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Tulloch turns a £6m loss into £2m profits

INVERNESS-based Tulloch Homes has overseen a major turnaround in its commercial fortunes after turning a pre-exceptional £6 million loss into a £2m profit before one-off items in its latest financial year.

The housebuilder produced its best sales in six years as underlying turnover rose 5.2% to £44.7m in the year to June 30.

It cited efforts to restructure its cost base, improved economic sentiment and more favourable mortgage conditions, as factors behind the recovery. Revenues were driven by improved sales in its key Highland market, which centres on Inverness and the surrounding area.

The company built 175 new homes over the period, achieving an average price of £200,000 per unit. Tulloch builds a broad range of homes, from one-bedroom starters to five-bedroom executive homes, with one to four-bedroom homes generating the bulk of its sales.

Growing turnover led the company to increase its headcount by 20 staff to 150 over the year. The hires were the first made by Tulloch in five years, with the company previously shedding staff as it scaled down operations in light of the recession.

Those efforts, which significantly reduced Tulloch's housebuilding capacity, were designed to allow the firm to produce operating profits based on the construction of a smaller volume of homes. It also saw the company retrench from commercial property investment.

The company had also extended its 2012 financial year by six months to take into account adjustments arising from a financial restructuring.

Finance director Sandy Grant said: "Over the past couple of years we have done a lot of work to reshape the cost base of the business and get our overheads in line with the volumes we are currently doing. That, aligned with a recovery in the marketplace, has meant we have been able to deliver a profit this year."

Tulloch, which saw Lloyds Banking Group sell its 40% share in the business to a private equity venture between Goldman Sachs and Texas Pacific Group in April, said the launch of Help to Buy in Scotland came too late to have an impact on its most recent results.

However Mr Grant said the shared equity scheme had since proved to be "very successful" for Tulloch, and predicted the year ahead would be "one of the strongest years we have had for a good period of time".

He noted signs of market improvement had been evident since the summer, when greater mortgage availability, including the return of 95% loan to value ratios, and a brighter economic outlook had buoyed confidence. Mr Grant highlighted Tulloch's optimism over its current financial year. Noting house prices in Inverness had rebounded to pre-recession levels - albeit prices had not fallen as steeply as in other parts of the UK - he said Tulloch was looking to begin housebuilding activity in two central belt sites it previously "parked up".

The company is also returning to Aberdeen with a development on Duff Street and the acquisition of a further site in the city.

Tulloch hopes to build 200 new homes this year and has signalled its intention to grow by acquiring a site in Inverness, with room for 350 houses, since year-end. Meanwhile, Mr Grant praised the contribution made to Tulloch by non-executive director Ian Bankier, who is stepping down from the board after 18 years.

Mr Bankier is the co-owner and chairman of The Whisky Shop chain and chairman of Celtic FC.

Mr Grant said: "As a board we were all extremely disappointed in Ian's decision because, particularly over the past few years, he has offered superb counsel in what have been some very difficult times. But we understand he has got other priorities now and [with] the business being in a much stronger place, he probably feels it's the right time."

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