Miller Group builds three-fold profit surge

HOUSEBUILDER Miller Group has set itself a target of building up to 3,000 homes a year after a rise in selling prices helped deliver a three-fold rise in annual profits.

Chris Endsor said quality locations had helped the builder
Chris Endsor said quality locations had helped the builder

But the Edinburgh-based firm said it would not be resurrecting its flotation plans, having cancelled its £450 million initial public offering (IPO) last year.

Results published today showed that pre-tax profits at the privately-owned group surged to £34.6m in the year to the end of December, up from £10.4m in 2013, on revenues 19 per cent higher at £484.4m.

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Miller, which also has interests in property development and the mining industry, said the number of completions at its housing arm grew 12 per cent to 1,918 units, with average selling prices rising

10 per cent to £200,000.

Outgoing group chief executive Keith Miller said: “Miller Homes delivered a strong performance in 2014, benefiting particularly from continued improvements in the housing market. Our target is to deliver annual completions of 2,750 to 3,000 units in the medium term.”

Miller announced in February that he would be stepping down after more than 20 years at the helm of the company that bears his family name, but chief executive Chris Endsor said Miller was leaving the business “in great shape”.

Endsor, who joined the group in 2000, said last year’s 10 per cent rise in selling prices was driven by the group’s strategy of building larger homes in “quality suburban locations”, combined with house price inflation of about 4 per cent.

He added that the firm had been unaffected by uncertainty over the outcome of this week’s general election, while stamp duty changes in Scotland had also had little impact. Under the new land and buildings transaction tax, introduced in April, a £200,000 property would attract a levy of £1,100. That compares with a stamp duty charge of £1,500 south of the Border.

“Scotland has been our strongest-­selling patch,” said Endsor, who has led the Miller Homes business since 2011.

“At our Polofields development in ­Edinburgh, we’ve got housing there up to £800,000 and we haven’t seen any impact because of the quality of the location and people are taking the extra stamp duty on the chin.”

Last October, Miller shelved plans for an IPO, blaming volatility in the financial markets, and while conditions have improved dramatically since then, Endsor said the firm had no immediate plans to reconsider a float, although he said such a move “remains an option available to us”.

He added that the builder’s shareholders – including private equity firm Blackstone Group and Royal Bank of Scotland – were “very supportive” of the business as it seeks to grow its number of annual completions towards 3,000.

At the group’s commercial property development arm, profits dipped to £7.6m from £8.4m in 2013, while Miller Mining’s earnings were flat at £4.5m amid “difficult market conditions”.

Listed rival Galliford Try, owner of ­fellow Edinburgh-based builder Morrison, last year paid almost £17m for Miller Construction, a major player in the ­private-finance education sector.

The latest construction purchasing managers’ index from Markit/Cips today showed the sector grew at its weakest pace for nearly two years in April, with the survey findings showing that some clients had delayed spending ahead of Thursday’s general election. The closely-watched report gave a reading of 54.2, down from 57.8 in March and the lowest level since June 2013.

However, Endsor said he had been surprised by the figures, adding: “It’s certainly not indicative of what we’re seeing at Miller Homes.”