5th Apr 2006 07:30
Boot(Henry) PLC05 April 2006 HENRY BOOT PLC PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR ENDED 31st DECEMBER 2005 Henry Boot PLC, the property development, land trading, construction and planthire group, announces its results for the year ended 31st December 2005. HIGHLIGHTS PROFIT BEFORE TAXATION UP 30% BASIC EARNINGS PER SHARE UP 21% NET ASSETS PER SHARE UP 12% DIVIDEND UP 15% John Reis, Chairman, comments: "Our company continued to grow from strength to strength in 2005..." "...our Property Development operation was able to benefit from some outstanding sale opportunities." "...our Land Trading company achieving a record trading performance." "Our Construction business exceeded its profit before tax target ..." "A record performance was achieved by our Plant Hire activity..." Enquiries: Jamie Boot, Group Managing Director - Tel: 0114 255 5444 CHAIRMAN'S STATEMENT Our company continued to go from strength to strength in 2005, and I again takepride in announcing another set of record trading results. Profit before tax for the year came in at £30.2m, compared with the restated£23.2m International Financial Reporting Standard figure for 2004. This £7.0mincrease in profit before tax was achieved on a £16.9m increase in revenue, withtotal revenue for the year amounting to £101.2m (2004: £84.3m). After strippingout property revaluations from the overall £30.2m profit before tax, a £25.4mprofit before tax figure was achieved compared with £13.8m for 2004. Basic earnings per share rose to 78.2p (2004: 64.6p), a 21% increase of 13.6pper share. The return on average capital employed in the year exceeded 26%compared with 22% in 2004, an increase of 18%. The increase in totalshareholder returns over the five year period to 31st December 2005 hasapproached the 200% mark, compared with a rise of 72% in the performance of theFTSE Small Cap Index during the same time. All in all, a very creditable and solid performance that has culminated in afurther outstanding year's result for 2005. TRADING SUMMARY PROPERTY Our Property Development, Property Investment and Land Trading activity producedrecord results in the year. Property Development and Investment With demand for quality schemes outstripping supply, yield compression continuedduring the year. This helped to sustain a healthy market, and our PropertyDevelopment operation was able to benefit from some outstanding saleopportunities. Ongoing schemes proving to be of particular interest to the investment marketare our projects at - Ayr Central, a 220,000 sq.ft retail development anchoredby major retailers including Debenhams, Next and Primark - Markham Vale, a 200acre industrial warehouse, distribution and office scheme due to commenceshortly off the M1 in Derbyshire - Smithdown Retail Centre, a smaller retailscheme in Liverpool including Tesco and Carphone Warehouse as tenants - afurther phase at Clifton Moor Retail park, York - Wharf Retail Park in Grimsbytown centre - and Priory Park, a leading commercial, industrial and specialityretail centre in Hull. The reduction in yields has benefited our growing investment portfolio which, onan internal valuation, contributed in excess of £4.0m to our annual results.Investment properties in the course of construction, and hence included at cost,include The Axis in Nottingham, Waterloo Square in South Shields and The Mall inBromley. Each of these projects is nearing completion, and offers significantgrowth prospects. Whilst the market generally shows little sign of easing at present, the board ismindful that current yields may be unsustainable in the medium to long term, andremain alert for any early indication of a slowdown in order to take appropriateaction. Land Trading A number of successful land sales were concluded during the year which made amajor contribution towards our Land Trading company achieving a record tradingperformance. The most notable of these disposals were at Aylesbury, Bathgate,Nafferton, Prestonpans and Wellingborough. Although we disposed of a substantial number of acres during the year, our landholdings remain very significant as we still maintain control over approximately6,500 acres through direct ownership, options or agency agreements. Thisdemonstrates our ability to continue to bring forward new schemes for futuredevelopment. The company's reputation in promoting land through the planning processcontinues to grow, and this is bringing in an increasing number of enquiries andopportunities from land owners and their agents. We are participating in and closely