Interim Management Statement

RNS Number : 8128L

Boot(Henry) PLC

14 May 2010

 



Henry Boot PLC ('the Company' or 'the Group') publishes its First Interim Management Statement for the year ending 31 December 2010 covering the period 1 January 2010 to 7 May 2010

The Company continued to trade profitably, in line with the Board's expectations during the period.

The improved trading conditions seen in the second half of 2009 have largely continued into 2010.  The recovery in the property market is patchy and moving at a modest pace and conditions continue to be very competitive.

The tight control of all costs and cash generation continues to be a key focus across all of our business streams.

The next formal investment property valuation will take place as at 30 June 2010 and no revisions to property values have taken place in this period.

We have reduced debt levels by about £10m since 31 December 2009 to around £23m at 7 May 2010 and the Company was fully compliant with all its banking covenants during the period.

KEY EVENTS IN THE PERIOD

LAND PROMOTION AND DEVELOPMENT

·	We received planning permissions during the period at Bishopbriggs (32 units), St Albans (150 units), Kettering (250 units), Rugby (40 units), and Chesterfield (54 units).
·	A number of these sites, together with approved sites at Buckingham (700 units) and Bridgewater (up to 400 units), should be available to be marketed either later this year or in early 2011.
·	We completed the initial phase sale of 5 acres of land at Mansfield to Barratt Developments PLC and also concluded the sale of 12 acres of optioned land at Worcester where payment of the related proceeds will be spread over the next two years.
·	We have seen a steady but muted strengthening of the land market during the period as refinanced housebuilders recover from their own recent difficulties.
·	We expect to submit further planning applications later this year on our sites at Chatteris, Irthlingborough, Blaby, Kilmarnock, Mansfield, Coventry, Market Harborough, Marston Moretaine and Milton Keynes.

PROPERTY INVESTMENT & DEVELOPMENT

·	In the period we completed the sale of our retail investment at Waterloo Court, South Shields, to Royal London Mutual Insurance Society Limited for £11.5m, which compares with a 31 December 2009 valuation of £9m.  We have used the proceeds from this sale to reduce net debt levels.
·	We completed and fully let the small district retail centre at Sandlands Court, Mansfield.  We have agreed terms to sell this investment and completion is expected shortly.  Once again, we will use the proceeds of around £2m to reduce debt.
·	At our long standing industrial and commercial development at Priory Park, Hull, we completed the sale of two office units.  These sales mean that our Bridge View project at Priory Park is now fully complete, let or sold.  In addition, on the remainder of the site we completed one plot sale and agreed two further plot sales to industrial users.
·	At our other major industrial regeneration site at Markham Vale, Junction 29A on the M1, we agreed a 15,000 sq ft design and build contract for an industrial unit and development of this has now commenced.  Furthermore, we have agreed terms for either sales or lettings of three of the units in the speculative Waterloo Court development of small units on the site.  Once these deals complete, there will be two small units vacant out of the eight constructed.  Finally, we have agreed terms for a small plot sale for a self build development.
·	Lettings of the vacant retail space at our investment at Bromley are progressing well, with a letting of 5,700 sq ft to Brighthouse completed and terms for two further units agreed.
·	We received detailed planning permission for a 20,000 sq ft office redevelopment in the town centre of Richmond, Surrey.  We are now seeking pre-lets to be able to progress this redevelopment opportunity further.
·	We continue to progress the development of a 25,000 sq ft foodstore for Waitrose, to include three other retail units, in Warminster and expect to start construction on site in either late 2010 or early 2011.

CONSTRUCTION

·	Our construction business continues to trade well and in line with our expectations.  Activity forecasts for the rest of 2010 are well supported by our secured order book.  Whilst we are now beginning to build the order book for 2011, we remain cautious regarding the amount of work that will arise in the near future from the public sector given the well publicised prospective cutbacks in public expenditure.
·	Within the public sector, we commenced building 27 new homes for Sheffield City Council; these are the first new council homes to be built in the city since 1988.  We also won three new construction contracts within the Sheffield Teaching Hospitals Framework and new social housing refurbishment contracts in North Lincolnshire and Manchester, adding to the work we are already undertaking for local authorities in Sheffield, Rotherham and Doncaster.
·	Within the private sector, where work has been scarce for sometime now, our General Works Division are expected to exceed their budgeted activity levels for 2010 after winning several small contracts.
·	Henry Boot Construction (UK) recently won two gold awards and one silver award in the 2010 Considerate Constructors Awards.  Both our gold award winning sites were also identified as exemplar projects, receiving the additional accolade of 'runner up' awards for the Most Considerate Site in the United Kingdom, this honour put both sites in the top 17 of the 7,600 sites audited.  The awards were gained on sites where we are refurbishing social housing in Doncaster and Rotherham for local authorities and demonstrate our success in managing the impact on all parties during building work.
·	Road Link A69, our PFI contract, continues to trade in line with our expectations. Income has not been affected by the poor weather earlier in the year and it continues to trade profitably.
·	Our plant hire business saw some recovery in activity in the last two months of 2009.  This was curtailed in January and February by the adverse weather conditions, however weekly turnover figures in March and April after the Easter period have returned to more encouraging levels.  We are beginning to increase plant replacement investment as specific demands warrant it, though hire rates remain extremely competitive across the whole plant range.

OUTLOOK

Whilst we remain cautious about certain aspects of our activities which rely on Government funding, there are now signs that the market for land, new development and completed investments is improving. At this stage, the recovery continues to be patchy and not yet fully established. We are, however, lowly geared and able to generate satisfactory returns in the current marketplace. If the economic recovery establishes itself more strongly over the remainder of 2010, we are confident that we will be well placed to benefit from the improvement in market conditions.

For further information, please contact:

Henry Boot PLC

Jamie Boot, Group Managing Director

John Sutcliffe, Group Finance Director

Tel: [phone]

www.henryboot.co.uk

Evolution Securities Limited

Joanne Lake

Tel: [phone]

Citigate Dewe Rogerson

Fiona Tooley

Mobile: [phone]

Tel: [phone]

 

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