Concerns grow as Midas teeters

The future of regional contractor Midas is in the spotlight this morning with the firm reportedly set to appoint an administrator with work on key jobs coming to a halt last week.

The Exeter-based firm, which according to its last set of accounts employed 500 people, has strongholds across the South-west and South Wales but also carries out work in areas beyond such as Hampshire.

The firm has been going for 46 years but late last week worries surfaced about its future after reports that work on three hotel schemes in Devon worth around £40m had stopped.

The client on two of them went public with its concerns on Thursday and told DevonLive: “Over the past three months, the Fragrance Group has become increasingly concerned by the very limited progress on our two new Paignton seafront hotel developments.

“We are in constant discussions with the main contractors and are now reviewing our options to complete the development of these hotels.”

Work on a third scheme, worth £11m for Torbay Council in Torquay, is also understood to have stopped.

One source told Building: “We’d been hearing reports from our subcontractors in the past couple of weeks [about Midas] that all was not well but these got louder in the past week or so. Let’s hope the supply chain is not too badly burnt.”

In its last set of accounts, Midas Group had a turnover of £291m and made a pre-tax loss of £2.4m in the 18 months to October 2020.

In the 12 months to April 2019, turnover was £259m with the firm posting a pre-tax profit of £751,000.

In the 2020 accounts, the firm said its numbers had been hit by covid-19 “which significantly impacted the operational and financial performance of the group”.

Its biggest business, Midas Construction, had a turnover of £261m and a pre-tax loss of £650,000 in the 18 months to October 2020.

Midas Group also has a business called Mi-space (UK) which carries out property maintenance on occupied properties and reported a £1.3m pre-tax loss on turnover of £33.6m in the same 18 month period.

In its accounts, Midas Group claimed just over £2m from the government’s Coronavirus Job Retention Scheme, nearly half of which was for the 250 employees at its construction business. Mi-space claimed £745,000 in furlough money for its 178 staff during the same period.

Filings at Companies House show that Michael Hocking stepped down as a director of the firm four days before Christmas with the 71-year-old being described as “a person with significant control” in a further filing made 18 days ago.

Hocking was made a director of Midas Group in 1998 and, along with chairman Steve Hindley, helped lead a management buy-in that year from Midas founder Len Lewis with the firm seeing revenue rise from £32m to more than £100m over the next four years thanks to a series of retail jobs. In it latest accounts, Midas Group said its retail business had been discontinued after turning in a pre-tax loss of £332,000 on £7m turnover in 2019 with the latest figures, for the 18 months to October 2020, showing it made a pre-tax loss of £351,000 on income of £351,000.

Midas is the biggest name contractor to be hit by problems since listed firm NMCN collapsed into administration last October.

NMCN was mainly a civils business and several of its divisions, including water and highways, were picked up by rivals including Galliford Try and Keltbray.

But one boss told Building interest in Midas from a would-be saviour could be limited as much of its work is building-only contracts. “There will be a lot of due diligence to do in a very short space of time,” he added.

The future of regional firms has been under the microscope for a while now with a spate of well-known businesses, including Simons, Shaylor and Clugston, all sinking in the months before the pandemic struck.

Speaking about Midas’s problems, another boss added: “Regional firms can’t really differentiate from the major players apart from price – so they go in low to win the job. The pandemic has exacerbated that.”

Last week, Building reported that the number of firms in the industry failing had risen 25% between October and November last year, with 325 businesses going bust during the period according to the latest figures from the Insolvency Service.

John Bell, senior partner at Clarke Bell Insolvency Practitioners in Manchester, said: “The sector is being hit by numerous issues including rising raw material prices, supply chain disruptions, historic debts built up during the pandemic, labour shortages and being tied to fixed-price contracts while the rate of inflation is rising.

“It is the combination of these difficult factors that is leading to so many construction companies going insolvent and being liquidated.”

Midas has been contacted for comment.