Henry Boot’s conservative approach still paying off

The Sheffield-based company said it believes the recovery will be a drawn out and uncertain process.

But it has seen an improvement in some of its markets.

The group said it is pursuing a number of opportunities in property development. It has secured a ‘minded to grant’ planning permission for a mixed use development, including a 45,000 sq ft supermarket on a 23-acre site in Thorne, Doncaster, which is being redeveloped in conjunction with The Royal Bank of Scotland.

Analyst Philip Sparks at Evolution said: “Although the housing and commercial property markets could hardly be described as ‘exciting’, Henry Boot is quietly completing deals, winning planning permissions and identifying opportunities for redevelopment.

“Town planners will have to take a gradualist approach to redevelopment, focusing on smaller schemes that meet the needs of local communities. This plays into the hands of regional developers with strong balance sheets.

“Henry Boot’s conservative approach to project and financial risk served it well through the credit crunch, and is likely to do so in its aftermath.”

In Rotherham, it has exchanged contracts to occupy a speculatively built 10,000 sq ft industrial unit located on its retail and industrial development, which is anchored by B&Q.

Practical completion of a 4,000 sq ft Tesco Express foodstore in Bradford has also taken place and terms for the sale of the investment have now been agreed.

Henry Boot’s managing director Jamie Boot said UK construction activity fell in the first quarter of 2011 due to adverse weather conditions in the early part of the year, the very tight constraints on public spending and continuing illiquidity in the housing market.

Despite this he said the group’s construction business is performing well in the challenging market place.

Henry Boot has won contracts with Sheffield Primary Care Trust and a major health care facility in Rotherham.

“Competitively priced work is available and we are looking at alternative work flows where higher margins are achievable,” he said.

The group reported stability in the housing land market.

“House builders have reported improving results, albeit on historically low volumes, though recovery remains slow reflecting the continuing lack of availability of mortgage finance,” said Mr Boot.

“However, these trends mask the fact that underlying demand for traditional family housing remains buoyant in certain areas of the country. Acquisition demand for sites in these areas, with planning permission for this product, are highly sought after as the supply of sites remains very restricted, particularly under the current planning regime,” he added.

The group recently completed 27 new homes for Sheffield City Council and it is continuing to work on social housing refurbishment contracts in Doncaster, North Lincolnshire, Manchester and Nottingham.

Speaking about results for the year so far, Henry Boot said it has continued to trade in line with expectations.

Trading conditions have been stable with a slight improvement in the group’s land, property development and plant hire businesses.

“The plant hire business also continued to trade satisfactorily in these difficult conditions and year to date turnover is marginally ahead of the same period in 2010,” said Mr Boot.

The company has net cash of £16.5m compared with net borrowings of £11.4m at the end of 2010.

No revisions to property values have taken place in the period and the next formal investment property valuation will take place next month.

In 2010 Henry Boot reported a strong return to annual profitability.

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