Northumberland contractor Howard Russell Construction has collapsed into administration with the loss of dozens of jobs, despite having predicted a huge lift in sales this year.
The Cramlington design and construction business has appointed specialists from FRP Advisory, months after posting a jump in turnover and hopes of future growth. The firm has been involved in a raft of notable projects around the 海角视频, as well as high profile North East schemes. Regional schemes included facilities for both Faltec and Snop at the North East advanced manufacturing hub IAMP, and the City Gate offices at Gallowgate, Newcastle.
Last December the firm posted accounts which showed a jump in turnover for the year ended March 2022 from £12.5m to £43.5m, and a small increase in operating profit from £769,478 to £789,808. It also predicted a big rise in turnover of up to £80m based on its secured orders, with hopes of boosting turnover by 10% each year going forward.
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However, it said it recognised how liquidity and cash management is key in the construction sector, while also warning that the “perfect storm” of the final few months of Covid, a boom in the industrial market, material shortages, Brexit, cost increases, shortage of skilled labour and the war in Ukraine had impacted its margin and projects programme.
Howard Russell’s administration follows high profile collapses of North East construction firms Tolent and Metnor, which have left a list of creditors within their supply chains owed millions of pounds.
In the most recent accounts report, the company said: “Company sales for the year ending 31st March 2023 are forecast to be £70-80m based on current secured orders. Positive feedback has been received from our existing clients and we anticipate a similar level of new business opportunities. The company are in a position where more projects are negotiated rather than tendered which gives us more certainty moving forward and projects are being booked in as far in advance as 2024.
“A combination of Covid, Brexit and other external factors has created uncertainty within our industry, further compounded by a boom within the industrial sector which has caused an added strain onto the industry. The industry is currently faced with problems from material availability, cost increases and a noticeable lack of skilled labour. Despite these issues, the company has remained strong during these challenging times. The company has good, trusting relationships with repeat clients, which allows us to negotiate projects well in advance of site commencement dates.
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“Recent construction corporate failures have, in some instances, resulted from an over reliance on bank funding. The company does not operate with bank borrowing facilities and it is our aim to remain cash positive in all the work we undertake. This reduces the risk of outside influences for both the company and its clients.”
The company had 31 employees according to most recent accounts.
A message on the firm’s website reads: “Howard Russell Construction Limited has been placed into administration as of 2 May 2023. The affairs, business and property of the Company are being managed by Steven Ross and Allan Kelly of FRP Advisory who were appointed Joint Administrators on 2 May 2023. The joint administrators of the company are licensed in the United Kingdom by the Institute of Chartered Accountants in England & Wales and are bound by the Insolvency Code of Ethics.”
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