The Edinburgh-based firm, which bought English peer Banner Homes for an estimated £200m a year ago, said yesterday that trading during the eight months to 28 February had been stronger than hoped thanks to improved availability of mortgages at record low interest rates.
Turnover in its last financial year that ended in June came in at £294.2m, and chief executive Alan Brown told The Scotsman: “We’re going to be north of £500m this year and growing beyond that into next year.”
Cala’s profits, which more than doubled to £27.3m last year, are also on course to reach a new record, he added.
Average selling prices over the past eight months jumped 27 per cent to £537,000 and the group is already 90 per cent sold for the current financial year.
Brown said the increase in prices was mainly the result of a greater proportion of sales coming from the south-east of England, “where selling prices per square foot are significantly higher” than in Scotland.
He added: “We’re seeing sales price inflation of roughly 4 per cent, which is pretty consistent around all of our operating areas.
“In the Central Belt, the market is operating as effectively as our south-east England regions. Aberdeen is a little quieter, but it’s not anything that we’re concerned about. Obviously the reduction in the oil price is causing some angst, but it’s nothing major at all and we’re still selling at our target rates.”
Brown said that 2014 had witnessed an increase in the cost of providing subcontractor labour, “but that seems to have stabilised a bit recently” as people who left the industry at the height of the downturn in 2008-9 return to the sector and builders invest more in apprenticeships. He also insisted that the looming changes to stamp duty – which will be replaced by the land and buildings transaction tax (LBTT) in Scotland next month – have had “no negative impact” on buying patterns.
Cala’s average selling price in Scotland is about £400,000, which would incur an LBTT bill of £13,350 under the new regime. That compares with a stamp duty land tax charge of £10,000 that would apply south of the Border.
The acquisition of Banner, which has now been rebranded as Cala, led to about five redundancies out of a workforce of 200, but Brown insisted the aim of the deal had not to been to squeeze out as many costs as possible.
“Our goal was to build on that management team and get operational efficiencies by being bigger,” he said.
“It’s almost a year to the day since we acquired Banner and that business is now fully integrated into Cala as a whole. We now have eight Cala businesses operating in the more affluent areas of the UK.”
Two years ago, Cala itself was acquired by insurer Legal & General and private equity firm Patron in a deal that valued the builder at £210m, prompting speculation about a return to the stock market for the business, which began life in 1875 as the City of Aberdeen Land Association and was the first Scottish company to list in London.
Brown said an initial public offering was one option being considered by the firm and its backers, but there are no concrete plans for a float.
“Patron and Legal & General invested in this business, like all shareholders do, to make a reasonable return out of it,” he said. “We’re just concentrating on our growth – getting to £500m and beyond in the next year or two is quite hard work but it’s going successfully at the moment.”
SUBSCRIBE TO THE SCOTSMAN’S BUSINESS BRIEFING