The decline in construction workload saw group turnover shrink at Henry Boot plc in the year to 31 December 2011. Turnover reduced 13% to £114.6m (2010: £131.9m). Less land development turnover during the period also contributed to the decline.
Pre-tax profit shrank 15% to £16.1m (2010: £18.9m) while operating profit fell 19% to £16.9m (2010: £20.9m).
However, with net debt reduced from £11.4m to £2.3m during the year, gearing is just 1% and the company is financially strong enough to push on with its own development programme.
Chairman John Brown said: “Although commercial property development remains challenging, with the combination of construction, tenant and valuation risk still at historically high levels, we have selectively started development activity once again. As values and occupier demand stabilised during 2011, we committed resources to prepare a number of sites for development in 2012 where we have now secured substantial pre-let or pre-sale agreements with good quality tenants.”
He added: “Construction activity remains very subdued with difficult market conditions and we do not expect any change to either activity or competitive tender pricing levels in the short term. We continue to be selective in the opportunities we pursue and focus on work streams where higher margins are still achievable. We are also being proactive in sourcing work and this has led to a reasonable level of enquiries and tender opportunities such that we have secured more than 60% of our budgeted workload for 2012; consistent with prior years. In general, we have seen a reduction in the value of individual contracts as new build schemes have been replaced by a growing proportion of refurbishment projects.”
The company also invests significant time and resource to get planning consents for housebuilding on its land portfolio. It has 10 sites with permission, six at appeal stage and eight awaiting decisions. Applications are also being prepared for a further 20 sites.
Mr Brown said: “Whilst still challenging, we have worked hard to adapt and improve our land and development sites so that they deliver acceptable returns for the group in the more competitively priced market in which we now operate. I believe we are adapting well to the issues that affect our sector and, though it is likely that the recovery will be patchy and protracted, our strategy will allow us to make further strides as a business."