Half Yearly Report

RNS Number : 8910M

Boot(Henry) PLC

24 August 2011

HENRY BOOT PLC

UNAUDITED HALF-YEARLY RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2011

Henry Boot PLC ('Henry Boot', 'the Company' or 'the Group') (LSE: BHY), a company engaged in land promotion, property development & investment, construction and plant hire, announces its half-yearly results for the six months ended 30 June 2011.

HIGHLIGHTS

·	Trading profits*: £11.0m (2010: £5.8m)
·	Property revaluation deficit: £1.7m (2010: surplus £1.7m)
·	Profit before tax: £9.1m (2010: £9.0m)
·	Earnings per share of 4.1p (2010: 5.0p)
·	Increased interim dividend: 1.65p (2010: 1.35p)
·	Net asset value per share: 146p (31 December 2010: 145p)
·	Net funds: £0.6m (31 December 2010: Net debt £11.4m)
	*Trading profit comprises operating profit of £9.6m (2010: £10.0m), adjusted for the decrease in fair value of investment properties of £1.7m (2010: increase £1.7m), profit on sale of investment properties of £Nil (2010: £2.5m) and the profit on sale of assets held for sale of £0.4m (2010: £Nil).

Commenting on the results, Chairman, John Brown, said:

"I am pleased to report on a further solid performance by Henry Boot during the half year ended 30 June 2011. On the whole, the property market has remained stable but continues to be challenging.

The house building sector has continued to trade at about the same level as over the last two years and indications are that over the next year activity will not increase substantially. We remain of the view that, as and when the recovery gathers momentum, our established portfolio of greenfield land sites will stand the Company in good stead and we continue to actively grow our site portfolio.

Construction trading remains in line with management expectations. We are mindful that Government spending cuts will have an impact on the level of work being available to the market as a whole. We are still seeing opportunities within both the private and public sectors, although it is anticipated that margins will have to be competitive to win this type of work. The newly formed renewable energy operation is beginning to identify good opportunities and is starting to secure new work. We believe the foothold we have established in this expanding sector provides impetus for future growth.

Overall, the Group continues to trade in line with the Board's expectations for the year ending 31 December 2011."

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, Corporate Finance

Tel: 0113 243 1619

Matthew Tyler, Corporate Broking

Tel: 0207 071 4300

Citigate Dewe Rogerson

Keith Gabriel

Tel: 0121 362 4012

Mobile: 07770 788 624

CHAIRMAN'S HALF-YEARLY REVIEW

RESULTS

I am pleased to report on a further solid performance by Henry Boot during the half year ended 30 June 2011. On the whole the property market has remained stable but continues to be challenging. We did, however, take advantage of slightly better demand for investment property by selling our shopping centre in Ayr and of improving demand in the greenfield land market resulting in the sale of an optioned site in Buckingham for 700 residential units.

Statement OF COMPREHENSIVE INCOME

Revenue increased to £66.9m (2010: £55.1m) after higher land sales during the period. Trading profit* increased 90% to £11.0m (2010: £5.8m), helped by the sale of the Buckingham site noted above for £10.4m, offset by lower income within the construction division.

Administration and pension costs were £8.4m (2010: £7.7m). The external valuation of property at the half year stage gave rise to a deficit of £1.7m (2010: surplus £1.7m). This principally arose from further investment in a lorry park at our motorway service area at Saltwood which was partially offset in valuation terms by changes to the tenant mix and lease arrangements.

We sold our Ayr shopping centre in January for £33.8m, before costs and provisions for rental guarantees. The cash received for the Ayr and Buckingham disposals meant borrowings in the first half were reduced and therefore interest costs in the period were 55% lower at £0.5m (2010: £1.1m). The majority of this interest cost is represented by facility non-utilisation fees.

Profit before tax was £9.1m (2010: £9.0m). Retained profits were £6.3m (2010: £7.4m) after a higher deferred tax charge than in the prior period because we are not recognising deferred tax capital losses on investment properties. Basic earnings per share were 4.1p (2010: 5.0p).

Statement of Financial Position

Non-current assets increased to £191.7m (December 2010: £179.1m) after disposals within the land development division completed on deferred payment terms. Current assets decreased to £107.0m (December 2010: £117.1m) following disposals of land and our Ayr shopping centre, included in assets classifiedas held for sale at the beginning of the period, offset by further expenditure on land and increased trade receivables relating to land disposals made on deferred payment terms. Current liabilities were down 11% to £71.5m (December 2010: £80.0m) after a £5.8m reduction in current borrowings and current provisions relating to land development were utilised.

As we continue to carefully manage our asset positions and generate cash, the above changes resulted in net current assets of £35.4m compared with £37.1m at 31 December 2010 and £7.2m at 30 June 2010. Net funds at 30 June 2011 were £0.6m (December 2010: net debt £11.4m) with gearing eliminated (December 2010: 6%) and we continue to trade well within our banking facilities and covenants. Within non-current liabilities, defined benefit pension liabilities under IAS 19 increased to £17.1m (December 2010: £16.2m) as a result of a 0.15% increase in the inflation rate assumption and changes to commutation factors, offset by an increase in corporate bond yields and the Company's deficit reduction contributions. Also within non-current liabilities, provisions for land development have been increased due to commitments to provide infrastructure relating to recent land disposals. Overall, non-current liabilities have increased to £37.3m (December 2010: £27.6m). Net assets stood at £189.9m (December 2010: £188.6m) after retained earnings in the period were offset by dividends paid.

