Miller Homes profit up under new owners but firm warns on 2023 numbers

Edinburgh-based housebuilder Miller Homes Group saw its profit rise to £160m in the first year under ownership of US private equity house Apollo, despite the impact of last September’s mini-Budget on the market.

Chairman Chris Endsor hailed a “strong” set of results as the firm, which builds across Scotland and England, said pre-tax profit in the 2022 calendar year rose 10% from £145m as revenue hit £1.17bn, up 12%.

However, in the first accounts to cover Apollo’s April 2022 purchase of the firm, the business revealed that the net debt of the finance vehicle which made the purchase – Miller Homes Group (Finco) PLC – had risen to £600m with the deal.

This vehicle, which reported accounts for the nine months from April to December, also said that £57.1m of acquisition and funding costs helped push its pre-tax profit down to just £29.9m for the period, despite the £160m pre-tax figure reported by the operating business for the whole year.

Miller Homes Group said it built 3,970 homes, up 3% on the previous year despite a drop in the reservation rate, with the rise in completions strongest in the Midlands and south of England. Miller said weekly reservations per site fell from 0.85 in 2021 to 0.62 last year, the lowest for at least five years, as the market turned in the second half following the mini-Budget.

The firm ended the year with forward sales of £481m, down 28% on the figure the previous year.

Endsor said “increasing economic and political challenges” impacted on the second half of 2022 and would likely have a bigger impact in the current financial year.

He added: “Sharp increases in mortgage rates and political instability in the second half of the year all combined to have an understandable drag on the market, which is likely to have a more noticeable effect on our 2023 results.”

He said the firm had paused land-buying in the second half of the year due to the downturn, which he said was likely to lead to a temporary pause in the firm’s stated plan to grow to be a 6,000 homes-a-year builder.

He said: “Given the uncertainty in the market outlook in the second half of 2022, we were not confident that acquiring land at that time would generate the margins we desire. This led to a pause in land purchases which will have a temporary impact on our growth ambitions.”

The firm ultimately bought just 3,008 plots in the year, lower than the replacement rate, and down on the 5,475 plots bought in 2021.

Endsor said: “However, we still believe in the long-term fundamentals of our markets and hence the merits of growing volumes towards our current 6,000 unit capacity over the medium term.”

Miller wrote off £20.6m in the year due to the “Self-Remediation Contract” entered into with the government in March 2023 over fire safety issues on legacy properties, further to the £9.7m written off for fire safety issues in 2021.