Rok suspends finance chief and issues profits warning
Thursday 12 August 2010
The building group Rok issued its second profits warning in just three months yesterday and suspended its finance director over "serious failings" in financial controls at its plumbing, heating and electrical (PHE) business.
The company said that as a result of problems identified in this area, its underlying pre-tax profits for the year to 31 December would be significantly below market expectations. The dire update from Rok, which also has a social housing and construction division, sent its share price tumbling by 13p, or 45 per cent, to 16p last night.
When it issued its previous warning on 30 April, Rok said profitability at its PHE business had been hit by certain underperformingcontracts which it had ended.
But subsequently, the PHE unit, which sits within its maintenance division, continued to struggle and the board appointed the accountancy firm BDO to conduct a review.
Rok said BDO had found "serious failings in the financial controls of the PHE business". As a result, the finance director Ashley Martin had been suspended with immediate effect and his day-to-day responsibilities handed to David Miller, an interim finance director, who previously worked for the public services provider Amey from 1998 to 2002.
While Rok has closed the sub-contracted part of the PHE business, it still provides these services across its maintenance division. However, the company, which provides building and maintenance services in the health, airports and retail sectors, said trade at its construction and social housing divisions was "strong".
It said these businesses had robust order books and were "well positioned to perform well during the remainder of the year".
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