Almost 4,000 employees at Cornish roof contractor ROK will be concerned about their future this morning as the company falls into administration. Months after revealing ‘serious failings’ in the financial control of its plumbing arm the company has struggled to stay afloat.

PricewaterhouseCoopers (PwC) has been brought in as administrator as the company makes the difficult decision to find a buyer for the Exeter-based company with offices from Truro to Inverness.

Mike Jervis, joint administrator and partner at PwC said, “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.”

Approximately four months ago ROK revealed half-year losses of £3.8 million, while an independent review by accountants BDO uncovered serious failings at its plumbing, heating and electrical business. These problems have lead to the company’s shares dropping by 90% over the last three years, trading at just 18.5p at the time of suspension.

ROK was originally hit hard during the financial crisis, when it lost several private and public sector clients, forced to cut 750 jobs. The firm was then restructured, terminating ‘troublesome’ contracts before appointing analysts BDO to conduct the review into the division.

Since then, ROK has actually announced several contract wins, including a £32 million deal to undertake building projects with the Scottish Government's economic and community development agency and a deal to provide services to Tesco Underwriting's home insurance customers. The firm's order book is thought to currently stand at £435.

“For the last four weeks I have been holding my breath waiting to see if and when they would survive. They had a profits warning, the resignation of their finance director, their shares slipped away dramatically and the comprehensive spending review put the final nail in their coffin as far as their core area of business is concerned,” said Devon and Cornwall Business Council Chairman Tim Jones.

“The hidden victims in this are going to be the massive supply chain – that's going to be a problem. It will cause long-term, collateral damage to businesses in the area.”

But Derek Phillips, Chairman of Exeter Chamber of Commerce, said many workers affected by the announcement would find jobs on other construction schemes in the city such as the planned science park near the M5 and the Cranbrook new town.

“It's obviously disappointing news but, on the other hand, I feel the people that are going to be made redundant won't find it that difficult to find other jobs,” he said.

“I am sure there are parts of the business that are very profitable and will be sold on fairly quickly.”

Paul Lewis, Branch Director of Exeter-based stockbroker Charles Stanley said, “The move to more social housing with heavier employment costs has impacted severely. The fall in profits will have given the banks reason to be concerned over the strength of the balance sheet and they may have called in part of their lending. The recent problems in the heating, plumbing and electrical division will not have been the sole reason for the news this morning but it will have had a huge impact on lenders level of confidence and ultimately be responsible for the beginning of the end.

“A mixture of cutbacks from councils, poor management and banks looking to protect their lending have proved to be too much of a storm for ROK to weather.”