Annual Report 2016
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Annual Report 2016 Miller Homes is a respected national homebuilder with an established reputation for building outstanding quality family homes and excellent customer service. We believe that by building homes safely, in a way which is considerate to the environment and by delighting our customers Strategic report The place to be 02 Business model 14 with a product and experience that recognises Strategy 17 Key performance indicators 18 buying a home is a significant lifetime purchase, Housing market review 21 Chief Executive’s review 22 we will deliver superior long term results for all Finance Director’s review 26 Principal risks and uncertainties 28 our stakeholders. Corporate responsibility 30 Board of Directors 32 Miller Homes – the place to be. Directors’ report and financial statements Directors’ report 35 Statement of Directors’ responsibilities 36 Independent Auditor’s report 37 Consolidated income statement 38 Consolidated statement of comprehensive income 39 Consolidated statement of changes in equity 39 Company statement of changes in equity 39 Statements of financial position 40 Consolidated cash flow statement 41 Notes 42 Core completions Average selling Revenue Operating profi Profit before tax Net assets Return on capital Consented landbank price (ASP) employed (ROCE) 2,380 £231,000 £565m £103m £89m £320m 30.3% 13,062 +11% +2% +13% +31% +44% +20% +10% +13% 2016 was an outstanding year delivering operating profit in excess of £100m, a first for the Group. Targeted capacity increases to 4,000 units per annum by 2020, 68% higher than current levels, and will be supported by the launch of a new region in 2017. Chris Endsor | Chief Executive Watch Chris Endsor’s review online at www.millerhomes.co.uk/corporate.aspx 01 Miller Homes Annual Report 2016 …well positioned for further profitable growth. The success of the Group’s business model is centred around five key principles, highlighted below. Find out more at www.millerhomes.co.uk/corporate.aspx 02 Miller Homes Annual Report 2016 strategic in engaged with committed focused on valued through an land acquisitions stakeholders to quality customers’ needs empowering culture 56% £50m 12 93% 94% Percentage of the consented landbank Local contributions including planning gain NHBC Pride in the Job Quality Percentage of customers who Positive staff sourced from strategic land. payments to local authorities and the value Awards in 2016. would recommend Miller Homes. engagement. of affordable housing delivered. 03 Miller Homes Annual Report 2016 Picture: A CGI of the Roman Heights development …strategic in land acquisitions. at Streethay, Lichfi ld. The primary focus is on family homes 2016: in quality locations which meet the financial and operational targets 13,062 2015: of the business. 11,600 Number of plots in the consented landbank. 04 Miller Homes Annual Report 2016 The Group has established a consistent, Pictures: disciplined and diligent approach to acquisitions 1. A site map of the land being developed at Streethay, Lichfield. to ensure all sites purchased meet strict criteria. 2. The show home at Roman Heights, Streethay, Lichfi ld. 3. Lichfield Cathedral. Phase 3 by A minimum of 22% gross margin Roman Heights has been carefully Miller Homes and 25% ROCE are required together designed to incorporate a wide with other key factors, which include range of facilities and amenities. location and proximity to good A primary school, a mixed use Phase 4 by local amenities, such as transport, community hub, a care home Miller Homes employment and quality schools. and significant green infrastructure, Show home including a district park, will be Phase 1 by Access The consented landbank is supported developed to support the creation Miller Homes by the strategic landbank which is of 750 new homes. significant in size relative to annual output and will make an increasing As a site delivered from the Group’s contribution to the Group’s ongoing strategic landbank, it was acquired growth and success. on excellent terms. The product mix Phase 2 by another housebuilder has been differentiated to enable Phase 1 by A good example of the quality of two points of sale which in turn another housebuilder the Group’s strategic landbank is will accelerate capital returns. Roman Heights, which was acquired The Group has also sold part of the Phase 1 by during 2016. The development is site to another major housebuilder. Miller Homes set across 135 acres in the village Through this approach and Show home of Streethay. It is well located being favourable deferred land terms, one mile from the heritage city the Group is forecasting to deliver of Lichfield and close to the A38, a ROCE of over 40% on this site. All areas in Phase 1 which is a major trunk road providing are being developed Access simultaneously. access to Birmingham and the West Midlands. The nearby Trent Valley 1 Railway Station is on the West Coast mainline, with excellent links 2 3 to Birmingham and London and easy access to the North West. This site has achieved 25 reservations over a 6 week period since its launch at the end of January 2017. Read more in the Chief Executive’s review on page 22. 