Turnover at Stewart Milne Group has decreased from £241.4m in 2015 to £209.2m, with operating profits falling from £14.2million to £0.6million, as a result of the reduction in the number of homes sold in North East Scotland following the downturn in the oil and gas sector.
However, turnover remained level in both Central Scotland and North West England and the group has responded to the strong market dynamics in these areas by significantly increasing investment to drive future growth.
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The on-going, strong demand for new homes across the country has seen the group’s timber systems business grow both turnover and profit for the year ended June 2016.
The group took the strategic decision to accelerate the growth in its long-established homes businesses in Central Scotland and North West England through increased investment in new sites. The disposal of non-core assets, such as non-residential properties and its historic shared equity portfolio, generated the cash to fund this increased investment. The losses on disposal led to an operating loss of £10.9million in the period.
Glenn Allison, chief executive of Stewart Milne Group said: “Disposing of these assets allowed us to invest in ten new developments in the areas of our business where the housing market is strongest, namely Central Scotland and North-west England. The strong sales performance that we have experienced on these developments since the year end has more than justified that investment.
“These businesses are therefore well-placed to take full advantage of the strong demand for new-build homes in these markets.
“With a strong order book for the current trading year and an increasing number of UK house builders using timber frame to benefit from the advantages it delivers, Stewart Milne Timber Systems, already a market leader, will continue to experience positive growth.”
In the Autumn of 2016, Stewart Milne Group secured a three year, £185 million banking facility with Bank of Scotland, part of Lloyds Banking Group.
Stuart MacGregor, group finance director of Stewart Milne Group commented: “Underpinning and supporting our growth strategy is the extension of our banking facility. This, coupled with the growth we have delivered subsequent to our financial year end means that we are financially robust and on-track with our ambitious medium to long-term growth plan.
“In common with all house-builders who operate in North East Scotland, we have faced a very difficult period in the local market where the downturn in the oil and gas sector has had a major impact on consumer confidence. We have responded to this by ensuring that we focus on providing quality family homes for which demand remains solid.
By taking a longer-term view and prudent approach, Stewart Milne Group says it is able to react to different market conditions in each of its geographical areas and increase opportunities to grow.
Mr Allison added: “Our trading reflects strong underlying performance which allows us to react to different market conditions in each of our geographical areas. Increasing the number of active developments will accelerate the delivery of our strategy and set the foundations for growth. Of equal importance will be our culture, which has customers at its heart and is built on strong leadership, coaching and development of our people to retain a committed, expert and safe workforce.
“Our continued commitment to our customers, the creation of award winning developments, the design, detail and individuality of our homes and aftercare service have seen us awarded 5-star status by the Home Builders Federation (HBF). We are proud to be the only major housebuilder in Scotland and one of only five of the large firms in the UK, to be awarded 5 star status by the industry this year.
“By delivering quality homes in places our customers want to live in and UK housebuilders and with contractors increasingly turning to offsite construction and our innovative timber systems products to meet demand, we are in good shape to take advantage of changing market conditions in the UK in a sustainable way.”
The group employs more than 800 people in Aberdeen, Edinburgh, Glasgow, Manchester and Oxford.
