Final Results

Boot(Henry) PLC 14 April 2004 HENRY BOOT PLC PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 31st DECEMBER 2003 Henry Boot PLC, the property development, land management, construction and plant hire group, announces its results for the year ended 31st December 2003. HIGHLIGHTS 18th SUCCESSIVE YEAR OF PROFIT GROWTH DIVIDEND UP 10% NET ASSETS PER ORDINARY SHARE UP 23% John Reis, Chairman, comments: ' .... another year's exceptional results, culminating in an 18th successive year of profit growth' '.... our property development and land management companies recorded excellent results in the year ....' 'The construction business took advantage of some buoyancy in the sector ....' 'The plant hire company posted a record profit before tax for the year ....' Enquiries: Jamie Boot, Group Managing Director - Tel: 0114 255 5444 CHAIRMAN'S STATEMENT Continuing our outstanding performance of recent years, it again gives me great pleasure to report on another year's exceptional results, culminating in an 18th successive year of profit growth. The year was also notable for a number of strategic changes to the group's business structure with the successful disposal of the housebuilding, training and Scottish construction companies. This completed the risk reduction programme which we commenced in 2002, and now enables us to concentrate on the group's core activity of property development, land management, construction and plant hire. The headline profit before tax was £30.0m, an overall increase of £12.8m over 2002. Group operating profit totalled £14.1m, made up from continuing operations (£11.5m), discontinued operations (£0.9m) and our share of an associate company profit (£1.7m). These compare with an operating profit of £15.3m for the previous year. Profit on the sale of the discontinued operations amounted to £16.2m, compared with £2.0m for 2002. Group turnover inevitably fell away during the year and at £106m was £111m below that for the comparative period. This fall in turnover was due to the effect of discontinued operations, as shown by the restated 2002 figures, although the increase in continuing operations was most encouraging. The disposals have made our company a more focussed organisation, with a much reduced personnel count and group net assets in excess of £116m. This position enables us to direct increased resources to the property development and land management operations where the scope for improving overall profit margins remains greater. However, as referred to in the Interim Report, due to the deferred consideration for the disposals, the full benefit arising from the reinvestment of the proceeds may take a little longer to come through. Basic earnings per ordinary share increased by 100% to 102.1p from 51.0p in 2002. Prior to the inclusion of profit on the sale of discontinued businesses, earnings amounted to 38.2p (2002: 43.0p), an understandable decrease of approximately 11% due to the disposals. Interest payable, excluding the group's share of the associate company's interest, netted down to £19,000. This compares with net interest receivable of £56,000 in 2002, and reflects the continued low level of borrowings experienced by the company throughout the year. Trading Summary I am pleased to report that our property development and land management companies recorded excellent results in the year, but with much of the group's business now dependent on the planning regime, the recently published findings of Kate Barker's Review of Housing Supply are important to us and raise a number of concerns about the future of the planning process. We trust that the government will engage with the industry to bring about some simplification and consistency. The Property Development operation put in another strong performance, significantly expanding the number of opportunities under its control and contributing to the group's results with the major sale of Hailsham Retail Park in East Sussex. Our portfolio of schemes extends from a prominent retail complex in Ayr, Scotland and through the North East and North West of England, with a town centre retail outlet in South Shields and substantial schemes in Blackburn and Warrington. It also encompasses the Midlands, South East and South West with developments in Doncaster, Nottingham, Worksop and Stoke-on-Trent, and extending down to Walthamstow in London, Bromley in Kent and Frome in Somerset. With a representative mix of projects across all sectors and with new opportunities continuing to be identified, further successes are anticipated. Our Land Management company benefited greatly from