Interim Management Statement

RNS Number : 8868R

Boot(Henry) PLC

11 November 2011

Henry Boot PLC

('the Company' or 'the Group')

Interim Management Statement

Henry Boot PLC (LSE: BHY), a company engaged in land promotion, property development and investment, construction and plant hire, is releasing this Interim Management Statement in respect of the period 1 July 2011 to 11 November 2011, together with a trading update for the year ending 31 December 2011.

Trading and outlook

Our property development and investment, construction and plant hire activities continued to trade in line with the board's expectations during the period. Within Hallam Land Management, our land promotion business, land sales were concluded at Rugby, Oxford and Countesthorpe. These transactions achieved somewhat better profits than anticipated and, as a consequence, we expect trading to be slightly ahead of the board's expectations for the year ending 31 December 2011.

Trading conditions remain relatively stable, albeit subdued, in line with those experienced over the last two years and the directors do not expect any significant change in conditions during 2012. However, the recent volatility in capital markets does give us cause for concern, particularly if the European sovereign debt crisis leads to a further weakening in the ability of UK banks to provide funding to the UK property market.

Given this potential risk to our markets, the board remains cautious in its approach and is currently operating the Group with net cash whilst retaining unutilised banking facilities of £50m. Notwithstanding this caution, if the market continues to be stable, we have a number of retail, commercial and industrial development opportunities, substantially pre-let, due to commence in 2012 on which we expect to achieve a fair, risk-weighted return.

KEY EVENTS IN THE PERIOD

LAND PROMOTION AND DEVELOPMENT

·	Hallam Land has concluded land sales during the period at Rugby, Oxford and Countesthorpe. These transactions have continued a year of successful trading in what has been a challenging market.
·	Despite a highly volatile planning backdrop with major changes to planning legislation, we have continued to deliver new planning permissions; the latest successes being at Desford (68 plots) and Kilmarnock (minded to grant 500 plots and 20 acres of employment land). We were unsuccessful at Nuneaton and Stratford but have appealed.
·	We have submitted new planning applications at Cam (71 plots), Highbridge (550 plots), Rugby (183 plots), Long Buckby (132 plots), Biddenham (495 plots) and Bradford (296 plots).
·	We have undetermined applications at Market Harborough (500 plots), Blaby (1062 plots), Irthlingborough (700 plots), Chatteris (1000 plots), Monmouth (145 plots) and Cleek Hall, Selby (a 12.5kw wind farm).
·	We continue to view the difficult financial conditions within a relatively stable property market as an opportunity to acquire new sites and are currently working on a number of site acquisitions or option agreements throughout the country.

PROPERTY DEVELOPMENT & INVESTMENT

·	Construction work commenced on the development of the 25,000 sq.ft foodstore in Warminster pre-let to Waitrose with completion expected in February 2012.
·	Progress at Markham Vale, the 200 acre business park adjacent to junction 29A of the M1 motorway, has continued with the development of the 41,000 sq.ft warehouse and offices for Squadron Medical commencing on site. Contracts have also been exchanged with McDonalds for a drive-thru restaurant and the business park has been shortlisted for Enterprise Zone status. Furthermore, we are in detailed discussion for two industrial developments, totalling in excess of 100,000 sq.ft, which are scheduled to commence in 2012.
·	At the joint venture development site with RBS at Thorne, Doncaster, terms have been agreed to secure an operator for the 45,000 sq.ft food store, the subject of a previous minded-to-grant planning permission. We anticipate this development will commence on site in 2012.
·	Terms have been agreed for the sale, on completion, of the office element of our mixed use retail, leisure and office scheme on Deansgate in Manchester which received planning and listed building consent earlier in the year. Building work is expected to commence later in 2012.
·	The sale of a recently completed 4,000 sq.ft Tesco Express store in Bradford has been finalised and terms are agreed for the sale of the newly developed 10,000 sq.ft industrial investment on our retail and industrial park in Rotherham.
·	Detailed negotiations are progressing with budget hotel operators to pre-let hotels on two of our development sites and it is anticipated that development work will commence on both schemes in the second half of 2012.

CONSTRUCTION DIVISION

·	Despite the reduction in general construction activity, we have secured 95% of our budgeted turnover for 2011 and we anticipate securing approximately 60% of budgeted turnover for 2012 by the end of this year. Whilst this is in line with our normal expectation, we still remain cautious regarding the amount of traditional construction work, at an acceptable margin, that will arise in 2012.
·	The housing sector continues to provide a steady flow of work under long term frameworks in Scunthorpe, Manchester, Nottingham and Doncaster. In addition, we have also recently been appointed to the Leicester City Homes, EN Procure and North Lincolnshire Homes Capital Investment four year framework programmes.
·	Our health sector work is progressing well with several schemes being undertaken for the Sheffield Teaching Hospitals and a major healthcare facility for the joint venture between Rotherham MBC and Rotherham Primary Care Trust being on target for completion early 2012.
·	The two alliance frameworks we have with the Ministry of Justice are still providing a good source of work. Civil engineering has also received a boost due to our inclusion on the YORcivils Framework which should generate opportunities over the next four years.
·	The retail and education sectors continue to provide reasonable opportunities with works commenced for Lidl Supermarkets and a number of schools in Cheshire, Scunthorpe, Derby and Calderdale.
·	Within the renewables sector, we are reviewing the impact of the Government's recently proposed reduction in the 'feed in tariff' and the negative impact this is likely to have on the feasibility of renewable technology schemes coming to market.
·	Activity within Banner Plant has continued to trend higher than last year. December 2010 was badly affected by the adverse weather conditions and, provided this year does not see the same disruption, the board expects this business to achieve a better result in 2011.
·	Roadlink (A69), our PFI contract, continues to trade in line with the board's expectations. As was the case earlier in the year, traffic volumes remain slightly lower than in 2010 but, due to careful management of costs, this has not had an impact on the anticipated profitability of this business.