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Help to Buy 'is having impact on Ogilvie'

GOVERNMENT Help to Buy schemes are unleashing demand from homebuyers at the same time as construction is at last becoming profitable, says Stirling-based Ogilvie Group.

ON TOP: Chief executive Duncan Ogilvie said the group had maintained a solid performance in tough conditions.
ON TOP: Chief executive Duncan Ogilvie said the group had maintained a solid performance in tough conditions.

Family-owned Ogilvie has weathered the downturn through its strong position in the fleet rental market, where it took advantage of a buoyant second-hand car market to boost profits more than 50% last year to £3.8 million.

But contracting and housebuilding were both under the cosh, according to the accounts of the year to June 30, with the £477,000 combined profit of 2011-12 reversing to a £281,000 loss. That included a £429,000 profit from its housebuilding joint venture with Stewart Milne in Stirling, down from the previous year's £977,000.

The group now expects to boost construction headcount by 10% in the new year as contracting turnover climbs from last year's £45m towards £60m, and margins recover. "I would see group profits rising by 15% to 20% without too much difficulty," finance director John Watson said.

"We are seeing very encouraging signs," he added. "There is no doubt that the Help to Buy scheme introduced by the Government rather belatedly has definitely had the impact the industry was looking for."

The Help to Buy (Scotland) shared equity scheme, where the Scottish Government takes up to 20% of the equity, was launched in September, five months after the English version. The all-UK Help to Buy mortgage guarantee scheme, covering banks to lend at 80% rather than 95% of value, was launched in October.

Mr Watson said: "We are seeing a marked increase in house sales, that will make a difference, and in contracting some public sector works are coming through and the private sector is starting to come out to play, with a few student residencies and leisure developments. Margins in construction are starting to increase - or rather there are now margins appearing."

He said the fleet business had benefited from the high prices paid in the second-hand market for its cars when sold on. "It has been exceptional, I don't think it will continue at that level," he said. "It is one of the pluses of having a diverse group... we have managed to get through."

The fleet size increased to 11,000 vehicles, ranking Ogilvie in the top 20 UK vehicle contract hire companies.

The accounts show Ogilvie maintained employment at 390 last year, as turnover rose from £160m to £173m, and pre-tax profit jumped 11% to £3m.

The group said Ogilvie Communications achieved a profitable performance in the IT and communications sector and anticipated further growth from a strategy of diversification along with new products and services, while Loy Surveys delivered a steady performance in a market now showing signs of recovery. Loys had opened an office in Milton Keynes and planned further expansion in England and Wales.

Chief executive and controlling shareholder Duncan Ogilvie said: "Once again, we have maintained a solid performance across the group, despite some challenging market conditions."

The group's asset-backed debt rose from £36m to £39m, but its bank debt is around £10m. The remuneration of the highest-paid director, assumed to be Mr Ogilvie, rose from £430,000 to £484,000.

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