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Over 30 Queensland-based construction companies have collapsed in 2017, and nearly 450 more are at “high to severe” risk of failure in the next 12 months, according to insolvency group SV Partners.
Insolvency group SV Partners has released its findings in August's Commercial Risk Outlook Report. The report analyses industries and regions within Australia where incorporated operating businesses are predicted to face financial distress within the next 12 months.
The report found that 3.4% of construction businesses in Queensland (444) face severe to high risk of financial failure. This is an increase of 51 in construction businesses since March 2017.
The report notes that 2017 has seen a number of construction companies enter into insolvency including Bluestone Constructions, The Cullen Group, Batir Pty Ltd and Trac Construction.
There have been two major collapses in the last week with Queensland One Homes going into liquidation with debts of more than $3 million and Commonwealth Games Village contractor Ware Building.
Brisbane-based Rimfire Constructions has told subcontractors and suppliers it would be seeking a court-approved scheme of arrangement for debts to creditors of about $4 million. The company had its business licence cancelled by Queensland Building and Construction Commission (QBCC) in July.
National-listed builder Watpac reported an annual loss of $31.4 million after tax this week, including almost $30 million in equipment write-downs in its civil and mining business, with a corresponding 9.35% per cent revenue drop. It described market conditions as “challenging”.
The Queensland Government’s Department of Infrastructure, Local Government and Planning has allocated approximately $2.2 billion in the state infrastructure fund for 2017 – 2018.
Managing director of Condev Construction, Steve Marais told the Gold Coast Bulletin that this year's collapses are the “the tip of the iceberg [and] next year is going to be a bloodbath”.
Marais told the Bulletin that he expected half a dozen mid-tier builders would collapse in 2018.
The Queensland government is currently reviewing new laws that require builders and contractors to deposit funds in project bank accounts to pay subcontractors on time.
[Related reading: What will the construction downturn actually look like?]
Image copyright: catalin205 / 123RF Stock Photo
