Tulloch had a specialist electrical contracting division which was rebranded as Rok’s PHE arm operating across Scotland and the North of England.
The plan was to expand the PHE division across the rest of the UK and that process was accelerated by Rok’s acquisition of M&E specialist Avonside in late 2007.
The PHE division started working alongside Rok’s bigger maintenance division and was winning contracts mainly from housebuilders.
But the subsequent housing crash hit the PHE division hard leading to a drop in demand and increases in materials costs which squeezed margins.
Chief executive Garvis Snook described the fall in prices and demand alongside rising costs as “the perfect storm”.
But the business was still reporting decent returns despite the tough market conditions.
The PHE operation used its own accounting system but was integrated into the Rok-wide COINS system last October when problems with the division’s numbers first became apparent.
Snook told the Enquirer: “We had a feeling something wasn’t right and had a hard look at the ledgers.”
The review led to a profit warning in April and a restructuring of the PHE business including the termination of a number of loss making contracts.
Accountants BDO were also brought in to undertake a complete forensic review which led to last week’s further profit warning and the decision to wind-down the £30m turnover business.
BDO found that costs were not being properly accounted for and the lax practices led to the suspension of Finance Director Ashley Martin.