STEWART Milne Group has announced a £36 million increase in turnover and a £12.7 million rise in profit.
The housebuilder hailed a ‘strong recovery’ in its accounts for the financial year ended October 31, 2021.
The group said it had exceeded targets set out in its business plan with ‘significant improvements’ in performance and a return to ‘sustainable, profitable growth’.
Turnover has risen from £270 million in 2020 to £306 million. Operating profit, before exceptional items, has increased from £800,000 to £13.5 million in the same period.
During the financial year, the group completed a review which included the re-design of its entire homes range to meet changing trends. Stewart Milne Group explained that this ‘streamlined’ approach to design and delivery of its homes, along with other efficiencies, have helped drive up gross margins from 13% to 16%.
The review included the decision to realise the value in its timber systems business by pursuing a sale and focusing on its core housebuilding business. As a result of the sale to Donaldson late last year, the business has reduced its borrowings and generated ‘considerable’ profit which will be reflected in the next year’s accounts. The sale did, however, incur preliminary costs and an associated refinancing in this year’s accounts but total exceptional costs reduced from £59.2 million to £8.7 million.
Stuart MacGregor, Stewart Milne Group chief executive, said, “Having delivered exceptional and substantially improved performance and completed our strategic review, we have exceeded the targets we set ourselves in recovering from the protracted downturn in north east Scotland and the impact of Covid across all our operations.
“Our streamlined approach, central to which was the new homes range, has enabled us to capitalise on the favourable market conditions over the past eighteen months. Working effectively with sub-contractors and suppliers, we have overcome the unprecedented challenges in the supply chain, including the availability and rising costs of people and goods.
“With our strategic review now complete and no major impairment of land assets anticipated, combined with favourable market conditions, which are set to continue in the near-term, we are incredibly well-positioned for strong, sustainable and profitable growth.”
Stewart Milne Home’s turnover was £209 million, an increase of £16 million from the previous year. While unit numbers decreased from 836 to 828, the sale of private homes increased by 10% to 668.
Turnover from Stewart Milne Timber Systems increased to £94 million from £65 million. This is said to reflect an ‘element of catch-up’ on delayed orders from the prior financial year and the increased trend of housebuilders for sustainable, modern methods of construction.
In the two years to 31 October 2020, the group reported a total impairment £71 million in its land bank, which it said related to assets either acquired prior to the financial crash in 2008 or in the north east of Scotland prior to 2015 and the beginning of the region’s downturn. Taking into account interest and exceptional items of £8.7 million, this resulted in an overall loss of £8.1 million and compares to a loss of £71.5 million for the twelve months up to 31 October 2020.
Finance director Fraser Park added, “These results underline the successful implementation of our strategic review. They recognise the efforts of our talented people in rising to the challenges of the past few years through innovation, digitalisation and high standards of design which are delivering elegant, spacious family homes in carefully planned communities, shaped around the way in which people want to live today.
“Customer demand in both north west England and central Scotland has remained high while we saw an upturn in both demand and pricing in north east Scotland, following a five-year period of year-on-year sales price decline in the region. The market sentiment in this region is more positive than it has been since 2015 and we will continue to review opportunities here as the local economy strengthens.
“During the year, we invested in a number of new sites across all our regions and our current forward sales position is the strongest we have seen in many years. This, coupled with our improved competitiveness and financial position, signal supreme confidence in the future, sustainable and profitable growth of the business.”