REG - Boot(Henry) PLC - Trading Statement

Henry BootAnnouncement

24/01/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230124:nRSX6102Na&default-theme=true

RNS Number : 6102N  Boot(Henry) PLC  24 January 2023

 

24 January 2023

HENRY BOOT PLC

('Henry Boot' or 'the Group')

TRADING UPDATE FOR THE YEAR ENDED 31 DECEMBER 2022

The Board of Henry Boot PLC issues the following trading update for the year
ended 31 December 2022 ahead of the preliminary statement of results which
will be issued on 21 March 2023.

Tim Roberts, Chief Executive Officer commented:

"Having seen strong sales across the Group, we have had our best year ever at
an underlying profit level. Reflecting a particularly challenging backdrop as
the year progressed, during which a noteworthy £30m of accretive sales was
achieved in a weak market, the year-end valuation movements in our investment
portfolio have had an impact on our 2022 profit before tax. Whilst it's too
early to predict the outturn for 2023 at this stage, the Group expects this
year to be more challenging than 2022. We remain convinced, however, that in
the medium term our three key markets, and the resilience of our business
model, will allow us to continue to meet our strategic growth and return
ambitions."

 

Trading update for the year ended 31 December 2022

Henry Boot has benefited from strong sales within its property development and
strategic land businesses, driving the Group's best ever financial results on
an underlying profit basis, which excludes unrealised valuation movements on
investment property. In line with the fall of UK commercial property values,
the investment portfolio reduced in value, resulting in the Group expecting
profit before tax for the year ended 31 December 2022 to be slightly below
market expectations. *

Throughout 2022, the Group continued to recycle capital achieving profitable
sales whilst continuing to invest in the business's high quality development
programme. Concurrently, the business has remained selective on new projects,
with net debt increasing only marginally to c.£49m (2021: £44m), remaining
at the lower end of our targeted gearing range of 10-20%. Whilst there is a
need to be cautious about the near-term trading environment given
macro-economic headwinds, the Group continues to make progress against its
strategic objectives and remains confident about achieving its medium-term
growth and return targets.

Hallam Land Management (HLM) traded strongly in 2022, exceeding its strategic
target of selling 3,500 plots per annum, with sales materially higher than in
the prior year primarily due to a major disposal of 2,170 plots to Taylor
Wimpey and Persimmon Homes at Didcot. The site's community benefits include a
total of 54 acres of public open space, within which 15 acres of new woodland
will be planted.

In 2022, HLM continued to source new opportunities to grow its land bank
securing 21 sites which have the potential to deliver c.6,900 plots. The total
land portfolio has increased to 95,407 plots (2021: 92,667) of which 9,325
plots have planning. Whilst demand for land from the national housebuilders
reduced in H2 22 against the backdrop of a slowing economy, the ongoing
challenges of the planning system combined with critical housing shortages
will ensure that demand for HLM's stock of permissioned sites remains robust.
This is reflected in the level of forward sales with HLM ending the year with
992 plots (2021: 1,880 plots) unconditionally exchanged for completion in
2023/24.

Henry Boot Developments (HBD) has performed well, completing developments with
a Gross Development Value (GDV) of £117m (HBD share £83m, 2021: HBD share
£68m), of which 92% have been pre-let or pre-sold. In the year, HBD completed
on:

·      Five industrial schemes totalling 497,000 sq ft with a combined
GDV of £86m (HBD share: £60m).

·      Two residential land sales with a GDV of £23m (HBD share:
£15m), comprising a 184-unit scheme in Skipton, which was pre-sold to
Bellway, as well as a sale of land to Aberdeen City Council for the
construction of 536 houses.

·      A 23-unit residential scheme at York, Clocktower, with a GDV of
£8m (HBD share: £8m).

