Interim Results

Boot(Henry) PLC 29 August 2007 HENRY BOOT PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 Henry Boot PLC, the land promotion, property development and investment, construction and plant hire business, today announces its interim results for the six months ended 30 June 2007. HIGHLIGHTS Turnover £47.1m (2006: £50.7m) Profit before tax increased 62% to £21.9m (2006: £13.5m) Revaluation surplus on investment properties £13.0m (2006: £2.6m) Basic earnings per share increased 73% to 11.6p (2006*: 6.7p) Interim dividend of 1.25p (2006*: 1.08p), an increase of 16% Further substantial investment in the land and development portfolios resulted in gearing of 38% (December 2006: 10%) Net asset value per share increased 9% to 128p (December 2006*: 117p) *restated for the 4-for-1 bonus issue in May 2007 Commenting on the results, Chairman John Reis said: 'I am delighted to report on another period of solid progress. The business has had a busy first half and achieved an excellent financial result, with further rewards expected during the second half.' For further information, please contact: Henry Boot PLC Jamie Boot, Group Managing Director John Sutcliffe, Group Finance Director Tel: 0114 255 5444 www.henryboot.co.uk Evolution Securities Limited Joanne Lake Tel: 0113 243 1619 Citigate Dewe Rogerson Fiona Tooley Tel: 0121 455 8370 Mobile: 07785 703523 CHAIRMAN'S STATEMENT RESULTS I am delighted to report on another period of solid progress in the half year to 30 June 2007. Income Statement Profit before tax increased 62% to £21.9m (2006: £13.5m). The period saw the completion and the directors' first valuation of our 220,000 sq ft Ayr Central Shopping Centre which was largely responsible for the increase of £13.0m (2006: £2.6m) in the fair value of investment properties. Trading profits after interest were lower at £8.8m (2006: £10.9m) resulting from the timing of land trading transactions compared with the previous year and a £0.5m increase in interest costs arising from the significant investments made within our property development pipeline. Administrative costs, including pension costs, were slightly down on last year at £6.8m (2006: £6.9m). Net interest costs at £1.1m (2006: £0.6m) are still very well covered by profits and continue to reflect the relatively prudent, albeit increasing, gearing levels at which we are operating. Profit attributable to equity shareholders increased 73% to £14.9m (2006: £8.6m), with basic earnings per share 73% higher at 11.6p (2006 restated: 6.7p). Balance Sheet As previously noted, the significant investment in the property portfolio accounts for a large proportion of the 60% increase in the value of property, plant and equipment and investment property to £207.6m (December 2006: £129.7m). In part, this is attributable to the initial internal valuation of Ayr Central transferred from inventories, but also due to further expenditure on schemes in Nottingham, Bromley, Markham Vale and Bromborough. In addition, we have made further land acquisitions, either directly or through option arrangements, with land inventories increasing 50% to £75.3m (December 2006: £50.3m). The combination of these investments resulted in higher net borrowings of £63.7m (December 2006: £15.9m) and gearing of 38% (December 2006: 10%). Employee benefit liabilities fell to £19.1m (December 2006: £25.8m) as higher long-term interest rates and the investment performance of the pension scheme's assets both had a positive impact on the scheme deficit. Share capital increased by £10.4m in the period as revenue reserves were capitalised pursuant to the 4-for-1 bonus issue in May 2007. This resulted in over 104m new ordinary shares being issued to existing shareholders. Net assets now stand at £167.8m (December 2006: £152.2m) and, restated for this bonus issue, net asset value per share increased by 9.4% to 128p (December 2006 restated: 117p). Cash Flows Operating cash flow adjusted for non-cash items was £12.3m (2006: £13.8m). The increase in inventories of £26.3m reflected investments in the land portfolio and the £12.2m increase in receivables primarily relates to land sales settled after the period end. These land investments are offset by higher trade creditors which increased £27.0m resulting in net cash outflows from operating activities of £9.5m (2006: £0.3m). Investment in property development and investment and plant and equipment, offset by disposal proceeds, equated to £33.4m (2006: £11.2m). After dividend payments of £4.8m (2006: £4.1m), total cash outflows in the period were £47.8m compared with £15.7m in the same period last year. Dividend The excellent performance by the Group during the period, coupled with the Board's commitment to a progressive dividend policy, result in the Directors' decision to declare a 16% increase in the 2007 interim dividend to 1.25p per share (2006 restated: 1.08p). This will be paid on 25 October 2007 to shareholders on the register at the close of business on 12 October 2007. REVIEW OF ACTIVITIES Property Our flagship retail development at Ayr Central was completed in the period and we are now working to fully let the property and this we expect to achieve by the end of the year. At Bromley, the final retail phase was recently completed and occupied. We are now focusing our attention on fitting out the 9,000 sq ft of office accommodation and expect to complete this before the year end. Our award winning 220,000 sq ft