Boot gives cautious support to planning shake-up

The Sheffield-based company, which reported a 15 per cent slip in 2011 pre-tax profits to £16.1m yesterday amid tough trading conditions, was reacting to changes to the planning system announced on Tuesday.

Under the new rules some 1,000 pages of guidance have been slimmed down to 50 in a bid to boost sustainable development.

Henry Boot’s finance director John Sutcliffe welcomed the news that planners can no longer reject a site if it has all the right credentials.

“We’ve got a lot more sites coming through application this year, between 30 and 40,” he said. “Six years ago we had five to 15. Yes the new rules are an opportunity, but they will have to settle down.”

He was speaking as the group reported annual results for the year to December 31. The £16.1m pre-tax profit was better than had originally been thought as the group faced continued challenging trading conditions.

The group’s managing director Jamie Boot, pictured, said the market’s recovery is likely to be “patchy and protracted”.

Mr Sutcliffe said a lack of mortgages and the high levels of deposit needed to secure one have led to a sharp drop in the number of homes being built.

“Before the downturn, housebuilders were producing 150,000 units a year, now it’s down to 80,000 to 90,000 a year so the overall level of supply is a lot lower,” he said.

“I do think there is scope for housing to grow although I’m not saying that we’ll get back to 150,000 units. If we got back to 100,000 units I’d be more confident.”

He believes 2012 will be a flat year, but the market should see some uplift in 2013, 2014 and 2015.

“The Government is doing the right things to reduce the deficit. UK companies are feeling more confident about life,” he added.

The group has set a target of returning the dividend to its pre-recession level of 5p a share and said its performance in 2011 and prospects for 2012 give it confidence it can make progress towards this aim.

The board has recommended a 21 per cent increase in the 2011 final dividend to 2.6p, which gives a total dividend of 4.25p for the year, also up 21 per cent.

Mr Sutcliffe said the company hopes to get the dividend back up to the 5p level over the next two years.

“We’ve had a very good year,” he said. “2012 will be more difficult in terms of profit as we had a significant sale in Buckingham coming through last year, but 2013, 2014 and 2015 could be quite good years for us.”

Analyst Robin Hardy at Peel Hunt described the results as a “solid performance”. “Boot guided to above consensus pre-tax profits in January but also cautioned that 2012 would most likely see a small step back as property disposal gains would be hard to repeat,” he said.

“We are forecasting that pre-tax profits will drop in 2012 assuming there are no further property disposals, but clearly if there is an attractive approach for anything in the portfolio, this could change.

“Boot has a good supply of already consented land and a substantial amount in progress for planning.” House broker Investec Securities said: “Henry Boot has reported a strong set of figures for 2011, with profits boosted by sales from Hallam Land over the year.

“While this will not be replicated in 2012, investors should take confidence from the high levels of activity the company has in place to drive results forward in 2013 and beyond.”

During 2011 the group concluded the sale of a Tesco Express in Bradford and two industrial units in Rotherham.