Construction insolvencies crept up again last month, but experts suggest greater client confidence could improve conditions in the near future.
Twenty-four construction firms went under in May, according to Creditsafe. The latest toll brings the total number of failed construction firms this year so far to 115, down from 154 by May last year.
The two largest companies to go under were subsidiaries of Osborne, after weeks of sales talks finally fell through. Parent company Geoffrey Osborne Ltd entered administration at the end of April.
Osborne Construction Ltd and Osborne Homes Ltd both filed for administration on 2 May. Geoffrey Osborne’s construction arm, focusing on commercial, education and residential projects, was hived down to Osborne Construction Ltd in 2017. Its final set of full accounts, filed in 2022 for the year ending September 2021, reported a £44.5m turnover – down from £155m in the 18 months to September 2020.
Osborne Homes Ltd’s turnover decreased from £9m to £200,000 during the same period, accounts show. Directors wrote that the company had multiple loss-making projects that it was completing with the help of its parent company.
Bath-based contractor Halsall collapsed after making a loss of £2.3m on a turnover of £28.9m in its last financial year, ending 30 September 2022. The company attributed the loss to inflation, Covid-19 and the war in Ukraine, with directors saying losses were made across multiple fixed-price jobs.
Halsall had been working on Cargo Work in Bristol, which consists of offices clad in used shipping containers, as well as a residential pilot project for modular start-up Modulous, which went into administration in January.
New View Windows Systems was another of May’s higher-profile casualties. The Wigan-based company fitted u-PVC windows, doors, patios, conservatories and sundry glazing on new-builds.
The firm had grown its in last full financial year, increasing its turnover from £10.7m to £12.4m to June 2022. It posted a pre-tax profit of £651,000, up slightly from £406,000 the year before.
New View Window Systems reported in its final set of accounts that it had increased its tender win rate and taken over additional work on its existing sites from underperforming competitors.
It employed an average of 84 people during the year across two offices, in Wigan and South Yorkshire.
Meanwhile, Michael Fallow, director of Hartlepool-based Wearside Contractors, told Construction News his firm’s collapse was brough about by a “lack of orders”. The company had completed its final job and became unable to pay overheads, Fallow said. In its final accounts, the firm reported £131,000 cash at bank and owed trade creditors £162,000.
The 35-year-old company worked mostly on brickwork and joinery in the north of England, employing 15 staff. Clients included Seaham Town Council and East Durham Homes.
Outlook
Brendan Sharkey, construction and real estate partner at consultancy MHA, told Construction News he believes the construction market is beginning to move forward from a very high insolvency rate, with more profitable work available for firms still standing.
He said: “The picture is not as good as it could be but I’d like to think the worst of the damage has been done.”
Sharkey added that as inflation has come down, “people feel that they have a little bit more money” and can spend on fit-out, repairs and maintenance.
“A little bit of confidence is coming back,” he said. “Interest rates are only going in one direction, local authorities have started their new year in budget spend, we have got a better feeling that housing will pick up – that all helps the industry.”
“There’s a general vibe things are getting better. We’ve been at a very low point.”
Chris Smith, head of Aldermore Bank, agreed that the industry had recovered from recent lows. He said “hope is on the horizon” despite ongoing supply chain issues, labour shortages and tighter access to credit.
“An improving economic outlook has meant we’ve seen an uptick in sales enquiries and business activity and we’d expect this picture to improve further once we start to see interest rate reductions,” he said. “There is a sense of optimism in the sector and businesses are remaining upbeat about their prospects for the rest of the year.”
He added: “As the industry plays a vital role in the UK’s economy, it’s important construction businesses can be empowered at this time to optimise their financial resources and grow sensibly so that they can continue to deliver projects despite the challenges against them and get the access to the finance they need to help support growth ambitions.”
Steve Cox, head of construction at insurance broker Miller, said an improving contractor insurance market had helped construction companies fare a little better than in recent times.
“The insurance market has been playing quite well with us. In 2018, the insurance market started to become more expensive as we lost a number of characters writing a decent share of policies.
“It’s finally got to the stage where a lot of insurers in the market are making money, which encourages new insurers into the market, bringing new capacity in.
“There is some competitive tension coming back. We are seeing a plateau, maybe even a slight reduction, in prices from a couple of years ago.”
Despite the sunnier outlook, Cox warned that ongoing contractor failures still held risks for the supply chain. “One of the key things we’ve discovered is that if a contractor that’s entering liquidation was responsible for insuring a project for an employer, that insurance ceases,” he said.
COMPANY NAME
DATE OF ADMINISTRATION
TYPE
DESCRIPTION
LOCATION
AQUAPARK DEVELOPMENTS LIMITED
20/05/2024
Administration Order
Development of building projects
London
BEVERLEY WAY DEVELOPMENTS LTD
02/05/2024
Appointment of Receiver / Manager
Development of building projects
London
EDGEWARE STONE DEVELOPMENTS LTD
02/05/2024
Administration Order
Development of building projects
Leeds
ENVIRONMENTAL ROOFING SERVICES LTD
10/05/2024
Administration Order
Other specialised construction activities n.e.c.
Manchester
HALSALL CONSTRUCTION LIMITED
14/05/2024
Administration Order
Development of building projects
Bath
HOMEBROOK LTD
10/05/2024
Administration Order
Electrical installation
Southampton
KITCHEN LIVING LTD
09/05/2024
Administration Order
Other building completion and finishing
Southampton
KRPG LTD
13/05/2024
Administration Order
Development of building projects
Lanarkshire
LTC DEVELOPMENTS LIMITED
07/05/2024
Appointment of Receiver / Manager
Construction of domestic buildings
Poole
NEW VIEW WINDOW SYSTEMS LIMITED
02/05/2024
Administration Order
Other building completion and finishing
Greater Manchester
OLD HOUSE GROUP LIMITED
03/05/2024
Appointment of Receiver / Manager
Management consultancy activities other than financial management
London
OSBORNE CONSTRUCTION LIMITED
02/05/2024
Administration Order
Construction of commercial buildings
London
OSBORNE HOMES LIMITED
02/05/2024
Administration Order
Construction of domestic buildings
London
PARKVIEW MARIANNE LIMITED
09/05/2024
Appointment of Receiver / Manager
Development of building projects
Essex
PREMIER CUSTOM BUILD LIMITED
21/05/2024
In Administration
Construction of domestic buildings
Glasgow
R K N ALUMINIUM LIMITED
07/05/2024
Administration Order
Other specialised construction activities n.e.c.
Lancashire
SS GROUNDWORKS (DERBYSHIRE) LIMITED
20/05/2024
Administration Order
Other building completion and finishing
West Yorkshire
SYDRICH DEVELOPMENTS LTD
07/05/2024
Appointment of Receiver / Manager
Development of building projects
Hampshire
SYMAL DEVELOPMENTS LTD
02/05/2024
Appointment of Receiver / Manager
Development of building projects
London
THE HOW DEVELOPMENT 2 LIMITED
14/05/2024
Administration Order
Development of building projects
Cambridgeshire
TROPHY HOMES LIMITED
10/05/2024
Administration Order
Construction of commercial buildings
Manchester
WAYHOMES (HOLYWELL) LIMITED
14/05/2024
Appointment of Receiver / Manager
Construction of commercial buildings
Cardiff
WEARSIDE CONTRACTORS LIMITED
10/05/2024
Administration Order
Construction of commercial buildings
County Durham
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