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09 September 2004
The Herald
Stewart Milne looks south as it builds on record year

STEWART Milne expects his construction and timber frame business to acquire its first plot of housebuilding land in England within the next few weeks, as he aims to capitalise on another bumper trading year.
The firm yesterday announced record pre-tax profits of 17m for the 12 months to June 30, a 21% increase on 2003 and the eighth consecutive year of continuous earnings growth.
Turnover increased 7% to 189m, consolidating the Aberdeen-based company's position as one of Scotland's biggest privately owned businesses. Earnings before interest and tax were 20% higher, at 20m.
Milne, chairman and chief executive, said: "We have produced another excellent performance. Our profits are double the level produced two years ago and have increased substantially above the turn-over growth we have achieved.
"While market conditions have been favourable, with increasing house prices being achieved, land prices have been rising even faster and that has also impacted on the trading performance."
Glenn Allison, group managing director, said the com-pany continues to invest in its land bank, which comprises more than 5000 plots north of the border. Milne anticipates growing its Scottish housebuilding operation by 30% during the next three years, while the group as a whole expects to double turnover and more than double profits within five to six years.
Those ambitious targets will depend on successful penetrat-ion of the highly competitive housebuilding market south of the border, into which Milne will begin expanding in 2005.
Allison added: "We have reached the stage of doing market research and investigation into areas (of England) we may be interested in. We are looking at land opportunities and although we have no land in England yet I would anticipate that we will have by the end of the year."
Milne already has a timber frame production facility near Oxford that will complement this growth strategy and has tentative plans to open a second plant in England.
However, Allison said the company is "keeping an open mind" on the "entry mechanism' for England, stating that it could come about through a straightforward land purchase, or acquisition, "or even a combination of the two".
Milne pointed out that housebuilders trade plots of land, adding that his company could swap part of its healthy Scottish holding to gain a substantial foothold in England.
Milne's general construction division meanwhile, which accounts for about 25% of turnover, has produced a "solid performance", he said.
Milne expects the softening in house prices to have some impact on the company by affecting people's confidence to buy new homes.
However, he said this is counterbalanced by a signific-ant gap between demand for housing and supply, an underprovision which he puts at 25% in Scotland.
 



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