Thanks to a new focus on frameworks, Miller Construction’s turnover rose 70% to £193m (2012 H1: £113m) but its losses before tax and interest widened from £800,000 last time to £2.4m.
At group level, however, there is better news with pre-tax profit for the first half up tenfold to £4.0m (2012 H1: £400,000) thanks to the house-building operations.
Before exceptional items, Miller Group achieved an operating profit of £14.2m, up 51% from last year.
Miller’s construction business has been refocused in the past two years. The loss recorded in the first half was attributed to competitive market conditions and the traditional adversarial form of contract used on a small number of its projects. “These projects encountered cost overruns as a result of operational issues, insolvency of subcontractors and difficulties in recovering the cost of client variations to project specifications,” explained group chief executive Keith Miller.
“We no longer tender for projects on this traditional contract basis unless they are projects with clients with whom we have on-going long-term strategic relationships. The group is seeking recovery of these costs.”
He added: “The Construction division’s strategy is now concentrated on providing end to end property solutions for public and private sector clients who have programmes of work and who positively embrace the value engineering approach we provide.”
The construction order book has increased by 18% to £1.8bn and is weighted towards frameworks and PPP projects where margins are more secure, he said.
On the company’s performance as a whole in the first half, he said: “The group made good progress during the first half of 2013 with increased profits, a longer land bank, strengthened order books and reduced debt. Housing has already secured 92% of target volumes for 2013 and most of the land required for 2014.
"Construction has also gained all the targeted turnover for 2013 and almost three quarters of its 2014 target. Our anchor sites in Developments have strong letting and investment interest and in Mining we have a full order book for 2013 and 2014.
"These results demonstrate that the group is benefiting strongly from the investment our shareholders made in 2012. The board is confident that the results for the year will be in line with its expectations. We now have a strong base from which to plan for the future development of the business.”