This article is from the Australian Property Journal archive
On another dark day for the construction industry, home builder Porter Davis collapsed on Friday, halting work on 1,700 homes and making 410 staff redundant, while Lloyd Group called in voluntary administrators.
Grant Thornton was appointed as liquidators to Porter Davis after a hail Mary bid to find a saviour failed on Thursday night.
All work has ceased on projects by Porter Davis’ group of companies in Victoria and Queensland. Englehart Homes, a small subsidiary acquired in late 2021, will continue operating.
“The extremely challenging environment for residential home building has directly contributed to the PDH Group’s financial position, with rising input costs, supply chain delays, labour shortages, and a drop in demand for new homes in 2023 impacting the group’s liquidity,” Grant Thornton said.
“Notwithstanding the financial support from shareholders and lenders, the group has exhausted options to secure the further funding required to allow Porter Davis to continue to operate viably, and the directors were left with no option but to place the companies into liquidation.”
The reasons given for Porter Davis’ collapse have been felt industry-wide. Construction costs have reached a new high after recording the greatest annual increase on record, outside of the period following the introduction of the GST. Major casualties have included ProBuild, multibillion-dollar developer Caydon Property Group, and Queensland builder Condev, leaving billions of projects across the country in doubt.
After a tough 2022, the woes have continued into 2023. High-rise and luxury apartments developer EQ Constructions was among the first builders to collapse this year, owing at least $40 million to $50 million, while in recent weeks Canberra-based national builder company PBS Building fell over, leaving 180 staff without a job and 80 commercial and residential projects across Queensland, NSW and the ACT in limbo.
Grant Thornton said it was working urgently to determine if a solution could be found to support Porter Davis customers and some employees. It has kept on 60 staff to assist with the on-sale of contracts. Those made redundant are expected to have their entitlements paid out under the government’s Fair Entitlements Guarantee.
Subcontractors have reportedly not been paid for work done.
Porter Davis had been forecasting $555 million in revenue this financial year. It was ranked as Australia’s 13th-largest home builder in the 2021 financial year, according to the Housing Industry Association.
Porter Davis was building more than 1,500 homes in Victoria and 200 in Queensland. Grant Thornton said there are 779 signed contracts with customers where building is yet to commence.
Meanwhile, Deloitte Turnaround & Restructuring partners Sam Marsden, Sal Algeri, Jason Tracy and Tim Norman were appointed voluntary administrators by the directors of Lloyd Group.
Lloyd Group specialises in the design and build of building and infrastructure projects for state and local government clients. The appointment affects 59 projects under construction – 29 in Victoria, 30 in NSW. The business has around 200 employees.
“Like others in the construction sector, and despite significant effort, Lloyd Group has been unable to overcome increasingly challenging circumstances over recent months that have eroded project margins, culminating in our appointment today,” Marsden said.
“We do appreciate that this news will be unsettling and potentially disruptive for employees and project stakeholders, contractors, and suppliers.
“In these early days, we will be undertaking an urgent assessment of the business’s financial position and project-by-project status, and immediately commence communication with project principals and stakeholders.
“We will also immediately commence an accelerated sale process and hold discussions with parties that might be interested in taking on individual projects.“
