Henry Boot wary over planned public spending cuts

Sheffield-based Henry Boot, which said it is trading profitably and in line with its expectations, warned work on public sector building projects may dry up as spending cuts are made by the new government. Improved trading conditions seen late last year have continued into 2010, the group said, but added the recovery is "patchy and moving at a modest pace", with intense competition.

"Activity forecasts for the rest of 2010 are well supported by our secured order book," said the group. "Whilst we are now beginning to build the order book for 2011, we remain cautious regarding the amount of work that will arise in the near future from the public sector given the well-publicised prospective cutbacks in public expenditure."

The group's land promotion and development arm has seen "muted" strengthening of the land market as battered housebuilders slowly rebuild their stocks. Since the start of the year it has won planning permission for more than 500 units at sites including Kettering, Rugby and Chesterfield. It plans further applications to develop sites in locations including Kilmarnock, Coventry and Market Harborough.

The group also sold five acres of land in Mansfield to housebuilder Barratt Developments, plus completed the sale of 12 acres of optioned land in Worcester.

Henry Boot's property investment division completed and let a small shopping centre in Mansfield, which it will soon sell to raise 2m.

Other highlights included a contract to design and build a 15,000sq ft industrial unit in Markham Vale in the East Midlands, and winning planning permission for a 20,000sq ft office in Richmond, London.

Its construction arm started building 27 new homes for Sheffield City Council, and also won three building contracts for Sheffield hospitals.

The firm, still headed by its original founding family, said tight control of costs and cash generation helped it slash debt by about 10m since the end of 2009 to 23m on May 7, keeping it within its banking covenants.

"If the economic recovery establishes itself more strongly over the remainder of 2010, we are confident that we will be well placed to benefit from the improvement in market conditions," it said.