REG - Boot(Henry) PLC - Trading Statement

Henry BootAnnouncement

28/01/2025 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250128:nRSb8412Ua&default-theme=true

RNS Number : 8412U  Boot(Henry) PLC  28 January 2025

HENRY BOOT PLC

('Henry Boot' or 'the group')

 

TRADING UPDATE FOR THE YEAR ENDED 31 DECEMBER 2024

 

Henry Boot, a company engaged in land promotion, property investment and
development, and construction, is today issuing a trading update for the year
ended 31 December 2024 ahead of the announcement of its full year results on
25 March 2025.

 

Tim Roberts, Chief Executive Officer commented:

 

"Throughout 2024, we saw a gradual improvement in market conditions which
translated into a steady increase in demand across our key sectors. This,
coupled with our focus on high quality land, prime property development and
premium homes means we expect year end profits to be in line with market
expectations.

 

Late last year we agreed two transactions which we see as being important
steps in achieving our medium term growth and return objectives. First is our
phased acquisition to take full ownership of premium housebuilder, Stonebridge
Homes, and secondly the industrial & logistics joint venture with Feldberg
Capital, which allows us to accelerate our development pipeline and recycle
capital more efficiently.

 

Looking forward, we have started 2025 with a bit more optimism, albeit while
the reduction in interest rates provided a welcome boost to the economy, the
trend downwards is now anticipated to be at a slightly slower pace than
previously expected. The improvements to the planning system we have already
seen under the new government also give us confidence, and we therefore intend
to ramp up our planning applications, with a further 10,000 plots expected to
be made in 2025."

 

Trading update for the year ended 31 December 2024

 

As 2024 progressed we saw a gradual improvement in the economy which
translated into a steady increase in demand in our key markets and, as
anticipated, a stronger second half performance for Henry Boot.

 

According to Nationwide, house prices across the UK increased by 4.7% over the
year while industrial property continues to see the strongest rental growth of
all our sectors at 5.0%. However, transactions of all kinds remain slow to
complete. Against this backdrop, our focus on high quality land, prime
property development and premium homes saw the group perform relatively well
and we expect profit before tax for the year ended 31 December 2024 to be in
line with market expectations *.

 

We have continued to make good progress toward our medium-term targets while
investing in our long term future. Last month the group announced a
transaction that will see it take full ownership of premium regional
housebuilder Stonebridge Homes (SH) through the acquisition of the 50% it does
not already own in the business from its joint venture (JV) partner. The
acquisition will be undertaken in three tranches over five years, with the
first having completed this month Henry Boot is now the majority shareholder.
This transaction further increases our investment in housebuilding and forms a
significant part of our growth plans.

 

As anticipated, by completing sales of major strategic sites and development
land the group reduced net debt throughout H2 24 to c.£63m as at 31 December
2024 (30 June 2024:  £103.9m), resulting in gearing remaining well within
the stated optimal range of 10-20%.

 

Hallam Land ("Hallam") completed 2,661 residential plot sales in 2024 (2023:
1,944 plots). Although this was below the target of 3,000 plots for the year,
Hallam still hit its full year financial target following the employment land
sale in Coventry. Demand from major housebuilders for Hallam's prime
deliverable sites has improved. In H2 24, at Pickford Gate, Coventry, a total
of 491 plots were sold to David Wilson Homes, whilst 632 plots were sold to
Vistry Group. Additionally, 52 acres of employment land were sold to Royal
London, resulting in total land sales at the scheme of £102m (Hallam share:
£36m).

 

Hallam also grew its land bank to 104,787 plots in 2024 (2023: 100,972 plots),
securing 10 new sites which have the potential to deliver c.6,500 plots. The
Government's proposed revisions to the National Planning Policy Framework
(NPPF), have already shown early signs of improvement to the planning system.
We believe this momentum will continue to unlock the delivery of new homes. In
total Hallam secured consents on 2,982 plots (2023: 1,014 plots), of which
2,186 were achieved between September and December of last year, bringing the
total number of plots with planning consents to 8,822 (June 2024: 7,990). A
further 13,146 plots are currently in the planning system awaiting
determination.

