29th Aug 2007 07:00
Boot(Henry) PLC29 August 2007 HENRY BOOT PLC INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 Henry Boot PLC, the land promotion, property development and investment,construction and plant hire business, today announces its interim results forthe six months ended 30 June 2007. HIGHLIGHTS Turnover £47.1m (2006: £50.7m) Profit before tax increased 62% to £21.9m (2006: £13.5m) Revaluation surplus on investment properties £13.0m (2006: £2.6m) Basic earnings per share increased 73% to 11.6p (2006*: 6.7p) Interim dividend of 1.25p (2006*: 1.08p), an increase of 16% Further substantial investment in the land and development portfolios resultedin gearing of 38% (December 2006: 10%) Net asset value per share increased 9% to 128p (December 2006*: 117p) *restated for the 4-for-1 bonus issue in May 2007 Commenting on the results, Chairman John Reis said: "I am delighted to report on another period of solid progress. The business has had a busy first half and achieved an excellent financialresult, with further rewards expected during the second half." For further information, please contact: Henry Boot PLCJamie Boot, Group Managing DirectorJohn Sutcliffe, Group Finance DirectorTel: 0114 255 5444www.henryboot.co.uk Evolution Securities LimitedJoanne LakeTel: 0113 243 1619 Citigate Dewe RogersonFiona TooleyTel: 0121 455 8370Mobile: 07785 703523 CHAIRMAN'S STATEMENT RESULTS I am delighted to report on another period of solid progress in the half year to30 June 2007. Income Statement Profit before tax increased 62% to £21.9m (2006: £13.5m). The period saw thecompletion and the directors' first valuation of our 220,000 sq ft Ayr CentralShopping Centre which was largely responsible for the increase of £13.0m (2006:£2.6m) in the fair value of investment properties. Trading profits afterinterest were lower at £8.8m (2006: £10.9m) resulting from the timing of landtrading transactions compared with the previous year and a £0.5m increase ininterest costs arising from the significant investments made within our propertydevelopment pipeline. Administrative costs, including pension costs, wereslightly down on last year at £6.8m (2006: £6.9m). Net interest costs at £1.1m(2006: £0.6m) are still very well covered by profits and continue to reflect therelatively prudent, albeit increasing, gearing levels at which we are operating.Profit attributable to equity shareholders increased 73% to £14.9m (2006:£8.6m), with basic earnings per share 73% higher at 11.6p (2006 restated: 6.7p). Balance Sheet As previously noted, the significant investment in the property portfolioaccounts for a large proportion of the 60% increase in the value of property,plant and equipment and investment property to £207.6m (December 2006: £129.7m).In part, this is attributable to the initial internal valuation of Ayr Centraltransferred from inventories, but also due to further expenditure on schemes inNottingham, Bromley, Markham Vale and Bromborough. In addition, we have madefurther land acquisitions, either directly or through option arrangements, withland inventories increasing 50% to £75.3m (December 2006: £50.3m). Thecombination of these investments resulted in higher net borrowings of £63.7m(December 2006: £15.9m) and gearing of 38% (December 2006: 10%). Employee benefit liabilities fell to £19.1m (December 2006: £25.8m) as higherlong-term interest rates and the investment performance of the pension scheme'sassets both had a positive impact on the scheme deficit. Share capital increased by £10.4m in the period as revenue reserves werecapitalised pursuant to the 4-for-1 bonus issue in May 2007. This resulted inover 104m new ordinary shares being issued to existing shareholders. Net assetsnow stand at £167.8m (December 2006: £152.2m) and, restated for this bonusissue, net asset value per share increased by 9.4% to 128p (December 2006restated: 117p). Cash Flows Operating cash flow adjusted for non-cash items was £12.3m (2006: £13.8m). Theincrease in inventories of £26.3m reflected investments in the land portfolioand the £12.2m increase in receivables primarily relates to land sales settledafter the period end. These land investments are offset by higher tradecreditors which increased £27.0m resulting in net cash outflows from operatingactivities of £9.5m (2006: £0.3m). Investment in property development andinvestment and plant and equipment, offset by disposal proceeds, equated to£33.4m (2006: £11.2m). After dividend payments of £4.8m (2006: £4.1m), totalcash outflows in the period were £47.8m compared with £15.7m in the same periodlast year. Dividend The excellent performance by the Group during the period, coupled with theBoard's commitment to a progressive dividend policy, result in the Directors'decision to declare a 16% increase in the 2007 interim dividend to 1.25p pershare (2006 restated: 1.08p). This will be paid on 25 October 2007 toshareholders on the register at the close of business on 12 October 2007. REVIEW OF ACTIVITIES Property Our flagship retail development at Ayr Central was completed in the period andwe are now working to fully let the property and this we expect to achieve bythe end of the year. At Bromley, the final retail phase was recently completedand occupied. We are now focusing our attention on fitting out the 9,000 sq ftof office accommodation and expect to complete this before the year end. Ouraward winning 220,000 sq ft