Stewart Milne Group (SMG) is back up for sale and bosses have reported a “serious level of interest” in the housebuilder.
A deal is expected to be announced within a few months, they said.
The news comes alongside SMG’s best annual profits performance for almost a decade.
A gain arising from the sale of a £100 million turnover timber systems business in December 2021 and “significant efficiencies” have driven pre-tax profits to a level not seen for more than seven years, the company said.
Chief executive Stuart MacGregor and chief financial officer Fraser Park told The Press and Journal the group’s new homes in Scotland and north-west England were selling well.
Multimillionaire’s retirement on hold
SMG owner and chairman Stewart Milne, 73, put the business up for sale more than a year ago. His luxury mansion in Bieldside, Aberdeen, also went on the market, with a £7.5m price tag.
The multimillionaire entrepreneur has been seeking a buyer for his house all this time.
But housing market and wider economic woes put the brakes on the sale process for SMG, as well as Mr Milne’s retirement plans, late last year.
Market conditions have now improved to the point where SMG is speaking to suitors again.
Mr MacGregor declined to say how much the business may fetch, saying it was “commercially sensitive”.
He added: “There has been strong interest. We are hoping to make an announcement in the next few months. We’re still in negotiations but there is a serious level of interest.”
Firm is currently building on multiple sites on both sides of Scottish border
Current projects for SMG include Charleston in Aberdeen, Dunnotar Park in Stonehaven, Silver Birches in Alford, Monarch’s Rise in Arbroath, Ballumbie Rise in Dundee and Hunter’s Meadow in Auchterarder.
The company, based in Westhill, near Aberdeen, also has live developments in the central belt and north-west England.
Accounts for the year to October 31 2022 show pre-tax profits of £16.5 million from continuing operations. It comes after losses totalling £13.1m in the 2020-21 trading year.
SMG said its reduced spend on land in the previous two years – due to Covid-19 – led to the number of new homes built falling to 583 in the latest period, from 828 a year ago.
This impacted 2021-22 turnover, which fell by £48.7m to £172.4m over the year, while operating profits before exceptional items were £1.4m lower at £7.1m, the firm added.
But operating profit margins before one-offs improved from 3.9% to 4.1%.
Mr Park said this reflected “steps taken to reduce the group’s cost base and deliver cross functional efficiencies”, including SMG’s 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.
SMG’s CFO added: “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.
‘Unprecedented demand’
“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.”
Mr MacGregor said confidence had returned to the sector since the uncertainty created by last autumn’s mini-Budget, when the short-lived Liz Truss government at Westminster created havoc in financial markets.
“The UK housing market has rebounded to more normal activity levels, with robust house prices and demand,” SMG’s boss added.