mixed-use redevelopment of a former department store in Nottingham is progressing well, with completion of the main part of the scheme, now fully pre-let, expected early in 2008. We recently gained planning consent for a further 18,000 sq ft of offices adjoining this development which is now under offer to a national company and we expect to commence this phase of development shortly, with completion scheduled for 2008. The motorway service area 'Stop 24', which will be the largest in the Country, at Junction 11 on the M20, is anticipated to open to traffic later in the year. The scheme is almost fully let, with a very strong tenant line-up, and we believe that this will become another very successful investment. We commenced development of a 37,000 sq ft retail and trade warehouse scheme in Bromborough which has been pre-let to Homebase and Magnet, with completion due in 2008. Furthermore, we began the second phase of our South Shields development with the provision of a 60,000 sq ft retail foodstore on behalf of Asda. In May 2007 we concluded a substantial pre-let with Recticel (UK), a subsidiary of a leading Belgian company, for a 124,000 sq ft industrial complex in Stoke-on-Trent on a 20 year lease. Construction has started and we aim to complete the development during 2008. We have also obtained planning consent for a further 200,000 sq ft of industrial space on part of the remaining 9.5 acres of this site. Also in May 2007 we acquired a 5 acre redundant factory site in Bodmin where we plan to develop a 50,000 sq ft trade counter and industrial site to complement our 2.8 acre 38,000 sq ft Bodmin Tor Retail Park, which also progressed well with a planning application submitted during the period. During the first half, we acquired the first 60 acres of land at Markham Vale, adjoining the new Junction 29A of the M1 near Chesterfield. Whilst the first phase of this development is not expected to commence until 2008 to coincide with the opening of the junction, we are encouraged by the level of tenant and investor interest already being shown in the site. A detailed planning application was submitted for a 150,000 sq ft mixed-use scheme in Grimsby regenerating derelict land in the town centre. The development will provide much needed retail space, parking for 290 cars, 25 apartments, a water sports centre and significant improvements to the public open space in the immediate vicinity. We exchanged contracts with North Somerset Council for a £30m leisure facility at Weston-super-Mare. We anticipate submitting a planning application by the end of the year for this 200,000 sq ft development which we expect to include a hotel, bowling alley, indoor leisure pool, cinema, restaurants and bars and a large car park, with anticipated completion in 2010. Land Our land trading business continues to make very strong progress with a further significant land purchase at our jointly owned 360 acre site at Milton Keynes. Land sales in the period were made at Gourock, Bathgate and Prestonpans in Scotland and Bognor Regis. In total, these utilised some 114 acres from our 6,500 acre portfolio. We also secured a 32 acre option on land to the south of Derby, which is near to another site we are currently promoting for 850 dwellings. The latter is the subject of a current planning inquiry, with the outcome expected in 2008. Further progress has been made during the period on sites at Rotherham, Sheffield, Retford, Tillicoultry, Peterborough, Ampthill, Milton Keynes and Melksham, and the possible sale of some of these prior to the end of 2007 should result in a successful outcome for the financial year as a whole. Other significant events in the period included submission of a planning application for a five megawatt wind farm on a 180 acre site in County Durham. Planning applications were submitted for the first phase of 187 dwellings on our site in Worcester and for 316 homes in Mansfield. The Mansfield application, if successful, will complement two further consents already granted for 700,000 sq ft of industrial space, a district shopping centre comprising several retail units, a public house/restaurant facility and a fast food operator. An inquiry has been held relative to our planned mixed-use development at Bowburn, County Durham, and we are expecting a result before the year end. Construction, PFI and Plant Hire Activity levels within our construction arm in the first half have been good. Revenues were in line with internal budgets and we have a strong order book through the second half of this year and into 2008. The £8m contract to build a combined garden centre and retail complex for Dobbies Garden Centres just south of Sheffield is now nearing completion. Other significant contracts awarded in the period include a £5.5m contract, under the Decent Homes Initiative, to refurbish 224 flats in two tower blocks in Hull. We are now working with local authorities in Doncaster, Hull, Sheffield and Rotherham on Decent Homes Initiative refurbishments, providing the opportunity to win further contracts over the next two to three years. Road Link (A69) Limited has performed slightly ahead of budget in the period and has continued to meet all its service agreement targets with the Highways Agency. Banner Plant continues to operate in a highly competitive environment. However, activity levels have been acceptable and the unit contributed satisfactorily in the period. Bonus Issue The Directors' proposal