Henry Boot prepares to pay £1.5m pension payment after High Court ruling

Henry Boot's Markham Vale scheme

Sheffield-headquartered housebuilding firm Henry Boot is preparing to pay a “one-off” £1.5m pension provision payment after a high court ruling last year stating that firms needed to equalise payments between male and female employees.

This morning issuing a trading update for the year ended 31 December 2018, the listed firm also said its real estate activities traded in line with the board’s expectations, after including the “one-off” Guaranteed Minimum Pensions pension provision, adding: “without which we would have slightly exceeded expectations.”

But it also said that its development division had been hit by uncertainty, with prospective developments held back due to client uncertainty or planning delays.

Henry Boot said it real estate performance was achieved “despite trading conditions becoming more challenging through the year, as negotiations around the UK’s departure from the EU served to increase the level of uncertainty within the UK real estate market.”

The pension payment of £1.5m will be included in its accounts for the year ended 31 December 2018, full details of which will be published in the spring. The payment is as a result of a UK High Court ruling in respect of the Equalisation of Guaranteed Minimum Pensions handed down on 26 October 2018 to several companies to comply with regulation.

Henry Boot added it received advice that any one-off charge should be taken to profit and loss, rather than through other comprehensive income, as with changes in the Pension Deficit.

Henry Boot operates several divisions. Its Henry Boot Development division results were affected by macro uncertainty. Henry Boot added that “prospective developments held back by a combination of client uncertainty or planning delays, which affected the timing of starts on site at certain projects.”

The draft full year valuation of the Group’s investment property portfolio was broadly neutral – unwinding gains seen at the half year results – as increases in the value of the Group’s logistics and industrial assets were offset by deficits on retail investments. The firm said that Henry Boot Developments’ largest development project, ‘The Event Complex Aberdeen’, continued to progress well and is expected to conclude mid-2019.

The firm’s Hallam Land Management division “performed exceptionally well”, helping to replenish the UK house builders land banks following their house sales in 2018, and identifying new site opportunities to replace those sold.

Stonebridge Homes, the firm’s jointly owned house builder, achieved 145 sales (2017: 79 sales), producing turnover of £35m.

Activity within its construction segment “held up well” and Henry Boot Construction started this year with a strong committed order book and, in addition, is expected to agree a number of contracts in the first half of 2019, further increasing workloads.

Its Banner Plant and Road Link A69 divisions both performed in line with management expectations.

The Group’s balance sheet remains strong. Gearing at 31 December 2018 was 7%, as it positions the business to be able to react to whatever challenges and opportunities arise through 2019.

John Sutcliffe, Chief Executive Officer, said: “2018 proved to be another successful year for Henry Boot. It is always difficult to finalise deals or new developments in a specific financial period and, as noted above, three commercial developments anticipated to start during 2018 will now commence in 2019, and one sale expected to complete in 2018 completed on the 4th January 2019.

“Although we remain mindful of some uncertainty in the UK real estate market, these transactions, added to the already committed and contracted activity for 2019, give us a good start to the year.”