Henry Boot had borrowed more in order to invest in new sites for its development and land sales businesses.
The firm’s net debt rose from £21.9m in the first half of 2012 to £38.8m at the same point in 2013.
£2.9m of the debt is non-interest bearing infrastructure loans repayable as houses are completed on a site in Exeter.
John Sutcliffe, Henry Boot’s finance director, told Construction News: “We are reinvesting in our property development portfolio and land portfolio and we are seeing some good opportunities.”
As well as developing sites itself, it also buys land, gets planning permission for it and then sells it to other firms, often housebuilders. For example it sold £15m of land at the former Terry’s Chocolate Factory site in York to housebuilders.
Its land development business was responsible for most of the firm’s £7.4m pre tax profits in the half year to 30 June 2013. In that period the division made a pre tax profit of £5.3m up from a loss of £27,000 a year earlier. Henry Boot’s overall pre tax profit rose 34 per cent increase on the £5.5m it made in the first half of 2012.
The company’s turnover almost doubled in that time from £43.3m to £81.8m.
It also carries out construction, property development and plant hire.
The firm has about 60 sites with planning or in the process of getting planning permission. Mr Sutcliffe said the number of sites it had with planning permission had grown over the last two years. “I think it is all to do with the fact the planning system is much more positive,” he said.
The group said the introduction of the Localism Act 2011 and National Planning Policy Framework introduced in April 2012 meant more sites were becoming available for homes.
They require councils that have not drawn up a five year land supply for housing to grant planning permission to schemes and there should be a presumption to grant planning permission to “sustainable developments” meant more sites were becoming available for homes.
He said the new legislation had provided a “more truthful” view of the five year land supply by basing it on the number of homes being built in the period rather than the number with planning permission.
He said Help to Buy was also useful but was unlikely to increase the price of land as planning reforms meant more land was coming through which should balance increased demand for housing.
“I think government has done a good job in getting an uplift in the level of supply [of land] to match the level of demand so hopefully we won’t see a ridiculous rise in value of land,” he said.
Despite these gains, the firm said the government and councils should not set demands for affordable housing and infrastructure through section 106 and the community infrastructure levy too high lest sites become unviable. He said: “Sites in the South-east and London can afford more of a contribution than [sites] in some parts of the north. We have to be careful because otherwise it makes developments unprofitable.”
Henry Boot’s forthcoming schemes include budget hotels in Malvern and Richmond upon Thames a Sainsbury’s supermarket in Skipton.