Gateshead construction company Tolent says the collapse of developer High Street Group was partly to blame for a £4m loss last year, despite the company chalking up record revenues.
The contractor saw a 7% increase in group turnover to £197.9m in 2021, the highest since its launch in 1983, driven by huge growth in its housing division which saw a 40% rise in turnover to £66.2m.
But the group – recently named as contractor for the £40m housing development at Riverside Sunderland – recorded a £4m loss, citing a “perfect storm” of adverse trading conditions.
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It said its bottom line has been affected by impacts of the pandemic, a bad debt, a loss-making contract and the overall macro-economic environment which has been affecting the whole sector.
Tolent said the group has been exposed to the repercussions of the collapse of a large number of developers, contractors and supply chain partners. Following the demise of High Street Group in 2022, Tolent was named as one of the company’s creditors listed in the administration document which resulted in a bad debt of £2.1m.
The company carried out construction of Newcastle skyscraper Hadrian’s Tower for High Street Group, which later went into administration owing between £75m and £212m. Despite recent losses, Tolent said its underlying business remains profitable with the firm in a robust financial position, with accounts for the year to date showing the company returning to profitability.
The change in performance at Tolent, which employs more than 400 people, coincided with strategic changes to the board, leading to Paul Webster moving from his position as chief operating officer to chief executive officer. Mark Overton, meanwhile, has joined as chief financial officer following over a decade at Colas.
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Mr Overton said: “We have worked hard over the last six months to financially strengthen the business and increase working capital which has included the renegotiation of our finance facility, a rights issues which raised £3.7m in new share capital and an £8m cash injection following the completion of a land deal which will soon become South Seaham Garden Village.”
Mr Webster said: “Our priority moving forward is to secure a sustainable profit, working with trusted clients as we continue to increase our workload within the public sector. We are focused on consolidating our position within the North East and Yorkshire and will continue to deliver some of the flagship projects we have become known for.
“Naturally with the increasing pressures on wage inflation, material prices and availability we have to be cautious in our approach to winning new work, however, we have a strong and identified pipeline of just under £1bn across a variety of sectors that provides us with the confidence to be cautiously optimistic for our business over the next few years.”
Tolent is currently involved in the South Seaham Garden Village scheme, which starts construction this year and will see the firm build 750 homes over a 10-year period.