Interim Management Statement

RNS Number : 8521W

Boot(Henry) PLC

13 November 2014

 



Henry Boot PLC

('the Company' or 'the Group')

Interim Management Statement

The Board of Henry Boot PLC (LSE: BHY) issues the following unaudited Interim Management Statement in respect of the period 1 July 2014 to 12 November 2014.

Trading and outlook

Trading throughout the period has been good, with all our subsidiaries performing well within reasonably buoyant end marketplaces. This solid performance reaffirms our confidence in meeting the Board's expectations for the full year.

KEY EVENTS IN THE PERIOD

LAND DEVELOPMENT

The first half of 2014 saw increased land buying activity by house builders, fuelled by a rapid increase in the number of site openings and improving house sales, assisted by Government backed finance schemes such as 'Help to Buy'. During this second half of the year, however, we have seen this growth in activity moderate as tighter mortgage conditions and valuation concerns in London became more prevalent. Experience tells us that, for a period of time around the forthcoming general election, we will see a tougher planning regime in operation and to some extent this is happening already. Notwithstanding that, we have continued to take advantage of the more benevolent planning environment to secure a number of new permissions and, the healthy land market to conclude profitable land sales.

As a consequence, during the period:

·	We concluded land disposals at Marston Moretaine, Winsford, Oulton and Hailsham.
·	We agreed to promote greenfield land for planning on three new sites, bringing our total interests in land to 9,837 acres.
·	We successfully obtained planning approvals for 375 residential plots and 37 acres of land for employment use.

In addition:

·	We are in advanced negotiations on nine other land sales which bodes well for 2015.
·	We currently have six applications at the Appeal stage of the planning process totalling 2,510 plots.
·	We have a further 14 undetermined planning applications totalling 6,510 plots, and we have a significant portfolio of sites that are further back in the allocation or neighbourhood plan part of the planning status.
·	Finally, we have in the region of 40 sites, totalling some 11,000 plots, available for disposal. These schemes are distributed throughout England and Scotland and include five large sites at Blaby, Cranbrook, Bedford, Chatteris and Burton upon Trent where land disposals are likely to occur over a longer time frame.

PROPERTY INVESTMENT AND DEVELOPMENT

After several years when developing investment property for an acceptable risk weighted return was very difficult, markets have begun to improve. The projects detailed below reflect an improving situation in both the investment and tenant appetite for newly built schemes, and the completion valuation of developments.

·	At Markham Vale, developed in partnership with Derbyshire County Council, we have successfully completed two design and build factory units totalling over 50,000 sq ft, both were delivered on time and budget. Furthermore, we have two pre-lets for an additional 150,000 sq ft of new factory space. Construction work has commenced on site with both units and is forecast to complete in 2015. Pre-let terms have also been agreed with a third company to lease a 40,000 sq ft factory unit with the development expected to commence early in 2015. Finally, the Marston's public house development is expected to be completed and trading by the end of 2014.
·	The first development with Calderdale & Huddersfield NHS Foundation Trust to provide a new outpatient and office facility is on programme to be completed in December 2014. The second project, involving the mixed-use redevelopment of a 23 acre former hospital site, saw the submission of a planning application in the period.
·	The 69,000 sq ft factory extension to our industrial investment in Stoke-on-Trent, developed a number of years ago, has now completed on budget. In conjunction with this extension we have agreed a new 20 year lease with the existing tenant and expect this to have a positive impact on the investment's valuation at the 2014 year end.
·	The sale of the Pure Gym investment, situated at Clifton Moor in York, recently concluded at the latest valuation figure of £1.755m.
·	At our Bromley investment, we have agreed the rent review with the multi-storey car park operator and have secured a significant uplift. Once again, we expect to see the positive impact of this review in the property's forthcoming valuation.
·	At Beeston, Nottingham, the redevelopment and refurbishment of the existing town centre retail scheme should be completed by the end of 2014. Terms have been agreed with a national retailer to lease the last remaining retail unit resulting in the redevelopment being fully let by early 2015.
·	The development of two budget hotels in Richmond upon Thames and Malvern, unconditionally pre-let to Travelodge and Premier Inn respectively, have commenced and both are expected to be completed in 2015.
·	In Bodmin, having secured detailed planning consent, agreements have now been exchanged with Home Bargains to lease an initial phase, retail warehouse of 18,000 sq ft, with construction work expected to commence shortly.
·	In Cumbria, a 22,000 sq ft office development, fully pre-let to a subsidiary of W S Atkins plc, has commenced on site and is on programme to complete by mid 2015.
·	Stonebridge Homes Limited, our jointly owned Leeds based house builder, is on track to sell some 30 units by the end of this year, in line with management expectations.

CONSTRUCTION DIVISION

·	Henry Boot Construction Limited has traded strongly in 2014. Additionally, we expect to secure approximately 70% of 2015 budgeted turnover by the end of this year, slightly ahead of expectations. Encouragingly, we are seeing improvements in both construction activity and the size of opportunities coming to market. There are signs that this will begin to lead to improvements in pricing levels in 2015. However, the recovery is fragile, particularly in the north of England, and we recognise that construction activity may be temporarily affected by next year's general election.
·	We have continued to maintain a good presence in the social housing sector with long-term frameworks in Doncaster, North East Lincolnshire, and Manchester. We also continue to undertake construction projects across a wide range of sectors including industrial, health, commercial, education and leisure. Notably, and appearing to mirror improvements in the economy generally, we have seen increases in commercial and industrial tender opportunities.
·	We have recently secured a further four projects on our ongoing framework with the Ministry of Justice in the north of England, and expect further opportunities to arise over the remaining four years of this six year framework.
·	We have also seen an increase in civil engineering workloads during the year; in particular, within our supply chain agreement on the 25 year Amey Sheffield Highways 'Streets Ahead' PFI scheme where we have delivered a large number of small projects, and expect to deliver further, similar schemes over the next four years.
·	Road Link (A69) Limited, with 11 years of the 30 year franchise to run, continues to trade in line with management expectations.
·	Banner Plant Limited has traded well throughout the year and, subject to any major weather related event that impacts activity in December, we expect the result for the year to be ahead of 2013.

For further information, please contact:

Henry Boot PLC

Jamie Boot, Group Managing Director

John Sutcliffe, Group Finance Director

Tel: [phone]

www.henryboot.co.uk

Investec Bank plc

Garry Levin

Tel: [phone]

TooleyStreet Communications Limited

Fiona Tooley

Tel: [phone]

Mobile: [phone]

 

END

 

 

IMSFFUFEEFLSEIF