Strong market boosts Strata’s profits

STRATA Homes saw its profits and sales rise last year, as the “resilient” housing market was supported by low interest rates and more affordable mortgages.

Wednesday, 1st April 2015, 6:24 pm
Irving Weaver Strata Homes

The Doncaster-based company’s performance was also boosted by the fact that more Britons believed their jobs were secure as the UK economy improved.

In the year ending December 2014, Strata’s sales rose by eight per cent to £86.5m. The company’s profit before tax was £9.5m, which was a healthy increase on the £9.0m achieved in 2013, while the average selling price rose to £174,000 from £154,000.

Irving Weaver, Strata’s chairman, said: “There has never been a better time for people to step on the housing ladder, with low interest rates and initiatives like Help to Buy. All the political parties are fully supporting steps to boost the housing supply.”

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However, Mr Weaver stressed that it took time to respond to the demand for new housing. He said it was widely agreed that 250,000 new homes a year were needed to meet demand. The last time the UK built on this scale was in 1979.

“There will have been around 150,000 houses built last year and that figure is slowly rising,’’ he added. “Smaller building firms have got to get started, and that means that bank lending has got to start coming through for them. We expect to see a little bit of house price movement in 2015.”

Analysts are suggesting that house prices will rise by three to four per cent this year, Mr Weaver said.

Strata has 98 staff, including 39 who are “out in the field”. Strata has 16 live building sites, and the company expects to take that figure to around 20 soon.

Developments are taking place in Leicester, Leeds, Hull, the Dearne Valley, Nottingham and Derby.

“The housing market is so strong that I don’t expect it to be really affected by the General Election,’’ said Mr Weaver.

Strata is 100 per cent owned by the Weaver family, with Mr Weaver retaining 80 per cent of the shareholding. He said Strata had taken prudent steps to deal with the recession.

“In 2008, we reduced capacity by half overnight,’’ he recalled. “We grafted through it. This was my fourth recession.”

Unlike previous recessions, there was no doubt about the challenges the sector faced, because the economy fell off a cliff, Mr Weaver said.

“We bought land towards the end of the recession, at post-recession prices,’’ he said. “Nine senior members of staff are part of an equity share plan in the business; to drive through the growth plan. The share plan matures in 2020.”

Mr Weaver said that Strata was well-placed to deliver its growth strategy of 750 completions a year by 2018. Strata achieved 524 sales in 2014, compared with 516 the year before.

Mr Weaver added: “A similar year is anticipated for 2015. The year has started well, in the first 13 weeks of trading visitors and key conversion rates were ahead of the previous year, and demand for new homes is strong.”

Irving Weaver’s grandfather Oscar founded Strata in 1919, and the company started to rebuild bomb damaged properties in South Yorkshire following the war. The company has evolved into a home builder that operates across Yorkshire and the East Midlands.

Yesterday, Mr Weaver said that the company’s pipeline of new sites was underpinning its growth, with estimated future gross margin of £130m.

In December last year, Mr Weaver was one of the keynote speakers at The Yorkshire Post’s Business Club event, which considered the future of the housing market. Mr Weaver warned the audience of leading business figures that costs and skills shortages were severely hampering the sector.