following the consultation process relatingto the proposed introduction of the Government's Planning-Gain Supplement, andits possible impact on future Section 106 Agreements with local authorities.Contribution is also being made to the follow-up of the Kate Barker Review ofHousing Supply, and to the Office of the Deputy Prime Minister's regionalspatial strategies debate. If enforced in their present form, these policies will undoubtedly bringproblems in the Government's attempts to deal with the present housing shortage,particularly if, as a result, land owners are dissuaded from releasing land dueto penal tax consequences. Our hope is that Government will take some note ofwhat the industry is telling them, and act accordingly. CONSTRUCTION Building & Civil Engineering Our Construction business exceeded its profit before tax target for the yeardespite a shortfall in revenue. Having secured a number of framework contractswith the public sector and quality private clients, both income and profitlevels are projected to increase during the current year. This increase will beachieved principally through a concentration of work for the prison andprobation services, local authority education departments, social housing andestate regeneration programmes as well as new and refurbished healthcarefacilities for the NHS and private health organisations. Civil engineeringopportunities continue to be secured in the industrial and water sectors for ourgeneral works division. PFI Road Project Road Link (A69) Holdings Limited continued to profitably undertake the runningof the A69 Carlisle to Newcastle trunk road, particularly after introducingoperational and maintenance efficiencies during the year. These were achieveddespite very poor weather conditions experienced early in 2005 which broughtabout severe flood damage and road disruption in the Carlisle area. Prospectsfor future profits remain firm for the remaining 20 years of the concessionaryperiod. Plant Hire A record performance was achieved by our Plant Hire activity with both salesrevenue and pre-tax profits exceeding expectations. Continuing capitalinvestment in an already modern range of plant, equipment and vehicles wasjustified by strong utilisation levels and hire rates which remained buoyantthroughout the year. This particularly applied to the expanding compressed airequipment, accommodation and toilet hire and service operations. INTERNATIONAL FINANCIAL REPORTING STANDARDS Our 2005 results are the first to be presented under International FinancialReporting Standards (IFRS), the adoption of which we were obliged under theListing Rules to comply with from 1st January 2005. The process of adopting IFRS involves the restatement of the previous year'sresults and balance sheet, and a reconciliation of those results to thepreviously reported figures under UK Generally Accepted Accounting Principles(UK GAAP). A copy of the statement dealing with the move from UK GAAP to IFRS was publishedin my letter to shareholders dated 7th September 2005. A copy of this lettercan be downloaded from the Henry Boot website at www.henryboot.co.uk, with hardcopies also available from the company's registered office. Segmental Reporting We are obliged under IFRS to report our results in business segments that followinternal reporting lines for management accounting purposes. Hitherto, ourgroup has always considered its activities as a single business, but in order tocomply with IFRS we now present our results under three business segments. Our three business segments are - Property: incorporating our propertydevelopment and investment activities, together with our land trading business -Construction: incorporating building, civil engineering, PFI road project andplant hire, and - Other: incorporating the parent company, the internal leasingcompany, and other service companies representing central administration andother central management functions, including pension costs. FINANCIAL PERFORMANCE, DIVIDENDS AND OUTLOOK Following such excellent results for 2005, and in keeping with the board's wishthat its dividend policy should reflect its confidence with regard to the nearfuture, your directors are proposing a final dividend of 14.1p per share. Thiswill bring the total dividend payable for year ended 2005 to 19.0p, representingan increase of some 15% over the 16.4p dividend for 2004. Net assets per ordinary share of £4.69 compare with the previous year's figureof £4.19, a 12% increase. The figures fully incorporate the Pension Schemeliabilities which, despite the prominent recovery