21st Sep 2006 07:00
Boot(Henry) PLC21 September 2006 HENRY BOOT PLC INTERIM RESULTS Henry Boot PLC, the property and construction group, announces its InterimResults for the half year ended 30th June 2006. Enquiries: Jamie Boot, Group Managing Director - Tel.: 0114 255 5444 CHAIRMAN'S STATEMENT The half year to 30th June 2006 was a period of significant progress andsustained growth with an overall profit before tax of £13.5m being achieved - a74% increase on the same period last year. Even prior to the inclusion of the£2.6m property revaluation, a £10.9m trading profit was impressive in reflectinga 60% increase over the comparative 2005 figure of £6.8m. The increase in revenue from £42.4m to £50.7m underpins these excellent headlinefigures and points towards another successful year. However, the increase inprofit is unlikely to be maintained to the same extent in percentage terms asthe half year. Our company remains a strategically focused business concentrating on its primesegments of Property (property development and investment, land trading) andConstruction (building and civil engineering, PFI operation, plant hire). PROPERTY Our property development schemes are targeted towards meeting specific marketdemand. This demand remains strong, particularly from retailers who are lookingfor larger unit accommodation and town centre locations, and from companiesrequiring industrial warehousing and distribution centres where quality space,location and effective communication networks are of high priority. Ongoing flagship developments include retail schemes at Ayr (Ayr Central),Bromley (The Mall) and South Shields (Waterloo Square), and a mixed-use schemeat Nottingham (The Axis). Other projects are warehousing and distributionschemes by the M1 in Derbyshire (Markham Vale Business Park), at Hull (PrioryPark) and Stoke-on-Trent (Meir Park). Work on 'Stop 24', our exciting motorway service area scheme on the M20 in Kent(the largest MSA in the country), has started and is making good progress. The half year results included a property sale at Skegness and a land sale atSwindon. Rentals increased by 14% from ongoing investment properties. Thecontinuing resurgence of property as an important asset class for majorinvestors, with returns running ahead of bonds and equities, fully supports thecompany's strategies. With demand continuing to outstrip supply, there is little sign of the marketweakening as evidenced by the margins between primary and secondary marketinvestments showing clear signs of erosion. Our land trading business goes from strength to strength and a number ofimportant land deals were concluded during the first six months of the year.These included land sales at Kettering and further sales at Bathgate andPrestonpans in Scotland. Significant progress was also made on our sites atStotfold, Bedfordshire; Syston, Leicestershire; and Stonehouse, SouthLanarkshire; the early sales of which should ensure a highly successful outturnfor the year as a whole. Whilst encouraged by these successes, we closely follow the ongoing debate tojustify introduction of the Planning Gain Supplement, in addition to the presentSection 106 system. Also of serious interest is the Government's attitudetowards 'brown first' embodied in the current 'Planning Policy Guidance 3Housing'. Its reaction to the 'brownfield/greenfield' issue is much awaited and, when known, will impact upon the huge expansion proposals for housing in the South East and, no doubt, reverberate to other essential housing needs elsewhere in the country. The Kate Barker 'Review of Housing Supply', the 'Code for Sustainable Homes',and water management continue to dominate the housing agenda although, inessence, market demand for new housing will lead events. Land prices will risewhilst the demand for new housing continues, and we will endeavour to stayabreast of such events and capitalise on the opportunities that ensue. CONSTRUCTION Our building and civil engineering activity performed much to expectations,although revenue was down on forecast due largely to delays in new frameworkcontracts and Home Office prison work starting on site. Significant contractsawarded during the period included our selection as one of four partners todeliver the £272m Decent Homes refurbishment programme for 2010 RotherhamLimited. Road Link (A69) Holdings Limited, our PFI operation and maintenance company,again reported impressive results and was 100% successful in meeting its targetsin respect of call-outs, street lighting, service requests and problems attendedto. Plant hire suffered generally from increased competition, particularly at thesmaller end of our product range, resulting in lower utilisation rates andmargins. Whilst profitability was below target, it continued to contributepositively to overall results. With a number of hire centre relocations in hand,it is anticipated that performance will be improved in the second half of theyear. FINANCIAL POSITION, DIVIDENDS AND OUTLOOK At the interim stage, the company's financial strength looks robust. Net assetsincreased from £122.3m at the 2005 year end to £134.5m, including a smallreprieve in pension obligations as bond yields rose towards the end of theperiod. Our gearing position increased as net borrowings moved from £20.0m atthe end of 2005 to £35.7m in line with our expanding property interests.However, gearing still remains at less than 30% and leaves further room forprofitable expansion and growth. Basic earnings per share grew from 18.5p per share to an impressive 33.7p pershare, reflecting the further improvement in performance. In line with the Board's commitment to a progressive dividend and itsexpectations of another successful year, the directors are recommending aninterim dividend of 5.4p per ordinary share, representing just over a 10%increase above that for 2005. John S Reis, Chairman21st September 2006 Group Income Statement (unaudited)for half year ended 30th June 2006 Half year ended Half year ended Year ended 30th June 30th June 31st December 2006 2005 