Henry Boot says trading in line as debt slashed

CONSTRUCTION group Henry Boot said it continues to trade profitably in line with its expectations, and has almost halved net debt in recent months.

The Sheffield company said tight cost control and cash generation remain key targets, and it has reduced net debt by about 12m since the end of June to 13m.

Henry Boot said a resurgence in commercial property and land markets during the second half of 2009 and early 2010 has now settled down.

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"Since the election, caution appears to have become the order of the day," said the group.

It added the new-build housing market is operating at output levels 40 to 50 per cent below the annual average for the last 20 years due to the bid deposits now required and concerns over job security.

The group has previously called the coalition Government's planning shake-up, which gives councils discretion on planning and the amount of land to be allocated for housing, a "retrograde step".

It said: "Major changes to the planning system will also create uncertainty and, potentially, shortages of consented sites if the market picks up."

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However, it added its strong pipeline of approved sites means it can capitalise on any shortage of greenfield land that arise.

"We believe our growing pipeline of opportunities should stand us in good stead," it said.

"(Henry Boot) has low gearing with the potential to generate further cash in the near future to reinvest in our portfolio of opportunities, in anticipation of improving economic conditions.

"Furthermore, we continue to have confidence in our ability to generate profit from those opportunities provided general economic conditions remain stable at current levels."

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Since the start of July Henry Boot said its land division has made key land sales to supermarket Morrisons and housebuilder Barratt Developments.

Its construction arm maintained "satisfactory" levels of activity during the period and the group expects to have an order book of worth 70 per cent of 2011's budgeted work by the end of this year.

It added public sector work held up well for the first half of 2010, but it expects opportunities will fall following the Government's Comprehensive Spending Review.

"However, with our mix of public and private sector clients and diverse market presence, we feel well placed to weather the predicted reduction in public sector-related construction activity," it said.