EDINBURGH information technology company Hutchinson Networks has fallen into administration, with 94 of its 109 staff made redundant with immediate effect, after investing heavily for growth.
Blair Nimmo and Alistair McAlinden of KPMG were appointed on Monday as administrators of the network solutions business, which serves blue-chip and small and medium-sized enterprise customers around the globe. They are now seeking to sell the business and assets.
Hutchinson, described by Mr Nimmo as having been a “rising star in global IT network deployment”, was placed in administration by its directors after they experienced cashflow pressures, with attempts to raise additional investment unsuccessful.
Mr Nimmo said of Hutchinson: “It had invested heavily for future growth and secured attractive contracts for the second half of 2019. Despite the exhaustive actions of the directors to increase sales, reduce costs and attract new investment, the business was unable to continue trading. We are exploring a sale of the business and assets and would encourage any interested parties to contact us as soon as possible.”
The administrators noted Hutchinson, set up in 2011 by chief executive Paul Hutchinson and chief operating officer Stephen Heslop, offers a secure, in-house-developed, multi-cloud platform and a network operation centre.
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Mr Nimmo declared that the administrators were “working with Scottish Enterprise and Skills Development Scotland to provide a full range of support to the company’s employees throughout this process”.
The administrators said of Hutchinson: “The company experienced a period of rapid growth as a result of significant new contract wins over the past two years, and forecast this trajectory to continue during 2019 and beyond.
“Unfortunately, during the second half of 2018, certain contract delays, coupled with the mixture of work secured, meant the company generated lower gross margins than forecast, resulting in monthly losses and cashflow pressures.”
They said the 15 employees who had been retained would help them to continue the network operation centre and provide multi-cloud platform services to customers, while a sale of the business and assets was explored.
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Hutchinson had last spring unveiled plans to recruit 50 technology staff over two years after raising £2.2 million of growth capital, citing “exceptional growth opportunities” created by the widespread move to cloud-based services. The funding, raised to accelerate international growth, was secured from funds advised by private equity house YFM Equity Partners. At the time, Hutchinson had an 89-strong workforce based across the UK.
Hutchinson was last spring projecting turnover of £11.5m in 2018, and forecasting a rise to £16.5m in 2019.
Nigel Owens, investment director at YFM responsible for the Scottish market, said of Hutchinson last spring: “The company has grown strongly due to the drive and energy of the management team. The plans for the business to scale both sales and employment, whilst expanding their geographic footprint in a growing market, fit perfectly into the portfolio of businesses in which we are investing.”
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