Miller said: "We are in discussions with the NHS to disengage. We expect to get back all of our bid costs."
Despite the setback, Miller announced a 10th successive set of annual profits this week. Pre-tax profit in 2003 was £40m, up from £27m the previous year. Turnover was up 13% to £743m.
Miller said that he was looking at one or two acquisitions in the housing sector, although discussions were at an early stage. He said the group had the facilities to go up to £150m for any one purchase, but that it was likely to be targeting companies valued between £50m and £100m.
Miller intends to boost the number of homes it builds each year from fewer than 2900 units to 4000 by 2009.
We are in talks to disengage. We expect to get back all of our bid costs
Keith Miller, Miller Group
It also hopes to increase its profit margin in construction from 2.5% to 3% within the next few years.