January Trading Update

The Miller Group, the UK’s largest privately-owned housebuilding, property development and construction company, is pleased to provide an update on trading ahead of its final results for the year to 31 December 2009, which will be released in March 2010.

The Miller Group performed in line with expectations against the background of a demanding economic environment. 

Housing

Sales volumes for the year to December 2009 have been encouraging with reservations 35% ahead of 2008 levels.  Despite lower business in hand at the start of the year, we achieved 2,068 legal completions (2008: 2,056) at an average selling price of £160,000 (2008: £164,000).   Both sales rates per site per week of 0.45 and cancellation rates of 15% are returning to more normal levels.  Forward sales are significantly ahead of the previous year with £108m of sales secured for 2010 which is a 104% increase on the same point last year (£53m).  We are currently operating from 81 active sites.

During the year we opened 7 new developments and plan to commence a further 10 developments in 2010.  Our landbank now stands at 8,300 units (2008: 10,300 units) equivalent to 4 years supply (2008: 5 years).  We do not expect to make any further landbank writedowns.  Excellent progress has been made in bringing forward our strategic landbank portfolio where we have concentrated our land resource.  We anticipate achieving planning for around 14,000 plots over the next 5 years.  This land will be procured at a discount to market value and accordingly will deliver good operating margins.

We continue to work closely with The Homes and Communities Agency (HCA) on both HomeBuy Direct (HBD) and Kickstart initiatives. We have an existing allocation of £19m of HBD funding covering c. 790 units targeted mainly at first time buyers across England.  Over 500 of these units have been sold with 276 completed by the year end.  We have recently been shortlisted through Phase 2 of the Kickstart process for an additional £6m of HBD to fund a further 274 units.  In addition to HBD funding we have secured £12.5m of gap funding through Phase 1 of Kickstart for 427 units over 7 sites and have been shortlisted for a further £6m in Phase 2 covering 6 sites and 312 units.

Restricted mortgage availability and the application of ‘lender policy’ by valuers to the valuation process, if perpetuated, would represent a serious obstacle to the return to a more normal housing market.  Despite the use of incentives such as our own Shared Equity and the Government’s Home Buy Direct Scheme, there is still some way to go until mortgage lending returns to normal levels.

Property

Miller Developments, the Group’s commercial property arm, has a 2m sq ft built portfolio of high quality properties, predominantly in the retail and office sectors.  We have focused efforts on improving the quality of the tenant base and have secured around 200,000 sq ft of new lettings during the year to a variety of tenants including Tesco, Companies House, Speedo International, Business Stream and Aker Business Services.

The portfolio has 85% of its space currently income producing.  We have substantial funds available for investment and expect to see the emergence of some quality investment opportunities in the year ahead.

Construction

Miller Construction has delivered another year of strong operational and financial performance maintaining good margins from a strategy that provides a balance between private and public sector work.  The UK construction industry remains challenging with thin order levels and unsustainable pricing however,  our focus on partnering and framework agreements together with an efficient operational structure provides us with optimal protection from these market conditions.

Mining

Excellent progress has been made at the Ffos-y-fran opencast land reclamation scheme in South Wales.  Overburden and coal production were in line with expectations despite extreme levels of rainfall in a number of months during 2009.  Spot coal prices have increased significantly in recent weeks and this, combined with the forecasted increase in coal outputs, bodes well for the future growth of this business.

Group

We continue to operate comfortably within our financial covenants with over £235m of headroom in our banking facilities.

Outlook

We anticipate the market will continue to be uncertain with mortgage shortages and the potential impact of increasing unemployment.  We have, however, performed well in a turbulent economic environment and the early actions we took in 2008 to rationalise our cost base have proved timely.   With over 30% of housing sales for 2010 already secured, a positive yielding property portfolio, a quality construction order book, and experienced teams, we look to the future with confidence.

      Ends

For Further Information
Cardew Group
Robert Ballantyne / Shan Shan Willenbrock / Daniela Cormano
020 7930 0777