Henry Boot H1 2025 Earnings Report

Henry Boot EPS Results

• Actual EPS: GBX 4.80
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Henry Boot Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Henry Boot Announcement Details

• Quarter: H1 2025
• Date: 9/23/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, September 23, 2025
• Conference Call Time: 4:30AM ET

Henry Boot (LON: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 £113m 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 1,500 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.

Henry Boot H1 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Executive highlighted resilient demand with total land and property sales near £160 million and a four-fold increase in consented plots after NPPF changes.
• Positive Sentiment: Half-year dividend was raised by 5% amid a “rock solid” balance sheet, conservative NAV of just over £3 per share, and simplified structure following the £4 million sale of Henry Boot Construction.
• Positive Sentiment: Land promotion saw 1,222 plots sold, ~2,369 under offer and planning secured on nearly 2,800 plots, boosting the land bank to 107,000 plots toward a 3,500-plot annual target.
• Positive Sentiment: Development pipeline strengthened by the industrial JV Origin (set to grow by £56 million with a first pre-let) and planning consent on the £1 billion mixed-use Golden Valley campus.
• Neutral Sentiment: Stonebridge Homes completed 85 homes in H1 with a 0.45 reservation rate and revised full-year completions of 240–250, but added 846 plots to its land bank aiming for growth in 2026.

Presentation

[Tim Roberts, CEO & Executive Director at Henry Boot]

Good morning, everybody. In a slightly different setting this morning, which is all very, very relaxed, and everybody's having croissants and bacon sandwiches and looking very, very smiley. It's good to see you all. To the interim results, it's going to be the normal running order. I'll start off with an introduction and a review of performance. Then you've got Darren, our CFO, who's going to do the finance and the land promotion. I'll come back and talk about development and Stonebridge, and I'll finish off with Outlook. First of all, I just wanted to say a few words of introduction. Our focus is on high-quality land, prime developments, and premium homes, and that's helped us to achieve total land and property sales of nearly £160 million, or our share, £100 million.

[Tim Roberts, CEO & Executive Director at Henry Boot]

This is at a time when markets are uncertain, and I think it shows the resilience of demand in our property, our prime property. I'm pleased to say we've also seen a significantly better planning environment since the changes to the NPPF at the beginning of the year. You'll remember we anticipated this, and we increased resources into Hallam last year, and that's already bearing fruit in that we've secured a four-fold increase in consented plots, and Darren will talk you through that. At HBD, planning has also been secured for the government-backed Golden Valley development, a £1 billion mixed-use campus. On our industrial-focused joint venture, Origin, it's performing well, and because it's performing well, it's set to grow in the second half. Together with the increase in Stonebridge's land bank, we've got ample opportunity within the portfolio to hit all of our targets.

[Tim Roberts, CEO & Executive Director at Henry Boot]

You'll also see this morning we've agreed a sale of Henry Boot Construction for £4 million, and that's important in that we are simplifying the group's structure and we're increasing more and more of our attention on our core activities. Throughout this period, and I know I'm going to get a smile from you all, as you would expect, the legendary Henry Boot balance sheet remains rock solid. Our NAV at just over £3 a share, as you all know, is very conservatively assessed because we hold our land and developments at cost. The decision to increase our half-year dividend by 5% is a sign that we continue to have conviction in our three key markets, and we're also confident of hitting our medium-term targets, both in terms of growth and return.

[Tim Roberts, CEO & Executive Director at Henry Boot]

I'm going to turn now to some of the operational highlights, and as you will know, we've been clear that this year was always going to be half-two weighted. It follows a similar pattern to last year, and we're confident of achieving our full-year performance in line with expectations. Looking at the operational highlights, first of all, you've got land promotion. We sold 1,222 plots and have got another 2,369 plots exchanged or under offer. Changes to the NPPF mean year to date we've achieved planning on nearly 2,800 plots. Our aim of submitting 10,000 plots is on track, and so far this year, in round terms, we've already submitted 5,000 plots.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Our land portfolio has increased to 107,000 plots, and as I said last time, really the emphasis now is on winning planning consent and selling plots, and less on growth because we believe that the portfolio has got the scale and the balance and the quality already. Turning to development, Origin is performing well with all schemes on time and budget, and the first pre-let agreed. The investment portfolio generated a total return of 5.7%, which yet again is well ahead of the index. In the first half of this year, we sold nearly £18 million of investments at an average 12% premium, as we continue to look to recycle our capital into higher returning opportunities. Looking at home building, Stonebridge has had a slower first half, completing on 85 homes. The net private reservation rate was 0.45 in the half.

