Miller cleans the stables to improve risk profile

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Miller cleans the stables to improve risk profile

Over-enthusiastic bidding lies behind losses at Miller Construction last year, the company has revealed.

It is now looking to framework agreements to reduce its exposure to risk.

Write-downs on a limited number of contracts pushed Miller Group’s Construction division into a £4.6m operating loss, despite a 58% increase in turnover to £408.7m (2012: £259.4m).

The board said that the loss was down to “contracts that had been procured competitively on the basis of price”. It added: “We no longer tender for projects on this basis unless they are projects with clients with whom we have ongoing, long-term strategic relationships and are at commercially viable margins.”

Miller Construction is particularly focusing on framework deals, with clients including Network Rail, Scottish & Southern Energy and the Ministry of Defence. “The key focus on framework contracts with public sector and regulated bodies provides greater certainty of work over the medium-term with an improved risk profile,” the company said.

Framework contracts are expected to generate an additional £1bn of additional construction revenue over the next five years, it added.

At group level, Miller Group saw overall revenues rise 32% in 2013 to £817.3m (2012: £619.9m). Pre-tax profit was up 58% to £10.4m (2012: £6.6m) and net debt was reduced from 202m down to below £169m.

Miller Homes reported total completions up 12% to 2,053 units (2012: 1,831 units) and turnover up 24% at £330.0m (2012: £265.7m) through increased volumes and a 6.5% improvement in average selling price to £181,000 (2012: £170,000).

Operating profit from house-building was up 57.2% to £22.8m (2012: £14.5m), driven by an increasing proportion of completions from newly acquired sites.

Group chief executive Keith Miller said: "All our businesses are now well positioned to take full advantage of improving market conditions. Miller Homes continues to benefit from increased demand, improving selling prices and a balanced sales mix, and is delivering increasing margins. In our Construction business we have taken the necessary steps to deal with the loss-making contracts. The business is now focused on frameworks and aligned to clients with long-term programmes of work.

“Developments continues to perform well, underpinned by our longer term property assets. Mining has secured a full order book for 2014. The board is confident that group performance coupled with our strong financial base means we will continue to generate further value. This is a strong set of results which provides an excellent base from which to plan the next stage of Miller Group’s development.”

 

Miller Group 2013 results by segment

 

 

 Division

2013 turnover

2012 turnover

2013 profit (loss) before interest

2012 profit (loss) before interest

 Housing

£330.0m

£265.7m

£22.8m

£14.5m

 Property

£52.4m

£60.6m

£8.4m

£5.4m

 Construction

£408.7m

£259.4m

(£4.6m)

£3.2m

 Mining

£26.2m

£34.2m

£4.5m

£9.2m

 

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