Trading Update

RNS Number : 1207M

Boot(Henry) PLC

23 January 2009

 



HENRY BOOT PLC

('Henry Boot' or 'the Group')

TRADING UPDATE

Henry Boot PLC, the Sheffield based property investor, developer, land management and construction business, today issues the following pre-close trading update in advance of its preliminary results announcement for the year ended 31 December 2008 which is due to be released on 25 March 2009.

The second half of 2008 saw the further deterioration in the performance of the UK economy, with the operating environment for property companies becoming even more challenging. Rising yields have adversely affected capital values and this has resulted in further significant falls in property valuations during the fourth quarter of 2008, with the IPD All Property Index falling 5.8% during December alone.

This has had an impact on the valuation gains we were expecting on developments completed during 2008, at Bromley, Nottingham, Bromborough, York and Stoke-on-Trent, and on the re-valuation of our shopping centre investment at Ayr. Having seen the effect of current yields on the value of investment properties, we have also taken the decision to reassess the value of developments in progress and, as a result, made provisions against costs in two cases to reflect anticipated capital values when these sites complete. These adjustments have together resulted in a higher than expected property revaluation deficit at 31 December 2008.

In this context, however, it is pleasing to be able to confirm that the Group's trading performance for 2008, before taking into account the revaluation deficits charged to the profit and loss account, has remained broadly in line with market expectations, primarily due to land sales achieved in the first nine months of the year.

We have also taken steps to reduce net debt levels through the year, with year-end gearing at approximately 26% (2007: 39%). There is significant unused headroom within our banking facilities and we have no issues in relation to banking covenants. We plan to reduce net debt further still during 2009 and this will provide us with scope to take advantage of market opportunities which may arise in the future.

The very well publicised plight of the UK housebuilding sector means that the market for greenfield land with planning consent remains very difficult. We are very pleased to have concluded the deals we did earlier in 2008 and we expect that it will be some considerable time before the market recovers. In the meantime, we continue to work aggressively towards achieving as many planning consents as possible on land located largely in Southern England and in Scotland, so that we will be in a position to satisfy housebuilders' requirements when the market improves.

Our Construction division, including Road Link, and Banner Plant Hire, has performed well during the year. Forward projections at both Henry Boot Construction and Road Link for 2009 indicate management expectations are achievable. However, we anticipate our plant hire business will suffer from the very serious slow down in housebuilding activity. We have, therefore, implemented a very tight cash management programme and still expect this business to generate a healthy level of cash in 2009.

Notwithstanding the valuation deficits mentioned above we still expect to show an increase in NAV per share for 2008. In the short term, we will also manage the balance sheet and reduce gearing to allow the flexibility to take advantage of additional opportunities as they arise. It is this careful approach to our portfolio of opportunities, the focus on cash management and the continued net cash generative returns achieved from the Construction division which will allow us to manage our progress through these difficult market conditions and then benefit from the recovery as it develops.

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, Corporate Finance

Tel: [phone]

Citigate Dewe Rogerson

Fiona Tooley

Tel: [phone]

Mobile: [phone]

 

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