CALA, the Scottish housebuilder, has revealed its highest profits since the group was taken private in 1999.
The company has benefited from a major restructuring and a focus on the premium end of the market to record a sharp rise in annual pre-tax profits from £2 million to £11.4m.
In spite of continuing difficulties in the housing market it said the outlook was positive, largely because it had positioned itself at the higher-priced end of the sector where home-buyers had fewer problems acquiring mortgages.
The company said it was also focused on more affluent areas of the UK, such as Aberdeen and Edinburgh, the Cotswolds and the Home Counties, enabling it to outperform management’s expectations.
Sales prices have remained relatively stable in these areas, with operations in the south-east of England and the east of Scotland proving to be particularly robust.
Cala said the housing market faced “notable headwinds” but it had entered the current financial year in “good shape”. As at 1 July, the group had 172 advanced private home sales against 147 for the same time last year.
As the first of the big housebuilders to announce full-year results, ahead of Barratt, Galliford Try and Redrow, Cala’s progress should give an indication of what is to come from others in the sector over the next two weeks.
Alan Brown, Cala chief executive, said: “Cala has delivered an excellent performance during 2012 with our highest profits since the group was taken private in 1999, improved gross margins and made excellent progress in developing the length and quality of our land bank. The group envisages further growth across the business.”
He added: “The company went through a restructuring in 2009 and that put us in a better debt position. It allowed us to reinvest in the business in the last three years.”
He was particularly pleased with the levels of customer satisfaction and the construction group’s record on health and safety.
A pre-tax loss of £266m in 2009 led to the restructuring and refinancing of the group. Brown stepped up from managing director into his current role to lead the changes, under which a third of the workforce was laid off.
It closed a couple of divisions and moved out of the lower-priced segment of the housing market, reducing its exposure to smaller apartment building.
Last year was its first profit since 2007 and last December it extended its debt facility with Lloyds Banking Group with a new loan of £180m that will take it through to December 2014.
Its turnaround includes the benefits of acquiring cheap land during the downturn, for future development.
Progress has been made on developing the length and quality of its land bank, which currently stands at 9,600 owned and contracted plots with a potential value of £3 billion.
The company acquired 31 sites during the year in prime locations and expects to build 1,397 homes with an estimated value of £473m.
It completed 875 homes during the year to the end of June, against 649 last year, a rise of 35 per cent.
Total group revenue rose from £215.4m to £253.7m. Net debt fell from £116.1m to £98.4m.
The company said it was continuing to discuss the sale of the vacant former Donaldson’s College in Edinburgh with interested parties and hoped it would have a deal in place within six months. There has been interest from hotel and residential companies.