for a 4-for-1 bonus issue by way of a capitalisation of reserves was unanimously approved by shareholders on 17 May 2007 and dealing in the new ordinary shares commenced on 21 May 2007. OUTLOOK Property The wider property market in the UK has undoubtedly become more competitive over the last twelve months. Interest rate rises to 5.75% by July 2007 are having a negative impact on secondary yields and therefore capital values. In addition, major banks are reportedly applying more restrictive terms to both existing and new borrowing. We believe this will potentially give rise to asset acquisition opportunities at more attractive prices in the near future. We have a strong pipeline of developments in progress, on a part or fully pre-let basis, ensuring that rental income on completion comfortably exceeds the financial cost of development. Where appropriate, we will continue to recycle capital back into the development pipeline or take advantage of market opportunities via the disposal of investments. Land The legislative framework in respect of the Planning Gain Supplement is still uncertain and the Code for Sustainable Homes will undoubtedly add significantly to residential developer costs. We are therefore mindful that these issues may have an impact on land values and factor them into our financial models. On the positive side, the Barker Review is very favourable for housing development and the Government has signalled its desire to speed up the planning process. We have a portfolio of some 6,500 acres on over 170 sites throughout the Country and we work hard to achieve quality planning consents that make these schemes highly desirable to housebuilders. Whilst we note the recent consolidation of housebuilders, we saw strong demand for the land we marketed during the period and expect this trend to be maintained in the second half as other sites come to the market. Construction, PFI and Plant Hire Strong developer activity, allied to government initiatives and strong levels of construction activity in the South East, are underpinning demand in the marketplace. More specifically, we have carved out strong niches within Decent Homes refurbishment and Prison Alliance programmes which are providing the opportunity to win work on a medium-term basis, ensuring we have good order visibility into the future. Group The business has had a busy first half and achieved an excellent financial result, with further rewards expected during the second half. We recognise that current financial market turbulence may have an impact on the timing of transactions and therefore profitability in the period, however I reiterate my statement at the Annual General Meeting in May 2007 that we expect profitability for the year to be biased towards the second half year. I look forward to reporting on further solid progress at the time of our year end results announcement. John S Reis Chairman 29 August 2007 GROUP INCOME STATEMENT (UNAUDITED) For the half year ended 30 June 2007 Half year Half year Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited £'000 £'000 £'000 ------------------------------------------------------------------------------------------------------------------ Revenue 47,149 50,655 142,284 Cost of sales (30,418) (32,240) (91,496) ------------------------------------------------------------------------------------------------------------------ Gross profit 16,731 18,415 50,788 Other income 5 58 27 Administrative expenses (6,215) (5,862) (11,479) Pension expenses (557) (1,071) (1,855) ------------------------------------------------------------------------------------------------------------------ 9,964 11,540 37,481 Increase in fair value of investment properties 13,014 2,577 3,032 Profit on sale of investment properties 4 - 1,381 ------------------------------------------------------------------------------------------------------------------ Profit from operations 22,982 14,117 41,894 Investment income 212 146 641 Finance costs (1,337) (797) (1,740) ------------------------------------------------------------------------------------------------------------------ Profit before tax 21,857 13,466 40,795 Taxation (6,235) (4,112) (14,008) ------------------------------------------------------------------------------------------------------------------ Profit for the period from continuing operations 15,622 9,354 26,787 ================================================================================================================== Attributable to: Equity holders of the parent 14,890 8,635 25,415 Minority interests 732 719 1,372 ------------------------------------------------------------------------------------------------------------------ 15,622 9,354 26,787 ================================================================================================================== Basic earnings per ordinary share * 11.6 6.7p 19.8p ================================================================================================================== Diluted earnings per ordinary share * 11.4p 6.6p 19.5p ================================================================================================================== Dividend 1.25p 1.08p 4.40p ================================================================================================================== * The comparative figures have been restated in respect of the 4-for-1 bonus issue in May 2007. GROUP BALANCE SHEET (UNAUDITED) At 30 June 