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Stewart Milne Group Announcement Wednesday 10th Sept 08

Stewart Milne Group today announced a solid trading performance for the year to June 2008. This was achieved despite the considerable impact of the “credit crunch” on the housing market.

The Group have reported Operating Profits of £42m for the year to June 2008, a reduction of 20% from the 2007 figure of £52m. The pre-tax profit for the year was £25m, a reduction of 40% from the 2007 figure of £42m. Turnover for 2007/8 was reported at £420m, compared to £348m in 2006/7, an increase of 21%.

Glenn Allison, Group Managing Director, said: “In the difficult trading conditions we faced during the year a 20% reduction in our Operating Profit is a relatively good performance overall. Our pre-tax profit of £25m – a reduction of 40% from last year – was impacted by an increase in interest charges arising from the acquisition we made and reported in the summer of last year.”

In common with the rest of the housing industry, the Group has had to contend with trading conditions, which deteriorated through the year and were particularly severe in their impact in the period from January to June 2008. However, the Group firmly believe that the underlying demand for housing remains strong and will increase with wider Government action.

Chairman & Chief Executive, Stewart Milne, said: “No-one is immune to the current market challenges in the housebuilding sector. There is a lack of confidence with potential house buyers and this combined with a lack of liquidity in the market place has stopped many people from buying new homes.

We understand our customers’ anxieties and have put together a range of packages/measures that deal with the problems that they are facing.

We have recently launched a competitive mortgage package and a Home Value Guarantee to new customers, that protects the value of their new home if they wish to sell in a 3-6 year period. We will pay back any shortfall.

We have a strong belief in our product and these initiatives demonstrate our confidence in the longer term view of the sector.”

The Group has confirmed that it has made 278 of its employees redundant. This was slightly less than the potential redundancies announced in July, with the majority of those taking advantage of enhanced voluntary packages.

Allison commented: “The consultancy process resulted in less people than originally projected being made redundant.

We have taken these measures to ensure we operate effectively in the current market conditions. Lower consumer confidence has resulted in a decline in house sales.”

The Stewart Milne Group comprises four main operating areas: Housebuilding, Timber Systems, Commercial Developments & Construction.

Despite difficulties in the market the Homes Division still produced a turnover of £228m, Timber Systems £86m and Commercial Property £46m but the star performer has been the Construction Division which has increased turnover by £47m to hit £78m.

Milne commented: “The Construction Division has again delivered a good performance largely created by the excellent management team we have there and their ability to work with their clients in an effective partnership.”

Stewart Milne Construction has recently won contracts with First Group to build their new headquarters in Aberdeen and with Unite to build student accommodation in Edinburgh. They are also working with Northburn Developments to construct a new retail park in Inverurie.

An underlying strength of Stewart Milne Group has been long term strategic land acquisition which has seen the value of their land bank remain relatively stable in a declining market.

Allison said: “The current market conditions have delayed our plans for expansion but not derailed them. We will continue to invest in major areas of the business to underpin long-term expansion at our housebuilding and timber frame businesses across the UK.”

The Stewart Milne Group have high quality people throughout their operation and Stewart Milne concluded: “The key to a continuous effective performance, especially in difficult times, is to have the right calibre of people and allow them to express their ability to produce positive results. Any business is only as good as the people operating in it.”

Editors’ Notes: Stewart Milne Group are heavily involved in product development and last year unveiled the UK’s first 5-star house that met all the Government’s criteria for sustainable housebuilding at the Building Research Establishment at Watford.

In 2006 the Group acquired Manchester housebuilding operation, Nuttall Construction and in 2007 acquired Perth based A&L King.

The Group has housebuilding operations in Aberdeen, Edinburgh, Glasgow and Manchester, plus Timber Systems operations in Aberdeen and Witney, near Oxford. The Construction Division is based in Aberdeen and operates across Scotland while the Commercial Property operation is based in Edinburgh and operates throughout the UK.

Stewart Milne received a remuneration package of £2m in the year to 30th June 2008 compared with £1.55m in 2007.

For further information contact

Ken Greig
Ken Greig Communications
Tel: 0131 335 3141 or 0771 048 4063

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