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Rok disbands its development arm

Building and maintenance group Rok is dissolving its development division and is on the prowl to expand its other specialties through further acquisitions.

Chief executive Garvis Snook said the company had been decreasing investment in its development arm since the beginning of last year and is expected to have cut 50 per cent of the bulk of its development portfolio by the end of this year.

Recently, Rok has placed a strong focus on buying smaller businesses and has already made two new purchases this year - Pitkerro, a plumbing and heating services business based in Dundee, and Richardson Projects, a social housing developer.

Mr Snook said: “The development division is operating in difficult market conditions as tenant demand remains slow and yields continue to soften.

“We were decreasing investment before the credit crunch hit and I think it is very unlikely we will ever re-invest to the extent we have in the past.

“Our core business of building and maintenance, particularly in social housing and education, has got stronger and stronger.”

It is expected the proceeds from the division will be used for acquisitions to underpin these activities.
Mr Snook, who admitted Rok was “always looking” for new businesses to buy, said the company aimed to acquire about five firms each year.

He said: “We are looking currently. We have made two purchases so far this year and it is only the beginning of May.”

Announcing strong first quarter results at last week’s annual general meeting, including a 20 per cent increase in revenue on 2007, Mr Snook revealed he had been approached by concerned shareholders regarding Rok’s involvement in the Office of Fair Trading investigation.

Three Rok subsidiaries - Sol Construction, Lemmeleg, and the newly-acquired Richardson Projects - received notices from the OFT regarding the inquiry.

Mr Snook said: “Our only involvement was limited to companies which we have bought. We have been able to protect Rok’s interests by gaining warranties and indemnities during the acquisition stage.”