Miller Group posts jump in profits

CONSTRUCTION group Miller today confirmed it was considering a flotation as the resurgent property market helped annual profits jump more than 50 per cent.
Keith Miller: One option would be an initial public offering. Picture: ContributedKeith Miller: One option would be an initial public offering. Picture: Contributed
Keith Miller: One option would be an initial public offering. Picture: Contributed

Chief executive Keith Miller said an offering on the stock exchange was one of a number of strategic options being explored by the Edinburgh-based firm, which has construction, mining and commercial property divisions as well as its core housing business.

He added: “You would expect a business of our size to be reviewing all our options, and we will announce the outcome in due time. We can confirm that one of those options would be an initial public offering.”

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Speculation grew last year that the firm was weighing up a possible £400 million flotation, trade sale or demerger that would provide an exit for private equity giant Blackstone, which took majority control of the business from the Miller family in 2011.

Blackstone owns 55 per cent, and as part of the group’s refinancing in 2011 Royal Bank of Scotland has 23 per cent, Lloyds Banking Group 9 per cent and National Australia Group 5 per cent. The builder is now said to have appointed Moelis & Co as a financial adviser to help with a possible float or sale.

Last September, analysts valued the firm at between £350m and £400m. Its latest figures could help push the price tag higher, especially in light of the raft of companies currently taking to the London Stock Market at valuations generally at the top end of expectations.

Miller group said pre-tax profits for 2013 soared to £10.4m, from £6.6m a year earlier, as revenues grew by almost a third to £817.3m. Turnover at its housebuilding arm rose by 24.2 per cent to £330m on the back of higher volumes and a 6.5 per cent improvement in the average selling price to £181,000.

And with expectations that the housing pick-up will continue, the firm increased its land-buying programme to £92m, from £56m in the year before taking its strategic landbank to 17,000 plots.

The firm concentrated its land buying in the southern parts of England where the market was most bouyant, rapidly replacing “legacy land” with new sites that have the potential for higher profit margins.

Miller Construction built up a record forward order book of £1.8 billion and was appointed to new frameworks with the Ministry of Justice and Perth-based energy supplier SSE, but fell to a loss after write-downs on a small number of contracts.

The group’s development arm was strengthened by the performance from long-term strategic developments in Aberdeen and Warrington, while the mining division weighed on the overall figures as its key coal contract reverted to a historic fixed-price system.

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Miller said: “All our businesses are now well positioned to take full advantage of improving market conditions.

“This is a strong set of results which provides an excellent base from which to plan the next stage of Miller Group’s development.”