Rok draws a £6.8m line under woes at plumbing arm

Grant Prior 12 years ago

The cost of financial mismanagement at Rok’s plumbing business was revealed as £6.8m today as the contractor drew a line under the division’s troubles during its interim results.

The cash was spent on redundancies and restructuring as around 150 people left the firm and the problem Plumbing, Heating and Electrical (PHE) business was integrated into the main maintenance division.

Rok alerted the City about the woes at its PHE arm last week during a profit warning which also saw finance director Ashley Martin suspended.

Group interim figures for the six months to June 30 show pre-tax profits before the restructuring costs down to £3m from £6m last time while turnover fell from £364.5m to £308.1m.

Chairman Stephen Pettit described the PHE problem as “a regrettable chapter in Rok’s history.”

But he added: “Immediate and appropriate action was taken relating to the shortcomings in financial and operational control in this part of our Maintenance and Improvements operations.”

Around 80 operatives have already been made redundant at the PHE division with another 70 in the process of leaving as the division is wound down.

Chief executive Garvis Snook said turnover at Rok’s social housing business remained flat for the period and margins were held at last year’s levels despite the change in government.

Social housing turnover dipped to £84.5m from £98.4m last time with operating profit down to £3.6m from £5m.

Construction operating profits remained steady at £0.5m from £0.6m despite turnover falling to £115.7m from £160.1m.

Snook said the construction arm was continuing to target profit over turnover.

He said: “This deliberate tactic has been employed since late November 2008 to minimise risk during the worst phase of the recession.

“A tight focus on costs has continued and the order book is good.  The construction business, with its seasonal second half weighting is positioned to continue to perform well during the remainder of the year.”

Looking forward to next year, Snook said: “We expect, and have planned for, lower volumes in construction next year in light of forecast reductions in public sector spending.

“Due to high levels of future revenue visibility we expect to increase our market share in social housing where industry volumes are forecast to reduce overall.

“Visibility of revenues in our Maintenance and Improvements business is good and we expect income to grow through new insurance customer wins.”

Net debt at the company fell to £47.6m from £57m while Rok also declared an interim dividend of 0.5p a share.

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