Henry Boot Plc – Unaudited Interim Results for the six months ended 30 June 2018

HIGHLIGHTS

Commenting on the results, Chief Executive John Sutcliffe said:

“We are very pleased to report another impressive performance in the first half of 2018, achieving improved profit, earnings per share, net asset value and dividends, while significantly reducing debt, compared to a year ago.

“So long as market conditions remain stable as we transit through the political and economic uncertainties, we look to the future with confidence. We have a strong pipeline of land, housing and commercial development opportunities to provide our customers with the property assets they require.

“Trading in the second half of 2018 has started well, and given the level of forward contracted business, the Board is confident in meeting its expectations for the full year and those for 2019 which, at this early stage, remain unchanged.”

CHAIRMAN'S STATEMENT

I am very pleased to report that the Group has traded well in the first half of 2018. As forecast at the time of our 2017 final results announcement, our performance in the first half of 2018 has been ahead of the same period last year, and we continue to expect the second half of 2018 to not benefit from the residential property sales achieved in the second half of 2017.

We have continued to see consistent levels of demand across all the businesses in the Group, but most particularly for housing development land within Hallam Land and housing within Stonebridge Homes. As anticipated, 2018 is a quieter year than 2017 in our commercial property development business, albeit, we are gradually seeing an increase in expected development activity for 2019. This is subject to stable trading conditions and the uncertain political climate all businesses in the UK are currently operating under.

We continue to successfully replenish our pipelines of strategic land housing sites and commercial opportunities, while maintaining a prudent level of gearing which, in our view, is vital at this stage of the economic cycle.

Dividend

The Board continues to remain confident in the Company's ability to profitably deliver the opportunities available to the Group. Therefore, the Board has declared a 14% increase to the interim dividend to 3.2p (2017: 2.8p), which will be paid on 19 October 2018 to shareholders on the register at the close of business on 21 September 2018.

Trading review

Revenue for the period remained stable at £196.2m (30 June 2017: £195.4m). Higher construction segment activity arose from the first full six months' contribution from Premier Plant in Leicester acquired in April 2017. Also, within Road Link, we are undertaking additional works for the design of two new roundabouts for Highways England, where we are taking a small management fee on these works. These were offset by lower land sale revenues in comparison to the previous first half where we acquired and disposed of a significant scheme held under option. Increased housebuilding sales were offset by lower commercial development revenues within the property investment and development segment.

Gross profit was 5% higher at £39.3m (30 June 2017: £37.5m) as the mix of revenues in the first half of 2018 generated slightly higher returns than in the first half of 2017.

Overheads increased 13% as we continue to invest in our people resource, particularly within commercial property development and our housebuilding activities. 2018 also carries a full six months' overhead of our new Leicester plant depots' acquired in April 2017. Property fair value increases of £0.6m (30 June 2017: deficit £2.0m) and investment property disposal profits of £1.1m (30 June 2017: £0.2m) helped profit from operations to increase by 16% to £26.4m (30 June 2017: £22.8m). Net financing costs were £0.8m (30 June 2017: £0.6m) reflecting both low interest rates and prudent gearing levels.

Profit before tax increased 16% to £26.2m (30 June 2017: £22.6m), a very creditable performance, and earnings per share increased by 20% to 15.7p (30 June 2017: 13.1p).