Half-year operating profits at Henry Boot (BHY), our 2013 'Value Tip of the Year', jumped 33 per cent to £7.8m as demand for consented land boosted profits at the group's Hallam Land operation from just £0.17m last year to £5.65m. And to cope with demand, the group increased its land bank to a record 9,565 acres.
Trading on the construction side remained tough, though, and while down from £3.51m a year earlier, operating profits were still a creditable £3.06m. Furthermore, the group has already achieved its targeted order book for the full year and has already started to build orders for 2014. A small joint-venture housebuilding operation has also been set up, currently selling from four sites around Leeds. The attractions here are that operating on sites of less than 15 units, there is no competition for the sites from the big builders, while there are no affordable housing requirements on such small sites. Finance director John Sutcliffe reckons that this could generate profits of £0.5m this year.
Operating profits on the property investment and development side fell from £4.02m to £1.26m, reflecting a £0.51m downward property valuation (on a few short-lease properties) compared with last year's fair value gains of £1.78m. However, redevelopment on a number of investment properties is expected to lift valuations in the second half, and overall net asset value per share rose from 139p at the end of 2012 to 144p.
Broker Investec Securities is forecasting full-year normalised pre-tax profits of £16.3m and EPS of 8.2p (from £13.4m and 7p in 2012).