 

As a result of the changes to the NPPF, Hallam has identified 10,000 plots,
which are expected to be submitted for planning over the next 12 months. This
positions the group strongly to meet its medium-term strategic target of
selling 3,500 plots pa.

 

In 2024, HBD completed schemes with a total gross development value (GDV) of
£331m (HBD share: £188m GDV), up from £126m last year (2023: HBD share:
£112m GDV), of which 72% have been pre-let or pre-sold. This includes Island,
(HBD Share: £33m GDV), a Net Zero Carbon (NZC) office building in Manchester
city centre in a JV with Greater Manchester Pension Fund, which was completed
in November on time and on budget. In October, a pre-let was secured for 50%
of the space across the top five floors on a 10 year lease to Virgin Media O2,
achieving a record office rent in Manchester. The remaining space is
attracting strong occupier interest. Setl, (HBD share: £32m GDV), a 102
premium apartment building in Birmingham, was completed at the end of May last
year. As of 20 January 2025, 64% of the units have been sold/reserved at
target selling prices, achieving an average reservation rate of 1.0 unit per
week. This includes c.£15m of sales that have either been completed or
unconditionally exchanged.

 

With regard to the industrial and logistic sector (I&L), HBD completed a
total of c.540,000 sq ft, including Rainham, (HBD share: £24m GDV), a four
unit NZC development serving Greater London in a JV with Barings and two units
(HBD share: £20m GDV) at Airport Business Park, Southend. At SPARK Walsall,
specialist remediation works (HBD share: £37m GDV) also completed, allowing
the first phase of this 620,000 sq ft prime development to begin.

 

Last month, HBD formed a UK focused I&L JV with Feldberg Capital, known as
Origin. It has been seeded with three sites from our pipeline with a combined
GDV of c.£100m. The JV intends to deliver c.£1bn of high quality I&L
schemes over the next seven years. Earlier this month the JV secured a £54m
development loan from BGO to fund the acquisition and development of the seed
assets.

 

Following the completion of three significant schemes, combined with a more
prudent approach to commencing new projects, HBD's committed development
programme now has a total GDV of £124m (HBD share: £33m GDV) compared to
£299m at the end of 2023 (HBD share: £159m GDV). The committed schemes are
currently 25% pre-let or pre-sold with 98% of development costs fixed. HBD
also has optionality on a significant near-term pipeline, which includes
various I&L schemes and Neighbourhood, Birmingham (£123m GDV) a 414-unit
BtR development where HBD is pursuing institutional interest in forward
funding the scheme.

 

As a result of the successful sales undertaken during the year, the total
value of the investment portfolio (including share of JVs and assets held for
sale) ended the year at c.£107m (2023: £113m). However, on a like-for-like
basis, property values increased and the portfolio delivered a total return
ahead of the CBRE UK Monthly Index total return of 7.7%. In H2 2024, an
industrial estate was sold in Enfield for £19.6m (£9.8m our share), at a
slight premium to December 2023 book value.

 

SH continued to grow its output completing 270 homes (2023: 251) in a
relatively subdued market. In the period net private reservations per active
outlet per week averaged 0.45 (2023: 0.45). Despite completions for the year
being marginally below our target of 275 homes, due to protracted chains, five
units continue to progress and have now been transferred to the sales target
for 2025. SH's total owned and controlled land bank stands at 1,726 plots
(December 2023: 1,513), of which 1,220 plots (December 2023: 923) have
planning permission. In line with our ambitious growth plans a further 499
plots have been added to the landbank, including Bracebridge Heath, Lincoln
(281 plots) our first site in the Midlands.

 

Henry Boot Construction (HBC) remained behind schedule for winning work and
turnover was lower than targeted. HBC starts 2025 in a better position, with
55% of its order book secured and a further 16% at the preferred bidder stage
or in legals. Under HBC's new management team, the focus for 2025 will be on
growing and diversifying the order book by developing a balanced portfolio of
private sector projects, to complement the existing public sector work.