mixed-use redevelopment of a former department storein Nottingham is progressing well, with completion of the main part of thescheme, now fully pre-let, expected early in 2008. We recently gained planningconsent for a further 18,000 sq ft of offices adjoining this development whichis now under offer to a national company and we expect to commence this phase ofdevelopment shortly, with completion scheduled for 2008. The motorway servicearea 'Stop 24', which will be the largest in the Country, at Junction 11 on theM20, is anticipated to open to traffic later in the year. The scheme is almostfully let, with a very strong tenant line-up, and we believe that this willbecome another very successful investment. We commenced development of a 37,000 sq ft retail and trade warehouse scheme inBromborough which has been pre-let to Homebase and Magnet, with completion duein 2008. Furthermore, we began the second phase of our South Shields developmentwith the provision of a 60,000 sq ft retail foodstore on behalf of Asda. In May 2007 we concluded a substantial pre-let with Recticel (UK), a subsidiaryof a leading Belgian company, for a 124,000 sq ft industrial complex inStoke-on-Trent on a 20 year lease. Construction has started and we aim tocomplete the development during 2008. We have also obtained planning consent fora further 200,000 sq ft of industrial space on part of the remaining 9.5 acresof this site. Also in May 2007 we acquired a 5 acre redundant factory site in Bodmin where weplan to develop a 50,000 sq ft trade counter and industrial site to complementour 2.8 acre 38,000 sq ft Bodmin Tor Retail Park, which also progressed wellwith a planning application submitted during the period. During the first half, we acquired the first 60 acres of land at Markham Vale,adjoining the new Junction 29A of the M1 near Chesterfield. Whilst the firstphase of this development is not expected to commence until 2008 to coincidewith the opening of the junction, we are encouraged by the level of tenant andinvestor interest already being shown in the site. A detailed planning application was submitted for a 150,000 sq ft mixed-usescheme in Grimsby regenerating derelict land in the town centre. The developmentwill provide much needed retail space, parking for 290 cars, 25 apartments, awater sports centre and significant improvements to the public open space in theimmediate vicinity. We exchanged contracts with North Somerset Council for a £30m leisure facilityat Weston-super-Mare. We anticipate submitting a planning application by the endof the year for this 200,000 sq ft development which we expect to include ahotel, bowling alley, indoor leisure pool, cinema, restaurants and bars and alarge car park, with anticipated completion in 2010. Land Our land trading business continues to make very strong progress with a furthersignificant land purchase at our jointly owned 360 acre site at Milton Keynes.Land sales in the period were made at Gourock, Bathgate and Prestonpans inScotland and Bognor Regis. In total, these utilised some 114 acres from our6,500 acre portfolio. We also secured a 32 acre option on land to the south of Derby, which is near toanother site we are currently promoting for 850 dwellings. The latter is thesubject of a current planning inquiry, with the outcome expected in 2008. Further progress has been made during the period on sites at Rotherham,Sheffield, Retford, Tillicoultry, Peterborough, Ampthill, Milton Keynes andMelksham, and the possible sale of some of these prior to the end of 2007 shouldresult in a successful outcome for the financial year as a whole. Other significant events in the period included submission of a planningapplication for a five megawatt wind farm on a 180 acre site in County Durham.Planning applications were submitted for the first phase of 187 dwellings on oursite in Worcester and for 316 homes in Mansfield. The Mansfield application, ifsuccessful, will complement two further consents already granted for 700,000 sqft of industrial space, a district shopping centre comprising several retailunits, a public house/restaurant facility and a fast food operator. An inquiryhas been held relative to our planned mixed-use development at Bowburn, CountyDurham, and we are expecting a result before the year end. Construction, PFI and Plant Hire Activity levels within our construction arm in the first half have been good.Revenues were in line with internal budgets and we have a strong order bookthrough the second half of this year and into 2008. The £8m contract to build acombined garden centre and retail complex for Dobbies Garden Centres just southof Sheffield is now nearing completion. Other significant contracts awarded inthe period include a £5.5m contract, under the Decent Homes Initiative, torefurbish 224 flats in two tower blocks in Hull. We are now working with localauthorities in Doncaster, Hull, Sheffield and Rotherham on Decent HomesInitiative refurbishments, providing the opportunity to win further contractsover the next two to three years. Road Link (A69) Limited has performed slightly ahead of budget in the period andhas continued to meet all its service agreement targets with the HighwaysAgency. Banner Plant continues to operate in a highly competitive environment.However, activity levels have been acceptable and the unit contributedsatisfactorily in the period. Bonus Issue The Directors' proposal for a 