Cash Flows

Operating cash inflows before movements in working capital were £11.6m (2010: £7.7m). A decrease in land inventories of £1.6m, higher receivables at £29.0m and an increase in payables of £5.0m resulted in an outflow of cash generated from operations of £10.8m (2010: inflow £2.2m). Net interest and taxation payments were £1.9m, resulting in net cash outflows from operating activities of £12.7m (2010: £1.1m). Cash inflows from investing activities of £28.4m (2010: £10.7m) resulted from the purchase of property, plant and equipment of £2.6m and the disposal of assets held for sale of £33.8m, the latter including the Ayr shopping centre. After dividend payments to equity, preference and non-controlling interests of £3.7m and a net decrease in borrowings of £10.6m, net cash and cash equivalents stood at £5.5m with net debt reducing by £12.0m since 31 December 2010 to give rise to net funds of £0.6m at 30 June 2011.

Dividend

The Directors have declared a 22% increase in the interim dividend to 1.65p (2010: 1.35p), which will be paid on 27 October 2011 to shareholders on the register at the close of business on 7 October 2011.

REVIEW OF ACTIVITIES

Land

Hallam Land Management, our strategic land business, was very active in this first half. At 30 June 2011, we held interests in 8,055 acres (December 2010: 8,052 acres), with 1,405 acres owned (December 2010: 1,409 acres), 4,016 acres under option (December 2010: 4,076 acres) and 2,634 acres under planning promotion agreements (December 2010: 2,567 acres). The inventory value of these assets was £52.6m (December 2010: £55.0m) which are spread countrywide though with a geographical bias to the East Midlands, South and South West England and the central belt of Scotland.

In the first half of the year we achieved planning permissions on sites at Rugby for a small District Retail Centre, Exeter 1,100 plots (full permission), Edinburgh 100 plots, Bishopbriggs 50 plots, Bolsover 250 plots (minded to grant) and Penniment Farm, Mansfield, 460 plots (minded to grant, half share).

We made disposals from our sites at Buckingham, Winsick and Exeter, generating turnover for the half year of £23.0m (2010: £4.0m) and resulting in higher profits than the preceding two years.

We also have undetermined applications in progress at Market Harborough 500 plots (Hallam share), Blaby 1,061 plots (Hallam share), Desford 150 plots, Nuneaton 326 plots, Irthlingborough 700 plots, Chatteris 1,000 plots, Stratford-upon-Avon 150 plots (Hallam share) and Kilmarnock 500 plots.

Housing and housing land markets continue to remain challenging. We believe that this is mainly because of the continuing lack of liquidity in the mortgage market. Although there have been some attempts to improve the supply of affordable mortgages, for many potential house buyers deposits and/or mortgages remain difficult to obtain. The London market, funded by international demand, remains vibrant and, whilst this has a ripple effect further out from London, the impact reduces with distance. There are, however, certain hotspots outside the South East, such as Edinburgh, Harrogate, Leeds and Chester, which generate higher levels of activity and prices. Nonetheless, in general, land prices remain below peak levels and we do not expect to see a return to those levels in the short term and, in certain areas of the country, particularly the North, values remain sluggish.

The introduction of the Localism Bill and the negative development attitudes that were encompassed within the localism concept have, to some extent, been replaced in the Government's thinking by a more dynamic view of the need for economic regeneration delivered in part by a vibrant development sector. Thus many elements of the Government's Spring budget statements were specifically designed to stimulate greater activity in the property and construction sectors. As a consequence, we believe there will be something of a relaxation within the planning regime and that over the next two to three years we are likely to see more progressive decision making at both national and local levels. Accordingly, therefore, we will carefully monitor the situation and are likely to submit further applications on our sites if these views are confirmed.

Developments and investments

Property development and investment markets have remained relatively stable during the first half of the year. Against this backdrop, there has been significant progress within our portfolio of opportunities and assets reflecting this stability and our ability to progress development projects and actively manage our investments.

Taking the investment properties first, activity during the period was as follows:

·	Ayr - it was considered that in order to achieve any further significant capital value improvement, substantial additional capital costs would be required without any certainty of achieving an acceptable additional return. Therefore, this town centre retail scheme was sold in the early part of the year to Sovereign Land in partnership with AREA Property Partners for £33.8 million, slightly ahead of valuation.
·	Nottingham - The Axis, our mixed-use city centre office, retail and leisure scheme, has remained fully let during the period. We expect to see good rental growth at the next round of rent reviews which are due to commence in the second half of this year. This remains a long-term holding for the Group.
·	Bromley - good progress has been made securing additional retail lettings and letting the first floor office space. This has reduced voids in the scheme to a nominal level and contributed to an increase in rental income, with only one small retail unit and an office suite remaining vacant.
·	Rotherham - the 50,000 sq ft B&Q has continued to trade well, reflecting its prime location, but the demand for further bulky goods retail space has remained subdued and existing vacant stock in the area has soaked up any demand. Therefore, development of the second phase of 50,000 sq ft of retail space will only commence once we have obtained viable pre-lets. Lettings have now been completed on the two 5,000 sq ft, speculatively built industrial units and we see continuing interest in the remaining industrial land, in addition to working on alternative, higher value uses.
·	Stop 24 - the ongoing management of our M20 Motorway Service Area saw the completion of a 110 space lorry park development on budget and this new venture is now operational. In addition, two units have been let to a convenience store retailer and a further letting to a food franchise has been completed. Other initiatives are under consideration, including the development of a budget hotel, as we build on the improvements in visitor footfall, assisted by the provision of additional motorway signage.
·	York - the 18,000 sq ft former nightclub, which has been vacant for some time, is now the subject of an agreement for lease with an outdoor and camping equipment retailer. The change of use permission has already been secured and it is expected that the unit will be open and trading in the Autumn.

