REG - Boot(Henry) PLC - AGM Statement

Henry BootAnnouncement

25/05/2023 07:00

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RNS Number : 5491A  Boot(Henry) PLC  25 May 2023

 

25 May 2023

HENRY BOOT PLC

('Henry Boot' or 'the Group')

AGM TRADING UPDATE

 

Tim Roberts, Chief Executive Officer, commented:

 

"We have started the year well and following the uncertain economic backdrop
to the final quarter of 2022, there are growing signs of recovery in our three
key markets. We expect this to continue, and for us to have a busy second half
of the year. We also continue to make progress against our medium-term
strategic targets".

 

Henry Boot has started the year well, trading in line with expectations*,
whilst making continued progress against its medium-term strategic objectives.
The Group's three key markets, Industrial & Logistics (I&L),
Residential and Urban Development are showing signs of recovery. The I&L
market remains resilient, supported by rental growth, and housebuilders are
selectively buying land, with the Group recently selling, and receiving offers
for a number of sites. House buyers are returning to the market after a
downturn in demand from Q4 22, although the selling season through Spring and
Summer remains important.

 

Hallam Land Management (HLM) has begun the year well, selling 1,900 plots.
Following a pause from buying land at the end of 2022, there are signs of
housebuilders returning to the market, with selective acquisitions and
encouraging levels of interest in HLM's portfolio of prime plots. Key
disposals so far in the year include:

·      612 plots (HLM Share) in Milton Keynes, Buckinghamshire to Taylor
Wimpey;

·      471 plots in Kilmarnock, East Ayrshire, to Barratt David Wilson;

·      250 plots in Eastern Green, Coventry, to Countryside
Partnerships; and

·      81 plots in Tonbridge, Kent, to Cala Homes.

In addition to plots sold, HLM have various sites under offer, which are
likely to contribute towards both sales targets and profit in 2023 and 2024.
HLM continues to replenish its land bank, which remains stable at 95,478
plots, of which 12,288 plots are awaiting planning determination.
Unfortunately, delays within the UK planning system continue, with the
business achieving planning permission on 379 plots. Whilst this is
frustrating, it does mean our 7,910 plots with planning will be in demand.

 

Anticipating slower markets in the spring of 2022, HBD reduced development
activity. However, there has continued to be occupier demand in the I&L
market, coupled with stabilising yields and investors returning to the market.
The Build-to-Rent (BtR) market remains strong in terms of customer demand and
investors are again looking to fund development.

 

As a result of market conditions and the completion of the 426,000 sq ft
I&L scheme, Power Park, in Nottingham (GDV: £54m), the committed
development programme has marginally reduced, but remains on time and budget,
with 57% of the schemes pre-let or pre-sold. The Group has also continued to
replenish its committed programme by adding two new projects at Airport
Business Park, its 52 acre I&L scheme in Southend, to develop a combined
c.156,000 sq ft of warehouse space (GDV: £19m). Both projects have been
pre-sold.

 

Within the £1.25bn development pipeline there are a number of I&L schemes
that HBD expects to commit to over the course of 2023, where healthy occupier
demand is anticipated. HBD also continues to replenish the development
pipeline, and in the year has acquired a 62-acre site in Preston, in a 50:50
Joint Venture. HBD will continue to selectively secure further opportunities.

 

At Golden Valley, Cheltenham, HBD is preparing to submit a planning proposal
for the first phase of the scheme (HBD share: £50m GDV), which comprises the
delivery of a mixed-use campus clustered around 150,000 sq ft of innovation
space. After securing planning approval at Neighbourhood, Birmingham (GDV:
£140m), in Q1 23 for a 414-unit BtR development, the aim is to secure funding
for this scheme over the Summer.

 

In relation to the £106m investment portfolio, values are beginning to
stabilise. After making well timed accretive sales in 2022, the Group will be
patient in growing the portfolio to the strategic target of £150m. This will
primarily be achieved by retaining completed developments that meet the
investment criteria and by acquiring investments with future redevelopment
potential.

 

Stonebridge Homes (SH) has already secured 71% of its 2023 delivery target of
250 homes, achieving a sales rate of 0.52 houses per week per outlet in the
first 18 weeks of the year, with house prices remaining relatively firm. Cost
inflation remains a challenge but is beginning to moderate, and there are
early signs of an improvement in key trade availability, material delivery
lead times and general cost pressures.

