Burton-on-Trent-based, S&I Groundworks Limited has appointed administrators. S&I linked the problems to the Russian invasion of Ukraine and the COVID-19 epidemic.
Materials, raising fuel costs, salary inflation, and “increasing competitiveness in the market for essential people” were listed by KBL Advisory as contributing factors to the collapse.
The statement from KBL said, “Significant cashflow strain as a result of cost inflation and economic uncertainties left the board with no choice but to put the firm into administration.
Administrators will try to understand what went wrong
The company reported a £41 million turnover in its most recent filings for the year ending May 31, 2021, an increase from the £24.7 million it reported the previous year. Pre-tax profit increased somewhat, from £1.4 million to £1.9 million, but only slightly.
During the year ended May 31, 2021, S&I opened a second office in Knutsford, Cheshire, enabling it to “accommodate the increase in the group’s performance, boost personnel numbers, and future expansion,” according to the accounts.
According to their website, S&I collaborated on projects with homebuilders such Barratt Homes, Crest Nicholson, Vistry, and Gleeson.
The company hired more people that year, going from 13 to 21 full-time employees. However, according to the papers, it also more than quadrupled its borrowings over that time, owing creditors £8.8 million as opposed to £3.9 million in 2020. Most of that had to be paid back within a year.
Since last year, the number of administrations has significantly expanded as the construction industry struggles with rising energy and material costs as a result of rising labour expenses and sector uncertainties.
Sector uncertainties in 2023
According to Construction news, there were 23 construction administrations in December, or more than one for each working day of the month. Glyn Mummery, a restructuring partner with FRP Advisory, cautioned at the time that December was often a slow month for insolvencies.
Since January is a lengthy month, he added, “we anticipate an uptick in activity.” Following the recession, a lot of firms are in debt, and paying off those loans is become more difficult.
The number of construction firms in “severe financial hardship” has increased recently, according to business recovery specialist Begbies Traynor, amid cost inflation and unstable economic conditions.
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With over three decades of experience in the business and turnaround sector, Steve Jones is one of the founders of Business Insolvency Helpline. With specialist knowledge of Insolvency, Liquidations, Administration, Pre-packs, CVA, MVL, Restructuring Advice and Company investment.