December dip in administrations caps softer year

Half as many construction companies went under in December than November, according to the latest data from Creditsafe.

A total of 15 firms hit the buffers in the final month of 2024, compared with 30 the month before.

It was an unseasonably mellow finale to a year in which major players – including the UK’s sixth biggest contractor, ISG – met a sticky end.

Creditsafe’s data recorded a similar thaw at the end of last year, with 18 administrations recorded in December 2023 compared with 33 the month before.

December’s figures brought the year’s total to 281 – more than 80 fewer than in 2023. Tolent and Buckingham Group were among the 363 companies that went under that year, in construction’s worst year for insolvencies since Construction News began reporting monthly totals in 2020.

Gloucestershire glazing firm Customade Group Services Ltd was the largest firm to collapse in December. The company went into administration on 18 December, taking three subsidiaries with it: Customade Ltd, Polyframe Ltd and Virtuoso Doors Ltd. A statement on the firm’s website explained that the parent group had completed a “significant financial restructuring” after historic financial losses and a December 2024 refinancing deadline.

The group sold the assets and trade of Polyframe and three other subsidiaries not in administration (Stevenswood, REAL and Atlas) to new buyers under two separate deals. It was unable to find a buyer for its £23.7m-turnover Virtuoso doors brand.

Chief executive Will Gold said the market for window and door products had been contracting over the past two years and he had seen many business within the sector struggle and enter insolvency.

He added: “I am pleased that through these transactions we have been able to secure so many jobs going forwards, but I am deeply disappointed that we were unable to find a solution that preserved the Virtuoso business and avoided the other staff redundancies.”

In its last full year, ending 31 December 2022, Customade Group Services Ltd  posted a pre-tax loss of £15.7m. Ultimate parent company Custombus Ltd made a pre-tax loss of £8.8m on a turnover of £109.6m. Custombus Ltd remains in operation.

It had lost £395,000 from the November 2022 administration of subsidiary Fineline Aluminium Design, which Gold wrote was “always inconsistent with the business model elsewhere in the group”. He added that the firm’s core product range would not have met the U values required by building regulation changes from June 2023.

Bedfordshire-based AJ Mechanical Services was another of December’s casualties. The 27-year old firm owed £1.6m to trade creditors when it went under at the beginning of the month, according to administrators from Quantuma Advisory. It specialised in care homes and assisted living and had recently worked on several schemes for housebuilder Hill Group.

Sheffield-based plant hire firm Elev8 also hit the brakes. In its final set of accounts, for the year ending 29 September 2023, the firm reported it owed creditors £7m, £3.6m of which was due within the year. It employed an average of 76 people.

Outlook

December’s milder death toll followed a year in which major insolvencies continued to dog the construction sector.

The demise of large players like Readie and Osborne – not to mention ISG – rattled investor confidence and had knock-on effects with the firms’ supply chains.

CN reported last month that more than one-sixth of businesses that went under in the year to November last year were in the construction industry, according to official figures. The  Insolvency Service identified 4,208 construction firms that entered liquidation, administration or company voluntary arrangements in the first 11 months of 2024.

At the time, Evelyn Partners partner Mark Supperstone predicted “green shoots” in the construction sector in the early months of 2025, although he warned incoming changes to employers’ National Insurance contributions would “add further strain”.

Aecom managing director Jo Streeten highlighted that the figures showed a year-on-year decrease in insolvencies.

She added: “There remains significant ground for optimism as we head into 2025, encouraged by the changes announced to the National Planning Policy Framework as well as government infrastructure spending.

“Simplified planning regulations will help stimulate project pipelines and offer a more predictable landscape for construction businesses, providing much-needed clarity and momentum for firms seeking to expand their order books.

“Meanwhile, falling interest rates should stimulate private investment and offer carefully managed firms opportunity for growth.”

In response to December’s figures, Richard Black, partner at law firm Eversheds Sutherland, told CN the brief dip in administrations is unlikely to signal a long-term decline in business failures.

He said: “It is common for insolvency and administration rates to vary during the year, and tend to be lower in December due to the holiday period.”

“The current construction landscape remains uncertain and the UK market is still reeling from the collapse of ISG, which will have left holes in the balance sheets of many suppliers.”

Black added that while government plans to increase housing and infrastructure construction would cause optimism in the market, policies that risk increasing inflation or restrain movement of goods would impact construction costs and put further pressure on the industry.