2007 30 June 31 December 30 June 2007 2006 2006 Unaudited Audited Unaudited £'000 £'000 £'000 ------------------------------------------------------------------------------------------------------------------- ASSETS Non-current assets Goodwill 3,493 3,595 3,697 Property, plant and equipment 127,455 99,595 77,718 Investment property 80,137 30,130 42,869 Trade and other receivables - - 3,244 Deferred tax assets 7,394 9,941 10,411 ------------------------------------------------------------------------------------------------------------------- 218,479 143,261 137,939 ------------------------------------------------------------------------------------------------------------------- Current assets Inventories 87,284 94,736 98,314 Trade and other receivables 29,918 17,592 18,516 Cash and cash equivalents 3,409 15,044 3,452 ------------------------------------------------------------------------------------------------------------------- 120,611 127,372 120,282 ------------------------------------------------------------------------------------------------------------------- LIABILITIES Current liabilities Trade and other payables 58,082 31,830 43,174 Current tax liability 5,432 11,739 5,581 Borrowings 38,972 2,801 9,876 Provisions 12,547 12,401 764 ------------------------------------------------------------------------------------------------------------------- 115,033 58,771 59,395 ------------------------------------------------------------------------------------------------------------------- Net current assets 5,578 68,601 60,887 ------------------------------------------------------------------------------------------------------------------- Non-current liabilities Borrowings 28,138 28,141 29,300 Employee benefits 19,116 25,813 28,026 Deferred tax liabilities 8,862 5,585 6,773 Provisions 144 144 184 ------------------------------------------------------------------------------------------------------------------- 56,260 59,683 64,283 ------------------------------------------------------------------------------------------------------------------- NET ASSETS 167,797 152,179 134,543 =================================================================================================================== SHAREHOLDERS' EQUITY Share capital 13,424 3,005 3,005 Revaluation reserve 2,787 2,908 2,916 Retained earnings 147,618 142,843 125,400 Other reserves 2,943 2,610 2,452 Cost of shares held by ESOP trust (678) (740) (712) ------------------------------------------------------------------------------------------------------------------- Equity attributable to equity holders of the Parent Company 166,094 150,626 133,061 Minority interests 1,703 1,553 1,482 ------------------------------------------------------------------------------------------------------------------- TOTAL EQUITY 167,797 152,179 134,543 =================================================================================================================== BUSINESS SEGMENTS (UNAUDITED) For the half year ended 30 June 2007 Half year ended 30th June 2007 Half year ended 30 June 2006 Year ended 31 December 2006 Unaudited Unaudited Audited ------------------------------- --------------------------------- ------------------------------ Inter- Inter- Inter- External segment External segment External segment sales sales Total sales sales Total sales sales Total Revenue £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 -------------------------------------------------------------------------------------------------------------------- Property and land 17,929 121 18,050 26,381 144 26,525 80,938 241 81,179 development Construction 29,216 2,987 32,203 24,228 4,310 28,538 61,285 4,950 66,235 -------------------------------------------------------------------------------------------------------------------- Other 4 325 329 46 354 400 61 528 589 47,149 3,433 50,582 50,655 4,808 55,463 142,284 5,719 148,003 Eliminations - (3,433) (3,433) - (4,808) (4,808) - (5,719) (5,719) -------------------------------------------------------------------------------------------------------------------- Group turnover 47,149 - 47,149 50,655 - 50,655 142,284 - 142,284 ==================================================================================================================== Result £'000 £'000 £'000 -------------------------------------------------------------------------------------------------------------------- Property and land 22,548 13,413 38,586 development Construction 2,653 3,204 7,610 Other (2,219) (2,500) (4,302) -------------------------------------------------------------------------------------------------------------------- Segment result 22,982 14,117 41,894 Investment income 212 146 641 Finance costs (1,337) (797) (1,740) -------------------------------------------------------------------------------------------------------------------- Profit before tax 21,857 13,466 40,795 Taxation (6,235) (4,112) (14,008) -------------------------------------------------------------------------------------------------------------------- Profit for the period 15,622 9,354 26,787 ==================================================================================================================== NOTES 1. For management purposes, the Group is currently organised into three business segments: Property and land development, Construction and Other. 2. As operations are carried out entirely within the UK, there is no secondary segmental information. 