Interim Management Statement

RNS Number : 4215G

Boot(Henry) PLC

12 May 2011

 



Henry Boot PLC

('the Company' or 'the Group')

Interim Management Statement and Dividends

Henry Boot PLC, a company engaged in land promotion, property development and investment, construction and plant hire, is releasing this Interim Management Statement in respect of the period 1 January 2011 to 11 May 2011, together with a trading update for the year ending 31 December 2011 and clarification of certain matters regarding dividends.

Trading

The Company continued to trade in line with the Board's expectations during the period. Trading conditions have been stable with, if anything, a slight improvement in the Group's land, property development and plant hire businesses. Not unexpectedly, UK construction activity, as identified in the recent UK quarterly growth statistics, fell in the first quarter due to the adverse weather conditions in the early part of 2011, the very tight constraints on public expenditure and continuing illiquidity in the housing markets. The Group's plant hire business also continued to trade satisfactorily in these difficult conditions and year to date turnover is marginally ahead of the same period in 2010. Road Link A69 also performed well during the period and the road remained open throughout the inclement winter weather.

The Board remains vigilant with regard to cost control and this, coupled with property and land sales during the period, has resulted in the Group having net cash of £16.5m at 11 May 2011, compared to net borrowings of £11.4m at 31 December 2010. No revisions to property values have taken place in the period and the next formal investment property valuation will take place as at 30 June 2011.

Outlook

There is currently stability in the housing land market. House builders have reported improving results, albeit on historically low volumes, though recovery remains slow reflecting the continuing lack of availability of mortgage finance. However, these trends mask the fact that underlying demand for traditional family housing remains buoyant in certain areas of the country. Acquisition demand for sites in these areas, with planning permission for this product, are highly sought after as the supply of sites remains very restricted, particularly under the current planning regime.

Property development is, selectively, becoming more attractive again and we are pursuing a number of opportunities which should provide an adequate risk weighted return on capital. The opportunity to generate this level of return arises because we remain well funded and have the flexibility to act quickly and drive particular developments forward.

Our Construction business is performing well in the challenging market place. Competitively priced work is available and we are looking at alternative work flows where higher margins are achievable. Both Road Link A69 and our plant business are trading satisfactorily.

Overall, trends in our markets give us the confidence to be able to make managed risk investments in the expectation of generating satisfactory returns in due course. That said, the tentative recovery remains fragile and we continue to assume that it will likely be a drawn out and uncertain process.

Key Events in the period

LAND PROMOTION AND DEVELOPMENT

·	We concluded the sales of land held under a planning promotion agreement at Buckingham for 700 residential units to Barratt Developments PLC and Bovis Homes Group PLC and an owned site for 50 social housing units at Chesterfield.
·	Discussions are in progress regarding sales of three sites (the first two of which are owned) at Rugby, Exeter and Countesthorpe in Leicestershire. It is unlikely that these sales will be concluded before the last quarter of the year but are indicative of the relatively positive land market.
·	Infrastructure work has been commissioned and is now well underway at our large mixed use development site at Bridgwater.
·	Planning permissions have been obtained at Rugby for a local retail centre and at Exeter for 1,100 houses and associated infrastructure and retail developments.
·	New planning applications have been submitted on sites at Market Harborough (1,000 units, 50% part owned, part optioned), Blaby (4,250 units, 25% interest in a planning promotion agreement), Bishopbriggs (51 units, owned), Desford (150 units, optioned) and Nuneaton (326 units, optioned).
·	New opportunities have been agreed at St Albans (97 acres, planning promotion agreement) and Evesham (41 acres, option) and we are currently taking several other sites through due diligence and acquisition processes.

