Prudent approach from Henry Boot as land sales boost figures
PROPERTY development group Henry Boot today said it had increased trading profits by 53% thanks to land sales but the difficult market saw its pre-tax profits drop by 59%.
The Sheffield-based group, run by chief executive Jamie Boot, is taking a prudent approach by reducing debt and focusing on the performance of its investment properties and construction arm which has a number of key public sector contracts.
The group has maintained its final dividend at 3.75p, giving a total dividend for the year of 5p.
Finance director John Sutcliffe said its record trading performance with profits of £44m was thanks to several large land sales that completed last year but were part of the 2007 pipeline.
Mr Sutcliffe said that the group had a property impairments and revaluation deficit of £22.4m last year compared to an £18.1m surplus in 2007.
He said the business would focus on cash generation from its investment portfolio and construction, PFI and plant hire division which operates the A69 Newcastle to Carlisle road and has public sector contracts for housing and prison projects.
Mr Sutcliffe said that he did not believe the property market has yet reached “equilibrium” and does not see that happening this year.
“Our approach is to manage carefully through the next couple of years to get ourselves into a good position to pick up on things when the market starts to return,” he said. Henry Boot plans to focus on getting planning consent for houses on its land as it believes it will then be well positioned to benefit when the market turns as many housebuilders have substantially reduced their land holdings.
Henry Boot saw pre-tax profits fall 59% to £19.3m from £46.5m in the 12 months to December 31.
It reduced its debt at the year end to £49.3m and gearing was 26% with plans to reduce it further this year.
Chairman, John Reis, said: “Given the very difficult market conditions that have arisen in the UK property market during 2008, I am pleased to report a further set of solid results, with the exception of our investment property portfolio where we have seen falling values throughout the year.”
“Our broad mix of businesses and prudently geared balance sheet, allied to a cautious strategy, gives the board confidence that we will manage the next phase of the cycle successfully and deliver growing value to shareholders once again.”