the sale of Henry Boot Homes Limited through the crystallisation of intra group profits. A land sale at Oxclose Park, Sheffield, also made a meaningful contribution to the year's performance which resulted in record pre-tax profits. The increasing demand for new homes should ensure that land prices remain high for at least the foreseeable future, and with interests in some 6,000 acres of land nationwide we are well placed to continue trading successfully in what promises to be a healthy forward market. The Construction business took advantage of some buoyancy in the sector to consolidate its reputation as a high quality contractor in both the public and private arenas. Our market share continued to grow, particularly in the education, prison and health sectors, with work in the latter being enhanced by our inclusion in an alliance for the government's NHS ProCure 21 initiative. Although competition remained strong, the securing of a number of partnering projects and a further improvement in performance contributed positively to group results. The Plant Hire company posted a record profit before tax for the year, meeting the expectations referred to in my interim statement. The new business strategy adopted in 2002 continues to deliver sound results, and with plans to open new power tool centres and to introduce a new product line in the accommodation division, further growth is anticipated. Financial Position, Dividends and Outlook Group net assets now exceed £116m, and net assets per ordinary share stand at 445p, an increase of 84p (23%) during the period. Net borrowings are some £5m, giving a gearing level of less than 5%. This means that our company is in a strong position to face the challenges of 2004 and beyond, and is well placed to pursue and exploit the various opportunities that have been identified. Whilst volatility in profits remains an important factor for us, the overall prospects for our business remain sound and your directors feel comfortable in proposing a final dividend of 10.8p (2002: 9.8p) which, when added to the interim dividend of 4.0p (2002: 3.6p), gives a total for the year of 14.8p. This compares with the total dividend for 2002 of 13.4p, an increase in excess of 10%, which reflects the continuing confidence of your directors in the future progress of the business. J.S. Reis 14th April 2004 Summarised Group Profit & Loss Account for the year ended 31st December 2003 2003 2002 As restated £'000 £'000 Turnover Group and share of associates 108,821 220,743 Less: share of associates' turnover 2,900 3,416 -------- -------- Continuing operations 90,027 81,190 Discontinued operations 15,894 136,137 -------- -------- Group turnover 105,921 217,327 Cost of sales 83,765 186,505 -------- -------- Gross profit 22,156 30,822 Administrative expenses 9,879 16,957 -------- -------- 12,277 13,865 Other operating income 37 38 -------- -------- Operating profit: Continuing operations 11,501 4,001 Discontinued operations 813 9,902 12,314 13,903 Share of associates' operating profits 1,748 1,445 -------- -------- Group operating profit 14,062 15,348 Profit on sale of discontinued operations 16,209 2,039 Interest (19) 56 Interest - share of associates (299) (303) -------- -------- Profit on ordinary activities before taxation 29,953 17,140 Tax on profit on ordinary activities 4,029 4,256 -------- -------- Profit for the financial year after taxation 25,924 12,884 -------- -------- Dealt with as follows: Dividends paid and proposed Cumulative preference shares (non-equity) 5.25% (2002: 5.25%) 21 21 Ordinary shares 14.8p (2002 13.4p) 3,781 3,395 Profit retained 22,122 9,468 -------- -------- 25,924 12,884 -------- -------- Basic earnings per ordinary share 102.1p 51.0p -------- -------- Diluted earnings per ordinary share 99.8p 49.7p -------- -------- Summarised Group Balance Sheet at 31st December 2003 2003 2002 £'000 £'000 Fixed assets 33,074 35,289 -------- -------- Current assets Stocks 73,727 99,473 Debtors 54,681 17,883 Cash at bank and in hand 6,457 14,030 Creditors: amounts falling due within one year (40,571) (59,438) -------- -------- Net current assets 94,294 71,948 -------- -------- Total assets less current liabilities 127,368 107,237 Creditors: amounts falling due after more than one year (10,444) (11,442) Provisions for liabilities and charges (579) (1,898) -------- -------- Net assets employed 116,345 93,897 -------- -------- Capital and reserves Called up share capital 3,005 2,989 Capital redemption reserve fund 271 271 Share premium account 2,563 2,158 Property revaluation reserve 13,911 14,136 Profit and loss account 95,971 73,648 Other