Oil downturn hits sales and forces Stewart Milne into red

The firm still made a £7.8 million pre-tax profit in its prior year but revealed that turnover had fallen to £209.3 million in the year to June 2016, from £241.4 million in the prior 12 months.

SMG described 2015/16 as “a year of transition” as it reported the plunge into the red with pre-tax losses of £26.1 million.

The firm, based in Westhill in the Granite City said it had seen a “reduction in the number of homes sold in north-east Scotland following the downturn in the oil and gas sector”.

Bank debt rose from £201 million to £227.7 million in the 12 months to June last year.

Stuart MacGregor, finance director of Stewart Milne Group, said: “In common with all housebuilders who operate in north-east Scotland, we have faced a very difficult period in the local market, where the downturn in the oil and gas sector has had a major impact on consumer confidence. We have responded to this by ensuring that we focus on providing quality family homes for which demand remains solid.”

The company noted it had taken a strategic decision to accelerate the growth in its long-established homes businesses in central Scotland and north-west England through increased investment in new sites.

It said a disposal of non-core assets, including non-residential properties and its historic shared-equity portfolio, had generated the cash to fund this increased investment. However, it noted it had made a loss on the sale of non-core assets.

In autumn 2016, the group secured a three-year, £185 million banking facility with Bank of Scotland.