[Tim Roberts, CEO & Executive Director at Henry Boot]

However, we still see great potential in this business, and now with the majority owner, we've added 846 plots to the land bank. On construction, the segment remains profitable with both Banner Plant and Road Link performing in line with expectations, and HBC has secured 94% of its 2025 order book, and it's on track to have a far better year than in 2024. To be frank, that's since we changed the management and the new management came into post in January of this year. When you look at operating profit after deducting central operating costs, it's £10.2 million. I always spend a bit of time just running through the medium-term objectives. The main ones are capital employed is at £427 million and is still set to grow to £500 million.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Our 12-month rolling ROCI is 9.1%, and we're going to maintain our financial discipline because we're absolutely determined to restore our ROCI to within the target range. We remain on target to sell over 3,500 plots this year in Hallam, so we're absolutely focused on that medium-term target of 3,500 per annum. In the current environment, it's no surprise we have reduced our committed development, with our share of completed development falling to £42 million, but I will outline later on in the presentation that we've got a clear plan to build this back up during 2026. Reflecting delays to opening new outlets, as well as a slower market, Stonebridge is aiming to complete on between 240 and 250 homes this year. However, due to our expanded land bank, we believe we're going to be in a position to sell from more outlets in all three regions in 2026.

[Tim Roberts, CEO & Executive Director at Henry Boot]

We're going to be firmly back into the growth of this business. I talked at the beginning about our confidence in hitting year-end expectations, and this is based on 80% of the budgeted land and property sales already having been completed, exchanged, or secured. To be clear, this is not turnover, it's property sales, and we believe that this gives you and us good visibility on our full-year performance. This slide shows that in detail. If you look, you've got light blue, which is Hallam, green, which is HBD, and dark blue is Stonebridge. You can see out of a budget of £221 million, which is on your left-hand side, we've completed on £98 million to date, but this rises to £139 million if you include exchange, and then it goes up to £176 million including sales that we've got reserved.

[Tim Roberts, CEO & Executive Director at Henry Boot]

You can see by the dark blue slug that the majority of reserved sales are in Stonebridge, and that's not unusual for this time of year. To get us to £221 million, we need another £45 million of sales. You can see that sales under negotiation for completion in half two 2025, and you can see that around half of that is in Hallam, and if they exchange and complete on the 1,800 plots that they've got under offer, they will hit that target. £5 million is in HBD, and that's about land sales that we're doing to the Origin joint venture, so we've got a degree of control over that, and one site at York, which is under offer to a national developer. The rest of the sales, it's about £19 million, is in Stonebridge, and what we've done there is we've taken the mid of our range.

[Tim Roberts, CEO & Executive Director at Henry Boot]

We've assumed that Stonebridge Homes will sell 245 homes, and to be clear, that means based on this, they've got £19 million to do and 53 homes to sell. There are other deals going on, and we can and might be able to use those for cover in the event that these things don't happen. Actually, Darren, that's what we did last year. Turning to HBC, we announced an MBO of Henry Boot Construction for £4 million this morning. The transaction simplifies the group's equity story, as well as improving the prospects for long-term growth by us having more focus on the core activities, creating synergies, and, as I say, being disciplined about also achieving returns. It's going to reduce the risk profile of the group.

