Henry Boot bullish as economic recovery takes hold
THE general economic recovery taking stronger hold and confidence returning to the construction market has helped Henry Boot deliver a strong set of half year results which has seen operating profit jump 79%.
For the six months ended June 30, the South Yorkshire construction and development company’s revenue was lower at £65.8m from £81.8m last time, as the £15m one-off sale of land at the Chocolate Factory site in York in the prior period was not repeated.
However, operating profits were 79% higher at £14m as a result of several land sales and combined development property sale profits and valuation gains of £2.1m, compared to a combined deficit of £0.3m in 2013.
Profit before tax was 81% higher at £13.4m from £7.4m in the corresponding period last year.
Chairman John Brown said: “Commercial development activity is now at its highest level since 2007 with new, pre-let developments achieving hurdle rates of return, expected to commence in the second half of the year. The combination of this increased level of commercial development, our strategic land sites with well over 10,800 permissioned housing units available for future sale and the solid returns from the construction segment should strongly support growing shareholder returns into 2015 and beyond.”
In York, Henry Boot said it is making “good progress” with the redevelopment of the former Terry’s Chocolate Factory following its purchase and onward sale of the part of the site with residential consent to David Wilson Homes last year.
It said terms are now agreed with a specialist residential developer to jointly convert the multi-storey factory building into more than 150 apartments, while sale terms have recently been finalised with a care home operator to convert the former headquarters building into an assisted living operation.
“These developments, and the interest we have from hotel operators for the balance of the site, are all conditional upon securing detailed planning permission but we hope to make substantial progress with this by the year end with a view to commencing activity on site in 2015,” the company said.
Looking ahead to the remainder of the year, Henry Boot said: “Trading in the first half of 2014 has been strong and we have a considerable number of strategic land sites for sale. The completion timing of these sales is always very difficult to predict with certainty.
“However, based on a prudent assessment, we currently anticipate trading profits including revaluation gains to exceed the board’s initial expectations for the year.”
The board has approved a 7.7% increased interim dividend of 2.10p per share, up from 1.95p last year.
