Interim Management Statement

RNS Number : 3639C

Boot(Henry) PLC

12 November 2009

Henry Boot PLC ('Henry Boot' or 'the Group' or 'the Company') publishes its second Interim Management Statement, covering the period from 1 July 2009 to 11 November 2009.

Since the Group's Half Year Results for the six months ended 30 June 2009, which were released on 27 August 2009, the Company's financial performance has remained in line with management expectations.

During the period under review the conclusion of transactions initiated earlier in the year, which are highlighted below, have reduced Group debt levels by over £20m to around £30m, a level the Group anticipates carrying through to the year end. The Group remains in compliance with all its banking convenants.

After a period of substantial readjustment there are some indications that valuations in the property market as a whole are beginning to stabilise, albeit at a significantly lower level than at peak. Buyers are selectively re-entering the market, identifying value and concluding transactions.

The following matters have been progressed or completed since the announcement of the Half Year Results.

PROPERTY DEVELOPMENT AND INVESTMENT

	We have sold the 37,000 sq ft Tebay Retail Park in Bromborough, Wirral, let to Homebase and Magnet, together with the 25,000 sq ft unit let to PC World at Clifton Moor, York, for a combined sum of £8.4m, broadly in line with their valuations in June 2009.
	At Meir Park, Stoke-on-Trent, having completed the 190,000 sq ft warehouse and distribution unit and let this to Sants Pharmaceutical Distributors Limited, part of the Co-operative Group, earlier in the year, we have sold this investment for £10.5m.
	At Northfields Retail and Business Park, Rotherham, we have recently completed the construction of a 50,000 sq ft retail unit fully let to B&Q, who began trading from the unit in August. This investment will be valued for the first time by the Company at 31 December 2009. In addition, on the same site, 10,000 sq ft of industrial space has been completed and is now available for sale or to let.
	At Mansfield the development and full letting of the neighbourhood retail centre at Sandlands is nearing completion. This investment includes 12,200 sq ft of retail space, an 8,000 sq ft play centre and 6,000 sq ft children's nursery, along with a small site to be developed later.
	Planning consents have been secured for 200,000 sq ft of open A1 retail space on a development site in Tamworth, Staffordshire and a 25,000 sq ft foodstore in Warminster, Wiltshire.
	At Priory Park, Hull, we have agreed lettings to Humberside Police for 12,000 sq ft of new office space and concluded the sale or letting of all remaining small industrial units on this site.
	At Markham Vale, near Chesterfield, we completed the development of a 51,000 sq ft terrace of eight small industrial units earlier this year. Sales of three units were concluded in the period under review, with one currently under offer, and interest in the remaining units continues to be strong.

LAND PROMOTION AND DEVELOPMENT

	Hallam Land, our land promotion business, has concluded the sale of a site at Ampthill, Bedfordshire, with planning consent to build approximately 150 units to house builders Bellway plc and Bloor Homes Limited.
	Planning consent has been received on a site at Buckingham for 700 residential units and, having concluded the Section 106 agreement, marketing of part of this site will commence in 2010.
	At Bridgewater, Somerset, we have received a minded to grant planning consent, subject only to the conclusion of a Section 106 agreement, for 2,000 dwellings and 750,000 sq ft of distribution space. Hallam Land will be working to progress the detailed planning for this site throughout 2010.
	The Group has several sites where it has obtained planning consent and sale terms are in the process of negotiation.
	There have been various statements made by the UK house building sector which indicate that the housing market is showing initial signs of recovery and that the sector is more positive about land purchases. The Henry Boot board believe caution is still appropriate given the well documented concerns over job prospects, levels of personal debt and difficulties in the mortgage market. Whilst we have received good levels of interest for the sites the Company has marketed, we have also seen house builders seeking to purchase land on deferred payment terms or to acquire part of a site rather than all of it. It is expected that this approach will continue for the foreseeable future.

CONSTRUCTION DIVISION

	The Construction business has maintained similar levels of activity to those achieved in the first half into the second half of the year and is anticipating having an order book of about 60% of 2010 budgeted activity by 31 December 2009, which is in line with the normal expectations of the business.
	Work with Decent Homes, the Prison Alliance and Local Authority Frameworks continues. However, increasingly our Construction division is seeing framework agreements give way to competitive tendering.
	The plant hire operation, Banner Plant, has continued to perform comparatively well in a very difficult market. Though any contribution this year and next will be small, this business continues to be very cash generative as we curtail capital expenditure and downsize the hire fleet to more accurately reflect current market conditions.
	Road Link A69 has continued to perform in line with expectations and previous years. Although slightly lower HGV traffic has been recorded this has been offset by higher car volumes, with the result that we expect revenues to be largely unaffected.

OUTLOOK

Whilst we remain very cautious with regard to activity levels within our market place, there are indications that investment property values have stabilised and house building is slowly beginning to recover. However, the parlous state of the public finances means that centrally funded construction projects are likely to be under very close scrutiny for some years.

Therefore, in the short term, Henry Boot intends to maximise returns from its businesses where it can, whilst managing debt levels prudently. Looking over the longer term, the Group continues to retain a store of opportunities that are capable of generating excellent returns as its markets improve.