Interim Management Statement

RNS Number : 4809E

Boot(Henry) PLC

13 May 2013

Henry Boot PLC

('the Company' or 'the Group')

Interim Management Statement

Henry Boot PLC (LSE: BHY), a company engaged in land development, property investment and development, construction and plant hire, releases this Interim Management Statement in respect of the period 1 January 2013 to 10 May 2013, as required by the UK Listing Authority's Disclosure and Transparency Rules, together with a Group trading update for the year ending 31 December 2013.

Trading and outlook

Trading across the business in the early part of 2013 has been encouraging. The Group continues to trade in line with our expectations at this early stage of the year and, provided that activity continues at current levels, we remain quietly confident about prospects for the Company in 2013. We have concluded several transactions in the period, which are covered in more detail below. We have also received good levels of interest and achieved anticipated pricing on the sites disposed of, and are continuing to witness relative price stability with, optimistically, some upside potential.

KEY EVENTS IN THE PERIOD

LAND DEVELOPMENT

·	During the period we made disposals at our sites in Edinburgh (100 plots), Banbury (250 plots), Evesham (59 plots) and Long Buckby (132 plots). Further site disposals are anticipated during the remainder of the year. Notwithstanding these land disposals we have added to our total acreage, which now stands at 9,336 acres, up from 9,011 acres at 31 December 2012.
·	Planning approvals (including minded to grant approvals) have been obtained at our sites at: Bradford (292 plots), Cam (71 plots, a permission which has subsequently been challenged in the High Court), Rolleston (23 plots), Kegworth (110 plots), Retford (8 plots) and Marston Moretaine (125 plots). The Secretary of State did not call in our large application at Blaby (1,593 plots) and we are now negotiating the Section 106 Agreement on this site. The Village Green Inquiry at Nuneaton (326 plots) was also decided in our favour but our permission at Stratford (200 plots) has been challenged in the High Court by the local Council.
·	We have the following sites at appeal: Abingdon (120 plots), Burton upon Trent (950 plots), Aylesbury (220 plots), Blackburn in West Lothian (120 plots), Dunbar (100 plots), Chesterfield (160 plots), Handcross (90 plots), Monmouth (145 plots) and Southborne (130 plots).
·	In addition, we have undetermined applications at: Aylesbury (1,560 plots), Banbury (500 plots), Chatteris (1,000 plots), Chellaston (54 plots), East Leake, Nottinghamshire (170 plots), Haddington (113 plots), Irthlingborough (700 plots), Market Harborough (500 plots), Moulton (125 plots), Oulton, Leeds (40 plots), Ripley (180 plots) and Rothwell, Leeds (40 plots).
·	New applications have been submitted on our sites at Bathgate (110 plots), Barnsley (75 plots), Coventry (98 plots), Harrogate (200 plots) and Launceston (100 plots).
·	We have consented sites available for disposal in Bridgwater, Bolsover, Cranbrook, Desborough, Highbridge, Kegworth, Kettering, Kilmarnock, Mansfield, Nuneaton, Peterborough, Retford, Rolleston, Selby, Tillicoultry, Torrance and Winsford, most of which are currently in the process of being marketed.
·	The housing market continues to improve across the country although there are still significant areas, particularly in the north, where the market remains challenging. It is too soon to determine whether the Budget announcements relating to the wider availability of mortgages for first time buyers now, and all parties next year, will have a significant impact on the land market, but the Coalition Government has tried to alleviate mortgage difficulties for first time buyers which, in turn, should increase the confidence of the national house builders.
·	The relaxation of planning regulation continues to have a beneficial impact on the planning system and it is gradually making it easier to obtain new permissions, particularly, where there is a genuine shortage of available building land. The process, though much improved, frequently remains painfully slow and cumbersome and the community contributions in the form of Section 106 Agreements, affordable housing and Community Infrastructure Levy are far too complex and can be very burdensome, especially in the weaker market areas where they are having a disproportionate impact on the viability of many sites.