[Tim Roberts, CEO & Executive Director at Henry Boot]

The vendor loan is repayable over five years, and personal guarantees have been given by the management team, so they've got skin in the game. We'll also retain oversight of the business because we'll have two Henry Boot representatives on the HBC board until the vendor loan is paid. The deal is set to complete no later than January 2026, and we expect a profit on the disposal. Over to Darren.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

Thank you, Tim, and good morning, everyone. Turning to our financial summary, we've performed well in the first half of this year with revenue in the period increasing by 19% to £126 million, really driven as a result of several significant transactions within both land promotion and the property development businesses. Gross profit increased by 30% to £32 million, with the gross profit margin improving from 23% to 25%. Underlying profit, which excludes valuation movements on completed investment properties, is up 79% to £6.5 million. With operating profit of £10 million, our rolling 12-month return on capital employed was 9.1%. Through the cycle, we continue to believe that our target range of 10% to 15% remains appropriate for the business.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

Earnings per share increased to 4.8 pence in the period, and we've increased the dividend by 5%, reflecting our progressive dividend policy, the confidence we have in achieving our full-year expectations, and as Tim mentioned, the confidence we also have in achieving our medium-term targets. If we turn over to the balance sheet, investment property, which includes our share of joint ventures and investment property in the course of construction, has reduced to £107 million. This is following more than £14 million worth of profitable sales during the period. We've seen further rental growth for our industrial assets, and we've made good progress on developments within our Origin joint venture. Following investment in land and developments, net debt increased to £88 million, with 21.4% gearing marginally above our optimal range of 10% to 20%.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

We expect gearing to be towards the top of our range at the year-end as we continue to invest across the business ahead of disposals next year. In January, we also completed the acquisition of a further 12.5% of Stonebridge Homes, taking our ownership now to 62.5%. As a result of this, our underlying net asset value per share, excluding the pension surplus, reduced by 2.6% to 304 pence. If we look at the cash flow, this largely demonstrates how investment property sales and debt funding have allowed us to continue to invest in strategic land, Stonebridge Homes as land bank, and property development. Cash outflows from operations total £3.1 million, being returns in the period, largely covering payments for interest, tax, and dividends.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

The profitable sales I mentioned on investment property generated £13.1 million, which has been recycled into investments of £10.7 million in inventories to grow land and work in progress in Stonebridge Homes, deliver our committed development pipeline, and fund planning costs within Hallam to bring sites forward for sale. As previously mentioned, we purchased a further 12.5% of Stonebridge for £10 million, and we continue to grow the Origin joint venture, investing £4.1 million in the period. Other working capital increased by £10.5 million following land sales to house builders on deferred payment terms, and as such, we ended the period with net debt of £88.1 million. If we can move on now to the operational review and starting with land promotion, Hallam Land sold 1,222 plots in the period, with a further 2,369 plots exchanged or under offer.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

Having started the year well, we are on target to exceed 3,500 plot sales this year. Sites exited during the period generated an average ungeared IRR of 23%, which we're clearly very pleased with. The planning environment has been positive for securing outlying consents, and during the first half, we achieved planning for 1,237 plots, a four-fold increase from the prior period. Plots with planning marginally increased to 8,837, and with over 14,000 plots awaiting determination in what we see as a very supportive environment, we expect our stock of plots with planning to increase. We're making good progress on our target for submitting 10,000 plots into planning this year. We've got nearly 5,000 plots already submitted. These take time to build up and submit, but others are well progressed to achieve that target, submitting them in Q4 this year.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

With our portfolio all held at cost, there's no valuation gain on securing planning recognized until the land is actually sold, and this continues to reflect a significant uplift in value not recognized within our balance sheet. I'll go into a bit more detail on that in a couple of slides on. We continue to manage one of the largest strategic land banks in the country. We've now got over 107,000 plots, and 77% of the portfolio is in the Midlands or in the South, where values tend to be higher. With a balance of freehold and promotion agreements, we're able to manage capital investment appropriately between risk and reward, taking advantage of the right time in the cycle when acquiring freehold land.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