4-for-1 bonus issue by way of a capitalisation ofreserves was unanimously approved by shareholders on 17 May 2007 and dealing inthe new ordinary shares commenced on 21 May 2007. OUTLOOK Property The wider property market in the UK has undoubtedly become more competitive overthe last twelve months. Interest rate rises to 5.75% by July 2007 are having anegative impact on secondary yields and therefore capital values. In addition,major banks are reportedly applying more restrictive terms to both existing andnew borrowing. We believe this will potentially give rise to asset acquisitionopportunities at more attractive prices in the near future. We have a strongpipeline of developments in progress, on a part or fully pre-let basis, ensuringthat rental income on completion comfortably exceeds the financial cost ofdevelopment. Where appropriate, we will continue to recycle capital back intothe development pipeline or take advantage of market opportunities via thedisposal of investments. Land The legislative framework in respect of the Planning Gain Supplement is stilluncertain and the Code for Sustainable Homes will undoubtedly add significantlyto residential developer costs. We are therefore mindful that these issues mayhave an impact on land values and factor them into our financial models. On thepositive side, the Barker Review is very favourable for housing development andthe Government has signalled its desire to speed up the planning process. Wehave a portfolio of some 6,500 acres on over 170 sites throughout the Countryand we work hard to achieve quality planning consents that make these schemeshighly desirable to housebuilders. Whilst we note the recent consolidation ofhousebuilders, we saw strong demand for the land we marketed during the periodand expect this trend to be maintained in the second half as other sites come tothe market. Construction, PFI and Plant Hire Strong developer activity, allied to government initiatives and strong levels ofconstruction activity in the South East, are underpinning demand in themarketplace. More specifically, we have carved out strong niches within DecentHomes refurbishment and Prison Alliance programmes which are providing theopportunity to win work on a medium-term basis, ensuring we have good ordervisibility into the future. Group The business has had a busy first half and achieved an excellent financialresult, with further rewards expected during the second half. We recognise thatcurrent financial market turbulence may have an impact on the timing oftransactions and therefore profitability in the period, however I reiterate mystatement at the Annual General Meeting in May 2007 that we expect profitabilityfor the year to be biased towards the second half year. I look forward toreporting on further solid progress at the time of our year end resultsannouncement. John S ReisChairman29 August 2007 GROUP INCOME STATEMENT (UNAUDITED)For the half year ended 30 June 2007 Half year Half year Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited £'000 £'000 £'000------------------------------------------------------------------------------------------------------------------Revenue 47,149 50,655 142,284Cost of sales (30,418) (32,240) (91,496)------------------------------------------------------------------------------------------------------------------Gross profit 16,731 18,415 50,788Other income 5 58 27Administrative expenses (6,215) (5,862) (11,479)Pension expenses (557) (1,071) (1,855)------------------------------------------------------------------------------------------------------------------ 9,964 11,540 37,481Increase in fair value of investment properties 13,014 2,577 3,032Profit on sale of investment properties 4 - 1,381------------------------------------------------------------------------------------------------------------------Profit from operations 22,982 14,117 41,894Investment income 212 146 641Finance costs (1,337) (797) (1,740)------------------------------------------------------------------------------------------------------------------Profit before tax 21,857 13,466 40,795Taxation (6,235) (4,112) (14,008)------------------------------------------------------------------------------------------------------------------Profit for the period from continuing operations 15,622 9,354 26,787==================================================================================================================Attributable to:Equity holders of the parent 14,890 8,635 25,415Minority interests 732 719 1,372------------------------------------------------------------------------------------------------------------------ 15,622 9,354 26,787==================================================================================================================Basic earnings per ordinary share * 11.6 6.7p 19.8p==================================================================================================================Diluted earnings per ordinary share * 11.4p 6.6p 19.5p==================================================================================================================Dividend 1.25p 1.08p 4.40p================================================================================================================== * The comparative figures have been restated in respect of the 4-for-1 bonus issue in May 2007. GROUP BALANCE SHEET (UNAUDITED)At 30 June 2007 30 June 31 December 30 June 2007 