Milne kickstarts stalled talks to sell company
Stewart Milne Group has resumed its search for a buyer and has already attracted attention from “seriously interested parties”.
The Aberdeen-based home builder was put up for sale last year after its eponymous founder announced his retirement, but it was taken off the market after the political turmoil at the end of the year.
Despite pressures on home buyers resulting from higher interest rates this year, Milne claims there is a more positive UK housing market which presents “highly encouraging” prospects for the group.
Stuart MacGregor, group chief executive, said: “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.”
The decision to go back to the market follows publication of annual results to 31 October 2022 which showed turnover on continued operations fell to £172.4m from £221.1m while operating profit before exceptional items was also down to £7.1m from £8.5m.
However, the gain arising from the sale of its timber systems business in December 2021 and significant efficiencies drove pre-tax profits to £16.5m, a level not seen for more than seven years and a turnaround from a loss of £13.1m in the previous year.
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.
Fraser Park, chief financial officer, said: “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.
“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.”
Development applications fall
New planning application statistics have been described as “shocking” by sector body Homes for Scotland (HFS).
The figures reveal a staggering 46% drop in the volume of applications for major housing developments for 2022/23 compared to 2019/20.
Despite this significant drop in the volume of applications, average decision times remain above pre-Covid levels at 39.3 weeks, nearly two and a half times the 16 week statutory timeframe for such applications.
HFS director of planning Liz Hamilton said: “In the context of Scotland’s housing crisis and the shortfall of 114,000 new homes that has accumulated since 2008, these shocking figures illustrate how much worse the situation is becoming.
“The Scottish Government must get Scotland’s planning system sorted if we are to ensure this and future generations are able to access safe and sustainable homes that meet their needs and they can afford.”