Our tendency to use planning promotion agreements provides a capital-light investment structure and gives us our USP against house builders by marketing the sites to drive best value for our land owners. Our five-year average plot sales are running at 3,000 plots per annum, and as we've said, we anticipate plot sales of around 3,500 this year in line with our medium-term target. Sales in the period were at an average of £16,000 gross profit per plot, and that's been driven by a particularly profitable freehold sale in Ambrosden. We do expect this figure to revert back in line with the five-year average of around £10,000 per plot at the full year. Moving on in terms of the planning environment and following the government's revision to the NPPF, we have seen positive changes to the planning system, which have significantly increased our ability to secure outlying consents.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

As you can see, since 2024, we've secured more planning consents, and year to date, we've achieved consents on 2,782 plots across 11 sites. This is a significant increase compared to a three-year average of around 600 plots to the end of 2023, and it takes plots with planning permission to nearly 10,000 now. We've been successful in utilizing the planning appeal system as well to unlock more sites, and we've won appeals on nearly 2,000 plots across five sites so far this year. This includes 300 plots in Sutton in Ashfield, which is a site exchanged for completion next year, and a significant site in Fareham for 1,200 plots, which we are currently marketing for sale.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

As we move forward, the focus is to convert our store of consents into sales and secure more planning permissions in this supportive environment as we build a sustainable high level of value in our portfolio. Moving on in this regard, our land promotion business has delivered consistently strong and stable returns over the long term. Sales over the last five years have delivered an average gross profit of £10,000 per plot, and these disposals have achieved an ungeared IRR of 23% per annum, which for us is absolutely fantastic. As I mentioned on previous slides, we've built up a considerable store of value, and with almost 9,000 plots at the half year with planning, in the table on the top right here, based on recently achieved gross profit per plot, sites currently with planning have the potential to deliver gross profit of £88 million over the short term.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

In addition to this, we've got over 14,000 plots in planning awaiting determination. This significantly de-risks 22% of our land bank, and that has the potential to deliver a further £146 million of gross profit. The full portfolio over time has the potential to deliver over £1 billion of gross profit, and for the first time, we're presenting an illustrative net present value for the total portfolio, which can be seen in the table on the bottom right. These figures are based on a range of gross profit per plot using average hold periods and making adjustments for overheads and tax. The matrix also includes a range of discount rates. If we take an average £10,000 gross profit per plot, this shows a potential discounted profit after tax to come of £180 million to £256 million, equivalent to an NAV uplift of 44% to 62%.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

Whilst there are, of course, risks to unlock this value, the business has got a really strong track record of mitigating these, and with a portfolio of over 200 sites, we are not reliant on a few large schemes to actually deliver these returns. On that note, I will hand you back to Tim.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Thank you very much, Darren. Looking at development, our committed development over half one has marginally grown to £128 million, or our share £37 million, and 40% of the schemes are pre-let or pre-sold. Understandably, we've been selective on starting development, and we've targeted industrial with the vast majority by value in Origin. I've set out the normal details of the development program in the appendix. Total profit on all the committed schemes is £8 million, or 38% profit on cost, of which only 16% has been taken to date. In the case of Origin, this does not include the sale profit when we transferred the land to the JV, and it doesn't also include the potential for us to earn promote fees.

[Tim Roberts, CEO & Executive Director at Henry Boot]

A lot of focus this year, rightly so, has been spent on building up our near-term development pipeline, and in this respect, we're set to grow Origin by a further £56 million in the short term, and also at our Golden Valley mixed-use campus with a GDV of £1 billion, we've achieved planning. We've also got a strong £1.3 billion development pipeline that will give us further optionality to grow back our committed program. I just want to spend a bit of time on Origin and also a bit of a recap, and you'll remember that it was a 25:75 JV that was formed at the end of last year with Feldberg Capital, and we believe it allows us to accelerate the development of industrial sites. We earn development management fees and also a promote over an 8% geared return.

