The move follows a thorough review of the troubled Plumbing Heating & Electrical business by accountants BDO.
BDO was drafted-in following a profit warning in April caused by problems at the plumbing business which led to a restructuring and termination of a string of loss-making contracts.
The accountant found things were even worse than first thought at the division.
Its damning report concluded that “there have been serious failings in the financial controls of the business.”
The report prompted a second profit warning to the Stock Exchange this morning and the suspension of group finance director Ashley Martin.
The City reacted immediately by dumping Rok shares with half the firm’s value wiped out in minutes as the share price plunged 49% to 15p in early trading.
The Rok statement said: “The Board has decided that the Company must have new financial leadership.
“Ashley Martin has therefore been suspended with immediate effect and his day to day duties passed to David Miller, a specialist interim CFO, who was Chief Financial Officer of Amey PLC between 1998 and 2002.”
Jobs will also go at the maintenance division which contains the troubled plumbing arm as Rok tries to cut costs.
The firm said: “The Board has taken the decision to streamline the cost base of its Maintenance and Improvements division.
“The Directors believe that this is prudent in the current economic climate although the business model remains robust and the Board is confident about the outlook for the wider division.”
“The Board believes that it has taken appropriate action in the best interests of shareholders and the future profitability of the Group.
“Rok’s fundamentals are strong – a solid order book, good momentum in the Social Housing and Construction divisions and very good cash generation leading to materially lower debt.
“With a significantly lower fixed cost base and having addressed the underperforming operations, the Board is looking ahead with confidence.
Rok will release its interim results on Tuesday 17 August 2010.
