Henry Boot returns to £9m profit
CONSTRUCTION and development firm Henry Boot returned to half-yearly pre-tax profits of £9m but warned of challenging times ahead.
The Sheffield-based firm turned around a £20.3m loss for the first half of 2009 on the back of a rise in trading profits from £3.7m to £5.8m.
The results were influenced heavily by a stabilisation of the property market as the company recorded an increase in the value of its investment properties of £1.7m for the six months to the end of June 2010 compared to a £23.6m decrease last year.
The company announced it would be increasing its interim dividend to 1.35p.
Henry Boot’s operations are split into four divisions covering property development, construction, land management and plant hire.
John Sutcliffe, finance director at Henry Boot, said: “It’s been a pretty challenging couple of years and it’s probably going to be challenging for another two or three years but the market is relatively stable at the moment and it is a market where you can make money if you are careful.”
Mr Sutcliffe pointed to cuts in public spending as one of the issues facing the company in the years to come. “A lot of construction companies have done a lot of work for local authorities. We do a lot of work on Decent Homes, over the last three or four years we have refurbished 10,000 units in South Yorkshire and that has been the mainstream of that division,” he said.
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But the company’s Hallam Land Management arm, which has interest 8,162 acres worth £55m, is expecting to benefit from changes to the planning system brought forward by the Coalition Government which could restrict new green field building opportunities and increase the value of land Hallam is already managing through the planning process.
“On the development side, I think two years ago you wouldn’t have contemplated undertaking a development because you didn’t know what the base level of asset values would be. But build prices have come down, land owners are taking a more realistic approach and tenants are coming to realise that some of those large packages they have been able to let are not available and they have got to take a different view,” Mr Sutcliffe said.
The company’s half-yearly report said Henry Boot was continuing to market its 100,000 sq ft retail warehouse development at Rotherham, currently anchored by a 50,000 sq ft B&Q, but would not be starting the second phase until occupiers could be found. Occupiers have been found to lease 10,000 sq ft of industrial space and “a good level of interest” has been expressed on the four acres of industrial land.
Negotiations over planning permission for the final 16 acres at Priory Park, in Hull, were described as “progressing well” with permission expected to be granted in the autumn. One previously vacant industrial unit had been sold and terms agreed on another.