[Tim Roberts, CEO & Executive Director at Henry Boot]

The JV was seeded with three sites from our development pipeline, and that's shown on the slide as current. You can see it totals £100 million, and in selling the sites to the joint venture last year, we realized a profit of £5.5 million. Work on all sites commenced in quarter one of this year, and I'm pleased to say that work is progressing well, and we've secured our first unit pre-let at Markham Vale. Another unit is under offer at Welling, and there's good occupier interest at Spark. The joint venture is set to grow by an additional £56 million, which is shown as future. We've got second phases in Markham Vale and Walsall, and then we're also again from our pipeline selling Preston into it.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Once these land sales are completed, together with the car park site at York that I've already mentioned, HBD will be done in terms of its sales and budget for the year. The other significant thing that we've done is we've got planning on Golden Valley, and that's a flagship mixed-use campus that will provide up to 2,500 new homes and 1.25 million square feet of space. The first phase will include IDEA, the new 160,000 square feet National Cyber Innovation Center, and you can see an image of it here. That's been identified in the government's industrial strategy. It's the old gag, it's next door to GCHQ, guess who's going to anchor it? Let's hope they're not monitoring what I'm saying because I've been told I can't say that.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Plus we've got 576 residential units, and we've got a funding package secured from government and the local authority because it's of national significance. Once we've signed up the anchor tenants, we'll commit to the first phase, and we expect to commit to the first phase during Q1 of next year. Turning to investment, our total return at 5.7% for the first half was once again ahead of the index at 4.2%. I show on the line graph our total return compared with the index since the start of 2020. You can see with the dark blue line, we're at 7.5%, and then the pale blue line is the index lagging behind at 3.6%. Total value of the investment portfolio is £96 million, and during the period, we secured four sales at a 12% premium to book value. Two of those will complete post-period end.

[Tim Roberts, CEO & Executive Director at Henry Boot]

The largest sale was Skelmersdale, where we've secured planning for a 245,000 square feet building, and that's 66% bigger than the existing building on site. We sold that property to a German fund in June at £9.5 million, and that achieved an ungeared IRR of 25% per annum. A bit better than the Hallam ones at 23%, but still good money, isn't it? Turning to Stonebridge, in January, we became the majority owner of Stonebridge. We've initiated an integration plan. We've identified several quick wins, and those quick wins have already been implemented. Looking at the operational performance, Stonebridge completed on 85 homes in the first half, with an average private sales price increasing by 3% to £391,000. Excuse me. Many of our customers took longer to commit to buying homes in an environment for them felt a bit more uncertain.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Our net private reservation rate was 0.45 in the first half. Reservation levels have also been impacted by delays in securing detailed planning, reducing the opening of new sales outlets. We currently operate from 9, and we'd planned to operate from 12. During the summer, we've seen softer trading conditions, with our sales rate also affected by several of our sites nearing completion and not offering the full range of products. The sales rate for the six weeks to 14 September was 0.38. As a result, current year completions are now anticipated to be lower, with a revised target range of 240 to 250 this year. Despite that, visitors' numbers and interest in our homes still remain. We're actually getting more people visiting sites by a significant amount, up to 50% more people.

[Tim Roberts, CEO & Executive Director at Henry Boot]

We still absolutely believe in this product, and we think that if we get the full offering and we've got a plan for that and more outlets, we can scale this business up. You can see growing the land bank is absolutely crucial. I'm pleased to say that we've added 846 plots to our land bank in the last six months or so. We've acquired three sites in the period, and we've just shown you two here. There's Kingston Village, Newcastle upon Tyne, capable of delivering 360 units. There's Whitby in Yorkshire, where we can deliver 223. By showing you the location of the land banks, the new sites, and the active outlets, you can see that Stonebridge really has got the potential for being a significant multi-regional premium house builder. We do believe that there remains a long-term structural undersupply of housing in these target regions.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Therefore, we're confident that we can hit our medium-term growth target of 600 homes per annum. Finishing off on Outlook, whilst we operate in an uncertain environment, we continue to make good strategic progress by focusing on quality projects within land promotion, development, and home building. I'm not on the slide, am I? Thank you, Darren. Significant steps include the sale of HBC and the agreed route to full ownership of Stonebridge. Now, with the majority owner of Stonebridge, we can increase and improve its land bank and drive sales. We expect, as I've said, to be back on our growth path next year. The outlook for Hallam is particularly bright, with 3,500 plots sold or under offer, and also planning policy, which in effect has a presumption in favor of development.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Consequently, the portfolio of planning consents will build up, and as Darren Littlewood said, that's building up a store of profit for the future. Similarly, HBD is preparing to commit to more of its near-term development through smart JVs like Origin or nationally significant schemes like Golden Valley. I believe this is a clear path of growth, which is a well-funded long-term business we're able to pursue. In the meantime, we do expect to meet our earnings expectations for this year. Our balance sheet remains rock solid, and that all puts us into a sound position to increase the dividend by 5%. Thank you very much. Questions?

