Boot well placed for house building recovery

The Sheffield-based group, which promotes land through the planning system and also builds supermarkets and distribution centres, said trading profits fell to £4.1m in the first six months of 2012, from £11m a year earlier.

Profit before tax was £5.8m, compared with £9.1m in the same period last year. The results were in line with its expectations and reflect a “challenging” environment, said chairman John Brown.

The firm did not sell any major parcels of land during the six months, but it invested heavily, buying 700 acres of land.

“Over the next year we are in a position to market several consented sites which, given the slightly improving outlook for the housing market, should see good demand,” said Mr Brown.

“Our balance sheet strength and ability to commit funding to land and property development without recourse to specific external funding, is resulting in a significant uplift in competitively priced opportunities arising.

“These sites will serve to increase our profit generation capability through the next few years, but more so if markets improve more quickly than we currently anticipate.”

Housebuilders Persimmon and Bovis have reported rising profits and increased output over the past week, amid a tough but stable housing market.

Henry Boot said its land interests grew from 8,051 acres at the end of 2011 to 8,761 acres at the end of June.

The inventory value of these assets increased to £68.1m from £58.8m six months earlier, which the group said reflects its growing and increasingly mature portfolio.

The sites are across the UK, but have a geographical bias towards the East Midlands, South, South West and central Scotland.

“The underlying need for more housing in the UK is, in our view, undeniable,” said the group. “However, house buyers have low levels of equity to commit and the relatively tight mortgage criteria applied by banks is contributing to the low level of funds available for residential property purchases.”

It hopes that the Government’s NewBuy housing indemnity scheme – where builders and the State share the mortgage risk with buyers – will bring more first-time buyers into the housing market.

“The recent statements made by the major UK house builders indicate that the market has continued to recover slowly in 2012 and we anticipate that this slow recovery will continue,” said the company.

“The Decentralisation and Localism Bill, together with the National Planning Policy Framework, have been introduced by the Government with a view to enabling decisions to be made at the local level, while facilitating an increased supply of housing land and new homes.

“We are seeing evidence in local authority and planning appeal decisions that, as a consequence of the new system, more planning permissions are being granted for much needed additional housing development.”

The company recently bought 56 acres of land in Skipton, North Yorkshire, from receivers, for the development of a mixed-use business park. The preparation of a comprehensive planning application is underway.

The construction division has secured orders for its budgeted turnover for 2012, and is starting to take orders for 2013.

While this is slightly ahead of its expectations, the company said it continued to remain cautious regarding the amount of traditional construction work that would arise in 2013 and beyond because of the public spending cutbacks.

Henry Boot said the social housing sector continued to provide a steady flow of work under long-term frameworks in Scunthorpe, Manchester, Leicester and Doncaster.

The company, which has Jamie Boot as its group managing director, is involved in a number of high profile Yorkshire schemes.

The group recently completed the refurbishment of an 18,000 sq ft retail unit at Clifton Moor, in York, to Great Outdoors.

It has also exchanged an agreement with Calderdale & Huddersfield NHS Foundation Trust, which will lease Henry Boot’s refurbished Acre Mill, on a 25-year term.

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