Henry Boot reports strong start to 2019

Henry Boot was behind the conversion of the Terry's Chocolate Factory in York
Henry Boot was behind the conversion of the Terry's Chocolate Factory in York
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Construction and property firm Henry Boot said it traded well in the first five months of 2019 and it expects this to continue assuming there are no major changes to UK economic conditions arising from Brexit and wider global political uncertainties.

The Sheffield-based firm has previously warned that trading conditions are more challenging as negotiations around Britain’s departure from the European Union have increased uncertainty within the UK property market. The group has said projects have been held back by client uncertainty and planning delays.

At its AGM on Thursday, Henry Boot told shareholders that its land promotion, property investment and development business divisions traded well during the first five months of this year.

The financial performance of the three businesses within its construction division remain in line with expectations.

The group’s chairman Jamie Boot told investors that Hallam Land has a strong pipeline of sales opportunities which are expected to conclude in 2019, although there is some uncertainty with regard to the timing of these deals.

Within Henry Boot Developments, Mr Boot said the group expects to conclude and hand over The Event Complex Aberdeen to Aberdeen City Council on time and in line with the cost plan.

“Given the good start we have made in 2019, and anticipating no major changes to the underlying UK economic conditions arising from both Brexit and wider global political uncertainties, we expect the group’s performance for the current financial year ending 31 December 2019 to be in line with the board’s existing expectations,” Mr Boot told shareholders.

Analyst Alex Stout at Peel Hunt said: “The group has managed to de-risk the model successfully despite ongoing political and economic uncertainty and all three divisions are performing as expected.

“The outlook remains robust, with construction activity for 2019 expected to be ahead of the prior year, ongoing robust demand for consented land and a strong property development pipeline.”

Henry Boot said its strategic land business Hallam Land Management has made a solid start to the year and has a strong pipeline of sale transactions working towards conclusion during the remainder of the year.

The group has concluded land sales totalling over 1,094 plots on nine sites. In addition, it has exchanged contracts on a further two sites and is in detailed discussions regarding the sales of a further 12 schemes which are expected to complete later in 2019 and 2020.

It recently obtained planning permission on two sites for 1,100 units and now has 45 sites working through the sale process consisting of 16,481 units. It also has 10,730 units on 25 sites which are currently subject to undetermined planning applications or are at appeal.

The total portfolio of land promotion sites is now 186 covering over 14,000 acres with a further 46 sites, across nearly 4,000 acres, much of which it expects to be brought into the portfolio subject to the completion of due diligence and legal agreement.

Mr Boot told shareholders that Henry Boot Developments is successfully delivering a number of schemes, whilst acquiring new opportunities for the future.

These schemes include The Event Complex Aberdeen, which is now almost through the development programme and is on course to be completed in August 2019 and handed over to Aberdeen City Council.

The company has strengthened its development pipeline of employment land, following acquisitions at Preston and Wakefield, taking the total amount of employment land across the country under its control to over 900 acres.

In addition to the 539-unit, build to rent scheme in Manchester City Centre, which is on track to complete in summer 2020, the group has a total of 248 private for sale units over four separate development sites and at various stages of planning which it is targeting to be under construction from 2020.

Henry Boot said its jointly owned house builder, Stonebridge Homes, is trading well and is targeting sales of over 150 units in 2019. Reservations and sales to date are consistent with achieving this goal, and it expects the average selling price per unit to be slightly higher in 2019 than in 2018.

The group’s construction business is working across a wide range of sectors, including industrial, residential, custodial, health, commercial, education, leisure and civil engineering.

“We have made a strong start to the year and in 2019 we expect to achieve a higher level of activity than in 2018,” Mr Boot told investors.

“We are currently bidding for some larger contracts which, if successful, will begin to underpin the 2020/2021 order books.

“Our plant hire business, Banner Plant, was slightly down on a like-for-like basis through the first quarter, reflecting slower construction activity across the UK market. While improved weather conditions have seen levels of activity improve slightly, we continue to expect the business to achieve a marginally quieter year than 2018.”