Write-downs lead to large loss for housebuilder, but construction division stays healthy
Miller Group, one of the UK’s largest private housebuilders, has announced a £170m loss before tax in 2008.
The company was forced into the red by exceptional charges that included an £85m writedown on its housing landbank.
However, Miller’s construction division was able to report a successful year, with turnover up 60% to £622m from £389m in 2007, and operating profits of £13.7m.
Turnover for the group as a whole was down from £1.23bn last year to just over £1bn in 2008. It made an operating profit of only £14.9m, a fraction of its 2007 operating profit of £170m. Troubled bank HBOS is understood to have invested £100m in a 20% share in Miller early last year, and the results are a further blow for the bank’s business lending arm which was headed by Peter Cummings before his departure in January. Last month Lloyds, which took over HBOS in January, was forced to announce writedowns of £10.8bn as a result of the divisions lending to the construction and property sector.
Miller’s housing division was badly hit by the credit crunch. Housing completions were 43% lower than in 2007 and the average selling price fell from £187,000 in 2007 to £164,000 last year. The group said it had taken “decisive action” as long ago as 2007 to reduce its exposure to the commercial property sector, and had managed to dispose of £200m of assets during the second half of 2007 and the first quarter of 2008.
Both its housing and property divisions were restructured during the year, but the group did not say whether this had resulted in a reduction in headcount.
The outlook for Miller’s construction division is more positive. It said it had a construction order book of over £700m, with 60% in the public sector.
Sir Brian Stewart, chairman of the Miller Group, said: “We took early action to reposition our businesses for the challenges ahead. The Miller Group has the confidence of its long-term funding partners with committed facilities through to 2012. This support and the decisive action taken during 2008 provides a solid platform to take the business forward.”