Roofing specialist Avonside has gone into administration, with 250 people at risk of losing their jobs.
The firm was forced to appoint administrators this week after it saw its profits squeezed by the Covid-19 pandemic. Those issues were accentuated by a “margin squeeze, the impact of underperforming divisions and financial reporting issues”, a spokesman for administrator Begbies Traynor said.
Avonside, which tabled a turnover of £48m in the year to 31 December 2020, was the largest roofing contractor in the UK, with 39 divisions in total, according to the administrator. A year earlier, the specialist turned over £71m, showing how the pandemic had affected the group.
Up to 250 people could lose their jobs as a result of the administration, although nine branches were safely sold, saving 79 jobs in total.
“Despite a positive outcome for a number of the group’s roofing branches, the difficult macro-economic backdrop and market conditions meant that the joint administrators were unable to find suitable buyers for the remaining roofing and plumbing sites within the group.
“As such, all remaining roofing and plumbing branches are expected to be closed imminently,” the spokesman said.
Negotiations to sell the company’s energy division, which continues to operate, are “advanced”. These should be completed in the next 24 hours.
Bank NatWest lent around £12m to Avonside, according to Sky News, which first reported the story.
One of NatWest’s shareholders, Core Capital, had suggested injecting new funding into Avonside. But that was rejected by the bank, according to the news outlet, which meant administrators had to be appointed.
Business administrations have soared in the past year as construction-related firms struggle to deal with mounting cost pressures. Although fewer firms collapsed in August this year than in July, the 20 recorded was still three more than in the same month for 2021.
Amid the current cost-of-living crisis, Oliver Haunch, a partner at audit advisors Grant Thornton, previously told Construction News that businesses were experiencing “an operational cost crisis”.
He added that this difficulty in running everyday business activities was caused primarily by rises in the cost of raw materials and energy, in addition to labour inflation.