The portfolio of development opportunities has seen significant progress in the period reflecting the aforementioned market stability. These include:

·	Markham Vale - a good level of occupier demand on our 200 acre business park, located on the M1 motorway near Chesterfield, resulted in a contract exchange for a design and build project of 41,000 sq ft and agreed terms to pre-let 100,000 sq ft of warehousing. These developments are targeted to complete in 2012. Markham Vale has now been put forward as part of Sheffield City Region's Enterprise Zone and, if successful, the additional benefits derived from this designation will boost take up over the next few years.
·	Richmond-upon-Thames - our town centre development site, on which we have already secured planning permission for 20,000 sq ft of offices, is now the subject of an agreed pre-let to a budget hotel operator and it is expected that a detailed planning application will be submitted within the next few months enabling a commencement of the development on site in 2012.
·	Malvern - we have secured a pre-let for a 67 bed budget hotel on part of our 1.17 acre development site. The site was originally purchased for the development of a trade park but this now offers a more immediate and lucrative return.
·	Thorne, Doncaster - this joint venture with Royal Bank of Scotland for the redevelopment of this 23 acre site on the edge of Thorne town centre is progressing well, with planning permission secured for a mixed use scheme, including a 45,000 sq ft supermarket, restaurants, hotel, public house and a range of industrial and office units. Following this rapid planning progress, terms are being finalised with a food store operator and other occupiers for the site.
·	Warminster - the initial phase of the supermarket development, pre-let to Waitrose, involving the relocation of a factory, has been completed on programme and on budget. This enables the second phase of the development of the 25,000 sq ft supermarket to begin, with anticipated completion in early 2012.
·	Bradford - the development of a small neighbourhood store, pre-let to Tesco, has been completed on budget and subsequently sold to a private investor.
·	Calderdale & Huddersfield NHS Foundation Trust - our joint venture with the Trust was established in the early part of the year and the initial planning phase of a development for approximately 50,000 sq ft of additional office and clinical accommodation is progressing well. We are targeting a start on site next year.
·	Watford - Henry Boot Developments has been selected as preferred development partner by Watford Borough Council to undertake the redevelopment of Charter Place shopping centre, located in the town centre. A preliminary agreement has been exchanged and work is now progressing on the scheme design.

Construction

Henry Boot Construction has maintained good levels of activity and with forward orders in hand, has currently secured 95% of this year's budgeted turnover. We are also now starting to build a book of business for 2012.

Whilst market conditions have remained challenging following the reduction in construction activity, we have been selective in the opportunities we have pursued and focused on work streams where higher margins are still achievable. As part of this, we have recently launched a business to deliver renewable energy technologies to align with Government strategies. This strongly positions Henry Boot Construction for the anticipated growth in this sector and helps to alleviate the effect of the reduction in public expenditure on general construction.

The social housing sector has continued to provide opportunities including works being undertaken for St Leger Homes on behalf of Doncaster Metropolitan Borough Council, Eastland Homes in Manchester and North Lincolnshire Homes in Scunthorpe. It is anticipated that these frameworks will provide work into 2012 and beyond. We are also carrying out a responsive repairs and maintenance partnering contract for Nottingham City Homes. The first half of the year also saw the completion of the award-winning new build Shirecliffe council housing scheme for Sheffield City Council.

The education sector continues to provide an encouraging level of activity, with primary school extensions and refurbishments being constructed or completed for Calderdale Metropolitan Borough Council, Rotherham Metropolitan Borough Council, Cheshire County Council, Lancashire County Council and North East Lincolnshire Council. We have also started major new build projects at Arboretum Primary School for Derby City Council and Westcliffe Primary School for North Lincolnshire Council. The Ministry of Justice National Offender Management Service framework continues to provide opportunities at establishments within our operating area. In addition, we have secured two further custodial frameworks for the Merseyside Police and the Ministry of Justice minor works.

Following the successful completion of four schemes at the Northern General Hospital for Sheffield Teaching Hospitals NHS Trust, we have received the order for the refurbishment of Floor K at the Royal Hallamshire Hospital in Sheffield. We expect further opportunities through this framework during 2011/2012. In addition, within the health sector, we are building the Joint Service Centre for Rotherham NHS Trust and the Metropolitan Borough Council.

As part of our focused drive to increase our private sector client base, we are building new retail units for Hammerson plc in Sheffield and industrial/commercial projects for Tata Steel, Outokumpu, Betafence and Henry Boot Developments. The waste sector has also provided civil engineering opportunities for our General Works division with Leeds City Council and Veolia and we have completed public open space improvement works for Barnsley Metropolitan Borough Council.

Pleasingly, we have commenced our first scheme under the Local Authority YORbuild framework within the Yorkshire regions and have been advised that we were successful in our application for the YORcivils framework.

Notably, in the period we have won for the second year running the RoSPA Gold Award for occupational health and safety and five prestigious national site awards from the Considerate Constructors Scheme. We were also recognised by the Business in the Community Environmental Index and received both the 'Significant Improver' award and 'Gold' status. In addition, we won the 'Green Apple' award for a new build social housing scheme in Sheffield and the CIOB awards for excellence and quality, and health and safety. All these awards are testament to the hard work of our employees and our ability to deliver excellence in all aspects of construction to our clients.

Our PFI project maintaining the A69 between Newcastle and Carlisle continues to trade in line with management expectations and previous years. The Group continues to retain a 61% stake in this project which did not see revenues affected by the adverse weather conditions in the early months of this year.

Banner Plant recorded an encouraging set of results, whilst maintaining the cautious approach adopted over the last two years. All categories of equipment traded well, with powered access and accommodation seeing strong growth over the previous year. This improvement in activity enabled management to marginally relax the approach to fleet size and saw increased investment in powered access, mini-excavators, telehandlers and accommodation units and this, along with a reduction in the disposal of older items, has seen the fleet size stabilise. This increased investment has been balanced against depreciation charges with the aim of remaining cash flow neutral during the year and borrowings within the plant business remain at their lowest levels for over ten years.

OUTLOOK

Overall, the Group continues to trade in line with the Board's expectations for the year ending 31 December 2011. The prospects for each of our three business segments for the remainder of 2011 are:

Land

The house building sector has continued to trade at about the same level as over the last two years and indications are that over the next year activity will not increase substantially. Therefore, the industry continues to trade at about half the volumes of the top of the cycle. However, there are signs that expansion and growth is no longer such a remote possibility with house builders reporting that they are buying land at more competitive pricing and opening more new sites. Whilst there is cautious optimism for the medium term, the severity of the funding crisis has been such that we cannot be complacent and there is still much work to be done. We remain of the view that, as and when the recovery gathers momentum, our established portfolio of greenfield land sites will stand the Company in good stead and we continue to actively grow our site portfolio.

