Miller Group builds its case for IPO

Miller Group chief executive Keith Miller. Picture: Phil Wilkinson

Housebuilder Miller Group has unveiled a doubling in half-year profits as the privately-owned firm continues to mull a possible stock market flotation.

The company, which last month sold its commercial construction division to listed rival Galliford Try, said tougher mortgage lending rules had not affected trading at its housing arm, where underlying profits almost trebled.

Chief executive Keith Miller said: “The group has performed well and benefited from continued improvements in the market. The disposal of Miller Construction in July allows the group to focus on the housing and commercial property markets, which are showing strong signs of growth.”

Galliford, owner of fellow Edinburgh-based builder Morrison, paid almost £17m for the loss-making construction arm in a move seen as a “clearing of the decks” ahead of a possible float by the private equity-backed firm.

The deal followed a strategic review launched in March, when Miller’s chief executive said an initial public offering (IPO) could be on the cards amid the resurgent housing market. Speculation grew last year that the builder was weighing up a possible £400m float or trade sale to provide an exit for private equity firm Blackstone, which owns a 55 per cent stake.

Miller is chaired by Philip Bowman, who oversaw the sales of ScottishPower and Allied Domecq to foreign owners.

A source told The Scotsman that “nothing has been ruled out”, adding that the group was under no pressure to rush into a deal. “They need to move forward as far as their shareholders are concerned, but they’re pretty happy about the way the company is performing,” the insider said.

Yesterday’s results showed that Miller Group’s pre-tax profits jumped to £8.3m in the six months to the end of June, up from £4m a year earlier.

Revenues from continuing operations, excluding the construction business, grew 23 per cent to £206.9m.

Losses at Miller Construction, which employs about 700 people, widened to £6.2m, from £2.4m in the first half of 2013. That was blamed on “continuing delays on a limited number of historic contracts that had been procured competitively on the basis of price”.

At its housebuilding arm, profits before interest and one-off items surged 189 per cent to £19.1m following a “significant” improvement in margins and an increase in average selling prices, which rose 11.9 per cent to £198,000.

The firm said the launch of the mortgage market review checks and Bank of England rules on lending earlier in the year had not had a “material” effect on reservation rates and “should help ensure a long-term sustainable supply of mortgage finance and hence demand for new housing”.

Official figures published yesterday showed that the number of homes built in Scotland rose 7 per cent in the year to the end of March – the first increase in new housing supply for six years.

However, Philip Hogg, chief executive of trade body Homes for Scotland, said he feared a decline in sales after funding for the Scottish Government’s Help to Buy scheme ran out last month.

Hogg added: “We have therefore been working closely with the government to try and find a resolution to the budget gap.”