2005 Unaudited Unaudited Audited £'000 £'000 £'000_______________________________________________________________________________________________Revenue 50,655 42,408 101,188Cost of sales (32,240) (29,827) (64,348)_______________________________________________________________________________________________Gross profit 18,415 12,581 36,840Other income 58 12 54Administrative expenses (5,862) (4,685) (9,042)Pension expenses (1,071) (1,240) (2,283)_______________________________________________________________________________________________ 11,540 6,668 25,569Increase in fair value of investment properties 2,577 919 4,724_______________________________________________________________________________________________Profit from operations 14,117 7,587 30,293Investment income 146 875 1,311Finance costs (797) (745) (1,448)_______________________________________________________________________________________________Profit before tax 13,466 7,717 30,156Taxation (4,112) (2,319) (8,652)_______________________________________________________________________________________________Profit for the period from continuing operations 9,354 5,398 21,504_______________________________________________________________________________________________ Attributable to:Equity holders of the parent 8,635 4,752 20,021Minority interest 719 646 1,483_______________________________________________________________________________________________ 9,354 5,398 21,504_______________________________________________________________________________________________Basic earnings per ordinary share 33.7p 18.5p 78.2p_______________________________________________________________________________________________Diluted earnings per ordinary share 33.1p 18.2p 76.8p_______________________________________________________________________________________________Dividend 5.4p 4.9p 19.0p_______________________________________________________________________________________________ Group Balance Sheet (unaudited)at 30th June 2006 30th June 31st December 30th June 2006 2005 2005 Unaudited Audited Unaudited £'000 £'000 £'000__________________________________________________________________________________________ASSETSNon-current assetsGoodwill 3,697 3,799 3,900Property, plant and equipment 77,718 68,304 56,305Investment property 42,869 40,566 38,822Trade and other receivables 3,244 3,244 -Deferred tax assets 10,411 13,012 10,013__________________________________________________________________________________________ 137,939 128,925 109,040__________________________________________________________________________________________ Current assetsInventories 98,314 88,156 73,512Trade and other receivables 18,516 19,135 10,991Cash and cash equivalents 3,452 3,458 20,871__________________________________________________________________________________________ 120,282 110,749 105,374__________________________________________________________________________________________ LIABILITIESCurrent LiabilitiesTrade and other payables 43,174 42,474 38,893Current tax liability 5,581 7,758 1,984Obligations under finance leases - - 119Borrowings 9,876 3,634 12,205Provisions 764 690 270__________________________________________________________________________________________ 59,395 54,556 53,471__________________________________________________________________________________________Net current assets 60,887 56,193 51,903__________________________________________________________________________________________ Non-current liabilitiesBorrowings 29,300 19,882 10,463Employee benefits 28,026 36,799 32,884Deferred tax liabilities 6,773 6,000 5,550Provisions 184 184 1,125__________________________________________________________________________________________ 64,283 62,865 50,022__________________________________________________________________________________________Net assets 134,543 122,253 110,921__________________________________________________________________________________________ SHAREHOLDERS' EQUITYShare capital 3,005 3,005 3,005Revaluation reserve 2,916 2,916 3,673Retained earnings 125,400 113,775 101,861Other reserves 2,452 2,104 2,057Cost of shares held by ESOP trust (712) (795) (765)__________________________________________________________________________________________Equity shareholders' funds 133,061 121,005 109,831Equity minority interests 1,482 1,248 1,090__________________________________________________________________________________________ 134,543 122,253 110,921__________________________________________________________________________________________ Business Segments (unaudited)for half year ended 30th June 2006 Half year ended 30th June Half year ended 30th June 2006 2005 Unaudited Unaudited Inter- Inter- External segment External segment sales sales Total sales sales Total £'000 £'000 £'000 £'000 £'000 £'000___________________________________________________________________________________________Revenue Property and land development 26,381 144 26,525 17,444 32 17,476Construction 24,228 4,310 28,538 24,798 290 25,088Other 46 354 400 166 313 479 50,655 4,808 55,463 42,408 635 43,043___________________________________________________________________________________________Eliminations - (4,808) (4,808) - (635) (635)___________________________________________________________________________________________Group turnover 50,655 - 50,655 42,408 - 42,408___________________________________________________________________________________________ Result £'000 £'000 Property and land development 13,413 7,054Construction 3,204 2,986Other (2,500) (2,453)___________________________________________________________________________________________Segment result 14,117 7,587Investment income 146 875Finance costs (797) (745)___________________________________________________________________________________________Profit before tax 13,466 7,717Taxation (4,112) (2,319)___________________________________________________________________________________________Profit for the period 9,354 