STEWART Milne Group has revealed pre-tax profits of £16.5 million and confirmed the board of directors has opted to recommence a competitive sales process following a more positive outlook for the housing market.
For the year ending 31 October 2022, the housebuilder has posted a turnover of £172.4 million and an operating profit of £7.1 million.
Reduced spend on land in the previous two years due the pandemic led to the number of units falling from 828 to 583, impacting turnover and operating profit which are down £48.7 million and £1.4 million respectively compared to the previous year.
However, the group said the gain arising from the sale of its timber systems business in December 2021 and ‘significant efficiencies’ have driven pre-tax profits to a level not seen for more than seven years.
Fraser Park, chief financial officer, said, “This improvement in margins reflect the successful steps taken to reduce the group’s cost base and deliver cross functional efficiencies, including the new ‘Villages’ housing range. Introduced in 2021, these new homes have been designed to meet changing customer needs while being more efficient and cost effective to build.
“The new and improved specifications of these homes, combined with the group’s investment in improved marketing have led to increased sales across Scotland and north west England.
“With two years of strong growth in operating margin performance, as a result of these transformative initiatives, we are highly confident of delivering future growth when combined with increased investment in new sites.”
During the financial year, Stewart Milne Group repaid £61 million of its debt facility to the Bank of Scotland, using the proceeds from the sale of its timber systems business.
At the end of October, the group had £15.8 million of year end cash, resulting in its banking facility being extended to June 2024.
Mr Park added, “This facility will ensure we can continue to acquire additional sites which will enable the business to grow in the future, capitalising on the positive trading we’re currently enjoying. In the first half of 2023, we’ve experienced strong reservations which exceed the same period in the prior year. At the end of last month, 87% of completions for the current financial year had already been secured, demonstrating unprecedented demand for our quality family homes.”
The business added that as a result of the more positive outlook for the housing market and the ‘highly encouraging’ prospects for the group, the directors have opted to recommence a competitive sales process.
Stuart MacGregor, chief executive of Stewart Milne Group, explained, “We initially embarked on a sale process in early 2022 after founder and major shareholder Stewart Milne announced his decision to retire. This attracted significant interest and was progressing well. However, the economic uncertainty caused by the government’s mini-budget in September 2022 prompted us to suspend the sale process in December last year.
“Since January 2023, however, the UK housing market has rebounded to more normal activity levels with robust house prices and demand. Reservation levels for Stewart Milne homes, across Scotland and north west England, have exceeded those for the same period in the previous year. This exceptionally strong performance and more positive market conditions, along with renewed interest from potential buyers, have led to our decision to go back out to the market.
“We already have a number of seriously interested parties.”
