Boot set to step out as market activity resumes

CONSTRUCTION firm Henry Boot yesterday told the City that profitable development opportunities were beginning to emerge.

The Sheffield-based firm, which promotes land for housing through the planning process before selling it to housebuilders, said that it planned to capitalise on its store of assets, as the economic recovery gathers momentum.

In a pre-close trading statement, the company said: "The group's financial performance has remained in line with management expectations and there has been no material change in the group's financial position since the issue of the interim management statement on November 12, 2010."

Revenues for the year ended December 31, 2010 are expected to be around 128m, with anticipated underlying trading profit in line with management expectations.

The statement added: "Subject to audit, the disclosed trading profit is expected to be higher than underlying profit, following credits to the statement of comprehensive income arising from the pension scheme liability management exercises undertaken in the second half of the year."

Property valuations are anticipated to be largely unchanged from June 30, 2010 because investment values have been "relatively stable".

Having renewed its bank facilities in 2009 for three years, the group said its balance sheet remained robust, with gearing at the year-end of around six per cent, compared with 18 per cent in 2009. The statement said: "In the short term, the board remains focused on maximising the returns from the group's businesses whilst continuing to manage debt levels prudently.

"Selectively, profitable development opportunities are now beginning to emerge and over 2011 and 2012, we hope to begin to reinvest resources back into these areas of activity. In the longer term, as the nascent economic recovery gathers momentum, the board believes that the group will increasingly capitalise on its store of assets and opportunities, capable of generating excellent returns as markets improve, and therefore remains optimistic about the group's future prospects."

The group expects to announce its preliminary results on Wednesday, March 23,

John Sutcliffe, the group finance director, said the economy had still to feel the effects "on the ground" of the Government's public sector spending cuts.

He said possible cutbacks in the numbers of staff employed in planning departments could also have an impact on the planning process.

London-based analyst Philip Sparks, of Evolution Securities, said in a note: "Henry Boot's trading has been stable throughout 2010.

"As expected, sales of housebuilding land will be well down on historic norms, but there were signs of a slight pick-up in activity at the end of the year.

"The one surprise in the statement was that management efforts to restructure their pension fund have led to a non-recurring credit when Henry Boot reports.

"Excluding this credit, PBT (profit before tax) is in line with forecasts."