Henry Boot saw group revenue and profits drop by a third in the first half of 2012, despite a rise in construction profits.
The contractor and developer saw group revenue fall from £66.9m to £43.3m, with profit before tax down from £9.1m to £5.8m, as it built up its land bank.
Construction revenue dipped from £38.8m to £35.9m in the period to 30 June, while pre tax profits increased from £3m to £3.9m.
In land development, revenue from land sales was just £0.8m compared with £22m last time, as Henry Boot made no significant sales and focused on buying plots. It saw a loss of £27,000, compared with £7.9m of profit last time. Property investments returned to profit.
The group’s net debt at 30 June 2012 was £22m, up by £19.8m on the 31 December 2011 cash figure of £2.3m.
Chairman John Brown said: “We have an unprecedented number of strategic land sites working through the recently revised planning process.
“As anticipated, we did not conclude any material land sales in the first half of 2012, however, we continued to invest heavily and added over 700 acres to our land portfolio.
“Over the next year we are in a position to market several consented sites which, given the slightly improving outlook for the housing market, should see good demand.
“Our balance sheet strength and ability to commit funding to land and property development without recourse to specific external funding, is resulting in a significant uplift in competitively priced opportunities arising.
“These sites will serve to increase our profit generation capability through the next few years but more so if markets improve more quickly than we currently anticipate.”
It said the social housing, health and education sectors continue to provide a steady flow of work in construction, with secured orders for their budgeted turnover for 2012 and the start of orders for 2013.
The firm said: “Whilst this is slightly ahead of our expectations, we continue to remain cautious regarding the amount of traditional construction work, at acceptable margins, that will arise in 2013 and beyond given the public spending cutbacks announced by the government.”
The firm said its plant company was affected by the ‘widely publicised slow-down in construction activity’ and although trading levels in the first half were marginally down on 2011, the position has been improving over 2012 and by the mid-year; hire contract count was ahead of the position a year ago.
In development, Henry Boot held interests in 8,761 acres on 30 June (31 December 2011: 8,051 acres) with 1,829 acres owned 31 December 2011: 1,432 acres), 3,436 acres under option (31 December 2011: 3,986 acres) and 3,496 acres under planning promotion agreements (31 December 2011: 2,633).
It added: “We remain cautiously optimistic about an increase in house building levels, although it is a slow process, which is not ideal. However, we hope that the policies being introduced to improve the situation will be successful in stimulating the market in the future.”
The directors have declared a 9 per cent increase in the interim dividend to 1.80p (2011: 1.65p).