Tulloch profits in challenging housing market
18th June 2008
--- Annual results of Scottish housebuilder show total operating profits up nearly £10million in 2007 ---
--- Turnover on continuing operations up 10% to £94.2m last year ---
Scottish housebuilder Tulloch Homes Group has shown its resilience in a weakening housing market in the second half of 2007 after announcing operating profits have increased by £9.5m in 2007.
In its 2007 Annual Report and Strategic Review, which will be published today (Monday, June 16, 2008), the Group revealed total operating profits have risen in 2007 to £15.85m from £6.235, a figure which included exceptional costs on the sale of the Group's construction business to Rok plc, in 2006 (total operating profits in 2005 were £12.5 million).
This rise was realised through increased sales − Group turnover on continuing operations for last year up to £94.2m from £85m in 2006 − and the sale of a site in Melrose, in the Scottish Borders, to Persimmon plc.
In the year ended December 31, 2007, pre-tax profits for the Inverness-headquartered Group – in which Bank of Scotland Corporate's Joint Ventures business recently acquired a 40 per cent stake – reduced to £10.753 m from £32.513m 2006. However, the figure for pre-tax profits in 2006 included a £27m net gain from the disposal of the Group's construction business to Rok plc.
Chairman and chief executive David Sutherland said: "The Group has delivered a first-class set of results for 2007, increasing the underlying profitability of the business. This has been achieved against a backdrop of a challenging housing market in the UK but one in which we have nonetheless continued to sell well.
"Given the turmoil in the housing market primarily south of the Border the Group's focus going forward will be on preserving our land bank − which at current volumes stands at five years − and driving sales across all our sites in Scotland.
"We are concentrating on marrying our construction and sales curves to ensure our stock carrying element is not too heavy as we move forward in current market conditions. We have no plans for any acquisitions in the near future."
Directors' salaries in 2007 have been reduced. Sutherland was the highest paid director with a salary, including bonuses, of £1.497m compared to £4.82m in 2006.
In 2007, Tulloch Homes Group made three acquisitions – Castleglen Properties Ltd, Aviemore & Highland Developments Ltd and Cameron & Paterson Holdings Ltd – providing a strong landbank in the north of Scotland.
In April last year, the Group, in conjunction with Scottish Sustainable Homes Ltd, secured a £20m contract to provide energy efficient pre-built homes in the Highlands using Scottish timber. The contract was awarded by the Highland Housing Alliance. This venture seeks to fast-track the building of affordable, energy efficient houses across the Highlands and Islands and the product is now on the last lap of its regulatory journey with topside development imminent across the Highlands.
Sutherland said: "In 2007 we have continued to invest in the key elements of the business, both through buying land in the open market and through business acquisitions − a strategy which we believe is laying solid foundations for the future."
During 2007, the Group underwent a reorganisation. Tulloch Homes Group was formed after Tulloch Ltd merged with Inverness Holdings, a move that saw Sutherland's shareholding rise from 56.66 per cent to 73.09 per cent.
However, in December 2007 Sutherland announced he had opted not to go for an AIM flotation as a result of uncertainty in global stock markets.
Instead, the Group opted for an equity partnership with Bank of Scotland’s Corporate JV section acquiring a 40 per cent stake in a deal worth £27.5m in April 2008. Sutherland remains the major shareholder with a 43 per cent stake in the business.
However, to maintain an efficient operation across the Group in the face of tougher market conditions, it was announced in May this year that its 250-strong workforce has been reduced by 18.
Sutherland said: "In May we took the extremely difficult decision to make 11 staff in our Inverness office and seven staff in our Glasgow office redundant. This move was taken to ensure we are operating in the most efficient way possible to maintain our position.
"None of the Group's sites with products to sell are downsizing and we are continuing to release new sites with a belief that, in terms of the economic cycle, house building is a vital ingredient to local economies and our customers always look for quality product in the area in which they live."
Tulloch Homes Group is working on housing developments across the Highlands and the North of Scotland in general. Sites at Lumphanan, Insch, Strachan near Banchory and Rothienorman near Inverurie are all being worked through our Grampian division and in Inverness we have vibrant activity at Slackbuie, Castlehill, Lochardil Wood, Milton of Leys and Castle Park.
In addition to the city-focused opportunities Tulloch are also building in Aviemore, Dornoch, Brora, Dingwall and on the Black Isle area just outside Inverness. In the Central Belt the Group is active in Cambuslang, East Kilbride, Hamilton, Falkirk, East Lothian and Fife.
The Group is also part of the consortium which recently won preferred bidder status for the Fort William Waterfront development, which will be a mix of housing, leisure and office accommodation.
In addition, the business has acquired a 50 per cent stake in Morston Tulloch Developments which owns the Upper Bridge Street retail scheme in Inverness. This redevelopment will not only visually improve the area adjacent to Inverness Castle and other impressive buildings but it will provide first class accommodation for the current tenants, Highlands and Islands Enterprise and the Crofters Commission.
Tulloch Homes Group comprises three principal brands: Tulloch Homes Express, Tulloch Homes and Argyll Homes.
Tulloch Homes Express continues to work closely with Scotland’s major housing associations to provide affordable housing across the country.
Tulloch Homes has a 25 per cent stake in Inverness Estates Ltd which owns a significant landbank across the A96 corridor, just outside Inverness, which is now scheduled for planning and development over the next three to five years. Inverness Estates Ltd also owns substantial land holdings between Milton of Leys and Culduthel in the Inverness area.
SDG Tulloch Homes Ltd, a joint venture with Scarborough Property Group, also completed its John Street development in Glasgow in 2007. In addition, the joint venture's Glebe Street site in the Centre of Inverness is currently the subject of an approach from a hotel group to develop the area and a planning application has now been lodged.
Outside Scotland, the Group's Argyll Homes brand linked up with Fairbriar and CDC Developments to redevelop Islington’s Collins Theatre to provide high-quality flats, offices and shops around the theatre shell. This project has now been put on the market having been completed on budget by the contractor.
Argyll Homes (South) Ltd is also trading in its own right in the London area and the Group has enhanced its joint venture with Stephen Brazier called Argyll Developments Ltd based in Beaconsfield by transferring some of the Argyll Homes South Ltd sites into this vehicle in villages such as such as Beaconsfield, Amersham, Lingfield, Epsom and Gerrards Cross.
Ends
Issued by Weber Shandwick on behalf of Tulloch Homes Group
For further information please contact David Sawyer on 07770 886923 / 0141 333 0557 or Nic White on 07770 886908 / 0141 333 0557 dsawyer@webershandwick.com / nwhite@webershandwick.com
Press pics of houses/developments and David Sutherland / interviews with David Sutherland available. Call David Sawyer or Nic White.