in equities worldwide, havecontinued to increase due to the prolonged decline in bond yields and theextension of mortality rate assumptions. In looking ahead, I can confirm that the new year has started well and, with anumber of profitable transactions having already been identified, we are verymuch on course to meet our 2006 targets. Our company is in a strong position tomeet the challenges likely to be encountered during the coming year and, withgearing levels at the end of 2005 well below 20%, we have the resources topursue existing and new business through to a successful conclusion. BOARD CHANGES AND CORPORATE GOVERNANCE As announced in December 2005, Tony Cooper, our Group Finance Director andCompany Secretary for the past 20 years, is to take early retirement at the endof June 2006. He joined the group at a key period in its history and, indemonstrating his financial skills, has proved to be far more than just a safepair of hands in advising on the group's strategy and controlling its financialresources. We wish Tony all the very best in his future endeavours. Following a distinguished career during his 50 years association with the group,David Boot chose to step down in March 2006. He joined the group in 1956 as anengineer before taking a main board position in 1960 and going on to becomeJoint Managing Director and Joint Chairman in 1978. David subsequently assumednon-executive roles in 1987, including that of non-executive Chairman which heheld until 1996. My board colleagues and I would like to thank him for all hisloyal and dedicated service over such a formative period for the group, and wishhim well. I can also advise that another of our non-executive directors, John Redgrave,has decided to retire from the board at the conclusion of our forthcoming AnnualGeneral Meeting. He joined the company in a non-executive capacity in 1991 andhas consistently remained an invaluable source of expertise and wisdom sincethat time. We offer John our thanks and sincere best wishes for the future. At this point, I am delighted to welcome John Brown to the board. He wasappointed on 6th March 2006, and will initially take on David Boot's previousresponsibility as Chairman of the Remuneration Committee as well as assuming therole of senior independent non-executive director. John recently retired asChief Executive of Speedy Hire Plc, a company he founded in 1977 and which istoday the leader in its field. He is also Chairman of two AIM listed companies,and a non-executive director of Lookers plc where he chairs its Audit Committee. Successors to Tony Cooper and John Redgrave are being actively sought, andannouncements will be made in due course. With the appointment of two independent non-executive directors, it is to beexpected that many of the perceived 'problems' associated with our company'sstatement on compliance with The Combined Code on Corporate Governance will beresolved. Other items requiring shareholders' consideration include someproposed amendments to the company's Articles of Association to bring a numberof governance issues into line with current best practice. EMPLOYEES The greatest asset our company employs is never recorded on the balance sheet,yet without it the company would not be able to function. That is, of course,its employees. Their contribution to ensuring that our company achieves itsobjectives is outstanding, and on behalf of my fellow directors I thank themunreservedly for their loyalty and commitment during the past year. In doingso, I also look forward to working with them towards another successful year in2006. John S Reis 5th April 2006 Group Income Statement 2005 2004 for the year ended 31st December 2005 £'000 £'000 Revenue 101,188 84,346 Cost of sales (64,348) (60,872)Gross profit 36,840 23,474Other income 54 121Administrative expenses (9,042) (7,664)Pension expenses (2,283) (2,064) 25,569 13,867Increase in fair value of investment properties 4,724 9,448Profit from operations 30,293 23,315Investment income 1,311 1,270Finance costs (1,448) (2,050)Share of profit of associate - 670Profit before tax 30,156 23,205 Taxation (8,652) (6,213)Profit for the year from continuing operations 21,504 16,992Attributable to:Equity holders of the parent 20,021 16,507Minority interest 1,483 485 21,504 16,992Basic earnings per ordinary share 78.2p 64.6p Diluted earnings per ordinary share 76.8p 63.3p Dividend 19.0p 16.4p Group Balance Sheet 2005 2004at 31st December 2005 £'000 £'000 ASSETS Non-current assets Goodwill 3,799 4,002Property, plant and equipment 68,304 32,398Investment property 