Trading Update

 

TIDMROK 
 
RNS Number : 8730Q 
Rok PLC 
11 August 2010 
 

Date:                               11 August 2010 
On behalf of:                    Rok plc ("Rok" or "the Company") 
For immediate release 
 
Rok plc 
Trading update 
 
Rok plc (LSE: ROK), the maintenance and building services group, today issues 
the following update on trading. 
 
In its Interim Management Statement ("IMS") on 30 April 2010, the Company 
announced that profitability in the Plumbing Heating & Electrical ("PHE") 
business - part of the Maintenance and Improvements division - was being 
adversely affected by a number of underperforming contracts and that these 
contracts had been terminated and the business restructured.  Despite these 
measures, the PHE business continued to disappoint and the Board instigated a 
further, thorough review.  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 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 Board therefore anticipates that this will have a 
material adverse impact on Group profit for the year to 31 December 2010 and 
that overall underlying pre tax profit for the year will be significantly below 
market expectations. 
 
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. 
 
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. 
 
Trading within the Construction and Social Housing businesses is strong and 
these divisions, with good order books, are positioned to perform well during 
the remainder of the year. 
 
The results for the six months to 30 June 2010 will be in line with previous 
guidance before one-off restructuring costs.  The Group's cash flow generation 
profile has strengthened during the first half of 2010 and the Board expects 
this will lead to a material reduction in net debt by the end of this financial 
year.  In consequence, the Group continues to have adequate headroom on its 
banking facilities, and the Board is confident in the Group being able to meet 
its covenants. 
 
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 be releasing its interim results on Tuesday 17 August 2010.  A briefing 
for analysts will be held at 0800hrs on that day at Rok's offices, 5 Lloyd's 
Avenue, London EC3N 3AE. 
 
                                    - ends - 
 
Enquiries to: 
 
+--------------------------------------+---------------------------+ 
| Rok plc                              | www.rokgroup.com          | 
+--------------------------------------+---------------------------+ 
| Garvis Snook, Group Chief Executive  | Via Redleaf               | 
|                                      | [e-mail] | 
+--------------------------------------+---------------------------+ 
|                                      |                           | 
|                                      |                           | 
| Redleaf Communications               | Tel:    [phone]          | 
| Emma Kane/Rebecca Sanders-Hewett     | 6700                      | 
|                                      | [e-mail]         | 
+--------------------------------------+---------------------------+ 
 
Notes to Editors: 
 
¡  The Group specialises in relationship based provision of building services on 
a national basis and undertakes maintenance and building improvements, social 
housing (new build and planned repairs) and construction. 
 
 
¡  Further information on Rok is available at www.rokgroup.com 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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