TIDMBOOT
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:
GBP54m), 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: GBP19m). Both projects
have been pre-sold.
Within the GBP1.25bn 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:
GBP50m 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: GBP140m), 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 GBP106m 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 GBP150m. 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 GBP42m urban
development scheme in the Heart of Sheffield, and the GBP47m BtR
residential scheme, Kangaroo Works in Sheffield, is heading towards
a summer 23 completion. The Cocoa Works, a GBP47m 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 GBP37.8m 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
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
Property Investment and Development:
HBD (Henry Boot Developments Limited), Stonebridge Homes
Limited
Construction:
Henry Boot Construction Limited , Banner Plant Limited , Road
Link (A69) Limited
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
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END
AGMPPUQAAUPWGWC
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