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Cala's future remains open as house builder reports 12pc volume surge

All options remain on the table for the long-term future of premium homes builder Cala, including a takeover by a private equity house or a float on the Stock Exchange, its chief executive has told Construction News.

The Edinburgh-based private firm today reported a 12 per cent surge in volumes and 2 per cent increase in average prices in the six months to January. Cala has sold 322 houses since July at an average price of £290,000. Its consented land bank now stands at just over 3,000 plots with a potential value of £909 million.

Chief executive Alan Brown told Construction News that he is expecting further growth as the profits from new, higher margin land come through, with revenue expected to rise from £215m last year to £245m this year, and £300m the year after.

The house builder is majority-owned by Lloyds since a debt-for-equity swap in 2009.  That came after major restructuring and huge write downs the year before, which had resulted in £260m of losses.  In 2010 the group disposed of its commercial property arm.  

Cala reported a return to profit in November 2011 for the first time since 2007, with home sales up 45 per cent to 649. 

It announced this week that it has now completed another refinancing with Lloyds, extending its £180m credit facility by 18 months to 2014 on the same terms as the 2009 arrangement.

Mr Brown said the financing enables the company to focus on growth. But he told Construction News that all options remain open for the future of the firm, including a float on the Stock Exchange through an initial public offering, a private equity house takeover or a trade sale.

“They (Lloyds) will be looking to maximise their value at some point in the future.

“A listing might be a possibility, a private equity deal might also be a possibility – but it is not something that is on the agenda for the short-term.”

Cala – which became embroiled in a lengthy legal battle with Eric Pickles over regional housing targets – operates mainly in Scotland, along with the South east England and the Midlands.

While Scotland already has a presumption in favour of sustainable development, Mr Brown said he welcomed the government’s efforts to adapt the planning system in England through the draft National Planning Policy Framework, if approved in its current form.  He also welcomed the longer-term domino effect the government’s mortgage indemnity guarantee move will have on his market.

While remaining optimistic, Mr Brown said the eurozone crisis continues to cast a shadow over the future, with events abroad having the potential to impact the housing market in the UK.

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