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Troubled Keppie looks to shed staff and shut offices

Ronald McDonald House by Keppie
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One in seven staff at Keppie Design is set to lose their jobs as the practice plans to shut almost half its offices in the UK in an attempt to return to profit

The firm’s offices in Aberdeen, Perth and Manchester are expected to shut with the potential loss of 25 jobs, while Glasgow, Edinburgh and Inverness will remain open. The company closed its Belfast office last year.

Problems with cash flow due to the nature of some public-sector contracts, combined with falling oil prices, are understood to be partially responsible for the job losses.

The AJ100-ranked practice, known particularly for its education and healthcare projects, was founded in 1854 and once boasted Charles Rennie Mackintosh as a principal.

Consultations with staff who are facing redundancy are due to end next Wednesday [15 June].

The shock move comes just months after accounts were signed off in which the firm committed to maintaining its staffing levels.

Keppie Design’s latest accounts filed with Companies House in April state: ’The directors took the decision in early 2015 to maintain staffing levels due to the strong prospects looking forward. This has had a negative effect on both profitability and cash flow, which has also been impacted by the payment terms attached to a number of public-sector contracts.’

The accounts add: ’The directors are confident that there will be a return to profitability and cash generation over the course of this year.’

The optimism was set against a bleak background, with the company reporting a pre-tax loss of £527,988 for the year to July 2015 in contrast to a pre-tax profit of £345,793 in the previous year.

Turnover for the year to July 2015 was down four per cent at £7.5 million, mainly due to ’delays at the start of certain projects, while others have been put on hold, in some cases as a result of the collapse in the price of oil’, according to the annual accounts.

The number of employees rose from 140 in 2014 to 152 in 2015 – resulting in employment costs increasing from £4.9m to £5.4m.

Keppie Design’s ‘cash in the bank and at hand’ plummeted from £1.2m in August 2014 to just £1,985 by July last year.

The decision will come as a blow to the recently formed 431 Architecture, an alliance of Keppie Design, Stride Teglown and TODD Architects. The new network promotes itself as giving clients access to 18 studios across the UK and Ireland – but this number will fall to 15.

In a statement to the AJ, a spokesperson for Keppie Design said: ’After careful consideration, we have chosen to restructure the business and are currently in consultation with 25 employees in Aberdeen, Manchester and Perth on the proposed closure of these offices. This period of consultation started on Wednesday 1 June will last until Wednesday 15 June.’

The spokesperson added: ’The proposal to close these three offices would dramatically reduce our overheads, allowing us to protect the business for the future and move forward from a position of increased stability.’

It is a decision which will ’strengthen the business’ and the company has a ‘very talented team who are involved in lots of exciting projects, and have a bright future ahead’.

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