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I&H Brown lifts profits after sale windfall

I&H Brown, the family-owned civil engineer and developer, lifted its pre-tax profit from £4.3 million to £5.9m last year and believes its substantial land assets will play into Scotland's housing market recovery.

SAFE MOVE: Scott Brown said the £1.5m Breckenbridge Estates deal was a conservative move. Picture: Julie Howden

The sale of two farms near ­Kirkcaldy for Diageo's new £46m bonded warehouse complex sparked a £5.4m windfall gain for the company last year.

But in Dunfermline, the Perth-based business says it is making "significant progress", with a major proposal which would include 1000 homes in a comprehensive mixed-use development.

Allan Miller, the company's development director who joined I&H Brown from Taylor Wimpey three years ago, said: "Across several prominent sites, the company now has a very ­significant bank of housing plots which are consented or which have an established and strong planning position."

The portfolio also includes the former ABB industrial site at Dundee and the historic Banknock brickworks site near Falkirk, both of which have been extensively remediated by Brown as longer-term investments.

Mr Miller added: "The company is well-placed to capitalise on this position as the housing market makes a recovery, and new opportunities for further land and ­property development continue to be sought."

I&H Brown, which celebrates its 50th anniversary this year, used part of the Diageo proceeds for the acquisition of a residential letting company in the golfing heartland of Berkshire, where the group already has some properties.

Managing director Scott Brown said the £1.5m deal to buy Breckenbridge Estates represented a "safe haven for the cash we have earned".

He added: "It is a sort of conservative strategy investing in some safer assets to sit alongside our development business."

Mr Brown said investing in the southern property market offered an income stream plus the prospects of capital growth, "particularly in the light of the statistics coming out on house price growth", and it bettered the returns offered by the banks.

I&H Brown was one of the ­Scottish companies affected by the banking crash, writing down over £1m of RBS and Lloyds shares in 2010.

The Perth-based business has returned to healthy profit after battling losses on a major civil engineering contract for the M80 (Stepps to Haggs), a project which won the industry's Saltire Award last year.

As a sub-contractor for the main consortium, which was led by Bilfinger Berger, it had pursued the consortium for up to £5m but then settled the case "amicably" in 2012.

The group was also embroiled in a long-running environmental battle over its wind farm at ­Calliacher in Perthshire, which it sold to neighbour SSE for £5.1m in 2011.

The wind farm is now operational, and I&H Brown has applied to extend it, adding seven turbines to the existing 14, with the likelihood of interest from SSE.

Mr Brown said that he was pleased that the proposal had the support of the local community council.

But he added: "We are not actively pursuing other (wind farm) developments at the present time - we would be nervous about grid capacity and planning prospect, and it's a long lead-in time, probably two to three years."

The group however hoped for more work from the offshore renewable sector, he said, following its £4m upgrade of docks on Merseyside for German utility RWE's wind turbine business.

It had also completed a project for Siemens at Hunterston.

Mr Brown said that civil engineering margins were still thin and had not improved, but the mix of the business would remain much the same.

He added: "We are keen to see some of the property development investment paying off."

Mr Brown said: "We are delighted with the results of the year in that it serves to strengthen our balance sheet, because we tend to retain much of the profit that is earned when we get a good year."

There was, however, a £519,840 dividend last year (nil in 2012) including £250,000 to Mr Brown, though the highest paid director's remuneration fell from £298,322 to £217,756.

Average monthly employment eased from 156 to 149.

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