A North East business which has traded for more than a century has become the latest construction company to collapse into administration.
Staff at historic Newcastle company Surgo Construction have been told that the firm has now ceased trading with the loss of 46 jobs, after falling into financial difficulties. The action was forced by lender White Oak 海角视频, a fixed charge holder.
The building contractor, based at Newcastle Business Park, specialised in both new build and renovation projects for public and private sector clients. It has has been responsible for high profile projects around the region, including work at Newcastle’s Theatre Royal, the redevelopment of Newcastle University’s Hatton Gallery, the National Formulation Centre at NETPark in Sedgefield, the RIBA offices at the Old Post Office in Newcastle city centre, The Palace Hub in Redcar, and Swans Centre for Innovation in Wallsend.
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The company traded as Bowey Construction Ltd, as part of the Bowey Group, for more than 100 years before deciding to rebrand as Surgo 20 years ago – an exercise which triggered a steep rise in sales and profits, peaking at £55m turnover in 2008, when it had 156 staff. The following year operating profit more than doubled to £5.6m. At one stage the company's workforce stood at 212.
Surgo’s collapse comes just seven months after it published accounts highlighting a strong pipeline of orders and an increase in profits. Accounts for the year ending October 2022 showed a drop in revenues from £15.9m to £14.4m, but operating profit rose from £36,369 to £111,456. Pre-tax profit also increased from £20,820 to £75,488.
The company was dealt a heavy blow during the pandemic, plummeting to a loss of £420,667 in 2020 - but it returned to profit the following year. Within the accounts for 2022, signed off last July, directors said its strategy to diversify provided it “with the ability to deal successfully with the ebbs and flows of the market and the potential obstacles resulting from further economic disruptions”, and that it was continuing to generate good cash flows, with net funds at £2.1m at the end of the year.
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But in recent weeks, court documents showed Surgo faced a winding-up petition from Bellway Homes Limited. Now specialists at FRP Advisory in Newcastle have been appointed as administrators, citing challenging trading and wider issues impacting the construction sector. FRP say they are now reviewing head office operations to understand contractual positions with ongoing work, in a bid to recover money for creditors.
Joint administrator Steven Ross said: “Despite the best efforts of the directors and support from the wider group, Surgo Construction has faced a number of challenges with projects in recent months that have been exacerbated by the headwinds facing the wider construction sector. This has left the directors with no choice but to place the company into administration.
“The joint administrators will now focus on assessing the position of the company in relation to ongoing work as well as supporting impacted colleagues in making claims to the Redundancy Payments Service.”
The firm’s demise follows the collapse of Gateshead based Tolent and Killingworth-based Metnor Construction last year. Earlier this year a report showed the number of North East firms on the brink of collapse had jumped by more than a quarter at the end of 2023 as fears grow of a “debt storm” caused by interest rate rises, a report has warned.
The Red Flag Alert report from insolvency specialist Begbies Traynor found that 836 companies in the North East were in ‘critical’ distress, a rise of 27.1% since the previous quarter and 12.5% up from a year earlier. Begbies said the figures demonstrate the speed with which severe distress is increasing in the North East, with the increase faster than that seen elsewhere in the 海角视频.