2006 2006 Unaudited Audited Unaudited £'000 £'000 £'000-------------------------------------------------------------------------------------------------------------------ASSETSNon-current assetsGoodwill 3,493 3,595 3,697Property, plant and equipment 127,455 99,595 77,718Investment property 80,137 30,130 42,869Trade and other receivables - - 3,244Deferred tax assets 7,394 9,941 10,411------------------------------------------------------------------------------------------------------------------- 218,479 143,261 137,939-------------------------------------------------------------------------------------------------------------------Current assetsInventories 87,284 94,736 98,314Trade and other receivables 29,918 17,592 18,516Cash and cash equivalents 3,409 15,044 3,452------------------------------------------------------------------------------------------------------------------- 120,611 127,372 120,282-------------------------------------------------------------------------------------------------------------------LIABILITIESCurrent liabilitiesTrade and other payables 58,082 31,830 43,174Current tax liability 5,432 11,739 5,581Borrowings 38,972 2,801 9,876Provisions 12,547 12,401 764------------------------------------------------------------------------------------------------------------------- 115,033 58,771 59,395-------------------------------------------------------------------------------------------------------------------Net current assets 5,578 68,601 60,887-------------------------------------------------------------------------------------------------------------------Non-current liabilitiesBorrowings 28,138 28,141 29,300Employee benefits 19,116 25,813 28,026Deferred tax liabilities 8,862 5,585 6,773Provisions 144 144 184------------------------------------------------------------------------------------------------------------------- 56,260 59,683 64,283-------------------------------------------------------------------------------------------------------------------NET ASSETS 167,797 152,179 134,543===================================================================================================================SHAREHOLDERS' EQUITYShare capital 13,424 3,005 3,005Revaluation reserve 2,787 2,908 2,916Retained earnings 147,618 142,843 125,400Other reserves 2,943 2,610 2,452Cost of shares held by ESOP trust (678) (740) (712)-------------------------------------------------------------------------------------------------------------------Equity attributable to equity holders of the Parent Company 166,094 150,626 133,061Minority interests 1,703 1,553 1,482-------------------------------------------------------------------------------------------------------------------TOTAL EQUITY 167,797 152,179 134,543=================================================================================================================== BUSINESS SEGMENTS (UNAUDITED)For the half year ended 30 June 2007 Half year ended 30th June 2007 Half year ended 30 June 2006 Year ended 31 December 2006 Unaudited Unaudited Audited ------------------------------- --------------------------------- ------------------------------ Inter- Inter- Inter- External segment External segment External segment sales sales Total sales sales Total sales sales TotalRevenue £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000--------------------------------------------------------------------------------------------------------------------Property and land 17,929 121 18,050 26,381 144 26,525 80,938 241 81,179developmentConstruction 29,216 2,987 32,203 24,228 4,310 28,538 61,285 4,950 66,235--------------------------------------------------------------------------------------------------------------------Other 4 325 329 46 354 400 61 528 589 47,149 3,433 50,582 50,655 4,808 55,463 142,284 5,719 148,003Eliminations - (3,433) (3,433) - (4,808) (4,808) - (5,719) (5,719)--------------------------------------------------------------------------------------------------------------------Group turnover 47,149 - 47,149 50,655 - 50,655 142,284 - 142,284==================================================================================================================== Result £'000 £'000 £'000--------------------------------------------------------------------------------------------------------------------Property and land 22,548 13,413 38,586developmentConstruction 2,653 3,204 7,610Other (2,219) (2,500) (4,302)--------------------------------------------------------------------------------------------------------------------Segment result 22,982 14,117 41,894Investment income 212 146 641Finance costs (1,337) (797) (1,740)--------------------------------------------------------------------------------------------------------------------Profit before tax 21,857 13,466 40,795Taxation (6,235) (4,112) (14,008)--------------------------------------------------------------------------------------------------------------------Profit for the period 15,622 9,354 26,787==================================================================================================================== NOTES 1. For management purposes, the Group is currently organised into three business segments: Property and land development, Construction and Other. 2. As operations are carried out entirely within the UK, there is no secondary segmental information. 