CALA Group posts fourth year of record profits despite ‘challenging’ market
Revenues rose 15 per cent to £587.1 million and pre-tax profits rose 18 per cent to £60.1m as the group celebrated “significant” award wins during the course of the year.
CALA said the average selling price of its homes rose six per cent to £538,000 and home completions rose 16 per cent to 1,151 on a 45 per cent increase in net private reservations.
Operational improvements were achieved despite housing gross margin falling to 21.8 per cent, down from 23.5 per cent last year, which it blamed on “challenging market conditions in Aberdeen” and a slowdown in demand for homes priced at more than £1.25 million due to changes to Stamp Duty Land Tax.
The group stated: “Market conditions in Aberdeen, which accounts for only seven per cent of total sales, remained challenging during the year due to ongoing concerns related to the North Sea oil industry, although conditions have stabilised somewhat in recent months.
“Despite this challenging market backdrop, completions in the region increased year on year and, while the group remains alert to ongoing difficulties in this market, CALA’s longstanding experience of operating in the city, its strong landbank and operational flexibility mean the group remains well positioned to deal with any short-term uncertainty.”
CALA said 84 per cent of its contracted landbank now has planning consent or has been adopted in a local plan.
The group contracted 30 new sites in the year, projected to deliver 2,683 homes with an estimated gross development value of £1.0 billion. Headcount across the group rose 13 per cent in the year to 810.
Commenting on the results, Alan Brown, chief executive of CALA Group, said: “2016 has been another record year with profits topping £60m for the first time in the group’s history. Despite headwinds in some of our markets, we have continued to build on the strong momentum we have generated over recent years, once again delivering robust volume and revenue growth while still achieving incremental improvements in our return on capital employed.
“Our growth strategy remains to focus on driving operational efficiency improvements throughout the group as we continue scaling up our divisions. Alongside this, we continue to invest in building the size and capability of our teams, welcoming almost 100 additional members of staff to the business including our ongoing increase of apprenticeship and graduate recruitment initiatives across the group.
“In the 13 weeks since the EU referendum result, and although still early days, the group saw positive trading with total enquiry levels and reservation rates up 9 per cent and 46 per cent respectively while website users have also risen by 32 per cent on the equivalent period last year. Sales prices have also remained stable while cancellation rates have actually reduced slightly.
“Overall, we remain on course to deliver an annual capacity of 2,000 to 2,500 units within the next four years through delivering premium quality, well designed homes and communities in prime locations across the UK.”