The committed development programme now totals a GDV of £395m (HBD share:
£240m) and is currently 63% pre-let or pre-sold, with 97% of the development
costs fixed. After securing pre-lets with DPD and DHL at Preston East (HBD
share: £15m) in H2 22, the 150,000 sq ft industrial & logistics
development was subsequently pre-sold to Titan Investments, at 10% above book
value, with completion expected in Q4 23. Further to this, HBD has committed
to Momentum, Rainham (HBD share: £24m) a 380,000 sq ft speculative industrial
development in an 80:20 joint venture with Barings. Whilst formal marketing
has not yet begun, the scheme is already attracting strong occupier interest.

As previously highlighted, the Group tactically reduced the value of the
investment portfolio (including share of properties held in JVs), which at the
year-end, was valued at £106m (2021: £126m). This was primarily due to sales
within the portfolio and property valuation losses. Whilst the CBRE index
shows values have fallen by 13% over 2022, HBD completed three sales in H2
2022 for a total of £29.6m, representing a 17% premium to the last reported
book value and therefore the portfolio is expected to outperform the Index.
There are still several opportunities to replenish and grow the level of
standing assets by retaining completed developments, in line with the
business's strategic target of £150m.

Stonebridge Homes (SBH) has continued to grow and during 2022 delivered 175
completions (2021: 120). In common with many in the industry, material and
supply chain challenges have impacted SBH with completed sales below our
target of 200 but strong selling prices means the business is in line with
budget. SBH enters 2023 with a total of 124 units forward sold, including the
remaining 25 units from 2022 which are expected to complete in Q1. SBH total
owned and controlled land bank now comprises 1,094 units (2021: 1,157) - of
which 872 plots have detailed or outline planning. The strategic objective of
growing the business to achieve 600 completions per annum remains on track,
with strong selling prices mitigating the effects of build cost inflation.

The construction segment traded ahead of expectations in 2022. Henry Boot
Construction is trading in line with management expectations, delivering its
order book for 2022 despite a challenging environment with regard to labour
and material supplies, beginning the year with 68% of the 2023 order book
secured. Banner Plant has seen record levels of trading activity after
experiencing strong demand from its customers. Road Link has performed well as
a result of traffic volumes increasing and the added benefit of high inflation
feeding into higher toll revenues.

Outlook

There are encouraging levels of pre-sales for both land and houses, providing
the business with a degree of insulation to a slowing residential market in
the early part of this year. The planning environment is becoming increasingly
challenging which supports demand for the 9,325 approved plots in HLM's
portfolio. Demand for SBH homes, whilst reducing from the record levels
experienced in the middle of last year, has also proven resilient since year
end. Whilst the investment market has slowed, occupational demand continues to
hold up with the Group experiencing robust appetite for high-quality
industrial space. It is too early to predict the outturn for 2023, however
overall, the Group expects this year to be more challenging than 2022.

Henry Boot has conviction that, in the medium-term, demand will remain in its
three key markets, and with gearing comfortably at the bottom end of its
targeted range, the Group expects to continue to invest this year in growing
the business in line with our strategic objectives. A full outlook for 2023
will be provided in the FY 22 results announcement in March.

*Market expectations being the average of current analyst consensus of £48.1m
profit before tax, comprising three forecasts from Numis, Peel Hunt and
Panmure Gordon.

-ends-

This announcement contains inside information for the purposes of article 7 of
EU Regulation 596/2014. The person responsible for making this announcement on
behalf of Henry Boot is Amy Stanbridge, Company Secretary.

 

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

Tel: 020 7260 1000

 

Peel Hunt LLP

Joint Corporate Broker

Charles Batten/Harry Nicholas

Tel: 020 7418 8900

 

FTI Consulting

Financial PR

Giles Barrie/Richard Sunderland

Tel: 020 3727 1000

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:
Henry Boot Developments Limited (HBD)
(http://www.henryboot.co.uk/our-businesses/hbd/) , 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 possesses a high-quality strategic land portfolio, a proven
reputation in the property development market for creating places with
purpose, 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 plant hire business, and
generates strong cash flows from its PFI contract, Road Link (A69) Limited.

 

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

 

 

 

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTNKNBPFBKDQDB