James Lumb and Howard Smith from Interpath Advisory were appointed joint administrators to Tolent plc and five of its operating subsidiaries today, Monday 13th February 2023.
Some 313 of the 404 staff were laid off immediately; 91 have been retained to assist the administrators while they explore a possible sale of the businesses and assets.
Headquartered in Gateshead and with offices in Leeds, Stockton-on-Tees and Shotton Colliery, the companies operate across the construction sector providing services in building, civil engineering and property development. The company had been trading for 40 years, having been established in 1983.
Tolent turned over 拢198m in 2021 and made a loss of 拢4.4m before tax (and a 拢4.1m operating loss). This came on the back of pre-tax losses of 拢8.5m in 2020 and 拢859,000 in 2019.
The administrators said that Tolent had faced 鈥渟ignificant challenges鈥� in recent years, 鈥渋ncluding the rising costs of raw materials, supply chain issues, material and labour shortages, and the collapse of a number of developers, contractors and supply chain partners鈥�.
Against this backdrop, one of Tolent鈥檚 major contracts 鈥� the 拢85.5m Milburngate development in Durham for Arlington Richardson Development 鈥� became significantly loss-making, which had a profound impact on the companies鈥� working capital.
There had also been some changes to the main board recently with Paul Webster moving up from chief operating officer to chief executive on the departure of Andy McLeod in October 2021, and Mark Overton joining from Colas as chief financial officer in February 2022. The new management had explored options to safeguard the future of the business, but finally decided that there was no alternative to administration.
Joint administrator James Lumb, managing director at Interpath Advisory, said: 鈥淭olent is one of the most well-known construction firms in the northeast, having been involved in landmark projects including Riverside Sunderland, the Hadrian鈥檚 Tower residential scheme and the 拢85.5m Milburngate development in Durham.
鈥淗owever, like many businesses across the UK鈥檚 building and construction sector, the group has been battling severe headwinds, including spiralling costs, labour shortages and also the loss of other companies within its supply chain, all of which unfortunately resulted in one of its major contracts becoming loss-making.
鈥淔ollowing the tapering off of the government鈥檚 covid support schemes, and in the wake of recent economic volatility, access to finance has tightened for many companies across the sector. This means many building and construction firms are finding they have fewer options available to them to help deal with any liquidity crisis.
鈥淎dditionally, after the annual Christmas shut-downs and a cold December, the months of January and February often bring with them a painful cash crunch. In a sector which typically operates on wafer-thin margins, this can often prove to be insurmountable, and unfortunately, so has been the case for Tolent.鈥�
James Lumb continued: 鈥淥ur priority in the coming days is to work with key stakeholders to assess options for each of the companies, including options for ongoing contracts and live projects. We will also be providing support to those employees who have been impacted by redundancy, including providing them with the guidance and information they need to be able to make claims from the Redundancy Payments Office.鈥�
The collapse of Tolent comes just days after fellow northeast contractor, the 拢80m-turnover Metnor Group based in Killingworth, filed notice of intent to appoint administrators.
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