One of the north-east’s best-known entrepreneurs, Stewart Milne, has announced his retirement and kick-started a sale of his housebuilding empire.
The Aberdeenshire-born multimillionaire plans to spend more time with family and friends, splitting his time in homes in Aberdeen, Perthshire, Turkey and Florida.
The unprecedented events of the last two years have forced many to re-evaluate and, after considerable soul-searching, I have decided that the time is right to step back from the business I founded to prioritise my time for family, friends and other ventures I want to pursue.”
Stewart Milne Homes (SMH) – based in Westhill, near Aberdeen – is expected to attract interest from national housebuilders, with any sale delivering a bumper retirement boost for its principal shareholder.
It is nearly 50 years since Mr Milne founded Stewart Milne Construction, which had
just 30 employees and turnover of £1 million in its first year.
Mr Milne, 71, will remain on the board at Aberdeen Football Club, where he was chairman for 21 years before stepping down from that role in December 2019.
Current Aberdeen FC chairman Dave Cormack said: “Stewart has devoted over five decades to building Stewart Milne Group into a leading independent player in one of the most volatile and fiercely competitive sectors.
“I fully understand his desire to take a step back and enjoy more quality time with family and friends but am pleased he will remain on Aberdeen FC’s board for the time being.”
Challenging times for housebuilder
Last August, SMG announced pre-tax losses of £71.5m and turnover of £269.7m for the Covid-impacted year to October 31 2020, when operations stopped for four months during the first pandemic lockdown.
Pre-tax profits and turnover for July 2018 to October 2019, before the group transitioned to a new financial calendar, came in at £48.5m and £379m respectively.
Performance during the latest period was affected by the revaluation of land acquired prior to the 2008 global financial crisis and before the oil and gas downturn in 2015.
Aside from the impacts of Covid, SMG has suffered a string of other challenges in recent years.
Last year, its flagship housing project, the £800m Countesswells scheme in the west of Aberdeen, was rocked by developer Countesswells Development Limited (CDL) – a wholly-owned subsidiary of SMG – collapsing into administration.
CDL’s directors blamed disruption caused by the oil and gas downturn, as well as the Covid-19 pandemic.
Timber frame business sold
In December the company announced it had sold its house kit business, Stewart Milne Timber Systems, turning over £100m annually, to Fife-based timber giant James Donaldson & Sons for an undisclosed sum.
SMG chief executive Stuart MacGregor said the sale of SMTS allowed the group to strengthen investment in its “thriving” homes business, targeting demand across Scotland and north-west England.
It came on the back of record sales at SMH, which has benefited from the release of pent-up demand for house moves as coronavirus restrictions eased.
SMG’s board now aims to capitalise on a continuing strong performance a SMH amid favourable market conditions as it seeks a new owner to replace the company’s founder.
Mr Milne said like many during the pandemic he’d thought about what was important to him.
He said: “The unprecedented events of the last two years have forced many to re-evaluate and, after considerable soul-searching, I have decided that the time is right to step back from the business I founded to prioritise my time for family, friends and other ventures I want to pursue.
“In the last 18 months, we’ve significantly strengthened the business with major efficiencies and our new homes range.
“We are superbly placed to capitalise on the favourable market conditions and demand which are set to continue in the near-term.”
SMG expecting higher profits
Accounts for the year to October 2021 are expected to show a dramatic increase in turnover and profits, driven by action to boost profitability as well as high demand for family homes.
But SMG has warned “significant investment” is needed to realise its growth ambitions for SMH, particularly in relation to its strategic land bank, in order to create future, high-margin development opportunities.
The company said it carefully considered all options with its advisers and “came to the unanimous conclusion” to investigate a potential sale.
Professional services giant EY has been appointed as financial adviser to the group in this process.
Mr MacGregor said: “We anticipate attracting a high level of interest from potential buyers who will invest in order to capitalise on the strength of our business and the buoyancy of the current homes market.
“We have one of the strongest sales pipelines in our history and anticipate generating significant sales over the next two years.
“With a strategic bank of land, award-winning developments, our new homes range and recently completed investments in new IT systems and in digital transformation, Stewart Milne Group presents a compelling proposition.”
SMG’s chief executive added: “However, with land prices rising, more investment is needed to take advantage of our unrivalled land-buying experience and the development opportunities available.”
SMG has offices in Westhill, Edinburgh, Glasgow and Manchester and a 1,000-strong workforce, including sub-contractors.
About 20 housing developments are currently at various stages across Scotland and north-west England.