3. Inter-segmental pricing is done on an arm's length open market basis. GROUP CASH FLOW STATEMENT (UNAUDITED)For the half year ended 30 June 2007 Half year Half year Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Unaudited Unaudited Audited £'000 £'000 £'000---------------------------------------------------------------------------------------------------------------Cash flows from operating activitiesProfit from operations 22,982 14,117 41,894Adjustments for non-cash items:Depreciation of property, plant and equipment 2,438 2,282 4,701Goodwill impairment 102 102 204Revaluation increase in investment properties (13,014) (2,577) (3,032)Gain on disposal of property, plant and equipment (160) (165) (263)Gain on disposal of investment properties (4) - (1,381)---------------------------------------------------------------------------------------------------------------Operating cash flows before movements in working capital 12,344 13,759 42,123(Increase) in inventories (26,255) (10,192) (11,355)(Increase) decrease in receivables (12,240) 702 4,847Increase in payables 26,665 1,591 2,532---------------------------------------------------------------------------------------------------------------Cash generated from operations 514 5,860 38,147Interest received 188 146 636Interest paid (1,245) (797) (1,599)Taxation (8,990) (5,546) (10,976)---------------------------------------------------------------------------------------------------------------Net cash from operating activities (9,533) (337) 26,208===============================================================================================================Cash flows from investing activitiesPurchase of property, plant and equipment (32,110) (11,716) (32,228)Purchase of investment property (3,787) - -Proceeds on disposal of property, plant and equipment 1,972 492 1,391Proceeds on disposal of investment properties 505 - 14,872--------------------------------------------------------------------------------------------------------------- (33,420) (11,224) (15,965)===============================================================================================================Cash flows from financing activitiesDividends paid - ordinary shares (4,258) (3,610) (4,995) - minorities (582) (485) (1,067) - preference (10) (10) (21)--------------------------------------------------------------------------------------------------------------- (4,850) (4,105) (6,083)===============================================================================================================Net (decrease) increase in cash and cash (47,803) (15,666) 4,160equivalentsOpening net debt (15,898) (20,058) (20,058)---------------------------------------------------------------------------------------------------------------Closing net debt (63,701) (35,724) (15,898)=============================================================================================================== Group statement of changes in equity (unaudited) At 30 June 2007 30 June 31 December 30 June 2007 2006 2006 Unaudited Audited Unaudited £'000 £'000 £'000------------------------------------------------------------------------------------------------------------------Profit for the period 14,890 25,415 8,635Equity dividends (4,268) (5,016) (3,620)Revaluation of group occupied properties - 140 -Deferred tax on property revaluations - (28) -Actuarial gains on defined benefit pension scheme 6,722 11,918 9,242Deferred tax on actuarial gain (1,882) (3,575) (2,632)Movements in fair value of cash flow hedges 333 506 348Share based payments 62 55 83Arising on employee share schemes - 206 -Deferred tax rate adjustment (389) - -------------------------------------------------------------------------------------------------------------------Movement in equity 15,468 29,621 12,056Equity at start of period 150,626 121,005 121,005------------------------------------------------------------------------------------------------------------------Equity at end of period 166,094 150,626 133,061================================================================================================================== NOTES 1. The interim financial information has been prepared in accordance with IAS 34 (Interim Financial Reporting) using the same accounting policies and methods of computation as compared with the annual financial statements for the year ended 31 December 2006. 2. The financial statements for the year ended 31 December 2006, which were prepared under IFRSs, have been reported on by the Group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain statements under Section 237(2) or (3) of the Companies Act 1985. 3. The financial information set out above does not comprise statutory accounts within the meaning of Section 240 of the Companies Act 1985 and is unaudited. 4. Earnings per ordinary share are calculated on the weighted average number of shares in issue. 5. The interim dividend amounting to £1,602,850 (2006: £1,383,000) will be paid on 25 October 2007 to shareholders whose names are on the register at the close of business on 12 October 2007. The proposed interim dividend has not been approved at the balance sheet date and so has not been included as a liability in these financial statements. 6. At the Board Meeting on 28 August 2007 the Directors formally approved the issue of these statements which have not been reviewed by the auditors. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Henry Boot