56% £50m 12 93% 94% Local contributions including planning gain NHBC Pride in the Job Quality Percentage of customers who Positive staff Percentage of the consented landbank payments to local authorities and the value Awards in 2016. would recommend Miller Homes. engagement. sourced from strategic land. of affordable housing delivered. 05 Miller Homes Annual Report 2016 Picture: Partners involved in supporting Miller Homes 2015: in preserving Covenanter’s Wood in Dreghorn, Edinburgh, are joined by schoolchildren from nearby Bonaly Primary School who are learning 2016: 81% about the historic World War One trenches. 87% Calls to Miller Respect, Miller Homes’ 24/7 community helpline, which were responded to within 24 hours. …engaged with stakeholders. Working collaboratively and building strong, enduring relationships enables the Group to successfully deliver new homes and communities in a timely manner. 06 Miller Homes Annual Report 2016 The Group has an established track record in 1 2 effective stakeholder engagement and the value provided through undertaking such activity to The number of plots expedite the planning process is widely recognised. which received a detailed planning approval during After new land is identified, The installation of interpretation 2016 was 4,445 engagement commences quickly boards and introduction of guided (2015: 2,389). with a wide range of stakeholders, tours and school visits to the area including local residents, community provide a greater understanding groups, parish councils, schools of Scotland’s military history. and local authorities along with local subcontractors and suppliers. In the Midlands, funding was Pictures: 3 provided for a new £2.2 million 1. Tracey Lee, Regional Operations Contributions to local communities primary school located adjacent Director for Miller Homes South, come in various forms and include to the Dales View development in and Martin Leach, Managing Director of Wates Developments. community amenities, such as Brailsford, Derbyshire, which opened 2. The launch of the new £2.2m education, affordable homes and in June 2016. Situated in the heart Brailsford Church of England transport, and working with local of the village, Brailsford Church Primary School. groups to identify ways of making of England Primary School replaced 3. The show home at Bradbery a positive impact which will result the previous school building and Gardens, Didcot, a joint venture in a lasting, positive legacy and provides a modern teaching and with Wates Developments. help secure local support. learning environment with state of the art facilities and expanded In Scotland, close relations were pupil capacity. established with the Defence Infrastructure Organisation, part In the South of England, a joint of the Ministry of Defence, and venture with Wates Developments the City of Edinburgh Council to combines the strengths of both implement a detailed woodland companies to bring forward new management plan funded by residential development in Southern the Group to help preserve, England. In 2016, two developments restore and enhance an important were launched at Bradbery Gardens historical and popular woodland site in Didcot, Oxfordshire, and Mulberry close to the prestigious Polofields Fields in Southwater, West Sussex. development in Edinburgh. The A further two developments will 46 acre Covenanter’s Wood was launch under the joint venture during used by soldiers in World War 2017. Of the four developments, One to prepare for the Battle three have originated from Wates of the Somme. Developments’ strategic landbank. Read more in the Corporate responsibility section on pages 30 and 31. 56% £50m 12 93% 94% Local contributions including planning gain NHBC Pride in the Job Quality Percentage of customers who Positive staff Percentage of the consented landbank payments to local authorities and the value Awards in 2016. would recommend Miller Homes. engagement. sourced from strategic land. of affordable housing delivered. 07 Miller Homes Annual Report 2016 Picture: The Dale, Wallace Fields, …committed to quality. Robroyston, Glasgow. To deliver homes that meet or exceed customers’ expectations. 2016: 95% 2015: 92% Percentage of subcontractors with SMAS certifi ation. 08 Miller Homes Annual Report 2016 Building attractive homes of the highest quality is 1 a key priority with the utmost importance placed on health, safety and the management of the site. The Group’s commitment to in the NHBC’s annual Pride in the encouraging the highest standards Job Awards. Bill Hughes received of site management is refl cted the highest award, a Supreme in the success of its teams Award in the Large Builder Category, and individuals. for the excellent management of The Views in Billinge, near Wigan. The Group is one of a small number of housebuilders with management This is Bill’s 56th NHBC award systems accredited under ISO and his impressive array includes 14001 (environment) and OHSAS 23 Quality Awards, 19 Seals of 18001 (safety).