40,566 23,868Investments - 1Trade and other receivables 3,244 -Deferred tax assets 13,012 10,097 128,925 70,366 Current assets Inventories 88,156 98,647Trade and other receivables 19,135 10,309Cash and cash equivalents 3,458 32,878 110,749 141,834 LIABILITIESCurrent liabilities Trade and other payables 42,474 38,811Current tax liability 7,758 2,610Obligations under finance leases - 446Borrowings 3,634 11,216Provisions 690 228 54,556 53,311Net current assets 56,193 88,523Non-current liabilities Borrowings 19,882 11,044Employee benefits 36,799 32,437Deferred tax liabilities 6,000 5,274Provisions 184 958 62,865 49,713Net assets 122,253 109,176 SHAREHOLDERS' EQUITY Share capital 3,005 3,005Revaluation reserve 2,916 3,753Retained earnings 113,775 99,931Other reserves 2,104 2,116Cost of shares held by ESOP trust (795) (849)Equity shareholders' funds 121,005 107,956Equity minority interests 1,248 1,220 122,253 109,176 Group Statement of Changes in Equity 2005 2004at 31st December 2005 £'000 £'000 Profit for the year 20,021 16,507Equity dividends (4,343) (3,905)Dividends from subsidiaries - -Revaluation of group occupied property (285) 2,605Deferred tax on property revaluations - (781)Actuarial loss on defined benefit pension scheme (3,315) (6,921)Deferred tax on actuarial loss 995 2,076Movement in fair value of cash flow hedges (12) (971)Share based payments 54 140Adjustments re properties transferred to stock 1 (23)Arising on employee share schemes 64 150Adjustment to deferred tax recognised in equity (131) -Movement in equity 13,049 8,877Equity at 31st December 2004 107,956 99,079Equity at 31st December 2005 121,005 107,956 Group Cash Flow Statement 2005 2004for the year ended 31st December 2005 £'000 £'000 Cash flows from operating activities Profit from operations 30,293 23,315Adjustments for non-cash items:Depreciation of property, plant and equipment 4,635 3,967Goodwill impairment 203 68Revaluation increase in investment properties (4,724) (9,448)Gain on disposal of property, plant and equipment (159) (877)Operating cash flows before movements in working capital 30,248 17,025(Increase) in inventories (26,523) (19,078)(Increase) decrease in receivables (12,017) 3,665Increase in payables 4,500 3,442Cash generated from operations (3,792) 5,054Interest received 1,312 1,301Interest paid (1,494) (2,155)Interest paid on finance leases (6) (41)Taxation (4,827) (3,959)Net cash from operating activities (8,807) 200 Cash flows from investing activities Acquisition of subsidiary - (5,001)Cash at bank acquired with subsidiary - 5,388Loans acquired with subsidiary - (12,788)Sale of subsidiaries - 32,946Sale of investments 1 -Purchase of property, plant and equipment (17,679) (4,405)Proceeds on disposal of property, plant and equipment 2,053 2,493Dividends received from associate - 270 (15,625) 18,903 Cash flows from financing activitiesDividends paid:Ordinary shares (4,322) (3,884)Minorities (1,455) -Preference (21) (21)Repayments of obligations under finance leases (446) (864) (6,244) (4,769)Net increase in cash and cash equivalents (30,676) 14,334Opening net funds (debt) 10,172 (5,026)Cash outflow from decrease in lease financing 446 864Closing net (debt) funds (20,058) 10,172 NOTES 1. The financial information above has been extracted from the group'sstatutory accounts for the years ended 31st December 2004 (as restated toconform with IFRS) and 2005. Statutory accounts for the year ended 31stDecember 2004 under UK GAAP have been delivered, and those for the year ended31st December 2005 under IFRS will be delivered, to the Registrar of Companies.The auditors of the Company have given unqualified reports on those accounts andsuch reports did not contain a statement under Section 237(2) or (3) of theCompanies Act 1985. 2. The financial statements were approved by the Board of Directors on 4thApril 2006 and authorised for issue. 3. The financial information has been prepared using accounting policiesconsistent with those adopted by the group in its restated IFRS accounts for theyear ended 31st December 2004. 4. The Annual Report 2005 is to be published and sent to shareholders on18th April 2006. Copies will be available from The Company Secretary, HenryBoot PLC, Banner Cross Hall, Sheffield, S11 9PD. 5. The Annual General Meeting of the Company is to be held at the SheffieldPark Hotel, Chesterfield Road South, Sheffield, S8 8BW on Friday 19th May 2006at 11.30 a.m. 6. The final dividend will be paid on 25th May 2006, with a record date of12th May 2006. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Henry Boot