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Henry Boot boosts development pipeline despite longer-term Brexit concerns

Henry Boot is confident it will deliver a boosted development pipeline in the next two years, despite longer-term concerns over the EU referendum result.

Speaking to Construction News after the firm’s half-year results, chief executive John Sutcliffe said the company had upgraded its forecasts in June before the referendum and was “still sticking to that forecast”.

“If you had said two months ago in the days after the vote, ‘What do you think’s going to happen?’, I’d have said the outlook would be pretty terrible,” he said.

“But here we are two months down the track and it’s not been too bad at all.”

The group is divided between three different segments: land development; property investment and development; and construction.

Major schemes Henry Boot has already confirmed include the £333m, 800,000 sq ft Aberdeen Conference Centre complex.

Robertson is due to start on site in the coming months after the project secured an unconditional development agreement with Aberdeen City Council yesterday, with the scheme set for completion in 2019.

Aside from this, Mr Sutcliffe said the firm has a strong pipeline of industrial and retail projects under development, with 225,000 sq ft of space for German automotive parts supplier Bilstien starting on site.

The firm has also seen unconditional pre-let agreements for retail units in Livingston and Belper, with these two developments due to complete in late 2016 to early 2017.

However, Mr Sutcliffe said he had longer-term concerns regarding the EU referendum in terms of the retail, industrial and manufacturing sectors.

“My concern is around manufacturing. We’ve still not heard from manufacturers whether they’ll move to the continent or whether they’ll stay put here.”

He added that this could potentially have an impact on industrial and retail development, both pre-let and speculative, and said discussions around whether companies would relocate are likely to be “still going on behind the scenes”.

“It’s all about confidence – and if retailers and manufacturers can maintain their confidence, then it can only be a good thing.”

The firm posted a pre-tax profit of £20.8m for the six months to 30 June 2016, up from £14m a year earlier, while revenue rose to £107.3m from £79.2m over the same period.

Mr Sutcliffe said Henry Boot’s construction division is due to turn over around £60m-£65m for the year, on what he described as “traditional industry margins” of 2-3 per cent.

“I’d be over the moon if we were getting 4 per cent-plus,” he added.

Elsewhere, he said the company’s housebuilding business would be looking at revenues of between £20m and £25m, while its development arm had further private rented opportunities in the pipeline.

These include plans submitted for a 500-unit scheme in Manchester, which Mr Sutcliffe expects to get under way “at the back end of the year”.

He added that the firm’s construction and development pipeline for 2017 and 2018 was “still coming to fruition”.

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