5,398___________________________________________________________________________________________ Business Segments (unaudited) (cont'd)for half year ended 30th June 2006 Year ended 31st December 2005 Audited Inter- External segment sales sales Total £'000 £'000 £'000_______________________________________________________________________________________Revenue Property and land development 43,115 241 43,356Construction 57,805 4,389 62,194Other 268 464 732_______________________________________________________________________________________ 101,188 5,094 106,282Eliminations - (5,094) (5,094)_______________________________________________________________________________________Group turnover 101,188 - 101,188_______________________________________________________________________________________ Result £'000 Property and land development 27,468Construction 7,833Other (5,008)_______________________________________________________________________________________Segment result 30,293Investment income 1,311Finance costs (1,448)_______________________________________________________________________________________Profit before tax 30,156Taxation (8,652)_______________________________________________________________________________________Profit for the period 21,504_______________________________________________________________________________________ Notes 1. For management purposes, the group is currently organised into three business segments: Property and land development, Construction and Other. 2. As all operations are carried out entirely within the UK, there is no secondary segmental information. 3. Inter-segment pricing is done on an arm's length basis. Group Cash Flow Statement (unaudited)for half year ended 30th June 2006 Half year ended Half year ended Year ended 30th June 30th June 31st December 2006 2005 2005 Unaudited Unaudited Audited £'000 £'000 £'000________________________________________________________________________________________________Cash flows from operating activities Profit from operations 14,117 7,587 30,293Adjustments for non-cash items:Depreciation of property, plant and equipment 2,282 2,345 4,635Goodwill impairment 102 102 203Revaluation increase in investment properties (2,577) (919) (4,724)Gain on disposal of property, plant and equipment (165) (502) (159)________________________________________________________________________________________________Operating cash flows before movements in workingcapital 13,759 8,613 30,248(Increase) in inventories (10,192) (13,559) (26,523)Decrease (increase) in receivables 702 (514) (12,017)Increase in payables 1,591 273 4,500________________________________________________________________________________________________Cash generated from operations 5,860 (5,187) (3,792)Interest received 146 875 1,312Interest paid (797) (734) (1,494)Interest paid on finance leases - (11) (6)Taxation (5,546) (2,086) (4,827)________________________________________________________________________________________________Net cash from operating activities (337) (7,143) (8,807)________________________________________________________________________________________________ Cash flows from investing activities Sale of investments - 1 1Purchase of property, plant and equipment (11,716) (2,572) (17,679)Proceeds on disposal of property, plant andequipment 492 1,482 2,053________________________________________________________________________________________________ (11,224) (1,089) (15,625)________________________________________________________________________________________________ Cash flows from financing activities Dividends paid: ordinary shares (3,610) (3,069) (4,322) minorities (485) (776) (1,455) prefererence (10) (11) (21)Repayments of obligations under finance leases - (327) (446)________________________________________________________________________________________________ (4,105) (4,183) (6,244)________________________________________________________________________________________________ Net decrease in cash and cash equivalents (15,666) (12,415) (30,676) Opening net (debt) funds (20,058) 10,172 10,172Cash outflow from decrease in lease financing - 327 446________________________________________________________________________________________________Closing net debt (35,724) (1,916) (20,058)________________________________________________________________________________________________ Group Statement of Changes in Equity (unaudited)at 30th June 2006 30th June 31st December 30th June 2006 2005 2005 Unaudited Audited Unaudited £'000 £'000 £'000___________________________________________________________________________________________________Profit for the period 8,635 20,021 4,752Equity dividends (3,620) (4,343) (3,076)Revaluation of group occupied properties - (285) -Actuarial gains (losses) on defined benefit pension scheme 9,242 (3,315) 195Deferred tax on actuarial (gain) loss (2,632) 995 -Movements in fair value of cash flow hedges 348 (12) (131)Share based payments 83 54 135Adjustments re properties transferred to stock - 1 -Arising on employee share schemes - 64 -Adjustment to deferred tax recognised in equity - (131) -___________________________________________________________________________________________________Movement in equity 12,056 13,049 1,875Equity at start of period 121,005 107,956 107,956___________________________________________________________________________________________________Equity at end of period 133,061 121,005 109,831___________________________________________________________________________________________________ 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 31st December 2005. 2. The financial statements for the year ended 31st December 2005, 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 £1,383,000 (2005: £1,253,000) will be paid on 26th October 2006 to shareholders whose names are on the register at the close of business on 13th October 2006. 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 20th September 2006 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