Help to Buy pushes Dawn Group back into profit
Dawn Group has swung back into profit in its latest financial year, as its homes division reaped the benefits of the Scottish Government’s Help to Buy scheme.
Accounts newly available at Companies House shows that Dawn, majority owned by chairman Alan Macdonald, turned a £4.7 million loss into pre-tax profits of £436,000 in the year ended January 31.
The return to profit came after exceptional costs of £172,000 linked to the winding down of its construction division, and booking £318,000 of exceptional finance costs.
Dawn had reported the losses in its 2013 accounts because of its withdrawal from the construction sector, which contributed to the £2.7m of exceptional “fundamental reorganisation” costs it booked in 2013.
Group finance director Stewart Rough said the turnaround in the most recent year had been driven by its homes division, which saw profits and turnover boosted by the Help to Buy scheme.
And the Glasgow-based company has called on Holyrood to ensure the continuation of the shared equity scheme, highlighting its importance to the continued recovery of the housing market in Scotland.
Dawn Homes lifted pre-tax profits to £709,000 from £642,000 the year before, while turnover rose to £15.9m from £14.6m.
Mr Rough said Help to Buy, which sees the Government help people build up deposits f or house purchases, “definitely assisted all housing companies, including ourselves” over the year.
But while this has continued into the current year, and expects it to boost sales next year, he is concerned the pot made available by the government in Scotland has narrowed.
While £120m had been made available in the current year, which was snapped up within three months, Mr Rough noted it will narrow to £100m when the 2015 tranche is launched in April 2015.
He said the company expects that to be used within a month or two of becoming available.
Mr Rough told The Herald: “I’ve read what other companies are saying and I would echo it. While Help to Buy is in there in a limited format in Scotland for a period next year, it is that, it is in a limited format. And there is no certainty at the moment as to what that is going to mean going forward, whereas down south there is a reasonable degree of certainty for I think up until about 2020.
“I don’t think you can underplay how important Help to Buy is at the moment in terms of helping to sustain the housing market in the UK, because is still relatively fragile, although it is improved from where it was a few years ago.”
Mr Rough said Dawn is continuing to invest in around two or three sites for house building a year, and builds roughly 100 new units each year. With activity focused largely in west central Scotland, it currently has sites under development in areas such as Bishopbriggs, Kirkintilloch, Johnstone and Monkton.
Mr Rough said: “We’re not a huge housebuilder. We’re a relatively small, niche housebuilder but we have a very good quality product and I think we are well regarded out there in the marketplace.”
Away from house building, Dawn’s development business reported “another difficult year”, although losses narrowed significantly to £1.9m compared with £7.1m in 2013.
Mr Rough highlighted the potential of the Collegelands development in Glasgow, a large multi-use site in Cambuslang, and its involvement as a joint venture partner in developing Scottish Power’s new headquarters in Glasgow with Helical Bar. It is also working on a supermarket deal.
Mr Rough also cited facilities management as a small but important aspect of the company.
He said: “Facilities management continues to be a good successful small business for us. It’s not a large one, but it is a successful business.
“On the development side, I think the things we are working on have got the potential to deliver quite a bit for us going forward.”
Dawn said it was “well through” the controlled wind down of its construction division, after deciding to withdraw from the market in light of the economic downturn.
The directors note in the accounts: “All projects have achieved practical completion and the business is now working through contractual defects periods on a reducing number of contracts.”
The accounts show that Dawn Group employed a monthly average of 75 staff over the year, down from 105 in 2013. Staff costs, including directors’ remuneration, fell to £3.3m from £7.3m.