’Serious failings’ in financial controls leads to profit warning and suspension
Rok has suspended finance director Ashley Martin after a profit warning and revelations of failings in the financial controls of the group’s plumbing business.
The review of the firm’s plumbing, heating and electrical business was carried out by accountants BDO who were brought in following a profit warning in April.
The report, citing “serious failings” in the financial controls resulted in a second profit warning this morning and the suspension of Martin.
Rok said in a statement: “BDO has now reported back to the board and has stated that there have been serious failings in the financial controls of the PHE business. BDO has also confirmed that this is the full extent of the problem.
“As a consequence of the problems, the PHE business has significantly underperformed relative to expectations and will not make a contribution to group profit this year.”
The statement went on to say: “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.”
Redundancies are expected to be made in the maintenance division which includes the troubled plumbing arm: “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 will release its interim results on 17 August.