Building firm Rok in a hard place

NEARLY 4,000 jobs are under threat after construction firm Rok went into administration.

Rob Hunt, Mike Jervis and Jeremy Webb of the accountancy firm PricewaterhouseCoopers were appointed joint administrators of Rok Plc and Rok Building Limited earlier today.

They said their immediate priority was to “urgently review” the financial position of the company and seek a buyer.

“We will work with the existing management team, employees, suppliers and customers to try and ensure that we achieve a positive solution,” said the administrators in a statement.

“Employees will naturally be concerned about their position, but they will continue to be paid if they attend work and perform their duties as normal. We will provide further updates throughout the coming weeks.”

The group, which had a strong regional presence including offices in Liverpool, Bolton and Rochdale employing around 650 people, had been in talks with its banks regarding a refinancing, but its board announced this morning that the business would be placed into administration and that its listing on the London Stock Exchange would be cancelled.

“It is anticipated that the administration and suspension will become effective shortly,” the company said in a statement to the stock exchange this morning. “Further announcements will be made in due course.”

The £715m-turnover company, which billed itself as “Britain’s Local Builder”, had grown quickly, but much of this was through acquisition such as its £40m purchase of Rochdale-based Richardson Projects in 2008.

Turnover climbed from over £500m in 2004 to more than £1bn in 2008, but it was hit by the decline in the construction markets. Around a third around a third of its income came from the social housing sector – including a major contract won in Bolton earlier this year.

However, when it revealed its half-year results in September, which showed that profits halved to £3m and revenues slipping by £56.4m to £308.1m, the firm announced that a review of its accounts had revealed serious failings in the financial controls” of its plumbing and heating business which led to around 80 job cuts in the division and the suspension of its finance director Ashley Martin.

Mr Martin was later fully exonerated of any wrongdoing, but decided to leave the firm anyway.

Clive Memmott, chief executive of Greater Manchester Chamber of Commerce, said many of his members in the construction sector were under pressure.

“Once the current round of publicly-funded construction work ends, there is nothing to immediately take its place so the situation could potentially get worse.

“We will continue to lobby for the delivery of much-needed capital projects and where funding has been cut from these, explore some of the new mechanisms that the Government is looking at.”