Perth builder Stephen swung back into profit last year but has warned over the fragile recovery in the economy and its key markets.
The family firm, one of three groups committed to housebuilding in the early stages of the £2 billion Chapelton of Elsick development by Portlethen, intends to focus its efforts on the “buoyant” housing market in the north-east of Scotland as it seeks to ride out the continuing storm.
And it hopes September’s introduction of the Government-backed Help to Buy initiative in Scotland will help boost revenues during the current financial year.
Stephen said turnover during the 12 months to March was “in line” with the previous period at £9.4m, with a very similar number of homes sold.
But a nine percentage point increase in gross margin saw the group post a pre-tax profit of £95,491, comparing favourably with the previous year’s £850,000 loss.
“It is encouraging the group has returned to profitability and the board consider the result satisfactory given the ongoing wider economic challenges facing the sector,” managing director John Stephen said.
“We are hopeful that the recently introduced government Help to Buy initiative will help stimulate demand for our houses, but recovery currently remains fragile.
“The group continue to focus on long term growth and are pursuing opportunities in the north-east where demand for housing remains buoyant.”
The group’s directors’ report, approved by the Stephen board last month and lodged with Companies House, revealed the company was particularly hopeful over Help to Buy noting that a similar scheme was credited with prompting a 40% increase in volumes for national housebuilders following its launch in England.
The firm saw also self-help measures pay off during the year selling 16% of its properties through its own shared equity initiative.
“This coupled with other purchase assistance plans and incentive packages indicates how hard we are working to achieve each sale,” Stephen’s directors added.
Stephen said a better buying strategy had mitigated the impact of higher input prices and the introduction of new building standards which added around £7,000 to the cost of building an average family home.
A further “step-change” in costs is anticipated when a further raft of rules introduced this year come into force.
The company has already revealed it believes involvement in the 2,200-acre Elsick project, alongside two other housebuilders, has the potential to be a “very significant” driver of growth.