Rok profits halve after failings uncovered
MAINTENANCE and building services firm Rok saw pre-tax profits halve in the first half of the year in the wake of problems in its plumbing, heating and electrical business which led to the suspension of finance director Ashley Martin.
The company saw revenue fall from £364.5m in the first half of 2009 to £308.1m in 2010 as pre-tax profits fell from £6m to £3m.
Rok, which has operations in Leeds, Wakefield and Grimsby, revealed last week that a review by accountants BDO had found “serious failings in the financial controls of the PHE business” leading to the suspension of Mr Martin and the installation of former Amey executive David Miller as interim chief financial officer.
In its interim results, the company put the cost of restructuring the maintenance and improvements division, which includes the plumbing, heating and electrical business, at £6.8m. Rok also confirmed the PHE business will not make a contribution to full year profits.
Rok chairman Stephen Pettit said: “Rok has a diversified range of revenue streams, a growing customer base, a strong order book with a very high level of visibility of work well into next year, significantly improved cash generation, and excellent customer satisfaction.
“The problems within PHE have been a regrettable chapter in Rok’s history. Immediate and appropriate action was taken relating to the shortcomings in financial and operational control in this part of our maintenance and improvements operations as referred to in our recent trading update.
“The board and management team are totally committed to rebuilding the strength of the business and delivering against expectations.”
The company said its social housing business had not been affected by public sector spending cuts and its construction arm had continued to meet expectations by focusing on profits rather than project volumes.
Rok will cut its interim dividend by a third to 0.5p.