[Tim Roberts, CEO & Executive Director at Henry Boot]

Thanks, Kristy York from Deutsche Bank. Three questions from me, please. The first one is just on Hallam. I know the target is 3,500 plots per annum. Looks like you're going to do better than that this year. Is 3,500 still the right number, I suppose, for the next three to four years, or could you get, you know, meaningfully higher than that? The second one, just as we look at Stonebridge, how should we think about EBIT margins and returns trending from here? I suppose implicit in that is you mentioned investment in more land, but what sort of scale should we think about there as well? Finally, with Golden Valley, et cetera, how should we think about GDV in terms of the committed pipeline evolving over the next 12 to 18 months? Thank you.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Okay, right. I'll have a go at the first one and the third one. Darren, you have a go at the second. First of all, Hallam will achieve, we believe, 3,500 this year. That will then get us onto a rolling average of five-year average of 3,000 plots sold. Has Hallam got the opportunity to sell more than 3,500 plots? Yes, it has. I've spoken to you before. We have a business model. It's a classic portfolio that you can model, isn't it? Because you've got so much data over how long it's likely to get planning, what the success rate is, how much it will cost. We think that we can grow it materially more than 3,500. Kristen, we think that what we will have to do at some stage is reset the medium-term growth targets rather than do it piecemeal.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Whether we do that next year or the year after, we will do it at some stage. To be clear, I think that Hallam will be selling more than 3,500 plots per annum over, let's say, the next five years. In terms of Golden Valley, the commitment will be to start phase one, and that's around £100 million. That will take certainly 2026 and 2027 to complete. We expect it to be fully funded and to be materially pre-let. It won't be a high-risk venture, but it is the start of a bigger scheme. We will expect to sell some land to house builders. As part of the first planning consent, we had just under 600 homes granted. We expect to, on the heels of that, get another 400 homes.

[Tim Roberts, CEO & Executive Director at Henry Boot]

We will get profit from the development, and then we will take equivalent to a promoter's profit on selling the homes. I would imagine that we will sell the first batch just under 600 next year and probably the next batch the following year. In terms of Stonebridge.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

In terms of Stonebridge, this year's been challenging, as Tim has said. I think we've had a few sites we would have liked to have been delivering from that have suffered from the complexities of obtaining detailed planning permission. We've also had the challenge of five sites closing and four sites opening, which means, as Tim had also said, the product choice on the closing sites is limited. When you're opening sites, you're selling off plan. I think what they've done really, really well this year is actually bolstering that land bank, Kristen. As you mentioned, we're getting on for two and a half thousand plots now within the land bank. We're getting on for a thousand plots that have actually got permission that we can start on site and look to deliver.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

As we move into next year, we are pretty confident that we can get the sales outlets up and we can start returning to that drive for growth. Now, as we are in that phase, I think our margins will not be where they might be for a stabilized business. What does stabilized mean? I think in a good market, a stabilized house building business is probably doing 20% gross, 10% net. Given we've got the challenges of growing, investing for the future, and the fact that the market at the moment is a little subdued, we're probably looking at more around the 7% to 8% net as we move forward into the future years.

[Adrian Kearsey, Equity Analyst - Building at Panmure Liberum]

Adrian.

[Adrian Kearsey, Equity Analyst - Building at Panmure Liberum]

Adrian here from Palmyra Librum. On Stonebridge, there was a difference in the reservation rates Q2 versus Q1, which is very encouraging. Could you perhaps give some detail or granular detail in terms of were there any particular types of property that were moving more quickly in Q2? Were there any particular sites that were benefiting within the mix? How has that Q2 trend moved into Q3?

