Small operators dominate November’s casualty list

More than a third of businesses that went into administration in November employed two or fewer people

November recorded a monthly total of 33 business failures, one less than in November 2022. However, despite this relative stability, the year-to-date total of 345 administrations marks a 49% increase over the 232 failures registered by Creditsafe during the first 11 months of 2022.

All but three of the companies that fell in November were too small to be required to file annual turnover and profit figures with Companies House, and one company (Emira Developments) had never filed an account since its incorporation in February 2022.

A further six companies (Aniqraa Homes, Click Above Corben Mews, Eastgate ACA, Kiln Court, Penrhos Quarry Operations and Picardy Apartments) had no employees below director level. Six others (Black Swan Homes, Blue Eyes Properties, Mayfair Homes (Luton), Minebreeze, Norwegian Homes Leisure and Soller Four) employed two or fewer workers.

Bradford collapses

The biggest contractor to pass in November was Bradford-based HB Projects, which called in administrators at Begbies Traynor on 9 November.

In a statement earlier that month, company executives said the “difficult but necessary step” was due to several unspecified “cancelled and/or postponed projects,” which put significant pressure on the cash flow on the business.

According to its latest published accounts, in the year to 28 February 2022, HB Projects employed 159 people and recorded revenue of £56.6m, up from £46m the previous year .

However, the company’s pre-tax profit fell to £1.1m from £1.3m in 2021. In the accounts, company directors said margins from ‘HB Projects were under pressure from inflation and shortages of material and labour.

HB Projects was founded in 1998 and has worked for clients including Asda, Breathe Energy, Ikea and B&Q.

Another Bradford-based company, glazing specialist HPAS Ltd (trading as Safestyle UK), called Interpath’s administrators. HPAS reported a turnover of £143.3m and a pre-tax profit of £5.4m in its most recent set of accounts, for the year ending 2 January 2022. It employed 750 workers.

Interpath cited high inflation, continued economic uncertainty and fragile consumer confidence as contributing factors to the company’s demise, and efforts to find a buyer have so far been unsuccessful.

Two companies in the Real Places group, Real (High Lane) Ltd and Real LSE Ltd, entered administration in November, with Cowgills handling the affairs of both companies.

Real LSE reported revenue of £19.2m for the year ending 28 February 2022, up from £12.9m the previous year. Pre-tax profit grew from £358,900 to £1.5m, but in the accounts, directors pointed to potential problems ahead from the impact of Brexit and the war in Ukraine. “With greater uncertainty in the market, there is a greater risk of our subcontractors going out of business,” they added.

Cowgills announced on 23 November that all the assets of Real (High Lane) had been sold out of administration the previous week. Buyer Rydon Holdings paid £3.5m in the form of a credit offer against Rydon Regeneration’s secured liability.

Double glazing specialist Fortuna Plus started the month in administration after an attempt to diversify into installing solar panels failed. In the 12 months to 30 June 2023, the company posted sales of £6.4m but made a pre-tax loss of £1.4m.

However, it ended in November under new ownership, after administrators FRP Advisory and Quantuma negotiated a £50,000 deal with related company Fortuna Home Solutions. Fortuna Plus and all its assets were sold on November 9, with the five full-time employees retaining their jobs under the Transfer of Undertakings (TUPE) rules.

Continued trend

On the construction side, 2023 has been characterized by business failures caused by rising interest rates, supply chain issues, high material prices and rising labor costs.

The latest official figures showed that the construction sector suffered more insolvencies than any other sector in the third quarter of 2023, accounting for 18% of the UK total.

Kelly Boorman, partner and national head of construction at RSM UK, said Construction news: “If we look at some of the insolvency numbers and some of the supply chain challenges, we expect the trend to continue in the first and second quarters of next year. But then we expect to see some settling as we we are approaching the summer months”.

Chris Davies, managing director of DRS Bond Management, argued that “the geopolitical and macroeconomic environments are sub-optimal for much-needed inward investment in the UK”, so the year ahead will be a matter of survival “for companies of all sizes in the sector”. “.

Contractors with a value proposition beyond offering the lowest price and working only with “top-tier contractors” have the best chance of “surviving until 2025,” he added.