 

Against a backdrop of economic uncertainty and increased mortgage costs, house
prices have remained resilient. There continues to be customer interest and
this, along with improved mortgage rate affordability and product
availability, leaves SH encouraged by the start of the year. However, SH will
rely on achieving marginally higher sales rates in the important Spring and
Summer selling season. SH will also look to take advantage of current market
conditions by selectively securing sites that will grow its land bank and
further support its medium-term growth target of delivering 600 homes per
annum.

 

Henry Boot Construction has secured 72% of its 2023 order book and remains
focused on securing the remainder of the targeted budget. Despite experiencing
delays and challenges with the supply chain and material deliveries, work on
both the £42m urban development scheme in the Heart of Sheffield, and the
£47m BtR residential scheme, Kangaroo Works in Sheffield, is heading towards
a summer 23 completion. The Cocoa Works, a £47m residential development in
York, remains on time and budget.

 

Both Banner Plant and Road Link (A69) are trading in line with budget.

 

Finally, the Group is making good progress against its Responsible Business
Strategic objectives, and this month launched a new mental health campaign,
which forms part of Henry Boot's Health and Wellbeing Programme. The campaign
provides people with direct access to mental health experts, as well as more
information on the resources available to support them with their own and
others' mental health.

 

In addition, the Group's new head office, Isaacs Building in Sheffield City
Centre, has now achieved practical completion. The building offers strong ESG
credentials and will provide people with a more open and collaborative
workspace. Fit out works have commenced, with the aim to move into the new
office by Autumn 2023.

 

Outlook

 

There are encouraging signs within our three key markets, particularly within
the I&L and Residential markets, where signs of early momentum are
building. The Group remains cautious in light of the current economic
environment and expects that activity in 2023 will continue to improve, which
will contribute towards 2024 performance and beyond.

 

Looking ahead, the Group is well placed, supported by a solid balance sheet
and a store of opportunities, placing the business in a strong position to
achieve its medium-term strategic objectives and growth targets.

 

*Market expectations being the average of current analyst consensus of £37.8m
profit before tax, comprising three forecasts from Numis, Peel Hunt and
Panmure Gordon.

 

For further information, please contact:

 

Enquiries:

 

Henry Boot PLC

Tim Roberts, Chief Executive Officer

Darren Littlewood, Chief Financial Officer

Daniel Boot, Group Communications Manager

Tel: 0114 255 5444

www.henryboot.co.uk

 

Numis Securities Limited

Joint Corporate Broker

Ben Stoop / Will Rance

Tel: 020 7260 1000

 

Peel Hunt LLP

Joint Corporate Broker

Harry Nicholas

Tel: 020 7418 8900

 

FTI Consulting

Financial PR

Giles Barrie/ Richard Sunderland

020 3727 1000

henryboot@fticonsulting.com (mailto:henryboot@fticonsulting.com)

 

About Henry Boot PLC

 

Henry Boot PLC (BOOT.L) was established over 135 years ago and is one of the
UK's leading and long-standing property investment and development, land
promotion and construction companies. Based in Sheffield, the Group is
comprised of the following three segments:

Land Promotion:
Hallam Land Management Limited
(http://www.henryboot.co.uk/our-businesses/hallam-land-management/)

 

Property Investment and Development:
HBD (https://hbd.co.uk/) (Henry Boot Developments Limited), Stonebridge Homes
Limited (http://www.henryboot.co.uk/our-businesses/stonebridge-homes/)

 

Construction:
Henry Boot Construction Limited
(http://www.henryboot.co.uk/our-businesses/henry-boot-construction/) , Banner
Plant Limited (http://www.henryboot.co.uk/our-businesses/banner-plant/) , Road
Link (A69) Limited (http://www.henryboot.co.uk/our-businesses/road-link-a69/)

The Group possess a high-quality strategic land portfolio, an enviable
reputation in the property development market backed by a substantial
investment property portfolio and an expanding, jointly owned, housebuilding
business. It has a construction specialism in both the public and private
sectors, a long-standing plant hire business, and generates strong cash flows
from its PFI contract through Road Link (A69) Limited.

 

www.henryboot.co.uk (http://www.henryboot.co.uk)

 

 

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