Miller Homes hails market condition for ‘strong’ 2018 performance
Edinburgh-based Miller Homes remains on track to achieve its 2021 target of 4,000 homes per year after its annual accounts revealed a strong financial performance in 2018, a growing workforce and an increase in forward sales.
Operating profit at the housebuilder rose 15% to £151.1 million in 2018, with inflation pushing the average selling price £10,000 higher to £249,000.
Operating margin surpassed the firm’s 20% target for the first time and was “ahead of plan”, up from 19.5% in 2017, while revenues were 11% higher at £747m.
However, net profit fell to £82.9m, down from £87.7m, as finance costs more than doubled to £51.1m due to a change in the company’s debt structure taking effect in October 2017.
Other highlights from the accounts include:
- A 14% increase in total completions to 3,170 homes (2017: 2,775 homes)
- A return on underlying capital employed (ROCE) of 33.4% (2017: 33.0%)
- Circa 3,900 plots acquired in last 12 months
- Forward sales at £292m and 6% ahead of last year
- A 10% increase in owned landbank to 9,174 plots (2017: 8,364 plots) further supported by 3,350 controlled plots (2017: 5,374 plots)
- A 5% increase in the strategic landbank to 17,331 plots (2017: 16,561 plots)
The housebuilder also reported an 11% increase in staff numbers, to around 970.
Chief executive Chris Endsor said: “I am delighted to report an excellent set of 2018 results for Miller Homes with improvements in all key metrics. Of particular note, was the 15% increase in operating profit to £151m which enabled us to achieve an operating margin of 20% for the first time and ahead of plan. Land investment was 12% ahead of 2017 at £204m and at the same time, the business generated £82m of free cash.
“Demand for mid-market homes continues to be strong, underpinned by low interest rates and government support with Help to Buy extended to 2023. We continue to have confidence in the resilience of the UK regional housing markets in which we operate and remain committed to our strategy of growing volumes incrementally to 4,000 units. Market conditions are continually monitored with the optionality in our business planning enabling us to adapt land buying depending upon demand and opportunities.”