Profits up as Henry Boot steps confidently into 2011

The Sheffield-based firm hiked its dividend by 40 per cent as property revaluations lifted 2010 pre-tax profits to £18.9m from £11.9m losses a year earlier.

Shareholders will receive a 2.15p final dividend, giving a 3.5p per share total payout, compared with 2.5p a year earlier.

“We’ve managed the recession pretty well and are in good shape to take advantage of a slowly recovering market,” said finance director John Sutcliffe. “It’s definitely a market which we can make money in.”

Shares in the group surged 7.50p to 116p.

Henry Boot was boosted by a £0.6m property revaluation, versus £22.4m writedowns in 2009.

Since the end of the year, the builder has cleared its debts, which stood at £32.1m at the end of 2009. It expects to generate more cash in 2011, and sees opportunities to reinvest this into its “extensive portfolio of land and development opportunities”.

Mr Sutcliffe said the group owns or controls land which could generate £250m to £300m if developed.

“Development can be profitable,” he said. “We are in a position where we can use that land.”

Since resuming development in 2010 – beginning a scheme in Warminster anchored by supermarket chain Waitrose – Henry Boot has also started work on a small Tesco supermarket in Bradford, plus a 15,000 square foot industrial unit and a 41,000 sq ft office and warehouse development at its Markham Vale business park, in the Midlands.

It has also submitted planning applications for a £50m retail development in Daventry, Northamptonshire, has won permission for a 200,000 sq ft shopping centre in Tamworth, and aims to build budget hotels in Richmond, in London, and Malvern.

However, Mr Sutcliffe said the group is unwilling to commit to speculative developments, and will begin building only when it has secured sufficient lettings.

The firm, still headed by its original founding family, expects public sector spending cuts to weigh on its construction arm. This division “performed well” in 2010, hitting targets and beating budgeted profit margins.

But it was forced to axe about 75 jobs in 2010 as margins shrunk and work dried up. In total, the division has halved its workforce to about 225 over the past three years. Mr Sutcliffe said he believes the group will still win public sector projects despite spending cuts, such as the Government’s axing of the Building Schools for the Future (BSF) programme.

The group’s land promotion arm, which pushes sites through the planning process, secured a number of planning successes and land sales, which helped it to operating profits of £0.6m, compared with £3.1m losses in 2009.

Philip Sparks, analyst at house brokers Evolution Securities said it was “another strong performance” and reiterated a buy recommendation.

Boardroom changes

Henry Boot chairman John Reis is to stand down after almost 30 years with the group, triggering a raft of boardroom changes.

Mr Reis, who has been chairman for 15 years, said it was an “appropriate time to retire”, and leaves after the group’s AGM in May.

Non-executive director John Brown, the former chief executive of Speedy Hire, will take over. The group has appointed chartered accountant James Sykes as a non-executive director.

Mr Sykes heads the private wealth arm of accountants Saffery Champness.