English expansion beckons
Mactaggart & Mickel turns sights southwards
Two sites have been identified in the south of England and the company says there are more to follow.
Unveiling a 7.1% rise in group profit before tax to £10.4 million (2015: £9.8m) chief executive Ed Monaghan said: “This financial year marked the last in our five year plan which advocated a consistent, medium term approach and sustained focus on improving efficiencies across the Group.
“It has delivered steady growth, consolidated by this year’s significant upturn in profit.”
Turnover was down 4.2% to £65.1 million (2015: £68m in the year to the end of April 2016.
The flagship homes division posted a strong performance against a background of market uncertainty and changes to the Land and Buildings Transaction Tax.
Decreased borrowings, the extraction of greater value from sites and increased efficiencies further boosted profit margins.
“We now move into a new phase for the business as we develop our operations not only in Scotland, but in England,” said Mr Monaghan.
“We have chosen two sites in the south of England for development by our Homes division, with more to follow. This marks a major milestone for the business, and helps fulfil our long term ambition to expand, taking advantage of wider opportunities for growth.
“We will continue to nurture our Scottish interests and remain firmly committed to growing our presence across Scotland; an intention crystallised by the signing of a new 10 year lease on our Glasgow-based headquarters.
“Diversification remains a priority as we embrace new technology, products and markets. With a strong land bank and clear strategic focus, we are well placed to deliver future business growth.”
Operational highlights include:
- Homes – The division delivered a robust performance, increasing turnover to £55m (2015: £48.5m) and profit to £13.7m (2015: £11.6m) with 169 units sold (+15% on 2015). Six new developments were launched in Midlothian, Uplawmoor, Newton Mearns, Howwood and Edinburgh, and three new house types brought to market.
- Timber Systems – Capital investment has delivered growth, with turnover increasing to £6.3m (2015: £5.4m) and profits breaking the £1m mark (2015: £0.8m). Operating capacity of the factory has doubled and the development of a new industry-leading web joist has created efficiencies and bolstered external revenue streams.
- Contracts – A change in focus in the year to concentrate on maximising value from Group-owned sites and the completion of the Commonwealth Games Athletes’ Village retrofit resulted in a reduction in income with turnover of £2.6m (2015: £10.4m) and profit of £0.4m (2015: £3.3m). This year the division worked for the first time with charity Houses for Heroes on three sites, rehoming 15 veterans. Going forward, we see clear opportunities to expand this division, given the Scottish Government’s intention to build 50,000 RSL homes over the next 5 years
- Commercial Property – Turnover remained consistent at £2.5m (2015: £2.5m). The sale of two retail developments impacted rental performance with a slight drop in profit to £0.5m (2015: £0.7m), while bringing in cash of £2m. Proposals are underway for retail sites in Symington and Gilmerton, equipping the division for future growth.
- Lettings – The Group entered the London private rental market, purchasing its first properties in the capital, an area we will see expand in the years to come; 15 flats in the south east of the city. Income remained steady at £3.3m (2015: £3.4m) returning profits of £2.3m (2015: £2.4m).
- Strategic Land – The Group’s English Strategic Land division moved into its next phase with two sites allocated for development by its Homes division. This marks the first time the company has built south of the border, an action set out in the five year plan in 2011. Profits from its first English land sale amounted to £0.6m.
The group’s Homes business secured a 5 Star Rating for the fourth consecutive year in the Home Builders Federation customer satisfaction scheme, one of only 14 housebuilders in the UK.
The company was awarded Investors in People accreditation in 2008, progressing to Gold in the financial year, an achievement accomplished by only 13.3% of UK companies. It has also achieved Investors in Young People status.
Eleven apprentices were recruited and the company sponsored triple Paralympic medallist swimmer Andrew Mullen and Scottish Open Water Swimming champion Mark Deans.