Developments and Investments

Whilst profitable property development remains a challenging business in the current environment, the stabilisation of market conditions, combined with the more realistic expectations of landowners and prospective occupiers, has resulted in development projects becoming more attractive. Increasingly, occupiers seeking modern accommodation now have to look at new build solutions, as the stock of good quality vacant space declines. Landowners, both public and private sector, are increasingly recognising the importance of partnering with property companies who not only have the relevant skills and experience to bring projects forward, but who are also in a position to finance such developments. These circumstances ensure that the Group is well placed to progress the profitable development of existing projects and secure a flow of profitable new opportunities into the foreseeable future.

Construction

Whilst current trading remains in line with management expectations, we are mindful that Government spending cuts will have an impact on the level of work being available to the market as a whole. We are still seeing opportunities within both the private and public sectors, although it is anticipated that margins will have to be competitive to win this type of work. We are delighted that the newly formed renewable energy operation is beginning to identify good opportunities and is starting to secure new work. We believe the foothold we have established in this expanding sector provides impetus for future growth.

Group risks and uncertainties

The Directors set out in the 2010 Annual Report and Financial Statements (and now reproduced in note 14) the key risks that could have a material impact on our results. The Board does not consider that these risks, which were identified at that time, have changed materially since then. The Government's stated aim to reduce spending, raise taxes and cut the UK's debt will serve to reduce the level of demand in the economy generally and, in particular, impact on the level and number of construction projects available to us. As noted earlier, the Government has also indicated that it will implement substantial changes to the planning regime which adds a level of uncertainty until the new system is fully adopted. On the positive side, our financial capability has been further strengthened in the period and we retain a significant number of land and development opportunities which remain capable of generating excellent profits as markets improve.

John Brown

Chairman

24 August 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

for the half year ended 30 June 2011

	Half year	Half year	Year
	ended	ended	ended
	30 June	30 June	31 December
	2011	2010	2010
	Unaudited	Unaudited	Audited
		(restated)
	£'000	£'000	£'000
Revenue	66,890	55,076	131,944
Cost of sales	(47,578)	(41,535)	(104,522)
Gross profit	19,312	13,541	27,422
Other income	12	12	23
Administrative expenses	(7,539)	(6,699)	(12,205)
Pension (expenses) credit	(819)	(1,050)	2,718
	10,966	5,804	17,958
(Decrease) increase in fair value of investment properties	(1,727)	1,727	555
Profit on sale of investment properties	10	2,519	2,433
Profit (loss) on sale of assets held for sale	365	-	(60)
Operating profit	9,614	10,050	20,886
Finance income	379	228	507
Finance costs	(926)	(1,313)	(2,475)
Share of profits of associates	30	-	-
Profit before tax	9,097	8,965	18,918
Tax	(2,797)	(1,558)	(5,395)
Profit for the period from continuing operations	6,300	7,407	13,523
Other comprehensive income:
Deferred tax on property revaluations	30	-	(19)
Actuarial (loss) gain on defined benefit pension scheme	(2,575)	(6,488)	4,649
Deferred tax on actuarial loss (gain)	506	1,817	(1,465)
Movement in fair value of cash flow hedge	99	(22)	122
Deferred tax on cash flow hedge	(32)	210	164
Other comprehensive income for the period	(1,972)	(4,483)	3,451
Total comprehensive income for the period	4,328	2,924	16,974
Profit for the period attributable to:
Owners of the Parent Company	5,364	6,535	11,827
Non-controlling interests	936	872	1,696
	6,300	7,407	13,523
Total comprehensive income attributable to:
Owners of the Parent Company	3,366	1,979	15,167
Non-controlling interests	962	945	1,807
	4,328	2,924	16,974
Basic earnings per ordinary share for the profit attributable
to owners of the Parent Company during the period	4.1p	5.0p	9.1p
Diluted earnings per ordinary share for the profit attributable
to owners of the Parent Company during the period	4.1p	5.0p	9.1p

Comparatives for the half year ended 30 June 2010 have been restated for a reclassification of overheads within the Construction segment amounting to £1,080,000 transferred from cost of sales to administrative expenses.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

at 30 June 2011

	30 June	30 June	31 December
	2011	2010	2010
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
ASSETS
Non-current assets
Intangible assets	11,044	12,211	11,707
Property, plant and equipment	16,242	15,729	15,234
Investment properties	136,400	164,570	135,117
Investment in associates	30	-	-
Trade and other receivables	21,994	2,601	10,449
Deferred tax assets	6,028	12,986	6,631
	191,738	208,097	179,138
Current assets
Inventories	56,658	58,353	58,005
Trade and other receivables	40,664	28,450	27,331
Cash and cash equivalents	9,638	3,867	4,037
Assets classified as held for sale	-	1,792	27,719
	106,960	92,462	117,092
LIABILITIES
Current liabilities
Trade and other payables	54,763	56,434	55,216
Current tax liabilities	2,361	1,988	1,602
Borrowings	5,549	24,236	11,362
Provisions	8,852	2,623	11,835
	71,525	85,281	80,015
NET CURRENT ASSETS	35,435	7,181	37,077
Non-current liabilities
Trade and other payables	1,402	1,583	1,347
Borrowings	3,488	4,650	4,069
Employee benefits	17,103	32,028	16,221
Deferred tax liabilities	-	12	-
Provisions	15,318	-	5,937
	37,311	38,273	27,574
NET ASSETS	189,862	177,005	188,641

