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Property prices help Miller double profits

MILLER Group has seen its half-year profits more than double as it benefited from buoyant housebuilding activity and rising property prices.

KEITH MILLER: Hopes to significantly increase completions over the next few years. Picture: Stewart Attwood
KEITH MILLER: Hopes to significantly increase completions over the next few years. Picture: Stewart Attwood

The Edinburgh company reported that its turnover grew 12 per cent from £333.9 million to £373.4m in the first six months of this year.

After stripping out the contribution from Miller Construction, which was sold to Galliford Try in early July, revenue from the group's continuing operations was up 23 per cent from £168.2m to £206.9m.

Group pre-tax profit came in at £8.3m, up from £4m, while the business also shaved its net debt by almost £29m to £169.4m.

The housebuilding arm was the strongest performer in the period with completions running 28.2 per cent ahead at 855 units while the average selling price was up by almost 12 per cent to £198,000.

The pricing rise was put down to "modest" underlying growth as well as bigger houses in more attractive locations while the government backed Help to Buy scheme was used in 39 per cent of completions. Recent changes to the mortgage market have not yet led to any slowing of demand. Turnover in the division soared 40.2 per cent from £125.1m to £175.4m with profit before interest and exceptional items at £19.1m, up from £6.6m.

The group had recorded 2,053 completions in 2013 but chief ­executive Keith Miller hopes to significantly increase that over the next few years.

Yesterday he said: "In Miller Homes, trading continues to be robust across all of our regions in the UK, increasing our confidence in our ability to deliver improved margins and return on capital through enhancing the quality of the landbank and product mix, growing volumes with limited additional overheads and increasing the conversion of strategic land.

"We are targeting annual ­completions of 2,750 units in the medium term."

However other divisions had a tougher period with the commercial property focused Miller Developments seeing its profits come in at just £100,000, down from £8.4m.

The group said that was because much of the activity in that division is focused on the second half of this year, which was in contrast to the very strong first half it had seen in 2013. Turnover from developments dipped from £30.6m to £20.6m.

The division has a development pipeline of around 12 million square feet with key developments at Omega near Warrington, the Arena Central site in Birmingham and across Aberdeen.

In the north east of Scotland Miller said its D2 business park at Dyce has secured BP, Emerson and Asco as occupiers while its joint venture revamp of the North Dee Business Quarter in Aberdeen is also progressing well.

In the period it bought two new change of use sites in Fife, which could accommodate about 400 homes.

Meanwhile the coal mining joint venture, which operates an opencast mine in south Wales, saw its profit before interest slide from £2.4m to £900,000 as a result of the bad weather at the start of 2014 affecting production volumes. Turnover fell from £12.5m to £10.9m.

The construction business booked a £6.2m operating loss, wider than the £2.4m in the prior year. The group also recorded a £3.5m exceptional gain relating to the writing back of land values.

Mr Miller added: "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."

Private equity firm Blackstone acquired a majority stake in Miller Group through its GSO Capital Partners arm in 2011.

Royal Bank of Scotland, Bank of Scotland and National Australia Bank also swapped debt for equity as part of a refinancing arrangement while Noble Grossart, Miller management and Miller family members are also shareholders.

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