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Kier saves 128 jobs as Southdale Homes enters administration, but 87 made redundant

Exclusive: Yorkshire-based housebuilder and main contractor Southdale Homes has entered administration with 87 staff made redundant.

The £32m-turnover company appointed administrators from Alix Partners Services on 29 April due to severe cashflow problems stemming from what they described as a “significant number of loss-making contracts”.

The administrators have sold part of the company’s business and assets to Kier Living, saving the jobs of 128 out of 215 employees.

In a statement, the administrators said: “Regrettably, the sale was not able to preserve the employment of the company’s remaining 87 employees and they were made redundant with immediate effect.

“The joint administrators will continue to explore all options for the residual business and assets.”

Southdale Homes, founded in 1988, specialises in building affordable homes, extra-care facilities, medical centres and community centres.

The company has three regional business units in Yorkshire and the Humber, the North-east and the North-west.

Kier Living will take on the contracts that it can integrate into its existing business.

It said the acquisition of some of Southdale’s contracts, business assets and employees would strengthen its presence in the North of England, increasing its employee headcount across its Halifax and Warrington bases to 520.

It represents a further expansion for the firm, which last week announced it would buy Mouchel for £265m.

Southdale told employees on 29 April that the company had insufficient funds to continue trading due to losses both incurred and forecast, a source told Construction News.

They said the appointment of administrators was “very sudden” and that planning for new sites and supply chain contracts had been continuing as normal until employees were told there would be a 2pm meeting.

In the full year to 30 June 2013, the last for which the company has published accounts, Southdale’s parent Southdale Holdings saw turnover fall by a third to £32.9m, compared with £48.8m in 2011/12.

It reported a pre-tax loss of £74,000 in 2012/13, down from a pre-tax loss of £293,000 the previous year.

At the time, the directors’ report forecasted that turnover in 2013/14 would more than double from the £32.9m in 2012/13.

Kier Living executive director John Anderson said: Today represents an important milestone for Kier Living as we expand our presence in the North of England in order to deliver our growth plans, as set out in Kier’s strategy Vision 2020.

“Not only will we be able to use the combined capability and expertise of the two teams to deliver existing developments, we will also be able to expand our offering to a wider range of clients, and deliver projects of an increased scale.

“I would like to take this opportunity to welcome Southdale employees to Kier and look forward to continuing our journey of growth with them.” 

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