TIDMBOOT
RNS Number : 6102N
Boot(Henry) PLC
24 January 2023
24 January 2023
HENRY BOOT PLC
('Henry Boot' or 'the Group')
TRADING UPDATE FOR THE YEARED 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 GBP30m 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.GBP49m (2021: GBP44m), 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 GBP117m (HBD
share GBP83m, 2021: HBD share GBP68m), 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 GBP86m (HBD share: GBP60m).
-- Two residential land sales with a GDV of GBP23m (HBD share:
GBP15m), 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 GBP8m (HBD share: GBP8m).
The committed development programme now totals a GDV of GBP395m
(HBD share: GBP240m) 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: GBP15m) 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: GBP24m) 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 GBP106m (2021:
GBP126m). 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 GBP29.6m, 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
GBP150m.
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 GBP48.1m 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
Property Investment and Development:
Henry Boot Developments Limited (HBD) , Stonebridge Homes
Limited
Construction:
Henry Boot Construction Limited , Banner Plant Limited , Road
Link (A69) Limited
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
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END
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