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Energy-from-waste contracts sink Clugston as 150 jobs go

6 December 2019 | By Neil Gerrard

Clugston Group has gone into administration with the loss of 150 jobs after it grappled with losses on a number of “large and complex” energy-from-waste contracts, administrator KPMG has confirmed.

James Clark and Howard Smith from KPMG’s restructuring practice have been appointed joint administrators to Clugston Group and Clugston Construction, with workers called to a meeting at 10am this morning to inform them of the move.

 

 

Meanwhile, James Clark and Chris Pole from KPMG’s restructuring practice have been appointed joint administrators to Clugston Services.

The group has 25 sites across the North and Midlands, operating in construction, civil engineering, logistics, property development and facilities management.

KPMG said the company’s losses on its energy from waste projects were exacerbated by the insolvency of one of its key subcontractors.

While there have been 150 redundancies, 262 members of staff remain with the firm as certain divisions continue to trade and the administrators look to sell on valuable contracts.

James Clark, associate partner at KPMG and joint administrator said: “The directors of the business have worked tirelessly trying to rescue the group and have pursued discussions with a key stakeholder about a potential rescue deal. Unfortunately, it has not been possible to obtain the funding required, and as a result, the directors concluded they needed to appoint administrators to protect the value of business.

'Seeking buyers'

“Our focus over the coming days will be to seek buyers for the contracts and divisions, and to liaise with those employees who have been made redundant, ensuring they are provided with the support and information they need to claim their statutory entitlements from the Redundancy Payments Office.”

Clugston Distribution Services Limited and Clugston Estates Limited are not affected by the administration and are continuing to trade under the control of their directors.

Clugston Group’s latest annual accounts for the year to 31 January 2018 showed that it made a pre-tax loss of £0.5m, despite a 49% increase in revenue to £176m. It warned then that despite the busiest year in its history, the market was “the most challenging in recent years”, with several project start dates delayed because of clients’ concerns about economic uncertainty.

Meanwhile, the business was suffering with productivity and quality issues as it grappled with a lack of “sufficient good quality resources” in the supply chain, which in turn impacted its profitability.

The company has been in business since 1937 when it was founded by LG Clugston, father of former chairman John Clugston who retired after 35 years last month. David Clugston was due to take over the role on 1 February 2020.

The contractor is due to complete its biggest-ever job next year – a £252m waste-fuelled power station for Viridor at Avonmouth, with a civils value of almost £90m, delivered in partnership with French firm CNIM. It is one of a number of energy-from-waste contracts the company has won in recent times, including a £66m deal to build a combined heat and power facility in Kemsley in Kent in 2016, and a £140m contract to build the Earls Gate waste to energy plant in Grangemouth in Scotland in partnership with CNIM, which it won earlier his year.

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