reserves 624 695 -------- -------- Shareholders' funds 116,345 93,897 -------- -------- Being: Non-equity shareholders' funds 400 400 Equity shareholders' funds 115,945 93,497 -------- -------- 116,345 93,897 -------- -------- Group Statement of Total Recognised Gains and Losses for the year ended 31st December 2003 2003 2002 £'000 £'000 Profit for the financial period 25,924 12,884 Unrealised surplus on property revaluation 459 2,471 Elimination of revaluation surplus on transfer of properties to stocks (483) (339) -------- -------- Total recognised gains and losses for the year 25,900 15,016 -------- -------- Summarised Group Cash Flow Statement for the year ended 31st December 2003 2003 2002 £'000 £'000 Net cash outflow (inflow) from operating activities (13,106) 12,347 Dividends received from associates 927 695 Returns on investment and servicing of finance (16) (34) Taxation (4,611) (3,809) Capital expenditure and financial investment (1,592) (3,678) Acquisitions and disposals 14,920 (6,335) Equity dividends paid (3,504) (3,130) -------- -------- Cash (outflow) before use of liquid resources and financing (6,982) (3,944) Financing (764) (679) -------- -------- (Decrease) in cash (7,746) (4,623) -------- -------- Notes to Group Cash Flow Statement 2003 2002 £'000 £'000 Reconciliation of net cash flow to movement in net funds (Decrease) in cash (7,746) (4,623) Cash outflow from decrease in lease financing 1,185 1,160 New finance leases - - -------- -------- Net cash flow in year (6,561) (3,463) Net funds at 31st December 2002 1,535 4,998 -------- -------- Net (debt) funds at 31st December 2003 (5,026) 1,535 -------- -------- Reconciliation of operating profit to operating cash flow 2003 2002 £'000 £'000 Operating profit 12,314 13,903 Depreciation and amortisation 3,734 4,224 Profit on sale of tangible fixed assets (295) (208) (Increase) in stocks (12,193) (5,048) (Increase) in debtors (15,899) (8,462) (Decrease) increase in creditors and provisions (767) 7,938 -------- -------- Net cash (outflow) inflow from operating activities (13,106) 12,347 -------- -------- Analysis of net funds At Cash At 31.12.02 flows 31.12.03 £'000 £'000 £'000 Cash at bank 14,030 (7,573) 6,457 Bank loans (10,000) (173) (10,173) -------- Decrease in cash (7,746) Finance leases (2,495) 1,185 (1,310) -------- -------- -------- 1,535 (6,561) (5,026) -------- -------- -------- Notes 1. The financial information above has been extracted from the Company's statutory accounts for the years ended 31st December 2002 and 2003. Statutory accounts for the year ended 31st December 2002 have been delivered, and those for the year ended 31st December 2003 will be delivered, to the Registrar of Companies. The auditors of the Company have given unqualified reports on those accounts and such reports did not contain a statement under Section 237(2) or (3) of the Companies Act 1985. 2. At the Board Meeting held on 13th April 2004 the Directors formally approved the issue of these statements. 3. The financial information has been prepared using accounting policies consistent with those adopted by the group in its accounts for the year ended 31st December 2002. 4. The Annual Report 2003 is to be published and sent to shareholders on 27th April 2004. Copies will be available from The Company Secretary, Henry Boot PLC, Banner Cross Hall, Sheffield, S11 9PD. 5. The Annual General Meeting of the Company is to be held at the Sheffield Park Hotel, Chesterfield Road South, Sheffield, S8 8BW on Friday 28th May 2004 at 11.30 a.m. 6. The final dividend will be paid on 3rd June 2004, with a record date of 21st May 2004. EDITORS' NOTES Henry Boot is currently involved in a number of major property development schemes throughout the country, including: AYR CENTRAL SHOPPING COMPLEX Work is to start soon on construction of the 196,000 sq.ft Ayr Central Shopping Complex where Debenhams have already taken the 80,000 sq.ft anchor tenancy. Other retailers are also signing up to take space, and negotiations are ongoing with more. Project completion is programmed for late in 2005. *** BEESTON, THE SQUARE SHOPPING CENTRE This recently acquired retail complex in Nottingham is trading up to expectations, and plans are in hand to redevelop surrounding land and property to form an additional 50,000 sq.ft of retail space. It is intended to refurbish the existing 80,000 sq.ft centre. *** BLACKBURN, NOVA SCOTIA RETAIL PARK Construction work started in September on a 140,000 sq.ft B&Q store with garden centre which has already been pre-sold. An additional 40,000 sq.ft of retail space is being constructed in three units, all of