The lie of the land just fine for Henry Boot

LAND and development group Henry Boot is looking forward to a stronger 2013 following a big jump in planning permissions which will feed sales during 2013 and beyond.

The Sheffield-based group, which promotes land through the planning system, has invested heavily in its land portfolio which now stands at over 9,000 acres.

Finance director John Sutcliffe said: “2013 is going to be better than 2012. In 2011 we had a very good year selling land and made £11m in profit in that division.

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“We made a £2m profit last year which was quiet for disposal of land, but we were very busy with the planning process.”

He was speaking yesterday as the group announced pre-tax profits of £13.9m for the year to December 31, above analysts’ forecasts of around £13m.

The figure was down from 2011’s £16.1m profit, but this was explained by the shortfall in land sales last year.

Analyst James Tetley at N+1 Singer said: “2012 full year pre-tax profits of £13.9m is ahead of our £12.9m estimate, fuelled by a strong result from the Property Investment and Development division, a robust performance from Construction and in line with guidance Land Development profits.

“Although Land Development profits were subdued in 2012, it has been an exceptionally busy year for this division.”

Analyst John Cahill, at Investec, said: “Henry Boot has reported another strong set of results, with core earnings in line with expectation, and reported earnings well ahead as the company captures – and largely crystallises – development surpluses.

“The company is benefitting from long-term careful management of its land bank in the Hallam Land business, and looks well placed to benefit from the changes to the planning system, which is now becoming relatively easier to navigate.”

The company said that despite the Government’s improvements to speed up the planning system, there remain some troubling aspects.

It said that while it is understandable that local authorities want to share in the enhanced value of land, sometimes they fail to recognise that land values are not what they were several years ago.

“The log jam has been the planning process,” said Mr Sutcliffe.

“A lot has been done to sort it out, there’s been a big commitment. Housebuilders have all shown significant progress on the previous year. The housing market is definitely on an improved trajectory.”

The group said it has made a strong start to 2013 across all its businesses.

In the property business, the group said it had considerable success reducing voids in existing investments. This included 18,000 sq ft of retail warehousing taken at York.

A number of active developments are in progress including a 56,000 sq ft redevelopment of a derelict mill in Calderdale, West Yorkshire, into clinical space for use by the NHS, which is due for completion in November.

The development is a 50-50 joint venture between Henry Boot and Calderdale and Huddersfield NHS Trust. Mr Cahill at Investec said: “The eventual outcome of taking whole ownership, at Henry Boot’s discretion, remaining in joint venture, or total exit gives management numerous options to crystallise development gains without risking the balance sheet.”

The partnership is also promoting a mixed-use development on a separate 23-acre former hospital site in Huddersfield, which is surplus to the Trust’s needs.

In North Yorkshire, the purchase of a 56-acre site on the edge of Skipton was completed in the first half of 2012 and subject-to-planning contracts were exchanged with a major retailer.

The site will be developed as a 40-acre mixed-use scheme.

The planning application is expected to be submitted by the middle of 2013, following extensive pre-planning consultation work and Henry Boot hopes planning permission will be granted by the end of 2013.

The group announced a final dividend of 2.9p, giving a total dividend for the year of 4.7p, an 11 per cent increase on last year.

Mr Sutcliffe said the group is working its way up to the 5p dividend last seen in 2008 before the banking crisis.

The recession saw the dividend halve to 2.5p in 2009 and it has been slowly working its way back up with 3.5p paid out in 2010 and 4.25p in 2011.

“We’re growing it back to the 5p level and we anticipate that happening in the 2013 year,” said Mr Sutcliffe.

“We’ll see where we go from there.”