Twelfth year of profit for Miller

Miller, the housebuilding and construction group, has unveiled its twelfth successive year of increased profit.

Financial results (12 months to 31 December 2005) show turnover at £890m (£750m), with the latest pre-tax profit standing at £76m (£54m).

Miller’s £500m debt figure is well short of the upper limit of its banking facility, which stands at £645m. Finance director John Richards said that there is a seasonal variation in the size of the debt as a result of work-in-progress. Having up to £200m of headroom offers operational comfort.

“If Miller was stagnant, the debt figure would come down,” said Richards, “But we plan to grow judiciously. Our five-year plan is to grow, year-on-year, both in terms of size and through improved margins. We look for further acquisitions.”

Miller is a Scottish, privately-owned group. “Flotation is not on the agenda,” said Richards. “There is more flexibility when you are private and we don’t need new equity.”

It was probably because Miller is private that it was able to nip in quickly and buy Fairclough ahead of two rival bids from the top 10 housebuilders quoted on the London Stock Exchange. “We made two approaches over the last two years, and when Fairclough did become available last June, City analysts had been downgrading housebuilding, so us being private was quite an advantage,” said Richards.

Miller’s latest pre-tax profit includes a three-and-a-half month contribution from Fairclough. The acquisition was completed last autumn at a figure of £264m. It generated an exceptional gain of £11m, the result of the sale of various fixed assets.

Rationalisation charges ran to £14m, 20% lower than the figure Miller had anticipated. The overhead savings resulting from the merger are put at £15m a year.

There has been a shake-up of senior jobs and three of Miller’s nine housing divisions are now headed by a managing director who was formerly with Fairclough: Nick Smith (north-west England); Steve Birch (Yorkshire) and Richard Saraff (north Home Counties).

Operating margins in Miller’s housebuilding division increased slightly to 16%. The average selling price of £185,000 representing a 6% rise.

In Miller’s construction division, a margin of 2.4% was achieved as turnover of £250m generated a profit before interest of £6m.