There was further turbulence in the construction industry last week as Geoffrey Osborne Ltd filed a notice of intention to appoint an administrator with the UK courts.
This represents a major blow to our nation’s construction sector and the biggest insolvency within the industry since Buckingham Group folded in 2023. At this stage, the extent of the company’s debt nor the numbers of its creditors are not yet known but invariably a company of such size has a significant amount of both.
Should an insolvency be the ultimate end to the administration, it is unlikely that the majority of these creditors, especially trade creditors, will recover a meaningful amount of the money owing and must instead write it off as bad debt.
This administration comes in the wake of a major restructuring effort by Geoffrey Osbourne Ltd. The purpose of this was to offload branches of the business that were not part of their core construction offering, reduce costs, raise funds to be reinvested into their core offering and make the business a more attractive prospect to investors.
To do this they sold various branches of the business. In late 2021, their civil engineering branch was sold to Sullivan Street whilst both the panel manufacturing and house maintenance divisions were sold off in 2023.
The impact of these sales had on the financials of the company is not yet known as the most recent set of accounts for Geoffrey Osborne Ltd were filed in September 2021. However, from the notice of intent to appoint an administrator we can infer that it did not have a significant positive effect.
These accounts show that the Surrey based company’s revenue fell by over £200 million between 2020 and 2021, from £551 million to £325 million, whilst their ebidta losses tripled from -£12 million to -£36 million.
Despite their best efforts, the company directors were unable to secure the required investment and continued operation was no longer viable. Despite this, the company remains confident that administrators will be able to successfully sell of many parts of the company along with securing the continue employment of many of its staff.
A company statement said, “The decision was reached after an 18-month program to restructure the firm to focus on the core construction business and following an extensive effort to secure new investment into the business.
“The company with its advisors are currently working with interested parties with the ambition that aspects of the business will be sold and will continue to trade. Negotiations are ongoing. To support this process all staff will be paid up to the date the administrators are appointed.
“Osborne has faced significant headwinds common to the entire construction over the past two years, fueled by high inflation, the lingering impacts of COVID-19 and Brexit, and a slowdown in public sector procurement. Despite these challenges, Osborne has maintained strong relationships with suppliers, contractors and staff, while delivering for customers.
“To address this under-performance and protect the underlying construction business Osborne has sold its property management division, infrastructure business and offsite manufacturing arm securing the employment of over 850 jobs. The proceeds of all three sales have been reinvested into the construction business, which has continued to deliver projects in London and the southeast.
“Regrettably despite a substantive improvement in performance the residual losses on legacy projects have undermined performance which has impacted on the ability to win new work. Despite the management team ensuring the current business is profitable with a good pipeline of work the business has struggled to secure the necessary investment to continue as a going concern."
Red Flag Alert gave our users over six months warning to this insolvency and had listed Geoffrey Osborne Ltd as a severe credit risk from 1st September 2023. Giving our customers the warning they needed to avoid extending credit and to actively pursue any money owing, so they were shielded from the devastating effects of receiving a bad debt.
To demonstrate the power of Red Flag Alert’s data and how we can protect your business, we have made our company report for Geoffrey Osborne Ltd available completely free of charge.
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