PROPERTY INVESTMENT AND DEVELOPMENT

·	A number of new lettings have been exchanged or are in solicitors' hands on vacant retail units at our mixed-use retail and office investment in Bromley, Kent; once completed, this will leave only one unit still available.
·	At our multi-let motorway service area in Kent, following the regearing of the occupational lease, work has commenced on the extension to the existing lorry park to increase its capacity by 50% to meet the increased demand being experienced and this should be fully operational later this year.
·	At Markham Vale, our 200 acre business park on Junction 29A of the M1 being developed in partnership with Derbyshire County Council, contracts have been exchanged with Euro Garages for the development of a petrol station and Drive-Thru Starbucks. Terms have also been agreed for the development of a further 55,000 sq ft of warehousing and manufacturing space with two operators, with both projects expected to commence in 2013.
·	Work commenced on the first project of the Pennine Property Partnership LLP, the joint venture vehicle set up in partnership with Calderdale and Huddersfield NHS Foundation Trust, for the redevelopment of a listed mill to provide 56,000 sq ft of new clinical and office space which has been pre-let to the Trust.
·	The redevelopment of Daventry town centre continues to move forward following the submission of planning applications for the 130,000 sq ft food and non-food retail scheme with good progress being made with a range of prospective retail tenants.
·	The redevelopment of the 23 acre mixed-use site in Thorne, Doncaster, in partnership with the Royal Bank of Scotland is proceeding as expected with contracts exchanged with Tesco PLC to purchase a site for a large foodstore.
·	The extensive public consultation exercise on our 56 acre mixed-use employment park in Skipton has commenced following exchange of contracts with J Sainsbury plc for a large foodstore development. There is also a good level of tenant interest being shown in the employment uses on the balance of the site.
·	In Chesterfield, the six acre development site we acquired in 2012 as part of a joint venture with Lloyds TSB Bank plc, is progressing with a wide range of operators actively looking to take floor space on the site.
·	The purchase of the listed former Terry's Chocolate Factory in York was completed in April 2013, together with a simultaneous onward sale of approximately half of the 25 acre site to a major house builder. Master planning of the 400,000 sq ft mixed-use development is now underway.
·	We have purchased a consented 6.14 acre greenfield site in Livingston town centre, Scotland, and are currently expecting to finalise pre-let terms with a number of retail warehouse operators in the coming months.
·	Our jointly owned house builder, Stonebridge Projects Limited, has also started the year positively and is currently on track to sell 25 units this year and will be building out at four sites by the end of 2013.

CONSTRUCTION DIVISION

·	After carrying a substantial order book into 2013, Henry Boot Construction Limited has now won further work to achieve its targeted turnover for the year and is confident that it will attain targeted profit levels. Whilst we are very pleased with this positive start to 2013, our market is still challenging and therefore, we remain cautious regarding the amount of traditional construction work, at acceptable margins, arising in the future.
·	We have maintained a very strong presence in the social housing sector with long-term frameworks in Scunthorpe, Manchester, Hull, Doncaster, Leicester and Wakefield. This market continues to offer excellent opportunities in the short to medium term. We also continue to undertake construction projects in the industrial, health, commercial, education and leisure sectors.
·	Our ongoing Framework with the Ministry of Justice Strategic Alliance Agreement for new-build and refurbishment schemes for HM Prison Service, HM Court and Tribunals Service, National Probation Service and Forensic Science Service in the north of England is continuing to provide opportunities, which will continue over the next five years.
·	Civil engineering opportunities are beginning to flow from our supply chain agreement on the 25 year Amey Sheffield Highways PFI scheme. In tandem with this we are also constructing a new asphalt recycling plant in Sheffield for Aggregate Industries Limited.
·	Road Link (A69) Limited ('Road Link'), our PFI contract, in the 18th year of the 30 year franchise, continues to trade in line with the Board's expectation. Traffic volumes remain slightly lower than previous years, however, due to careful cost management, this has not had a negative impact on Road Link profitability levels.
·	Banner Plant Limited continues to recover its levels of activity in spite of the generally challenging construction markets. The unit has now seen some ten months of encouraging performance, with the first four months of 2013 more than 10% ahead of the comparative period in 2012. As a result, we have committed further capital expenditure to support specific items of plant which are immediately required for relatively long-term hire.