[Tim Roberts, CEO & Executive Director at Henry Boot]

Yeah, okay, right. You're right. Q2 was at a higher sales rate, but there were not material characteristics either in terms of the sites or the houses that we sold. I'm afraid we just, like the industry, and then particularly the north, got off to a slow start. It sounds a bit weak blaming the weather, doesn't it? Up in Yorkshire, we would have had sites closed during the snow. In Q1, we just never ever caught up from that slow start. In Q2, that picked up. Over the summer, as I alluded to during my presentation, I'm afraid the summer has been slower again. We've started slow, picked up, and then we were ahead of our budget at 0.45. We were nearly at 0.5 in Q2.

[Tim Roberts, CEO & Executive Director at Henry Boot]

The trading up to the middle of September from the end of the first half has been just below 0.4, so it's slowed again. Part of that, we think, is some of the uncertainty in the market. Part of that is the summer. Over the last couple of weeks, it feels as though it's improved yet again. To be honest, Adrian, it's been reasonably volatile.

[Tim Roberts, CEO & Executive Director at Henry Boot]

I want to ask one more question. With Hallam Land Management, obviously, there's a portfolio of different, you know, different size schemes, different locations. You made a reference to sort of the southeast, south, and Midlands. Could you perhaps give an indication in terms of the level of interest you're getting from the market at different size schemes?

[Tim Roberts, CEO & Executive Director at Henry Boot]

Yeah, yeah. I mean, the range of schemes that we've been selling has been significant. We've been selling, and typically, we would be selling schemes of between 200 and 400. That's typical for Hallam Land Management. We've also sold some smaller sites of around 100, and we've got a very large one under offer at the moment of 1,200. What's plots? I've got to say, what is consistent, Adrian, is that there is strong demand. We're seeing this from the national house builders, and we're also seeing it from regional house builders. Typically, we will be getting between four to eight bids on sites. We know that the national house builders will be saying that they're keeping their discipline in buying sites, and I'm sure they are, but I think that this is also a reflection of what Hallam Land Management has to offer.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Certainly, in terms of some of the bigger sites, so between 400 and the 1,200 that I've mentioned, we believe that they are often significant sites of strategic interest in different regions. If you're a house builder and you want to maintain your outlets, then you do have to be prepared to buy a significant site at a time when it is available. We have been getting good levels of demand. I know that there is a lot of chat about the market in the southeast, and it is definitely harder from a house building perspective in the southeast, but we're still seeing demand from house builders for sites in the southeast as well. There's not a rush to the Midlands or the north.

[Andy Edmond, CEO & Co-Owner at Equity Development]

Andy in Mudden at Equity Development. Just a couple of things. Post-period, you finish with your outlook and nice picture of Duxford. I wondered if you could just say a little bit more about what looks to be a very exciting project, how competitive it was to do it, and what your expectations are.

[Tim Roberts, CEO & Executive Director at Henry Boot]

For those of you that didn't catch the press statement that went out a few days ago, basically, it's just under 450,000 square feet of tech just in Duxford on the edge of Cambridge City. We've entered into a development agreement with the Imperial War Museum. We will promote that through the planning and then look to develop it. As you can imagine, the demand for technology space generally in and around Cambridge is strong. There's a very strong aviation sector. The planning is centered towards that area, and we think that there's good demand in that area. In the event that there isn't the occupied demand to meet the full 450,000 square feet, there will be some flexibility to sell it to other tech occupiers. Very, very pleased that we got it. The competition was strong.

[Tim Roberts, CEO & Executive Director at Henry Boot]

I think that what Henry Boot does well is it has got a great reputation with, in particular, the public sector. We always say, always do what we say we're going to do. I also think that some of the work that we've been doing on Golden Valley has put us in good stead because there is no doubt on Golden Valley. We are in a market where we're attracting not just cybersecurity, but other technically related businesses. We're getting a lot of information from that. That information will put us in a good place to help the Duxford scheme.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

Just to add on Golden Valley and Duxford, they are both in what is very traditional contractual arrangements for Henry Boot Developments, which is what we term land drawdown opportunities. Whilst we're responsible for getting the planning permission, we don't buy the land. We're not heavily capital invested in these schemes. We only actually invest when we know the opportunity is there to actually deliver.

