13/10/2008
Building and maintenance services play Rok, sold down alongside peers over the threat of recession in the UK construction market, has cheered with news of a significant contract win with airports operator BAA.
Rok, the self-styled ‘Nation’s Local Builder’, has clinched a five-year framework deal with BAA, worth ‘in the region of £130m’, for work on building improvement projects at airports including Gatwick, Heathrow and Glasgow. This major award is in addition to a long-term framework deal already in place related to smaller improvement works at BAA airports.
Rok, now focused on repairs, refurbishment and maintenance services, having exited from credit crunch-hit commercial property development, continues to grow organically and via acquisitions in a highly fragmented £42bn UK market. And despite worsening conditions in the sector, the company delivered strong results for the half to June from ongoing operations.
On turnover up 37% at £546.7m, ‘adjusted’ pre-tax profits jumped 22% to £12.4m, although impairment charges and the one-off costs related to the closure of the development business meant profits of £7.7m made way for a £6.8m loss.
For 2008, analysts are looking for a rise in PBT to £33m (2007: £31.7m) and earnings of 13.1p (2007: 12.7p), placing the dividend-paying shares on a prospective multiple of just six times. That looks far too low for a company with formidable revenue visibility (half-time long-term framework deals amounted to £2bn) with profits mainly arising from the resilient social housing and insurance response sectors. Current price weakness represents an opportunity to buy for recovery.
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James Crux
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