Scottish housebuilder Cala has scaled up its expansion targets, pledging to triple the size of its business following the March acquisition of upmarket brand Banner Homes.
The Edinburgh-based firm cast aside plans revealed in October to double by 2017 through organic growth, as it announced even greater ambitions over a shorter period of time.
CEO Alan Brown said the faster-than-anticipated integration of Home Counties and south east of England-focused Banner had helped it improve average selling prices and boost margins, and would see a three-fold boost to revenues by 2016.
The group revealed a 22% rise in turnover to £293 million during what it called a “transformational” 12-month period to the end of June, including a “strong three-month contribution” from the new acquisition.
Margins grew to 23%, generating a “significant” increase in profits, while the average sale price climbed 24% to £415,000. Cala did not disclose the value of its purchase, but net bank debt rose by just above £100m to £143.1m.
Mr Brown said the company had entered the new financial year in a “very strong position”.
“In October 2013 we announced plans to double the size of the business through organic growth by 2017,” he said.
“But, with the Banner integration significantly advanced and the group delivering well against our stated strategy, we are now confident we can almost treble in size, significantly ahead of our targets, in just two years.”
He said Cala was “well-financed” following its own acquisition by Patron Capital and Legal & General in 2013, with a five-year, £300m revolving credit and loan facility providing the headroom necessary to capitalise on opportunities and deliver on growth plans.
“As a result we have been able to make selective acquisitions within the land market during the period, mainly of larger sites in the south east of England, in order to support our growth plans in the region,” added Mr Brown.
“We are acquiring land at above hurdle rates in premium Cala locations and continue to see many good opportunities to increase our land bank further, despite the more competitive environment,” he added.
“Overall, I am very pleased with how Cala has performed over the past year and am confident about the ability of the enlarged business to build on this momentum going forward.”
The value of forward sales at the year-end more than doubled on the previous June to £166m, equivalent to 34% of planned private housing revenue for the present year.
The company which regards the east of Scotland as a key growth area, has plans for hundreds of new houses in Kirkcaldy, and views other areas of Fife as possible locations said the figure was an “optimal balance” between forward sales visibility and continued exposure to rising house prices.
“The wider recovery in the housing market, which properly took hold during the second quarter of 2013, has continued strongly into this financial year with increased access to mortgage finance and a more encouraging outlook for the UK economy translating into improved buyer confidence,” the company said.
“Combined with a relatively tight housing supply, this has served to drive higher sales prices which Cala is now seeing in all of its operating regions, albeit at sustainable levels.”