EQUITY
Share capital	13,424	13,424	13,424
Revaluation reserve	3,324	3,314	3,294
Retained earnings	169,345	156,824	168,528
Other reserves	2,815	2,714	2,774
Cost of shares held by ESOP trust	(232)	(476)	(476)
Equity attributable to owners of the Parent Company	188,676	175,800	187,544
Non-controlling interests	1,186	1,205	1,097
Total equity	189,862	177,005	188,641

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

at 30 June 2011

	Attributable to owners of the Parent Company
					Cost of
					shares held		Non-
	Share	Revaluation	Retained	Other	by ESOP		controlling	Total
	capital	reserve	earnings	reserves	trust	Total	interests	equity
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 January 2010	13,424	3,349	156,200	2,599	(602)	174,970	1,230	176,200
Profit for the period	-	-	6,535	-	-	6,535	872	7,407
Other comprehensive income	-	-	(4,671)	115	-	(4,556)	73	(4,483)
Total comprehensive income	-	-	1,864	115	-	1,979	945	2,924
Equity dividends	-	-	(1,623)	-	-	(1,623)	(970)	(2,593)
Transfer to retained earnings	-	(35)	35	-	-	-	-	-
Share-based payments	-	-	348	-	126	474	-	474
	-	(35)	(1,240)	-	126	(1,149)	(970)	(2,119)
At 30 June 2010 (unaudited)	13,424	3,314	156,824	2,714	(476)	175,800	1,205	177,005

At 1 January 2010	13,424	3,349	156,200	2,599	(602)	174,970	1,230	176,200
Profit for the period	-	-	11,827	-	-	11,827	1,696	13,523
Other comprehensive income	-	(19)	3,184	175	-	3,340	111	3,451
Total comprehensive income	-	(19)	15,011	175	-	15,167	1,807	16,974
Equity dividends	-	-	(3,378)	-	-	(3,378)	(1,940)	(5,318)
Transfer to retained earnings	-	(36)	36	-	-	-	-	-
Share-based payments	-	-	659	-	126	785	-	785
	-	(36)	(2,683)	-	126	(2,593)	(1,940)	(4,533)
At 31 December 2010 (audited)	13,424	3,294	168,528	2,774	(476)	187,544	1,097	188,641
Profit for the period	-	-	5,364	-	-	5,364	936	6,300
Other comprehensive income	-	30	(2,069)	41	-	(1,998)	26	(1,972)
Total comprehensive income	-	30	3,295	41	-	3,366	962	4,328
Equity dividends	-	-	(2,789)	-	-	(2,789)	(873)	(3,662)
Share-based payments	-	-	311	-	244	555	-	555
	-	-	(2,478)	-	244	(2,234)	(873)	(3,107)
At 30 June 2011 (unaudited)	13,424	3,324	169,345	2,815	(232)	188,676	1,186	189,862

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

for the half year ended 30 June 2011

		Half year	Half year	Year
		ended	ended	ended
		30 June	30 June	31 December
		2011	2010	2010
		Unaudited	Unaudited	Audited
		£'000	£'000	£'000
Cash flows from operating activities
Operating profit		9,614	10,050	20,886
Adjustments for non-cash items:
Amortisation of PFI asset		562	559	1,117
Goodwill impairment		102	102	204
Depreciation of property, plant and equipment		1,483	1,529	3,024
Impairment losses on land and buildings		-	-	24
Revaluation decrease (increase) in investment properties		1,727	(1,727)	(555)
Share-based payment expense		311	348	659
Pension scheme credit		(1,693)	(192)	(4,862)
Movements in fair value of cash flow hedge		-	(22)	122
(Gain) loss on disposal of assets held for sale		(365)	-	60
Gain on disposal of property, plant and equipment		(162)	(387)	(554)
Gain on disposal of investment properties		(10)	(2,519)	(2,433)
Operating cash flows before movements in working capital		11,569	7,741	17,692
Decrease (increase) in inventories		1,577	(2,847)	(2,888)
Increase in receivables		(28,941)	(3,361)	(8,606)
Increase in payables		4,986	628	13,905
Cash generated from operations		(10,809)	2,161	20,103
Interest paid		(964)	(1,010)	(1,754)
Tax paid		(931)	(2,211)	(3,438)
Net cash flows from operating activities		(12,704)	(1,060)	14,911
Cash flows from investing activities
Purchase of intangible assets		(1)	(188)	(344)
Purchase of property, plant and equipment		(2,590)	(1,390)	(2,479)
Purchase of investment property		(3,243)	(386)	(2,857)
Proceeds on disposal of property, plant and equipment		261	722	954
Proceeds on disposal of investment properties		13	11,821	13,823
Proceeds on disposal of assets held for sale		33,851	-	1,732
Interest received		70	144	273
Net cash flows from investing activities		28,361	10,723	11,102
Cash flows from financing activities
Decrease in borrowings		(10,581)	(7,581)	(20,963)
Dividends paid	- ordinary shares	(2,779)	(1,612)	(3,357)
	- non-controlling interests	(873)	(970)	(1,940)
	- preference	(10)	(11)	(21)
Net cash flows from financing activities		(14,243)	(10,174)	(26,281)
Net increase (decrease) in cash and cash equivalents		1,414	(511)	(268)
Net cash and cash equivalents at beginning of period		4,037	4,305	4,305
Net cash and cash equivalents at end of period		5,451	3,794	4,037
Analysis of net funds (debt):
Cash and cash equivalents		9,638	3,867	4,037
Bank overdrafts		(4,187)	(73)	-
Net cash and cash equivalents		5,451	3,794	4,037
Bank loans		(4,650)	(28,813)	(15,231)
Related party loans		(200)	-	(200)
Net funds (debt)		601	(25,019)	(11,394)

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

for the half year ended 30 June 2011

1. GENERAL INFORMATION

The Company is a public limited company which is listed on the London Stock Exchange and incorporated and domiciled in the United Kingdom. The address of its registered office is Banner Cross Hall, Ecclesall Road South, Sheffield, United Kingdom S11 9PD.