which are currently under offer to national retailers. A further phase of development is planned on the 12 acre site. *** BROMLEY, THE MALL Phase one of this £18 million redevelopment of The Mall mixed-use scheme is underway and due to open in summer 2004, and phase two by the end of 2004/early 2005. Some 100,000 sq.ft of retail and health & fitness accommodation will be provided, and includes Argos remaining as a key anchor tenant. *** DERBYSHIRE, M1, MARKHAM VALE BUSINESS PARK This business park is to be developed on the 200 acre employment growth zone of the former Markham Colliery, and will involve the provision of a new junction 29a on the M1. The scheme will offer plots from 0.5 to 50 acres in size, and be able to accommodate units of over 1,000,000 sq.ft. Although the land will be available immediately, the new junction will not be ready until autumn, 2005. *** FROME, WESSEX FIELDS RETAIL PARK More than 50% of the 21,500 sq.ft retail space available at Wessex Fields Retail Park in Somerset has been pre-let. The scheme will be available for occupation in 2005. *** HULL, PRIORY PARK The latest development on Priory Park was the sale of 4.3 acres to De Vere Hotels for a 120-bed hotel and conference centre. The speculative construction of 20,000 sq.ft of industrial and 17,000 sq.ft of office accommodation is presently in hand, and further land sales are being negotiated. An additional 30 acres of employment land is expected to be made available in the near future. *** LIVERPOOL, SMITHDOWN RETAIL CENTRE Pre-lets have already been agreed with Tesco Express and Carphone Warehouse at this 12,500 sq.ft district retail centre which is planned for completion in 2004. There is a strong level of interest in the remaining space. *** NOTTINGHAM, DEPARTMENT STORE REDEVELOPMENT Following the recent acquisition of the 220,000 sq.ft former Co-op department store in Nottingham city centre, redevelopment plans are in hand to provide a mixed-use leisure, retail and office scheme. Preliminary works are to be undertaken in 2004. *** RIPON BUSINESS PARK It is hoped to make a start shortly on construction at our 11 acre land holding at Ripon, North Yorkshire. Many enquiries have been received from potential users, and contractual arrangements have already been entered into with Homebase. *** ROCHDALE, MELLOR STREET RETAIL SCHEME Progress is being made with the intended start of work on a 25,000 sq.ft non-food retail scheme later in 2004. A full pre-letting is already in place. *** SKEGNESS RETAIL PARK Completion of the final 12.500 sq.ft phase of development is expected during 2004, with all the new space pre-let to Carpetright and Pizza Hut. *** SOUTH SHIELDS, WATERLOO SQUARE RETAIL SCHEME Planning permissions have been obtained for this 108,000 sq.ft food and non-food development. Conditional contracts have been exchanged with Asda, and negotiations are proceeding with other interested parties. *** SOUTH YORKSHIRE, M1, WENTWORTH BUSINESS PARK Our long-term 150 acre development at Wentworth is reaching its conclusion, and one or two modest land sales will complete our involvement in the scheme. *** STOKE-ON-TRENT, MEIR PARK Following the opening of a new 162,000 B&Q Warehouse on Meir Park, a further 18 acres have been made available for mixed-use development *** WALTHAMSTOW, THE ARCADE The £15 million redevelopment of The Arcade to provide 160,000 sq.ft of modern mixed-use accommodation (retail, residential, leisure, health) has started with the initial demolition phase. The residential element of the scheme has been sold, and agreements for some of the retail units have already been concluded. It is proposed to announce the start of construction work later this year. *** WARRINGTON, BIG APPLE DISTRIBUTION PARK Construction work is expected to start this year in providing 375,000 sq.ft of high bay warehousing close to M6 junction 20. An agreement is at the legal stage with one major user, and negotiations are underway with two other potential users. *** WORKSOP, RETAIL & LEISURE SCHEMES Detailed planning applications have been submitted for a 120,000 sq.ft two-site retail and leisure scheme. All anchor tenants are contracted on the leisure park site, and Tesco are to relocate their existing Worksop store to new 70,000 sq.ft premises on the second site. *** YORK, CLIFTON MOOR RETAIL PARK Offers have now been received from a number of quality retailers for our final 25,000 sq.ft of retail space on this highly successful development. This information is provided by RNS The company news service from the London Stock Exchange

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