Miller profits build as buyers play down Brexit fears

Miller Homes has highlighted its financial firepower and booked a sharp rise in full-year profits as it gears up to build hundreds of additional ­houses.
Miller Homes saw profits jump 44% last year. Picture: Andrew Smith SG PhotographyMiller Homes saw profits jump 44% last year. Picture: Andrew Smith SG Photography
Miller Homes saw profits jump 44% last year. Picture: Andrew Smith SG Photography

Reporting its latest annual results, the ­Edinburgh-headquartered housebuilder said the launch of a new operation in the ­Midlands would help it achieve its goal of 4,000 units a year by the end of the decade.

Chief executive Chris ­Endsor played down the impact of last June’s Brexit vote saying the company “didn’t miss a beat” during the second half of 2016 with sales “substantially up” on a year earlier.

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Miller Homes taking Brexit in its stride
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The results showed that ­Miller generated pre-tax profits of £89.3 million in 2016, up 44 per cent on the year before, on a 13 per cent hike in revenues to £565m. It completed 2,380 units during the year, an increase of 11 per cent on 2015’s total.

Describing 2016 as an “outstanding” year, Endsor said the group had also achieved its 2017 operating margin target of 18 per cent a year ahead of plan. On an operating basis, profit rose above £100m for the first time, at £103m.

“We will have to see how things pan out after Article 50 is triggered,” said Endsor. “The experience after the vote in June is that we saw a very strong housing market that continued in all of our regions, including Scotland.

“Our second-half sales were substantially up on the prior year and we didn’t miss a beat.”

The company shelved plans for a stock market flotation in 2014, attributing the decision to turbulent market conditions at the time, and Endsor stressed yesterday that there were “no immediate plans” to reconsider such a move.

“We have a very solid capital structure to fuel our growth and that is all in place,” he said. “There is no requirement to go to capital markets.”

Finance director Ian Murdoch said there had been a significant increase in land spend during the year and a substantial land investment programme was being rolled out in 2017, alongside the launch of the new Midlands region.

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“In 2016, we invested £178m, well up on the year before,” he added. “We are looking at an increase in 2017 partly on the back of new regions launching and organic growth across our other areas.”

Endsor acknowledged that there was strong competition in the land market but said the company was capable of “identifying the right areas to fuel our growth and maintain or beat our target margin and return on capital”, adding: “We don’t sit on land as it is an expensive commodity.”

He said: “We are currently 55 per cent forward sold for 2017, with continued confidence on the back of our strong presence and successful operating model in our regional housing markets.”

During the year there was a 2 per cent uptick in the average selling price to £231,000. The firm pointed to a robust economic backdrop supported by low interest rates, high employment and improving mortgage availability.