CONSTRUCTION to property developer Henry Boot said 2011 results will beat expectations, but it warned that the eurozone crisis could have a knock-on effect on the UK property market.
The Sheffield-based company is concerned that the European sovereign debt crisis could stop UK banks funding the property market.
“There is total uncertainty with the European scene,” said managing director Jamie Boot.
“It has a knock-on effect on things over here. It is a concern that we can’t influence.”
While Henry Boot is relatively immune as it has no debt and unused banking facilities of £50m, it is concerned that UK banks might not lend as much to other players in the property market.
“It won’t affect us, we’ve got good banking facilities, but it might affect other property companies or investors from buying from us,” said Mr Boot.
The group was expected to announce pre-tax profits of £13m this year, but Mr Boot said they would be slightly ahead of expectations thanks to a number of land promotion deals.
“We had some good deals,” said Mr Boot. “We managed to do three this year in Rugby, Oxford and Countesthorpe and hopefully we’ll do some more next year.
“We’re cautiously optimistic. We’re in a good position, but we can’t help what’s going on in Europe.”
The group said it has a number of retail, commercial and industrial development opportunities, which are substantially pre-let and due to start in 2012
It added that if the market continues to be stable, it expects to achieve a fair, risk-weighted return.
In Yorkshire it has submitted new planning applications at Bradford for 296 plots for housing.
It also has an application for a 12.5kw wind farm at Selby.
“We’re taking it through the planning procedure,” said Mr Boot. “We will sell it on to a wind farm operator. We have no-one in mind yet.”
Terms have been agreed to secure an operator for a 45,000 sq ft food store at Thorne near Doncaster, which is a joint venture development site with Royal Bank of Scotland.
“We anticipate this development will commence on site in 2012,” said Mr Boot.
The sale of a recently completed 4,000 sq ft Tesco Express store in Bradford has been finalised.
In addition, terms have been agreed for the sale of the newly developed 10,000 sq ft industrial investment on its retail and industrial park in Rotherham.
The company said the housing sector continues to provide a steady flow of work under long term frameworks in Scunthorpe, Manchester, Nottingham and Doncaster.
It added that health sector work is progressing well with several schemes being undertaken for the Sheffield Teaching Hospitals. This included refurbishing of wards at the Northern General Hospital.
It is also working on a major new healthcare facility for the joint venture between Rotherham MBC and Rotherham Primary Care Trust, which is on target for completion early 2012.
Henry Boot believes it is well placed to meet inevitable growth in the UK housing market.
The group said a hiatus in UK housebuilding during the recession has led to pent-up demand, which it can help to satisfy with its greenfield landbank.
However, a sustained recovery remains distant as there is little sign of a substantial increase in activity next year.
Henry Boot pushes land through the planning system before selling it to housebuilders, also working on projects ranging from social housing to new hospital wings.
Trading profits in the first six months of the year increased to £11m from £5.8m a year earlier. Pre-tax profits edged up to £9.1m from £9m a year earlier.
It has wiped out debt, compared with net debt of £11.4m a year earlier.
Henry Boot’s land promotion business kept land holdings level at 8,055 acres. The value of its land portfolio slipped to £52.6m from £55m a year earlier, but land sales of £23m were up from just £4m a year earlier.
The group said it is seeing a polarised market, with the London and South East market remaining “vibrant”, while much of the North remains “sluggish”, with the exception of “hotspots” such as Harrogate, York, Leeds, Edinburgh and Chester.
It recently launched a renewable energy arm to tap into growing demand for small clean power schemes. Henry Boot is targeting annual revenues of £5m from the venture within a couple of years.