Rok’s plumbing, heating and electrical arm has come to an abrupt end after the firm disclosed that costs in the division had run out of control.
The contractor revealed that problems in the division had led to 80 people leaving the business, including group finance director Ashley Martin.
In an interview with H&V News, Rok chief executive Garvis Snook said the problems were isolated to the PHE arm.
“Problem contracts in the PHE business were entirely focused on this area. The problems were identified and measures taken to address them. We are confident these issues will never reoccur.
“There has been no evidence of fraud,” he said.
Despite its difficulties, the City appears to have backed Rok’s attempts to move on, with shares rising by 10 per cent following the announcement of its half-year results last Tuesday.
The PHE division contributed about £40 million to group revenue during 2009, with an additional £30m of trading between Rok-owned companies.
Finance director Ashley Martin left the group last week following the PHE issues, and it was unclear why, if the problems were so specific, they required such a high-profile casualty.
Mr Snook said tradespeople in the PHE division will be unaffected and should be integrated into the rest of the maintenance and improvements part of the business.
Other parts of Rok’s business also insisted that they were still operating in the plumbing, heating and electrical sector.
Rok’s managing director for Scotland Andy Mallice said: “Our plumbing, heating and electrical business was not exposed to the private housing market and therefore continues to provide Rok in Scotland with the potential for future growth, over time.”
In the interview with H&V News, Mr Snook also revealed that he has had enquiries from clients about taking on work from Connaught, which has had wide-ranging problems with contracts and is currently in negotiations with its bankers to ensure its survival.
Mr Snook said: “We are definitely not looking at parts of Connaught’s business and enquiries from mutual clients are just cautionary at this stage. We wouldn’t be happy to see Connaught go and we hope they survive.”
The results overall revealed a loss of £3.8m, taking into account £6.8m of exceptional charges.
Its total revenue fell to £308.1m in the first half, from £364.5m at the same time a year earlier.
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