Turnaround as Miller reveals £6.6m profit

Deputy Business Editor

Friday 15 March 2013

MILLER Group is back in the black with a pre-tax profit of £6.6 million and has indicated it is expecting steady growth across its housebuilding, construction, mining and commercial property businesses.

FOUNDATIONS: Miller Group's boss Keith Miller predicts opportunities for the year ahead. Picture: Stewart Attwood

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GREIG CAMERON Deputy Business Editor

Results for 2012 showed a marked turnaround from the £30.4m loss posted in the previous year.

The Edinburgh company's balance sheet has been transformed after a large debt for equity swap with lenders including Royal Bank of Scotland, Bank of Scotland and National Australia Bank plus a £160m capital injection from GSO Capital Partners, part of private equity group Blackstone.

Accounts for 2012 show Miller Group posted a 5.5% increase in turnover from £587.6m to £619.9m with all divisions reporting a profit.Housing completions rose 5% from 1745 to 1831 with average prices 6% ahead at £170,000.Turnover in the division actually fell from £271m to £266m due to greater value land sales in the previous year but gross margin increased from 11% to 16%. That helped profit before interest charges, to £14.5m from a £35.1m loss in 2011.Mortgage availability is said to be improving with government-backed schemes NewBuy and MI New Home responsible for 9% of reservations in the second half of 2012 while the number of shared equity deals has dropped.Keith Miller, chief executive, said there had been "strong" sales activity in the first 10 weeks of 2013. He said: "It is steady market and moving very much in the right direction."In recent months housebuilders such as Taylor Wimpey, Barratt and Persimmon have all reported strong results while Crest Nicholson returned to the stock market with a valuation of £553m.Miller Group's construction arm boosted its order book to a record £1.5 billion as it continues to focus on large and long-term private sector work alongside private sector projects in buoyant geographic regions such as Aberdeen.Turnover from construction activities grew from £238.6m to £259.4m although profit before interest fell from £6.8m to £3.2m.Mr Miller said: "We are really focusing on trying to work with clients that have a longer pipeline of work and repeat business and those ones who want us to look after the building when it is finished so we are building up our service revenue. "Although there has been a drop in margins that has been a timing issue and the current year will show a big benefit from rapidly increasing turnover. "We are seeing lots of opportunities coming through for this business in the coming year, and if anything we won't be able to take advantage of them all just because of the scale." Property turnover rose from £46.6m to £60.6m with Mr Miller citing developments in Aberdeen, Warrington, Cheshire and Birmingham as among those with a lot of potential.Profit before interest was at £5.4m, from a £8.8m loss the previous year.Further improvement in margins across all businesses are expected once more land bought after the 2007 peak of valuations comes into development.Miller Group's Welsh coal operation at Merthyr Tydfil benefited from a favourable forward hedging policy which resulted in it growing profit before interest from £7.5m to £9.2m on the back of an increase in turnover from £31.8m to £34.2m.That is in contrast to the troubled Scottish coal sector which has seen ATH Resources fall into administration and heavy job cuts at Scottish Resources Group.Miller Group now employs around 1450 people, up from 1300, and Mr Miller indicated it would continue to hire throughout 2013 across its division to service "additional workload". Due to the financial restructuring Miller Group saw its net debt decline from £706.6m to £202m.Mr Miller added: "The debt levels we are very comfortable with as we have £70m head room and we are pretty happy with that number. "We manage cash flow carefully but we are also investing in new land so it is keeping the balance right."

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Turnaround as Miller reveals £6.6m profit

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