Miller confident of 'eventual 'uplift in the housing market

MILLER Group, the UK's biggest privately owned housebuilder and construction business, is banking on an "inevitable eventual uplift" in the housing market this spring after suffering a further fall in sales during 2010.

• Miller stressed that 88 per cent of its commercial property portfolio was income producing Miller Group statement

In a trading statement ahead of filing its annual accounts, the Edinburgh-based group said it had sold 1,915 homes last year, a 7 per cent decrease on 2009 and less than half the 3,960 built during the market's peak in 2006.

But Miller said the average price of a property sold was 168,000, a 5 per cent increase reflecting more sales of family homes than flats.

It noted that housing sales had been "encouraging" at the start of 2010 but that following the general election and public spending review, market confidence diminished. Chief executive Keith Miller said the firm's performance was "encouragingly ahead of expectations" in advance of releasing its annual figures in the spring.

He said the downturn in house sales "was more than compensated" by the group's construction business.

His comments follow similarly positive signals from major rivals such as Persimmon and Bellway.

Miller's statement said that, while the marketplace was "challenging", the construction arm had taken "significant strides" in winning business, particularly in the public sector. It is involved in three major projects, including the 28 billion NHS Procure 21 framework, the 400 million North of Scotland Area Hub and the 200m Royal Mail framework.

Miller added the firm was "well positioned" to benefit from an "inevitable eventual uplift" in the UK housing sector.

A "major spring sales initiative" is planned in time for the expected seasonal uplift in house sales.

The firm is continuing a major restructuring with its lender, Lloyds Banking Group, which also owns a stake in the business. It emerged yesterday that it had cancelled 100m from its lending facility ahead of schedule, and had retained 180m in "headroom" on its debt agreement with Lloyds which was set to run to 2012.

Miller has also negotiated a separate 45m debt facility for its mining division with a new pair of lenders, Credit Suisse and CAT Financial - a specialist industrial lender owned by US-based construction and mining equipment firm Caterpillar.

The group said its commercial property division last year achieved sales of 30m. Demand for "institutional quality" buildings is said to have been "robust".

Last year, Miller sold the Edinburgh Quay site to Luxembourg-based Cordea Savills European Commercial Fund for 21.1m, as well as offloading the UK headquarters building in Nottingham for sportswear manufacturer Speedo. The group also sold a shopping mall and cinema complex in Bulgaria it acquired in 2008.

It said the sale led to a 94m reduction in group debt.

Miller stressed that 88 per cent of its commercial property portfolio was income producing.Its housing division has also won two contracts to build out developments left incomplete by builders that failed. The firm won a competitive tender to build homes on nine sites in Scotland after the Fife-based builder Thomas Mitchell Homes fell into administration. Miller was also awarded a management contract at The Rock, in Bury which involves the management and sale of a 113 residential units.

• Roy Homes yesterday said it was set to build three times as many homes in 2011 as it did in 2009. The Inverness-based firm completed 18 homes in 2009, rising to 30 in 2010 - a figure this is set to be shattered with more than 50 scheduled for 2011.