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Housebuilder Stewart Milne Group poised for growth in buoyant market

Stewart Milne
Stewart Milne Group is targeting a buoyant market

Strong demand for new homes across the north-east, as well as in the central belt and north-west England, is behind a buoyant outlook for housebuilder Stewart Milne Group (SMG).

Buyers are snapping up its properties in locations in and around Aberdeen, on Tayside and in the Manchester area.

The group’s timber-frame house kits are also in high demand as part of a post-lockdown trend for moving into new homes with more space and a garden, SMG finance director Fraser Park said today (August 3).

Mr Park said SMG’s Stewart Milne Timber Systems (SMTS) subsidiary had a forward-order position that was “unprecedented” in the history of the business.

Stewart Milne Group
Stewart Milne Group finance director Fraser Park.

A currently buoyant housing market and modern construction methods have led to a “phenomenal” doubling of orders for the division’s products, compared with two years ago, he said.

Meanwhile, all 700 homes being constructed by SMG’s housebuilding division in the current trading year to October 2021 have been sold, with the group also reporting a “substantial” number of reservations for 2022 and beyond.

The Aberdeenshire-based group has also acquired new sites in the Glasgow, Edinburgh and Manchester areas which are due to launch in the coming months. These will feature a new range of homes that are expected to generate sales of £550 million across existing and proposed developments in Scotland and north-west England over the next two years.

Targeting Tayside

Mr Park said each of SMG’s areas of focus for new detached homes – the company’s “sweet spot” was seeing strong demand.

Last December the firm said it was aiming to invest millions of pounds in Dundee after being stunned by the success of its Ballumbie Rise development in the city. It is also looking to build more new homes on its Monarch’s Rise development in Arbroath.

Mr Park said: “The demand for new homes shows no signs of letting up and, having used lockdown to accelerate the most ambitious and comprehensive redesign of our homes in the group’s history, we are well-placed to capitalise on this.

“Our streamlined homes business in Scotland, a focus on digitalisation and our new range of homes will play a major role in our competitiveness and profitable growth over the next five years.

‘Changing needs of families’

“These new designs, which cater for the changing needs of families now and in the future, take account of the increasing demand for flexible space, indoors and outdoors; a growing trend following the coronavirus-imposed lockdowns.”

He added: “As developers, we have a responsibility to ensure that what we build has a positive and life-enhancing effect on those who live there. Our approach to new developments means we will leave a legacy we can be proud of, with places that have soul, individuality and character, shaped around the way people live.”

Stewart Milne Group

Mr Park was speaking as SMG, based in Westhill, near Aberdeen, announced pre-tax losses of £71.5 million during the Covid-impacted year to October 31 2020.

Turnover of £269.7m effectively reflected fewer than eight months of “normal” trading, with operations halting for more than four months during the first pandemic lockdown. Ongoing coronavirus restrictions limited progress – and profits – during the rest of the year.

SMG had 75% of its workforce on furlough at one stage. The company no longer has any of its staff on the Coronavirus Job Retention Scheme and a 900-strong workforce ready to take advantage of healthy market conditions.

The demand for new homes shows no signs of letting up.”

Fraser Park, finance director, Stewart Milne Group

The group said it was poised for sustainable, profitable growth in 2021 on the back of “exceptional” trading over the past 10 months.

SMG’s full-year figures for 2019-20 follow a 16-month trading period as the group transitioned to a new financial calendar. Pre-tax profits and turnover for July 2018 to October 2019 came in at £48.5m and £379m respectively.

Operating profits for the latest period totalled nearly £800,000, compared with £7.2m in the previous 16 months.

Legacy impacts

On a pre-tax level, performance during the latest period was affected by the revaluation of land acquired prior to the 2008 global financial crisis and for land under development in the north-east that was purchased before the oil and gas downturn in 2015.

The losses also include exceptional items in relation to a restructuring of the business which SMG said had “paved the way for future growth and profitability”.

SMG also revealed it had extended its bank facilities with Bank of Scotland to March 27 2022, with an option to extend to July 31 2022.

Stewart Milne Group
The group is enjoying rocketing demand for its timber kit homes.

Group chief executive Stuart MacGregor said: “The strength of our current exceptional trading performance, coupled with our extended banking facility, allows us to continue to grow the business across our core markets in both Scotland and North West England where the demand for quality, family homes is at its highest.

“Investment in our product and manufacturing innovation and capacity in our timber systems business is ensuring we are able to keep up with the extremely strong demand which has resulted in our record order book value.”

Stewart Milne Group
Stewart Milne Group chief executive Stuart MacGregor.

SMTS reported turnover of £65m for 2019-20, down from a like-for-like 12 month comparison of £95m in 2019, as a direct result of the shut-down of sites and factories during lockdown.

Stewart Milne Homes saw turnover fall to £204m, with the suspension of construction resulting in fewer completions and sales – down from 1,067 to 836.