The financial information set out above does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006 and is unaudited. The Financial Statements for the year ended 31 December 2010, which were prepared under IFRS as adopted by the European Union, have been reported on by the Group's auditors and delivered to the Registrar of Companies. The Independent Auditors' Report was unqualified and did not contain any statement under Section 498 (2) or (3) of the Companies Act 2006.

2. Basis of preparation and accounting policies

The half-yearly financial information has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority and with IAS 34 'Interim Financial Reporting' as adopted by the European Union.

The Company meets its day‑to‑day working capital requirements through a secured loan facility, which includes an overdraft facility, and is due for renewal on 7 May 2012. The current economic conditions create uncertainty for all businesses over a number of risk areas. As part of their regular going concern review the Directors specifically address all the risk areas that they consider material to the assessment of going concern. The report arising from these discussions concludes that the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future and thus they continue to adopt the going concern basis of accounting in preparing the half-yearly financial information.

The preparation of half-yearly financial information requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may differ from these estimates.

In preparing these half-yearly financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2010.

The half-yearly financial information has been prepared using the same accounting policies and methods of computation as compared with the annual Financial Statements for the year ended 31 December 2010, except for as described below:

Government grants are recognised at fair value in the Statement of Financial Position, within deferred income, where there is reasonable assurance that the grant will be received and all attached conditions will be complied with. Grants are then released to the Statement of Comprehensive Income and recognised within cost of sales over the period necessary to match the grant on a systematic basis to the costs that they are intended to compensate.

The following standards and interpretations are mandatory for the first time for the financial year ending 31 December 2011:

		Effective from
IFRIC 14 (amended 2009)	'Prepayments of a Minimum Funding Requirement'	1 January 2011
IFRIC 19 (issued 2009)	'Extinguishing Financial Liabilities with Equity
	Instruments'	1 July 2010
IAS 24 (revised 2009)	'Related Party Disclosures'	1 January 2011
IAS 32 (amended 2009)	'Classification of Rights Issue'	1 February 2010
IFRS 1 (amended 2010)	'Limited Exemption from Comparative IFRS 7
	Disclosures for First-time Adopters'	1 July 2010

The adoption of these standards and interpretations has not had a significant impact on the Group.

3. Segment Information

For the purpose of the Board making strategic decisions, the Group is currently organised into three operating segments: Property investment and development; Land development; and Construction. Whilst Group overheads are not a reportable segment, information about them is considered by the Board in conjunction with the reportable segments and is therefore included for completeness.

Operations are carried out entirely within the United Kingdom.

Inter-segment sales are charged at prevailing market prices.

The accounting policies of the reportable segments are the same as the Group's accounting policies as detailed above.

Segment profit represents the profit earned by each segment before tax and is consistent with the measure reported to the Group's Board for the purpose of resource allocation and assessment of segment performance.

	Half year ended 30 June 2011 Unaudited
	Property
	investment
	and	Land		Group
	development	development	Construction	overheads	Eliminations	Total
Revenue	£'000	£'000	£'000	£'000	£'000	£'000
External sales	5,090	22,963	38,837	-	-	66,890
Inter‑segment sales	155	-	109	270	(534)	-
Total revenue	5,245	22,963	38,946	270	(534)	66,890
Operating profit (loss)	384	7,906	2,733	(1,409)	-	9,614
Finance income	603	311	658	3,407	(4,600)	379
Finance costs	(3,106)	(309)	(352)	(1,759)	4,600	(926)
Share of profits of associates	30	-	-	-	-	30
Profit (loss) before tax	(2,089)	7,908	3,039	239	-	9,097
Tax	455	(2,081)	(996)	(517)	342	(2,797)
Profit (loss) for the year	(1,634)	5,827	2,043	(278)	342	6,300

	Half year ended 30 June 2010 Unaudited
	Property
	investment
	and	Land		Group
	development	development	Construction	overheads	Eliminations	Total
Revenue	£'000	£'000	£'000	£'000	£'000	£'000
External sales	7,860	4,007	43,209	-	-	55,076
Inter‑segment sales	157	-	57	277	(491)	-
Total revenue	8,017	4,007	43,266	277	(491)	55,076
Operating profit (loss)	8,951	(466)	3,507	(1,962)	20	10,050
Finance income	735	84	685	4,034	(5,310)	228
Finance costs	(3,808)	(393)	(353)	(2,069)	5,310	(1,313)
Profit (loss) before tax	5,878	(775)	3,839	3	20	8,965
Tax	(818)	210	(1,103)	(32)	185	(1,558)
Profit (loss) for the year	5,060	(565)	2,736	(29)	205	7,407

	Year ended 31 December 2010 Audited
	Property
	investment
	and	Land		Group
	development	development	Construction	overheads	Eliminations	Total
Revenue	£'000	£'000	£'000	£'000	£'000	£'000
External sales	13,467	33,901	84,576	-	-	131,944
Inter‑segment sales	304	440	199	520	(1,463)	-
Total revenue	13,771	34,341	84,775	520	(1,463)	131,944
Operating profit	10,528	581	9,230	527	20	20,886
Finance income	1,331	275	1,412	8,026	(10,537)	507
Finance costs	(7,515)	(730)	(735)	(4,032)	10,537	(2,475)
Profit before tax	4,344	126	9,907	4,521	20	18,918
Tax	(833)	(51)	(2,858)	(1,302)	(351)	(5,395)
Profit for the year	3,511	75	7,049	3,219	(331)	13,523

	30 June	30 June	31 December
	2011	2010	2010
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Segment assets
Property investment and development	156,123	189,511	183,964
Land development	95,909	61,882	74,396
Construction	29,298	30,147	25,428
Group overheads and other	1,702	2,166	1,774
	283,032	283,706	285,562
Unallocated assets
Deferred tax assets	6,028	12,986	6,631
Cash and cash equivalents	9,638	3,867	4,037
Total assets	298,698	300,559	296,230
Segment liabilities
Property investment and development	5,074	5,462	4,080
Land development	27,999	7,338	27,958
Construction	45,000	43,835	39,918
Group overheads and other	2,262	4,005	2,379
	80,335	60,640	74,335
Unallocated liabilities
Current tax liabilities	2,361	1,988	1,602
Current borrowings	5,549	24,236	11,362
Non-current borrowings	3,488	4,650	4,069
Employee benefits	17,103	32,028	16,221
Deferred tax liabilities	-	12	-
Total liabilities	108,836	123,554	107,589
Total net assets	189,862	177,005	188,641

4. EARNINGS PER ORDINARY SHARE

Earnings per ordinary share are calculated on the weighted average number of shares in issue. Diluted earnings per ordinary share are calculated on the weighted average number of shares in issue adjusted for the effects of any dilutive potential ordinary shares.

