PwC have been appointed administrators of Rok Plc and Rok Building Limited.
Rob Hunt, Mike Jervis and Jeremy Webb of PwC will oversee the administration.
Mike Jervis, joint administrator and partner at PwC said: “In response to changes in market conditions, Rok Plc had taken a number of steps to improve operations and to develop a sustainable and profitable business going forward. However, due to difficulties in meeting the company’s financial obligations, the company and certain subsidiaries have been placed into administration to protect the business and assets.”
Mr Jervis added: “Our immediate priority is to urgently review the financial position of the company and seek a buyer of the businesses. We will work with the existing management team, employees, suppliers and customers to try and ensure that we achieve a positive solution. Employees will naturally be concerned about their position, but they will continue to be paid if they attend work and perform their duties as normal. We will provide further updates throughout the coming weeks.”
One source said: “I’m shocked by today’s announcement given they have been making positive comments recently. Their bank must have looked at their debt and been worried that it wouldn’t be repaid.”
Rok’s administration potentially puts thousands of jobs at risk. At the end of the firm’s most recent financial year, which ended 31 December 2009, Rok employed 4,600people, down from 5,200 a year earlier.
“Rok has been a relatively weak player for some time and in a recession the weak players often disappear.”
Another source added: “Rok has been a relatively weak player for some time and in a recession the weak players often disappear.”
Rok released its first profit warning in April this year. At the time it said: “The severe weather conditions at the beginning of the year created industry-wide difficulties in accessing customer locations, and our insurance repairs business was affected, with an adverse impact on first quarter revenues and profitability.”
It was in April when problems in its plumbing, heating and electrical division were first flagged. The firm said: “We have decided to terminate a number of under-performing contracts and to restructure the business. This issue has been dealt with swiftly and decisively so that it should not recur, although it will contribute to the reduction in profits for the first half of the year.”
In its interim results in August, Rok reported a loss of £3.8 million, as a result of a £6.8m charge to restructure its plumbing, heating and electrical business.
While it reported its debt at £47.6m, this was not representative of its actual financial position, as its average debt in the first six months of the financial year was £64.2m.
It was during August that Rok suspended then finance director Ashley Martin.
Mr Martin was later exonerated of any role in the problems leading to losses in the PHE business or the financial reporting of these issues. Upon his reinstatement he immediately resigned, describing his position as “untenable”.
As of yesterday’s close of trading, Rok had a market value of £33m. Shareholders are unlikely to see any return on their investment.