RNS Number : 0208I
Boot(Henry) PLC
12 November 2008
Henry Boot PLC announces its second Interim Management Statement for the year ending 31 December 2008.
Despite the financial turmoil and deteriorating market conditions that have prevailed since the Statement of Half Year results for the six months ended 30 June 2008 was issued at the end of August, performance has remained in line with management expectations. Debt levels continue to remain similar to the prudent levels we carried at 30 June 2008 and we comfortably satisfy all covenants and have significant unutilised headroom within agreed facilities.
The following matters have been progressed or completed since the Half Year Statement.
PROPERTY DEVELOPMENTS
§ At Meir Park, Stoke-on-Trent, we concluded a pre-letting agreement with Sants Pharmaceutical Distributors Limited, part of the Co-operative Group, for a 190,000 sq ft distribution warehouse on a 25 year lease. Building work is in progress and should be completed by the Spring of 2009.
§ We acquired the former County Court Buildings on Deansgate in Manchester. This is a Grade II listed building of over 31,000 sq ft and the intention is to refurbish it to create a mixed-use scheme incorporating office and leisure facilities.
§ In August, B&Q exchanged contracts with us to take 51,000 sq ft at our Northfields Retail and Business Park, Rotherham. We have outline consent for 100,000 sq ft of retail on this site, along with several industrial units. The building contract for the B&Q outlet has been let to Henry Boot Construction (UK) Limited.
§ At Markham Vale we commenced development on the 200 acre business park in partnership with Derbyshire County Council. It has 81,500 sq ft of industrial space in nine units, including a 30,000 sq ft design and build freehold unit for Industrial Ancillaries Limited.
§ We sold a small office block in Glasgow, previously occupied by ourselves, for £1.2m. The sale value was in excess of the asset value of £0.73m at 30 June 2008.
§ We have recently completed on the sale of Vanguard Trading Estate in Chesterfield for £2.55m. This sale price is in line with the asset value at 30 June 2008.
§ We will be valuing developments at Nottingham, Bromley, Stoke-on-Trent, Bromborough and Saltwood, all completed during the year, for the first time at the year end.
LAND PROMOTION AND DEVELOPMENT
§ We completed the sale of the final piece of land at Syston in Leicestershire. This sale marked our exit from the site.
§ In August, we concluded the sale of a 46 acre site at Melksham.
§ In October, we received planning consent for a major housing development of 259 units on 32 acres at Rushpool Farm in Mansfield. The development offers flexible mixed accommodation of 1 to 5 bedroomed homes.
§ In October, we received planning permission for 100 dwellings at Chudleigh, Devon.
§ We have several schemes where we have now applied to further improve the planning position and where we hope to obtain consent in the near future. The strength of the residential rental market, which has grown as the provision of mortgage capital has declined, indicates very strongly that the demand for a place to live has not lessened; it is a question of how it is funded. We strongly believe that, as the gap between housebuyers' deposit savings and the financial sector's minimum deposit requirement closes and house prices find their new level, the demand for particularly good quality land will, once again, increase as housebuilders replenish the land built out through the bottom of the cycle.
CONSTRUCTION DIVISION
§ The Construction business is maintaining the high levels of activity seen earlier in the year through the second half.
§ We continue to see work for the Decent Homes and Prison Alliance Frameworks continuing into 2009 and beyond.
§ Our plant hire business, Banner Plant Limited, has performed very resiliently to date given the well publicised difficulties in the housebuilding market.
§ Road Link, which maintains the A69 between Newcastle and Carlisle as a PFI project, has seen some reduction in traffic numbers after the significant increases in fuel prices earlier in the year. However, efficient management of costs means that we continue to perform in line with management expectations.
OUTLOOK
We have reported to the market that conditions within the wider property sector are challenging and are likely to remain so for sometime to come. The very recent financial turmoil and the Bank of England's assessment that we are entering a prolonged recession make it very difficult to predict when market activity levels will recover. However, we believe that it is unlikely that we will see any recovery in the property market before 2010.
In this uncertain environment where debt is no longer readily available and effective total borrowing costs are still high, despite the recent falls in Base Rates, we are being very selective in the acquisition of opportunities and the authorisation of capital for property developments. However, there are a significant number of interesting prospects arising as a result of the aforementioned turmoil and we continue to invest where we are able to identify the opportunity to achieve excellent long term returns.
Enquiries to:
Henry Boot PLC
Jamie Boot, Group Managing Director
John Sutcliffe, Group Finance Director & Company Secretary
Tel: 0114 255 5444
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