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Rok reveals cost of credit crunch with £125m shortfall in revenue

The credit crunch has cost Rok more than £125 million in revenue and £12 million in profit, according to finance director Ashley Martin.

The contractor’s revenue passed the £1 billion mark in 2008 increasing 16 per cent from 2007 to £1.01 billion.

But Mr Martin said that as recently as September, the firm was aiming for about £1.15 billion for the year.

Profit for 2008 ended some £12 million down on Rok’s forecasts six months ago. The results showed a 76 per cent drop in pre-tax profit to £5.9 million from £24.5 million a year earlier.

Mr Martin said: “The fall-off as a result of the banking crisis in recent months could not have been more dramatic.

“It has taken £125 million of sales away from our business. More importantly it has taken away £12 million of profit.

“When you look at what has happened we have had no option other than to take cost out of the business.”

In November Rok announced 750 job cuts as the credit crunch caught up with the company, particularly in its new-build division.

The firm reduced its cost base by £30 million with the job losses and the closure of its property development division.

Chief executive Garvis Snook said: “There is no doubt that we experienced a sharp setback last year but acted promptly and decisively to plan for the reduced revenue expectations.”

He added that about 70 per cent of Rok’s revenue now came from public and regulated sectors.

Mr Martin added: “We have taken decisions effectively and quickly to put in place a business in alignment with where we can confidently see our future revenues will be.”

Meanwhile Rok agreed a new £90 million debt facility up to 2012 on the eve of announcing its annual results last week. The results revealed £43.7 million of net debt.

Mr Martin said: “In the current climate, for new banks to support us is a great vote of confidence.”