3. Inter-segmental pricing is done on an arm's length open market basis. GROUP CASH FLOW STATEMENT (UNAUDITED) For the half year ended 30 June 2007 Half year Half year Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited £'000 £'000 £'000 --------------------------------------------------------------------------------------------------------------- Cash flows from operating activities Profit from operations 22,982 14,117 41,894 Adjustments for non-cash items: Depreciation of property, plant and equipment 2,438 2,282 4,701 Goodwill impairment 102 102 204 Revaluation increase in investment properties (13,014) (2,577) (3,032) Gain on disposal of property, plant and equipment (160) (165) (263) Gain on disposal of investment properties (4) - (1,381) --------------------------------------------------------------------------------------------------------------- Operating cash flows before movements in working capital 12,344 13,759 42,123 (Increase) in inventories (26,255) (10,192) (11,355) (Increase) decrease in receivables (12,240) 702 4,847 Increase in payables 26,665 1,591 2,532 --------------------------------------------------------------------------------------------------------------- Cash generated from operations 514 5,860 38,147 Interest received 188 146 636 Interest paid (1,245) (797) (1,599) Taxation (8,990) (5,546) (10,976) --------------------------------------------------------------------------------------------------------------- Net cash from operating activities (9,533) (337) 26,208 =============================================================================================================== Cash flows from investing activities Purchase of property, plant and equipment (32,110) (11,716) (32,228) Purchase of investment property (3,787) - - Proceeds on disposal of property, plant and equipment 1,972 492 1,391 Proceeds on disposal of investment properties 505 - 14,872 --------------------------------------------------------------------------------------------------------------- (33,420) (11,224) (15,965) =============================================================================================================== Cash flows from financing activities Dividends paid - ordinary shares (4,258) (3,610) (4,995) - minorities (582) (485) (1,067) - preference (10) (10) (21) --------------------------------------------------------------------------------------------------------------- (4,850) (4,105) (6,083) =============================================================================================================== Net (decrease) increase in cash and cash (47,803) (15,666) 4,160 equivalents Opening net debt (15,898) (20,058) (20,058) --------------------------------------------------------------------------------------------------------------- Closing net debt (63,701) (35,724) (15,898) =============================================================================================================== Group statement of changes in equity (unaudited) At 30 June 2007 30 June 31 December 30 June 2007 2006 2006 Unaudited Audited Unaudited £'000 £'000 £'000 ------------------------------------------------------------------------------------------------------------------ Profit for the period 14,890 25,415 8,635 Equity dividends (4,268) (5,016) (3,620) Revaluation of group occupied properties - 140 - Deferred tax on property revaluations - (28) - Actuarial gains on defined benefit pension scheme 6,722 11,918 9,242 Deferred tax on actuarial gain (1,882) (3,575) (2,632) Movements in fair value of cash flow hedges 333 506 348 Share based payments 62 55 83 Arising on employee share schemes - 206 - Deferred tax rate adjustment (389) - - ------------------------------------------------------------------------------------------------------------------ Movement in equity 15,468 29,621 12,056 Equity at start of period 150,626 121,005 121,005 ------------------------------------------------------------------------------------------------------------------ Equity at end of period 166,094 150,626 133,061 ================================================================================================================== NOTES 1. The interim financial information has been prepared in accordance with IAS 34 (Interim Financial Reporting) using the same accounting policies and methods of computation as compared with the annual financial statements for the year ended 31 December 2006. 2. The financial statements for the year ended 31 December 2006, which were prepared under IFRSs, have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985. 3. The financial information set out above does not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985 and is unaudited. 4. Earnings per ordinary share are calculated on the weighted average number of shares in issue. 5. The interim dividend amounting to £1,602,850 (2006: £1,383,000) will be paid on 25 October 2007 to shareholders whose names are on the register at the close of business on 12 October 2007. The proposed interim dividend has not been approved at the balance sheet date and so has not been included as a liability in these financial statements. 6. At the Board Meeting on 28 August 2007 the Directors formally approved the issue of these statements which have not been reviewed by the auditors. This information is provided by RNS The company news service from the London Stock Exchange

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