 

Banner Plant traded slightly below budget in 2024 and in response has adjusted
its sales strategy. Road Link has traded in line with expectations.

 

Outlook

 

Looking ahead, while interest rates are anticipated to remain on a downward
trajectory, this is now likely to be at a slower than previously expected
pace. Following a gradual pick up in demand over the last 12 months we still
anticipate that our markets will continue to steadily improve during 2025.
Similarly, even though there are early signs of an improving planning system,
we expect there will be a lag before the benefits are realised through
increased plot sales.

 

As a result, we anticipate slower growth in volumes across the group, and
accordingly, we now expect profit for the year to be similar to the 2024
outturn and once again H2 weighted. We remain confident that SH will build on
its track record of sequential growth in homes completed, but due to further
investment in the SH landbank and the increase in planning applications within
Hallam, gearing will be towards the upper end of our optimum range of 10-20%
through 2025.

 

Henry Boot remains well placed to achieve its medium term growth and return
objectives, having made good strategic progress during 2024, and future growth
will be supported by a solid balance sheet and a significant number of high
quality opportunities in prime locations within our portfolio.

 

*Company compiled market consensus for 2024 profit before tax is £30.7m,
comprising the average of three forecasts from Deutsche Numis, Peel Hunt and
Panmure Liberum.

 

Certain information contained in this announcement would have constituted
inside information (as defined by Article 7 of Regulation (EU) No 596/2014),
as it forms part of domestic law by virtue of the European Union (Withdrawal)
Act 2018) ("MAR") prior to its release as part of this announcement and is
disclosed in accordance with the Company's obligations under Article 17 of
those Regulations.

 

ENDS

 

Notes to editors

 

Henry Boot is one of the UK's leading land, property development, home
building and construction businesses - and we've been transforming land and
spaces since 1886. Listed on the London Stock Exchange since 1919, we're
renowned for quality, expertise, delivery and a partnership approach across
the group - which comprises, Hallam Land, HBD, Stonebridge, Henry Boot
Construction, Banner Plant and Road Link.

 

Operating across the UK, and employing over 500 people, we focus on three key
markets: urban development, industrial and logistics and residential. Hallam
Land has facilitated 52,000 new homes since 1990, managing one of the top five
largest land portfolios in the country, with the potential to facilitate over
100,000 homes. HBD manages a development pipeline of £1.3bn, the equivalent
of 7m sq ft of developments across our key markets, while maintaining a £107m
investment portfolio, of which 73% of the properties have an EPC rating of 'C'
or higher. Stonebridge, our jointly owned home building business, manages a
land portfolio capable of delivering 1,700 homes, with an ambition to deliver
up to 600 new homes a year.

 

Henry Boot Construction has extensive experience in both the public and
private sectors, including major projects such as the £200m regeneration of
Barnsley town centre, and The Cocoa Works, a £57m residential development in
York. For over 65 years, Banner Plant has supplied construction products and
services, operating from seven regional depots in the North of England.

 

We have also developed an ambitious Responsible Business Strategy to help us
meet our aim of being Net Zero Carbon by 2030, and to deliver, by 2025,
charitable, community and education work valued at £1m.

 

From land promotion, property development and investment to home building,
construction and plant hire, Henry Boot is where great places start.

 

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

 

Enquiries

FTI Consulting

Richard Sunderland/Giles Barrie

07894 797067 / 07798 926814

henryboot@fticonsulting.com

 

Henry Boot PLC

Tim Roberts, Chief Executive Officer

Darren Littlewood, Chief Financial Officer

Daniel Boot, Senior Corporate Communications Manager

07825 088807

dboot@henryboot.co.uk

henryboot.co.uk

 

Deutsche Numis

Joint Corporate Broker

Ben Stoop / Thomas Philpott

0207 260 1000

 

Peel Hunt LLP

Joint Corporate Broker

Ed Allsopp / Pete Mackie

0207 418 8900

 

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  TSTPKOBQABKDNDB