather resulting in a reduction in reactive repair work for insurance
companies. We expect to reverse the margin trend during the second half.
Since the period end, we are pleased to have been selected by Royal & Sun
Alliance as one of their partners to enhance the quality of their repair
network. This will deliver a significant increase in insurance repair activity
for the Group.
Spaceage - Building Components
Spaceage's performance was affected during March and April by a drop in consumer
confidence. Since the end of the war against Iraq, enquiries and orders have
returned to normal levels, giving us confidence in the full year performance.
We have invested in a new roof production facility, due to open in September,
which will enable us to double capacity to over 100 roofs per week.
People
Your Board would like to wish Michael Bailey every success as he leaves the
Group to pursue other endeavours. Michael joined the Company in 1985 and we
express our thanks to him for the contribution he has made during a period when
the Group has evolved from a small, Exeter-based company to a business which has
grown more than four times in size over the past three years providing specially
tailored property solutions across Southern England.
We are delighted to announce the appointment of Ashley Martin to the Board as
Group Finance Director with effect from 5 September 2003. Ashley, 45, was
previously Group Finance Director of Tempus Group PLC, a #2 billion turnover
media communications group and one of the best performing stocks of all
companies listed on the London Stock Exchange over the last decade, where he
successfully handled and integrated over 40 acquisitions.
We continue striving to be the Best Employer in our industry. Our success in
this regard is reflected in the lack of skills' shortages we encounter, an issue
that is so often complained of by our competitors.
As part of this objective we have recently written to all employees spelling out
a new look retirement savings plan that will be open to all, ending the
inequality created by some being in defined benefit schemes, some in defined
contribution schemes and many tradespeople with little or no provision.
Agreement has been reached with the trustees of the two final salary schemes
that will enable the Group to meet its obligations for past service without
compromising shareholders' expectations.
In the Spring of this year, we were delighted to receive a second RoSPA
President's award for our outstanding performance in occupational health and
safety over a 10 year period. This is a testament to the efforts of all those
who work for the Group.
Current Trading and Prospects
Our record forward order book has been maintained in excess of #250 million,
including #129 million in respect of Llewellyn's activities, and there is a
steadily increasing level of enquiries. The order book also includes #80
million in respect of social housing and urban regeneration work.
The strengthening of the Group's Executive team continues with the appointment
of Ashley Martin as Group Finance Director, enabling us to prepare for the next
stage in the Group's growth strategy focused on delivering increased shareholder
returns.
Bob Carlton-Porter
Chairman
12 August 2003
GROUP PROFIT AND LOSS ACCOUNT
6 Months to 6 Months to 12 Months to
30 June 2003 30 June 2002 31 Dec 2002
#000 #000 #000
(unaudited) (unaudited) (audited)
External turnover 171,792 66,802 221,037
Operating profit before
goodwill amortisation 4,588 2,278 5,886
Operating profit 3,903 1,991 5,094
Net interest payable (474) (219) (592)
Profit before taxation 3,429 1,772 4,502
Taxation charge 1,132 532 1,188
Profit after taxation for the period 2,297 1,240 3,314
Dividend 449 330 1,304
Dividend per share 1.75p 1.6p 5.5p
Earnings per share - basic 9.12p 6.14p 15.30p
- adjusted 11.84p 7.56p 18.96p
- diluted 9.01p 6.04p 15.07p
(There were no other gains or losses in the period)
DIVISIONAL ANALYSIS
External turnover Operating profit (loss)
before goodwill
30 June 30 June 30 June 30 June
2003 2002 2003 2002
#000 #000 #000 #000
Rokeagle (Develop) 21,625 6,295 2,146 965
Rok (Build) 135,455 51,326 2,516 957
Rokforce (Maintain) 11,379 6,082 731 625
Building components 3,333 3,099 209 239
Central administration - - (1,014) (508)
171,792 66,802 4,588 2,278
SUMMARISED GROUP BALANCE SHEET
As at As at As at
30 June 2003 30 June 2002 31 Dec 2002
#000 #000 #000
(unaudited) (unaudited) (audited)
NET ASSETS
Fixed assets - intangible assets 25,112 11,723 25,798
- tangible assets 9,697 4,031 13,309
- investments 551 224 427
35,360 15,978 39,534
Work in progress and stocks 33,292 26,367 28,483
Debtors 50,282 20,396 49,785
Cash at bank and in hand 5,875 - 14,873
124,809 62,741 132,675
Creditors due within one year (69,744) (34,989) (74,851)
Total assets less current liabilities 55,065 27,752 57,824
Creditors due after more than one year (8,640) (5,501) (13,065)
Provisions for liabilities and charges (14,242) (1,135) (14,641)
32,183 21,116 30,118
SHAREHOLDERS' FUNDS
Called up share capital 2,566 2,060 2,550
Reserves and share premium 29,617 19,056 27,568
32,183 21,116 30,118
SUMMARISED GROUP CASH FLOW STATEMENT
6 months to 6 months to 12 months to
30 June 2003 30 June 2002 31 Dec 2002
#000 #000 #000
Net cash (outflow) inflow from operating (1,594) (1,972) 13,617
activities
Net interest paid (474) (219) (592)
Taxation paid (822) (1,032) (1,618)
Sale (purchase) of tangible fixed assets 2,884 (507) 268
Purchase of own shares (124) (32) (235)
Net cash outflow from acquisitions - (318) (19,441)
Equity dividends paid (772) (642) (1,027)
Cash outflow before management of liquid resources (902) (4,722) (9,028)
and financing
Financing - issue of shares net of expenses 10 106 6,071
- decrease in loan notes (2,109) - (1,147)
- (decrease) increase in (5,586) 741 15,079
bank loans
(Decrease) increase in cash (8,587) (3,875) 10,975
Cash inflow (outflow) from change in debt 7,696 (741) (13,932)
Loans acquired with subsidiary undertaking - (285) (492)
Issue of loan notes on acquisition of subsidiaries (500) (706) -
Movement in net debt (1,391) (5,607) (3,449)
Net debt at start of period (7,648) (4,199) (4,199)
Net debt at end of period (9,039) (9,806) (7,648)
Notes to the Interim Report:
1. The Interim Report has been prepared on the basis of accounting
policies set out in the Group's statutory financial statements for the year
ended 31 December 2002.
2. The figures for the half years ended 30 June 2003 and 2002 are
unaudited. The figures for the year ended 31 December 2002 are abridged from
the statutory financial statements for that year which have been filed with the
Registrar of Companies and on which the auditors gave an unqualified report,
without any statement under section 237(2) or (3) of the Companies Act 1985.
3. The calculation of basic earnings per share for the six months is
based on the average number of ordinary shares in issue, excluding those held in
the Long Term Incentive Plan, in the period of 25,186,754 (2002: 20,192,745).
The calculation of adjusted earnings per share excludes the charge for the
amortisation of goodwill. The calculation of diluted earnings per share takes
account of the dilutive effect of employee share options.
4. The issued share capital as at 30 June 2003 comprised 25,658,977
ordinary shares (2002: 20,594,371).
5. Reconciliation of movement in shareholders' funds:
30 June 2003 30 June 2002
#000 #000
Profit after taxation for the period 2,297 1,240
Dividends (449) (330)
New share capital issued (including premium):
- from exercise of share options 10 106
- as scrip dividend alternative 207 63
- as acquisition consideration - 450
Net movement in shareholders' funds since annual reports 2,065 1,529
6. Taxation has been provided for the six months ended 30 June 2003
at an assumed effective rate for the year of 33% (2002: 30%).
7. The interim dividend of 1.75p (2002: 1.6p) will be paid on
10 October 2003 to shareholders on the register at 5 September. The associated
ex-dividend date is 3 September. A scrip dividend alternative is available
based on the scheme rules, copies of which, together with a scrip dividend
mandate, may be obtained from the Registrars. Shareholders who have already
lodged a mandate and who wish to remain in the scheme need do nothing whereas,
those who wish to cancel an existing mandate and receive a cash dividend, should
advise the Registrars in writing of this by 26 September. Shareholders who have
not yet lodged a mandate but who wish to take the scrip alternative need to
complete a mandate and return this to the Registrars to arrive by 26 September
2003.
The Registrars, Computershare Investor Services PLC, may be contacted on 0870
702 0000, or at PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH.
8. Cash flow from operating activities
6 Months to 6 Months to 12 Months to
30 June 2003 30 June 2002 31 Dec 2002
#000 #000 #000
Group operating profit 3,903 1,991 5,094
Depreciation and amortisation 1,414 545 1,603
(Increase) decrease in stocks and work in (4,809) (5,231) 300
progress
Increase in debtors (497) (2,547) (3,221)
(Decrease) increase in creditors (1,206) 3,270 9,841
Decrease in provisions (399) - -
Net cash (outflow) inflow from operating (1,594) (1,972) 13,617
activities
Registered Office: Rok Centre, Guardian Road, Exeter Business Park, Exeter EX1
3PD. Tel: 01392 354000
This information is provided by RNS
The company news service from the London Stock Exchange
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