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
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
