Collapse part of a growing wave of insolvencies in the sector
Sydney-based company DB Group Global, which positioned itself as a leader in demolition and construction services, has recently collapsed and is now actively seeking a buyer.
The voluntary administration of DB Group Global, along with its subsidiaries DB Scaffolding & Rigging Australia and DB Group Services, comes at a time when Australian business activity is alarmingly low, according to a report by The Australian.
DB Group has declined to comment on the matter, while Adam Shepard, the appointed administrator from Setter Shepard, has confirmed that the company is still operating as investigations continue. Shepard told The Australian that the business is being put up for sale, although he did not provide further details regarding potential buyers or the timeline for the sale process.
According to information available on DB Group's website, the privately-owned company has been in operation for the past 15 years, The Australian reported. The website highlights the company's successful completion of numerous large-scale projects, positioning itself as a leader in demolition and construction services. Additionally, DB Scaffolding & Rigging Australia, a subsidiary of DB Group, is recognized as a leader in scaffolding supply, project design, and management solutions in the greater Sydney area.
The company has contributed to notable projects such as the AMP Quay Quarter Development, the Darling Exchange Precinct, Barangaroo, and the University of Technology Sydney, The Australian reported.
DB Group Global's most recent financial report, filed with the Australian Securities and Investment Commission, reveals that the company recorded $36.37 million in revenue during the 2018-19 period, compared to $41.5 million in the previous year. The company also reported a profit of $1.415 million, a significant improvement from the loss of $1.715 million incurred in the preceding 12 months.
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The collapse of DB Group is part of a growing wave of company insolvencies in Australia. ASIC reports that there have been 3,308 external administration or controller appointments between July 1 and Oct. 29, with the construction sector accounting for approximately one-third of these appointments. In the previous financial year, a total of 7,942 company failures were recorded.
A recent report by CreditorWatch, a credit reporting agency, highlights the concerning state of Australian business activity. The report reveals that the average value of invoices has reached its lowest point since January 2015, indicating a significant decline in business transactions. Furthermore, business-to-business trade payment defaults have been on the rise, increasing by 60% since January, The Australian reported. CreditorWatch forecasts that the business failure rate will further increase to 5.78% over the next 12 months, up from the current rate of 4.21%.
Patrick Coghlan, the CEO of CreditorWatch, attributes the challenging business environment to the Reserve Bank of Australia's efforts to curb inflation through interest rate increases.
“Consumer demand is one of the key drivers of the economy and that is coming to a grinding halt as cost-of-living pressures bite,” Coghlan told The Australian. “Costs of rents, electricity and fuel are all still very high despite the RBA’s best attempts to drive down inflation.”
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