Readie collapse dominates February casualty list

The stream of construction insolvencies continued steadily in February with 24 businesses entering administration, according to the latest available monthly data from Creditsafe.

This month’s toll was lower than last February, which saw 30 construction businesses go under. However, 50 companies have gone under so far this year, five more than the 45 that collapsed in the first two months of 2023.

The month’s highest-profile casualty was logistics and warehouse specialist Readie Construction. The 17-year-old firm had seen turnover increase by 22 per cent to £421.1m in its last full year of trading, enabling the firm to climb 20 places to 55^th in the CN100 2023 table of top contractors.

But this did not prevent the Essex-based contractor from shutting down its operations, blaming inflation, subcontractor failures and insurance-market tightening.

Constantinos Pedhiou and Gary Shankland from Begbies Traynor were appointed as joint administrators on 6 February.

Readie was the latest in a recent string of employee-owned trusts (EOTs) to collapse, with £665m-turnover Buckingham Group and mechanical & electrical stalwart Michael J Lonsdale also going under in the past six months.

Chris Davies, managing director of DRS Bond Management, told Construction News shortly after Readie entered administration: “EOTs and construction are not natural bedfellows.”

Readie’s demise comes amid a wider contraction of the market for industrial projects. Glenigan economics director Allen Wilen said that while the growth of online retail during the pandemic led to the value of industrial-sector project starts doubling between 2020 and 2022, interest rate spikes have since knocked investor confidence and weak retail spending has hit demand.

He added: “While the sector is expected to return to growth, benefiting from a structural shift towards online retailing, recent volatility… combined with higher construction and borrowing costs has created a difficult trading environment for firms operating in the sector.”

Along with Readie, Essex lost another two companies this month: developers Bebac Investment Group and Dimora Homes.

Two other companies in this month’s casualty list were large enough to file revenue and profit figures with Companies House.

Rye Demolition was another well-established firm that got hit with the wrecking ball in February. The Aylesbury-based subcontractor, which posted a turnover of £11.1m for the financial year ending April 2023, had worked on many large projects with major housebuilders such as Barratt and Hill Group.

However, the superstructure came tumbling down after the firm was hit with two winding-up petitions.

Contract flooring provider Axiom Group, which was founded in 1979 and had four regional offices, was the other larger firm to go bust.

Its last set of accounts, covering the year ending 30 November 2022, described a nearly 20 per cent increase in turnover to £17.8m and an increase in pre-tax profit of about £130,000, to £781,000.

The accounts had said the company’s “low levels of debt” and “more than adequate levels of working capital and reserves” would allow it to keep going.

The Marble Mosaic Company was the oldest firm to collapse in February. The Somerset-based company had provided cladding on many notable luxury buildings in its 119-year history, including Portcullis House (pictured) near the Houses of Parliament in London, the European Investment Bank in Luxembourg and Bristol’s Grade I-listed Clifton Cathedral.

‘Nervousness’ continues

The latest set of administrations complements a mixed picture for the construction industry. Recent data from S&P Global showed that, although a long-term decline in construction activity is beginning to reverse, employment numbers dropped at the fastest rate since November 2020.

“I still think there’s a nervousness out there,” said Brendan Sharkey, head of construction real estate at MHA. “The [Spring] Budget hasn’t helped, interest rates are still high and costs are going up all the time.”

However, he sounded a note of cautious optimism for the industry as the summer approaches: “There could be more casualties but I’d like to think we’ve broken the back of it.”