5. DIVIDENDS

	Half year	Half year	Year
	ended	ended	ended
	30 June	30 June	31 December
	2011	2010	2010
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Amounts recognised as distributions to equity holders in year:
Preference dividend on cumulative preference shares	10	11	21
Interim dividend for the year ended 31 December 2010
of 1.35p per share (2009: 1.25p)	-	-	1,745
Second interim dividend for the year ended 31 December 2010 of 2.15p per share (2009: 1.25p)	2,779	1,612	1,612
	2,789	1,623	3,378

An interim dividend amounting to £2,132,000 (2010: £1,745,000) will be paid on 27 October 2011 to shareholders whose names are on the register at the close of business on 7 October 2011. The proposed interim dividend has not been approved at the date of the Consolidated Statement of Financial Position and so has not been included as a liability in these Financial Statements.

6. TAX

	Half year	Half year	Year
	ended	ended	ended
	30 June	30 June	31 December
	2011	2010	2010
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Current tax:
UK corporation tax on profits for the year	1,851	2,051	2,684
Adjustment in respect of earlier years	(161)	(672)	(464)
Total current tax	1,690	1,379	2,220
Deferred tax:
Origination and reversal of temporary differences	1,107	179	2,307
Adjustment in respect of earlier years	-	-	868
Total deferred tax	1,107	179	3,175
Total tax	2,797	1,558	5,395

Corporation tax is calculated at 26.5% (2010: 28%) of the estimated assessable profit for the period being management's estimate of the weighted average corporation tax rate for the period.

During the period, as a result of the change in the UK corporation tax rate from 28% to 26% that was substantively enacted on 29 March 2011 and effective from 1 April 2011, the relevant deferred tax balances have been re-measured. Deferred tax balances at the period end have been measured at 26% (June 2010: 28%), being the rate expected to be applicable at the date the actual tax will arise.

Further reductions to the UK corporation tax rate have been announced. The changes propose to reduce the rate to 25% from 1 April 2012 and by 1% per annum thereafter to 23% by 1 April 2014. The changes had not been substantively enacted at the Statement of Financial Position date and therefore are not recognised in these Financial Statements.

7. INVESTMENT PROPERTIES

At 30 June 2011, the Group had entered into contractual commitments for the acquisition and repair of investment property amounting to £2,400,000 (31 December 2010: £2,088,000).

8. INVENTORIES

During the period, the Group completed the sale of optioned land with planning permission for 700 dwellings at Buckingham to Barratt Developments PLC and Bovis Homes Group PLC for £10.4m. This follows the submission, in 2008, of a planning application on the non-allocated site by Hallam Land Management Limited for the dwellings and 2.5 hectares of employment development. Outline planning consent was secured in late 2009 and the site was marketed in mid 2010, receiving substantial levels of interest. Hallam Land retains its interest in the employment land following the transaction.

9. ASSETS CLASSIFIED AS HELD FOR SALE

During the period, the Group completed the sale of Ayr Central Shopping Centre to Sovereign Land and AREA Property Partners for £33.8m before costs, reflecting a net initial yield of 6.25%. Located in the heart of Ayr town centre, the 180,000 sq ft shopping centre was developed in 2006 by Henry Boot Developments Limited and is anchored by Debenhams and Primark, with other tenants including H&M, JD Sports, HMV, Clarks and River Island. Net sales proceeds of £32.4m, compared with the 31 December 2010 market valuation of £32m, gave rise to a profit on disposal of £0.4m.

10. BORROWINGS

	Half year	Half year	Year
	ended	ended	ended
	30 June	30 June	31 December
	2011	2010	2010
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Bank overdrafts	4,187	73	-
Bank loans	4,650	28,813	15,231
Loans from related parties	200	-	200
	9,037	28,886	15,431

Movements in borrowings are analysed as follows:

			£'000
At 1 January 2011			15,431
Secured bank loans			8,000
Repayment of secured bank loans			(18,581)
Movement in bank overdrafts			4,187
At 30 June 2011			9,037

The Group has in place three-year committed facilities totaling £50m with our three banking partners. The facilities become due for renewal on 7 May 2012. During the period we have commenced discussions with our three banking partners with a view to agreeing a further three year facility to commence on 8 May 2012 and we expect matters to be concluded by the year end.

11. PROVISIONS FOR LIABILITIES AND CHARGES

Since 31 December 2010 the following movements on provisions for liabilities and charges have occurred:

the road maintenance provision represents management's best estimate of the Group's liability under a five-year rolling programme for the maintenance of the Group's PFI asset. During the period £286,000 has been utilised and additional provisions of £231,000 have been made, all of which were due to normal operating procedures; and

the Land development provision represents management's best estimate of the Group's liability to provide infrastructure and services to land which has been disposed of. During the period £3,013,000 has been utilised and additional provisions of £9,466,000 have been made.

