Henry Boot issues perky trading update
Ahead of its full year results in March, the Sheffield-headquartered group said that despite challenging conditions, it had shown resilience in 2023, with development arm HBD noted for its performance.
Chief executive Tim Roberts said: “Despite challenging market conditions for our three key markets, our ongoing focus on high quality land and development in prime locations resulted in a resilient performance in 2023.
“We therefore expect profit before tax for the year to be in line with current market consensus. Furthermore, we have maintained a strong financial position and continued to invest in the business to ensure we are well placed as our markets begin to recover.
“While the housebuilding sector has seen slowing sales rates, our land business is experiencing continued demand for strategic sites with planning in premium locations, as highlighted by the recently announced sale in Swindon, and we continue to selectively grow our land bank.”
Roberts said that the HBD development business has performed ahead of expectations, while the group’s investment portfolio is on track to outperform the wider market, helped by the sale of five properties at an average premium of 23%.
Stonebridge Homes, Henry Boot’s premium housing arm has also grown, having increased its output by 43% during the year.
He concluded: “With a path to lower inflation and improved interest rates, whilst there will undoubtedly be bumps along the way, the economy and our markets have turned a corner, but we expect our results for 2024 to be impacted by these factors. We continue to firmly believe that Henry Boot remains well placed to achieve its medium term growth and return objectives.”
Net debt over the year increased from £487.6m to £77m, as the group continued to invest in its prime land portfolio, growing its housebuilding business – which has just secured a consent with Miller for a major Sunderland project – and building out its committed development programme.
The group has also completed the relocation of its head office functions into Sheffield city centre.
Hallam Land Management
Although HLM sold fewer plots in 2023 than 2022 – 1,944 plots against 3,869 – average gross profit per plot increased due to a large disposal of freehold land at Tonbridge, Kent. A major sale has just been completed to Vistry in Swindon. Eighteen sites were secured in the year, with potential for more than 7,000 homes.
HBD and Stonebridge
HBD has performed ahead of expectations, with continued growth of its completed schemes to a gross development value of £126m (HBD share £111m, 2022: HBD share £83m), of which 100% have been pre-let or pre-sold.
In the year, HBD completed on three industrial schemes totalling 661,000 sq ft with a combined GDV of £104m, and Brainkind’s (formerly the Disabilities Trust) low-carbon building in York.
The committed development programme now totals a GDV of £299m (HBD share: £159m) and is currently 48% pre-let or pre-sold with 98% of development costs fixed. Three speculative schemes; Setl, Momentum and Island are expected to generate interest from occupiers as they progress toward completion during 2024.
In December, HBD bought out its joint venture partner to become sole developer of a £1bn cyber-campus near Cheltenham called Golden Valley, backed by the local authority and lined up for a 2025 start.
Stonebridge Homes continued to grow, increasing its output by 43% in 2023, completing 251 homes, up year-on-year from 175. The medium term target is 600 a year.
Construction
The construction segment traded below expectations in 2023 but remained profitable. Along with the wider market, Henry Boot Construction experienced difficult operating conditions, with performance on two significant projects impacted by the availability of materials and the resultant delays.
HBC begins 2024 with 46% of its order book secured and is actively pursuing an encouraging number of new opportunities, the firm said.
