Revenues and profits dip at listed construction and property firm

Jamie Boot, chairman of Henry Boot
Jamie Boot, chairman of Henry Boot

Sheffield-headquartered construction group Henry Boot saw revenues and profits drop in year of ‘economic uncertainty and global political tension’; as chairman hails strong performance to report the firm’s second-best annual results throughout its 133-year history.

Publishing its annual results for the year ended 31 December 2018, the listed firm saw pre-tax profits drop from £55.4m in 2017 to £48.6m; and revenues drop from £408.5m to £397.1m.

The firm has three divisions – Land Promotion (Hallam Land Management);  Property Investment & Development (Henry Boot Developments and Stonebridge Homes); and Construction (Henry Boot Construction, Banner Plant and Road Link A69).

Chairman Jamie Boot said the firm’s two key profit drivers were Hallam Land and Henry Boot Developments. He said it had been “another strong performance” in a year that was typified by higher levels of economic uncertainty and global political tension.

The firm had to make a one-off unexpected pension scheme provision of £1.5m in relation to Guaranteed Minimum Pensions within the year. In 2018, Hallam Land, sold over 3,500 units on 24 sites. It retains a site portfolio of 14,325 acres and still holds 16,489 units with planning permission, held at cost with no planning gain value recognition, that are working through the sale process.

He added that Henry Boot Developments performed well but was not able to progress certain schemes as quickly as it had originally anticipated. Boot said: “This was due to a combination of planning delays and the higher levels of due diligence that now accompany real estate transactions. Furthermore, the 2017 results of this business benefitted from the rapid sales of 164 apartments at the former Terry’s Chocolate Factory which brought profit forward from 2018.”

Stonebridge Homes, its jointly owned Leeds-based housebuilder, achieved 145 completions, up 84% on the 79 units completed in 2017. Boot added: “Once again, planning permission delays have affected the speed at which Stonebridge Homes was able to replenish its land bank. However, its proven ability to deliver much needed housing will result in more opportunities to buy land. We delivered £71m of construction activity in the year, up from £60m in 2017 and, given levels of already confirmed contract work and the number of opportunities open to us, we anticipate further growth in 2019. Banner Plant and Road Link A69, where we own a 61% share through to 2026, performed in line with expectations.

Boot said:”The key strategic ethos of Henry Boot is to create long term value and sustainable growth for our stakeholders by financially empowering and commercially developing our people. In 2018 we continued this journey as we delivered yet another strong financial performance, while replenishing the longer-term property development opportunities within the business.

”We anticipate that 2019 will be a challenging year, as the UK real estate sector adapts to the marketplace following the UK’s decision to leave the EU. Nevertheless, I remain confident that we will achieve sector-leading results, despite the challenges we face, as we continue to build an extensive pipeline of opportunities in each of our businesses.”

Chief Executive Officer, John Sutcliffe said: “We continue to take a long-term strategic approach to land promotion and property development while at the same time focusing on the delivery of the existing pipeline which should enable us to produce good results for the years ahead.

“2019 has started well throughout the Group and will see us delivering significant schemes across the whole spectrum of our strategic land, property investment and development, housebuilding and construction businesses.”

Vivienne Clements, director and head of Henry Boot Developments’ (HBD) Sheffield office, added: “The Henry Boot Group of companies has produced another strong set of results.  HBD’s robust performance is underpinned by our long-term, strategic approach to development, our commitment to quality and our experience in delivering JV projects, which has proven a successful delivery method for our business and, as such, remains a central pillar of our future strategy.”

“From our Sheffield headquarters, we have invested heavily in Yorkshire and the north east region, continuing to develop our flagship industrial scheme at Markham Vale, progressing the 370-acre International Advanced Manufacturing Park and further expanding our development pipeline. Although the majority of our projects remain self-funded, we are also actively targeting large-scale projects and continue to build relationships with funding partners to bring those schemes forward.”

Clements, will speak alongside HBD managing director Ed Hutchinson at TheBusinessDesk.com’s Sheffield property lunch on May 2; tickets for which are now available.

Boot added: “We anticipate that 2019 will be a challenging year, as the UK real estate sector adapts to the marketplace in anticipation of the UK’s departure from the EU. In advance of this, we have taken the opportunity to reduce gearing through 2018 to take advantage of any opportunities which may arise through 2019. Henry Boot Construction has started the year with a strong committed order book, certain commercial developments anticipated to start during 2018 have now commenced and one sale expected to complete in 2018 completed in January 2019.”

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