12. DEFINED BENEFIT PENSION SCHEME

The assumptions that have been used in the calculations of the defined benefit pension scheme by its actuary were as follows:

	30 June	30 June	31 December
	2011	2010	2010
	%	%	%
Retail Prices Index - RPI	2.90	2.75	2.75
Consumer Prices Index - CPI	2.15	-	2.00
Pensionable salary increases	1.00	1.00	1.00
Rate in increase to pensions in payment liable for
Limited Price Indexation	2.90	2.65	2.65
Revaluation of deferred pensions	2.00	2.75	2.00
Liabilities discount rate	5.50	5.40	5.40
Expected rate of return on scheme assets	5.78	5.75	5.81

Amounts recognised in the Consolidated Statement of Comprehensive Income in respect of the scheme are as follows:

	Half year	Half year	Year
	ended	ended	ended
	30 June	30 June	31 December
	2011	2010	2010
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Current service cost	(472)	(405)	(1,111)
Interest cost	(3,393)	(3,776)	(7,151)
Expected return on scheme assets	3,213	3,022	6,659
Past service cost	-	-	877
Gain on curtailment	-	-	3,299
Gain on settlement	-	250	389
Pension Protection Fund	(60)	(45)	(1)
Pension expenses	(712)	(954)	2,961

The amount included in the Statement of Financial Position arising from the Group's obligations in respect of the scheme is as follows:

	Half year	Half year	Year
	ended	ended	ended
	30 June	30 June	31 December
	2011	2010	2010
	Unaudited	Unaudited	Audited
	£'000	£'000	£'000
Present value of scheme obligations	132,881	138,840	129,668
Fair value of scheme assets	(115,778)	(106,812)	(113,447)
	17,103	32,028	16,221

13. RELATED PARTY TRANSACTIONS

There have been no material transactions with related parties during the period.

There have been no material changes to the related party arrangements as reported in note 27 of the Annual Report and Financial Statements for the year ended 31 December 2010.

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

14. KEY RISKS

In common with all organisations, the Group faces risks which may affect its performance. These are general in nature and include: obtaining business on competitive terms, retaining key personnel, successful integration of new business streams and market competition.

The Group operates a system of internal control and risk management in order to provide assurance that we are managing risk whilst achieving our business objectives. No system can fully eliminate risk and therefore the understanding of operational risk is central to the management process within Henry Boot. The long-term success of the Group depends on the continual review, assessment and control of the key business risks we face. To enable shareholders to appreciate what the business considers are the main operational risks, they are briefly outlined below:

Development - not developing marketable assets for both tenants and the investment market on time and cost effectively. Rising market yields on completion can make development uneconomic. Construction, funding and tenant risk which is not matched by commensurate returns on development projects. The lack of funding availability at acceptable interest rates to allow development to take place.

Land - the inability to source, acquire and promote land would have a detrimental effect on our strategic land bank and income stream. Prices may be affected by changes in Government policy, legislation, planning environment and taxation. A dramatic change in house builder funding sentiment and demand for housing can dramatically change the demand and pricing profile for land.

Investments - identifying and retaining assets which have the best opportunity for long-term rental and capital growth, or conversely selling those assets where capital values have been maximised. This is an ongoing process with regular reviews of the assets and market conditions and must be undertaken dispassionately to achieve best value.

Interest Rates - significant upward changes in interest rates affect interest costs, yields and asset prices and reduce demand for commercial and residential property.

Treasury - the lack of readily available funding to either the Company or third parties to undertake property transactions can have a significant impact on the marketplace in which we operate. Due to the difficulties within the banking sector, the Group has agreed three-year facilities with our three banking partners. Detailed cash requirements are forecast up to 15 months in advance and reviewed and revised monthly. Financial instruments are considered where applicable and any short-term positive cash balances are placed on deposit.

Planning - increased complexity, cost and delay in the planning process may slow down the project pipeline. The recent significant change in demand for housing and the attendant decline in land prices may have a detrimental effect on the supply of land being brought to market by landowners. Changes in Government or Government policy, as happened in 2010 towards planning policies, could impact on the speed of the consent process or the value of sites.

Personnel - the attraction and retention of the highest calibre people with the appropriate experience is crucial to our long-term growth in the highly competitive labour markets in which we work. It is anticipated that in the short term this risk may be reduced as unemployment rises and recessionary conditions prevail.

Pension - the Group operates a defined benefit pension scheme which has been closed to new members for some time. Whilst the trustees have a prudent approach to the mix of return seeking and fixed interest assets, times of economic instability can have an impact on those asset values with the result that the reported pension deficit increases. Furthermore, the relationship between implied inflation and long-term gilt yields has a major impact on the pension deficit and our business has little control over those variables. Whilst pension schemes are a long-term commitment, regulations require us to respond to deficits in the short term.

Environmental - the Group is inextricably linked to the property sector and environmental considerations are paramount to our success. Therefore our interaction with the environment and the agencies that have an over-arching responsibility has got to be positive at all times in order to achieve best value. Stricter environmental legislation will increase development and house building costs and therefore could impact on profitability if capital and land values do not increase to reflect this more efficient energy performance.

Economic - we operate solely in the UK and are closely allied to the real estate, house building and construction sectors. A strong economy with strong tenant demand is vital to create long-term growth in rental and asset values, whilst at the same time creating a healthy market for the construction and plant hire divisions. The much published forecast reductions in public spending, the more difficult planning regime and comparatively low levels of property lending could have an impact on our business.

Counterparty - we depend on the stability of our customers, suppliers, funders and development partners to achieve success. In recessionary periods we pay particular attention to the financial strength of counterparties before contracting with them so as to mitigate financial exposure.

15. APPROVAL

At the Board meeting on 23 August 2011 the Directors formally approved the issue of these statements which have not been reviewed by the auditors.

RESPONSIBILITY STATEMENTS OF THE DIRECTORS

We confirm that to the best of our knowledge:

a)	the unaudited Condensed Consolidated Financial Statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the European Union;

b)	the Half-yearly Report includes a fair review of the information required by Section DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

c)	the Half-yearly Report includes a fair review of the information required by Section DTR 4.2.8R (disclosure of related parties transactions and changes therein).