Henry Boot trading in line but property development business hit by Brexit

(Sharecast News) - Construction and property development company Henry Boot said on Friday that its real-estate activities traded in line in 2018, but its property development business was hit by Brexit uncertainty.In an update for the year to 31 December 2018, the company said that had it not been for a one-off pension provision, it would have exceeded expectations for the year. This was despite a more challenging year in which Brexit negotiations increased uncertainty within the UK real estate market.Hallam Land Management performed "exceptionally well", it said, helping to replenish the UK housebuilders' land banks following their house sales in 2018, and identifying new site opportunities to replace those sold.Meanwhile, the company's jointly-owned housebuilder, Stonebridge Homes, achieved 145 sales versus 79 in 2017, producing turnover of £35m.On the downside, however, the property development business, Henry Boot Developments, was hit by macro uncertainty, with prospective developments held back by client uncertainty or planning delays, which affected the timing of starts on site at certain projects.The group said its balance sheet remains strong. Gearing at 31 December 2018 was around 7% as Boot positions itself "to be able to react to whatever challenges and opportunities arise through 2019".Chief executive officer John Sutcliffe said: "2018 proved to be another successful year for Henry Boot. It is always difficult to finalise deals or new developments in a specific financial period and, as noted above, three commercial developments anticipated to start during 2018 will now commence in 2019, and one sale expected to complete in 2018 completed on the 4th January 2019."Although we remain mindful of some uncertainty in the UK real estate market, these transactions, added to the already committed and contracted activity for 2019, give us a good start to the year."At 1015 GMT, the shares were up 1.6% to 254p.Peel Hunt said this was a "reassuring" trading update."As a result of good cash performance we decrease our FY18E net debt forecast to £19.6m (from £25.8m), resulting in gearing of 7%, in line with management guidance," the broker said."The business has made a robust start to FY19E, with strong demand for consented land from major UK housebuilders, though ongoing Brexit negotiations may continue to have a softening effect on Property Development. The shares had a tough run in 2018, down 25%, but have bounced back and are up 4% year-to-date. Our sum-of-the parts valuation generates a target price of 290p. We still see this as an attractive entry point."