Upmarket homes sales lift CALA's operating profits

Deputy Business Editor

Monday 2 July 2012

CALA Group has revealed a "significant" improvement in operating profits, suggesting the top end of the housing market continues to perform well.

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Greig Cameron

In a trading update, the upmarket housebuilder said its average selling price increased from £328,000 to £339,000 during the 12 months to June 30, 2012.

The Edinburgh company confirmed that it has seen stable prices across its operations but added that the south-east of England and the east of Scotland have been the most resilient performers.

Completions went up 24% from 649 to 875, while reservations in the year showed a 23% improvement.Alan Brown, chief executive of CALA Group, said: "Despite what continues to be very challenging market conditions, the high quality of our homes, selection of prime locations and focus on being the industry leader in customer service have again assisted us in exceeding our sales and profits targets for the year."We currently have the highest average selling price of any housebuilder in the top 20 by volume, making us the most upmarket in the sector, yet we still achieved a 23% increase in our sales rate over the period." Gross margin rose from 14.8% to 16%, while the company also expects net debt to reduce more than anticipated from £116 million to £105m.CALA's landbank currently stands at more than 9000 plots, which have a potential value of £2.8 billion and enough to satisfy its plans for more than eight years.During the financial year 2279 plots were given planning allocation, while CALA also secured 30 new sites. These are projected to deliver 1280 houses with an estimated development value of £449m.Earlier this year CALA agreed a new £180m financing agreement with Lloyds Banking Group that will run until the end of 2014.Lloyds has a major stake in the business following a £280m debt-for-equity restructuring deal in 2009. Mr Brown, who became chief executive in 2009, said: "With a quality landbank, robust management processes and the extension of our funding arrangements in place, the outlook for the new financial year is positive."Forward private sales at the end of June stood at 160 homes, ahead of the 147 recorded in the previous year.Mr Brown said that the NewBuy incentive programme, which helps to offer 95% mortgages to first-time buyers in England, was helping get people on the property ladder, but he believes lenders must do more.He said: "We are confident that NewBuy is providing first-time buyers with an opportunity to get on to the property ladder at a time when other mortgage products simply don't enable them to do so. "However, lenders must be more realistic in the rates they offer if it is ever going to deliver on its volume potential."CALA currently has developments across Scotland including in Edinburgh, Glasgow, East Kilbride, Motherwell, Bishopbriggs, Larbert, Aberdeen and Dundee.For 2010/11, CALA posted a £2m pre-tax profit on turnover of £215m.That was the first time since 2007 the company had reported a profit, as it was one of the many property companies to suffer during the credit crunch.

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Upmarket homes sales lift CALA's operating profits

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