Rok profit warning
Published: 12 August, 2010
LONDON: Shares in maintenance firm Rok fell 40% after a breakdown in financial after the building group suspended its finance director for "serious failings" regarding the financial reporting of its plumbing business.
Rok's plumbing, heating & electrical business has been struggling as house builders look to renegotiate contracts, but the scale of the issues facing the division were only uncovered after BDO Stoy Hayward was brought in to conduct a review.
Investors in a sector already reeling from problems at Connaught, which is also heavily reliant on social housing contracts, took fright and the Rok's shares fell by more than 40% to close at 16.34p.
The group's chief executive, Garvis Snook, insisted that the problems at Rok are different from those at Connaught. He said Rok had identified the trouble in its plumbing, heating and electrical business and that underperforming contracts and a restructuring had led to the April profits warning. But when the PHE business did not respond he had ordered a thorough review by accountants BDO.
"In order to be certain that the full extent of the problem was known, the board appointed BDO to conduct an independent review. BDO has now reported back to the board and has stated that there have been serious failings in the financial controls. BDO has also confirmed that this is the full extent of the problem," Mr Snook said.