PROPERTY INVESTMENT & DEVELOPMENT

·	We completed the sale of our retail investment 'Ayr Central' to Sovereign Land and AREA Property Partners for £33.7 million, slightly ahead of the 2010 year end valuation.
·	A 'minded to grant' planning permission has been secured for a mixed use development, including a 45,000 sq ft supermarket, on a 23 acre site in Thorne, Doncaster, being redeveloped in conjunction with The Royal Bank of Scotland.
·	Tile Giant, part of Travis Perkins, and Quay Plastics, a national plastics manufacturer, have both exchanged contracts to occupy the speculatively built 10,000 sq ft industrial unit located on our retail and industrial development in Rotherham, anchored by B&Q.
·	Our business park development at Markham Vale on junction 29A of the M1, undertaken in partnership with Derbyshire County Council, continues to make good progress with the completion of a 15,000 sq ft factory unit, the exchange of contracts for the development of 41,000 sq ft warehouse and office facilities, and a one acre plot sale.
·	Completion of the first phase of our supermarket development in Warminster, to relocate the existing business and clear the site prior to the foodstore build for Waitrose, has been successfully achieved on programme.
·	Practical completion of a 4,000 sq ft Tesco Express foodstore in Bradford has taken place and terms for the sale of the investment have now been agreed.
·	At our motorway service area on the M20 in Kent, we completed the development of an 80 space pre let lorry park and exchanged leases for three unlet retail units.
·	Pennine Property Partnership LLP, our partnership with Calderdale & Huddersfield NHS Trust to provide new medical accommodation for the Trust and maximise the value of surplus property assets, has been established. Work is now proceeding on the first joint development, 46,000 sq ft of new flexible office and administration space for the Trust.

CONSTRUCTION

·	Within the housing sector, we have recently completed 27 new homes for Sheffield City Council and continue to work on social housing refurbishment contracts in North Lincolnshire, Manchester, Nottingham and Doncaster.
·	Work has continued in the health sector with contracts for Sheffield Primary Care Trust and a major health care facility for a joint venture between Rotherham MBC and the Rotherham Primary Care Trust.
·	Work has also been maintained in the education sector with contracts being undertaken for North East Lincolnshire, Calderdale, Derby, Cheshire and Lancashire Councils. We have also recently commenced work on Westcliffe Primary School at Scunthorpe for North Lincolnshire Council and the Arboretum Primary School for Derby City Council.
·	Our Strategic Alliance with the Ministry of Justice continues to provide a healthy stream of prison work with several major opportunities expected to come forward later in the year.
·	We have formed a renewable energy division to begin to strategically position the Company for the anticipated growth in this market over the coming years.
·	Henry Boot Construction has received a number of prestigious awards in 2011 for its commitment to health and safety, sustainability and the environment and corporate responsibility and excellence.  These include:
	·	A RoSPA Gold Award for the second consecutive year.
	·	A 'Green Apple Award 2011'. The awards are part of a campaign to find Britain's greenest companies and winners will feature in The Green Book, a leading international work of reference for best practice in green construction.
	·	Five prestigious National Site Awards under the Considerate Constructors Scheme recognising excellent standards of health and safety and consideration towards the communities within which we work.

DIVIDENDS - CLARIFICATION

A resolution was to be put to shareholders at the Company's forthcoming Annual General Meeting on 27 May 2011 seeking their approval of the previously notified proposed final dividend of 2.15p per share. The resolution was, however, unfortunately omitted from the Notice of Annual General Meeting sent to shareholders on 21 April 2011. In order to avoid any delay in the payment of this dividend to shareholders, the Board has decided to withdraw its recommendation of the previously proposed final dividend, and will now pay, in its place, a second interim dividend of the same value and on the same timetable as already set out. The shares went ex-dividend on 27 April 2011 and the second interim dividend of 2.15p per share has a record date of 3 May 2011 and a payment date of 31 May 2011.

For further information, please contact:

Henry Boot PLC

Jamie Boot, Group Managing Director

John Sutcliffe, Group Finance Director

Tel: [phone]

www.henryboot.co.uk

Evolution Securities Limited

Joanne Lake, Corporate Finance

Tel: [phone]

Matthew Tyler, Corporate Broking

Tel. [phone]

Citigate Dewe Rogerson

Fiona Tooley

Mobile: [phone]

Tel: [phone]

 

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