Rok revels in credit crunch

Rok has bought 17 companies in the past eight years and Snook said it planned to maintain its rate of seven a year as firms’ valuations continue to fall.

He said: “There are lots of good businesses out there and the valuations have come down as reality kicks in. We bought seven last year and I wouldn’t be surprised if we buy as many in 2008.”

Announcing strong results for the year to 31 December 2007, Snook said the acquisition market had got hotter ahead of the changes to capital gains tax (CGT) that are to come in on 6 April.

The abolition of taper relief on CGT means that partnerships and individuals will pay a flat rate of 18% on a chargeable gain if they sell up after that date, compared with a previous maximum rate of 10%. Observers believe the changes may prompt smaller companies to sell up in the next three weeks.

Rok posted a 42% rise in pre-tax profit to £31.7m for 2007. Turnover rose 38% to £950m, a figure that Snook hopes to double to £2bn by 2012. It also plans to quadruple staff numbers to 20,000 over the same period. Rok’s order book was up 17% to £610m.

There are lots of good businesses out there and the valuations have come down as reality kicks in

Garvis Snook, ROK

The one black spot in the results was the group’s development division, which suffered from its exposure to the commercial property market. Turnover there fell 17% to £75.4m and operating profit was down 24% to £7.4m.

Snook plans to cut its contribution to profit from 12% to 5% in the short term.

Despite his upbeat stance, Snook warned that smaller contractors without a repair or maintenance arm could go to the wall in 2008. “Lots of businesses will decide to do up their offices rather than move to new premises. I’d be nervous about getting through next winter if I was a pure commercial or industrial contractor,” he said.