Once again the Group has produced record profits in 2001 with operating profits up 33% to £39.3m, and the underlying profit before tax excluding the exceptional gain being 16% ahead at £23.8m. As well as being our eighth successive year of profit growth we have now achieved a balanced business with the capability to continue to deliver further profit growth in the future. The re-focussing of the Group into a development led organisation was successfully completed with the disposal of our Civil Engineering and Mining businesses at a profit of £19.6m. This final strategic divestment now enables the Group to address its markets in a more cohesive fashion with three strong and complementary business activities to draw on.

Strategy
We intend to achieve further profitable growth in each of our three businesses. Property growth in both the UK and overseas will be driven primarily through significant joint ventures with both public and private sector partners, such as the 500 acre Omega project in the North West of England with English Partnerships, where we are in joint venture with the Royal Bank of Scotland. Housing is growing on three fronts – continued organic expansion across all of our existing seven regions, through joint ventures with small local developers and also through acquisition. Construction Services is looking to emulate its partnering and PPP successes in Scotland and the North and make major inroads into the Midlands and the South of England.

Property
The financial and project successes of the past few years have firmly placed us on the map as a leading national developer with a broadly based portfolio of projects and joint ventures with an out-turn value of £2.5bn. Our sector concentration is primarily focussed on retail and offices, areas where we see above average returns.

While we ensure there is a balance within our portfolio to deliver a regular flow of profits, we are now moving up the value chain and competing for larger portfolios such as the £400m NHS estates, where we are on the shortlist in joint venture with Bank of Scotland.

Housing
We now sell over 2,000 houses per annum and have the ability to generate an annual turnover of £300m from our existing regions. Our margins moved ahead during the year and with a strong landbank and excellent projects secured we expect to see further improvement in the current year.

Our landbank was strengthened during the year and we now have 9,300 plots controlled and a further 15,300 plots under option. In a restrictive planning environment it is vital to secure future production capability. Our current position will enable us to increase volumes by 15-20% by 2003.

Last year saw us invest heavily in improving customer satisfaction. Our increased market penetration and sales are testimony to the improving image of the Miller product.

Construction Services
Our Construction Services team had a tremendous year, lifting profits by over 450% from last year’s level. Our improved margins have been achieved through a partnering approach and a careful risk management regime. The business is equally split between Partnering and Public Private Partnerships. We have a strong forward order book of quality work from clients with whom we are able to work on a collaborative basis to engineer ‘value in and cost out’ of projects.

Funding
We have unsecured but committed term banking facilities of £225m which are in place until 2006. In addition, at the year end we had £54m of property specific non-recourse facilities which are tailored to specific transactions. These properties are income producing with a yield of 10% per annum. We also have a number of development specific off balance sheet facilities for joint ventures, which have limited recourse back to the Group.

Environment
The Group recognises its responsibility to the environment at both a local and national level. We work closely with suppliers, customers and planners to enhance the development environments we create, and ensure our products are wherever possible from sustainable resources. In housing 56% of our sales in 2001 were from brownfield sites.

Outlook
All of our sectors are experiencing fundamental change. In Housing, we have seen a second wave of consolidation against the background of an increasingly difficult planning environment. The Property sector has seen more public to private transactions and innovative asset refinancings as companies seek to improve returns. In the Construction Services sector public and private sector clients are at long last understanding and embracing the partnering approach to delivering complex projects.

The Group is ideally placed collectively and through each of its businesses to respond to this changing environment and to deliver steady growth for our shareholders.

Keith M Miller Group Chief Executive