A taste for cold towels and the bracing Edinburgh air could explain why they do things differently at Miller Group. Whether in office design or the construction business itself, the 2000-strong company is not one to follow fashion.
It ignores the current trend for consolidation by running a business with five strands: construction, civil engineering, housebuilding, commercial property and the UK鈥檚 largest coal-mining contractor. It is a private company, whereas most of its competitors in the 黑洞社区 top 50 are fixed in the unwavering spotlight of a stock exchange listing. It is family-owned, at a time when the construction dynasties of Laings and Shepherds are, on the whole, bowing out. And it enjoys its privacy, appreciating the freedom to manoeuvre and shield its plans from analysts and journalists.
At least it did until early this year, when Miller announced that the company viewed acquisitions for its housebuilding and property businesses as its twin motors of growth. There followed a 拢69m retail property acquisition, the unsuccessful 鈥� and very public 鈥� battle to take over Cala, and last month鈥檚 拢23m offer to buy Newcastle-based 500-unit-a-year housebuilder Cussins Group.
All this activity has been accompanied by the sort of press attention that must have had 50-year-old Miller reaching for his favourite wet towel. Asked if he has enjoyed having a higher profile, he remarks dryly: 鈥淚t鈥檚 not a question of enjoyment; it just goes with the territory.鈥� But with further acquisitions in the offing, the company and chief executive will remain in the limelight 鈥� and, as many in the industry believe, deservedly so.
Looks good in black
Miller Group is in the minority of construction companies that have remained in the black over the past five years. Thanks to careful husbandry of its profit 鈥� amounting last year to 拢14.8m before tax on a turnover of 拢365.7m 鈥� and shareholders鈥� funds, Miller Group has up to 拢100m to spend in pursuit of 鈥渃onsistent earnings growth and adding shareholder value鈥�. Family trusts and Miller Group employees will be the beneficiaries, and outside investors will have to look on in envy.
Miller himself appears as cautious and buttoned-up as the way he likes to run the company. However, a colleague from a rival firm believes that this conceals a surprising degree of passion: 鈥淗e鈥檚 very keen to make his mark on Miller, and to put it up there in the industry. He鈥檚 very tough, very ambitious and very hardworking.鈥� Another industry observer describes him as 鈥渧ery professional; a clear thinker with a good-quality business鈥�.
As Miller explains, the group鈥檚 entrance on the corporate stage was prompted by a strategic review that highlighted how cash generated by contracting could be best turned to profit elsewhere 鈥� namely in the 1100-unit housebuilding and commercial property arms.
鈥淎lthough we will get better contracting margins as we extend partnering, there isn鈥檛 the same potential for earnings. There鈥檚 a limit to how much profit growth you can get without an acquisition and taking on additional risk,鈥� he explains.
The deals Miller opted for were a failed bid for Glasgow-based property company City Site Estates, followed by the successful acquisition of the Co-operative Retail Society鈥檚 49 retail sites for 拢69m. In April, Miller moved on to Scottish housebuilder Cala, which was defended by managers intent on a buyout. Miller lost the tussle when a technicality in the bid document prevented it from raising its offer price above that of the MBO team.
Miller only wants to spend as long on the subject as he deems polite. Did he feel frustrated when Cala slipped out of his hands? 鈥淭hat鈥檚 history now.鈥� What did he say to the adviser responsible for the document? 鈥淚t鈥檚 history now,鈥� he repeats. 鈥淵ou can鈥檛 be successful in everything. You鈥檝e just got to get more right than you get wrong.鈥�
That Miller fits in well with the company that his uncle grew from his grandfather鈥檚 one-man architectural practice is hardly surprising. Growing up in the Miller family meant spending holidays and weekends on site 鈥� 鈥淲e thought it was what you did on a Sunday.鈥� He joined the company in 1975, after a year at Wimpey, a masters from Glasgow University and a degree in building from Heriot-Watt. He started in the mining division, then progressed through Miller Developments before being appointed group chief executive in 1994.
He describes his role as a well-travelled one, involving spending three days a week away from Miller鈥檚 Murrayfield headquarters on visits to offices and sites throughout the country. There, his input is chiefly in evaluating new opportunities. He certainly seems to have the stamina for these weekly marathons, mentioning yacht-racing, climbing and 鈥渟ki-mountaineering鈥� as his pastimes. But he discusses them reluctantly, rebuffing non-business questions with 鈥淚 don鈥檛 think your readers are interested in that.鈥�
Even if he is keen to move on from Cala, Miller acknowledges that the experience did have benefits. 鈥淲e鈥檙e now much more widely known as a company that has growth ambitions. We鈥檙e able to see a greater number of opportunities than otherwise.鈥� These include sites and property portfolios, as well as corporate acquisitions. The likelihood is that with part of the war-chest remaining, there will be more deals to come.
Embracing PFI and squeezing margins
Meanwhile, the construction business 鈥� which, Miller stresses, looks to its sister property arm for only 10% of its workload 鈥� is embracing partnering and the private finance initiative. It has several health schemes on the go, including Edinburgh Royal Infirmary and is awaiting a decision on Glasgow鈥檚 拢1bn PFI schools contract. Miller hopes the construction business will grow organically by squeezing better margins out of contracts.
One way he hopes to do this is by harnessing IT, seen as 鈥渁 real source of competitive advantage鈥� and a target for future investment. 鈥淭he advantage is to be able to control work in progress, to get real-time information quickly to make fast decisions. When everybody is communicating you cut down on the chance of mistakes,鈥� he says.
One move he seems unlikely to make is to take the company public. Although Miller Group already lives by public standards of corporate governance, the extra regulatory requirements attendant on a listing have little attraction for a company with no need for a cash injection. However, Miller is careful not to rule out the possibility of a flotation at some point in the future. 鈥淲e don鈥檛 need to attract additional equity funding at the moment, although that may change depending on how successful our growth strategy is.鈥�
In fact, Miller appears proud of the company鈥檚 status as an outsider in the club of listed, London-based contractors and is keen to preserve it. 鈥淚t鈥檚 a privilege to be private and to have that additional differentiating factor from our competition.鈥� And being privately owned allows the chief executive to say things such as: 鈥淲e鈥檙e lucky we don鈥檛 have to conform to short-term fashions.鈥� In other words, it suits the Edinburgh style quite nicely, thank you.