[Adrian Kearsey, Equity Analyst - Building at Panmure Liberum]

Thank you. Very clear. Just a little bit on regionality, you just talked about the southeast. In terms of planning permission, it's certainly a much more encouraging picture overall. Are you seeing any variation on a localized regional basis? Are some local authorities not following quite the path that's prescribed by central government, or is it now reasonably uniform?

[Tim Roberts, CEO & Executive Director at Henry Boot]

It's generally better, full stop. There will always be some planning authorities that are either more restrictive or more conservative in their approach. The thing is, if you've got at a high level a planning policy that favors development, what we will do is we will negotiate with the planning authority, and then we'll get to a point where we will say if they are indicating that they're going to grant consent, we will go to appeal. We've done, we're on five appeals at the moment. Henry Boot is quite a consensual one. We want to work in partnership with people, so we don't like to go to appeal. We're going to appeal more, and the chances of winning an appeal now have increased because of the changes to the planning policy. Because of that, the conservative planning authorities are more likely to grant consent.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Even if they don't, you've still then got a proper chance of getting a consent because you will go to appeal. Net-net, there will be more planning consents granted as a result of the changes to the planning policy framework. The only problem, as we've alluded to during the presentation, is that there will be some planning authorities, not all of them, some planning authorities that aren't properly resourced, and they're taking a lot of time to grant the detail of the planning consent. We've had a situation recently where we've actually appealed for non-determination of a detailed planning application, and that is almost unheard of because all you're doing is you're arguing over the color of the bricks, yeah? That's basically because the planning authority just didn't have the resources to put it through the system. That's what's holding us up in Stonebridge.

[Tim Roberts, CEO & Executive Director at Henry Boot]

That will be what's holding up some of the national house builders in terms of some of the sites that they want to be promoting and developing houses on.

[Andy Edmond, CEO & Co-Owner at Equity Development]

Direction of travel is good.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Yeah, yeah.

[Andy Edmond, CEO & Co-Owner at Equity Development]

Lastly, very quickly, Darren, lots of good KPIs moving in the right direction. Just the two percentage points up in gross margin. Can we expect that every half going forward, or would you like to give a little bit of perspective of how it may move?

[Darren Littlewood, CFO & Executive Director at Henry Boot]

Look, it's good that it's moved in the right direction at the half year. I'm not saying that we're going to continue to see that come in, and actually what we've not touched on is we are seeing a little bit of inflation coming back into, particularly housebuilding, probably easing off actually on the construction side of life. It's manageable at the level it's at, but I don't think it's going to help push those gross margins forward as we move on. All right, thank you very much.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Yeah, Clyde, did you just see your hand up?

[Tim Roberts, CEO & Executive Director at Henry Boot]

Thank you, Clyde Lewis of PLUN. I think I've got one on Hallam, one on Stonebridge, and one on property and development, if you don't mind. On Hallam, it'd be interesting to know of the 11,200 plots you've got that are owned. How many of those have got planning permission? I'm trying to get a feel for ultimately that 11, was it £11,500 you were making per plot? How does that move? You're talking it back to 10. It will depend a lot on how much is freehold, how quickly that comes through. I suppose away from that, do you think there is pressure on margins from Hallam, given the pressure on the industry right now probably to buy more sites versus probably the increased supply that's coming through, as you've alluded to, the extra planning is helping the overall supply of land at the moment? I'll start with that one.

[Andy Edmond, CEO & Co-Owner at Equity Development]

All right. Go through your other two.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Okay, so the other two. On Stonebridge, it'd be useful to understand where you are with regards to the sort of management structure now, what you've got set up in terms of how you're running the business, and I suppose how you think you're going to have to invest in that over the next couple of years. The third one was really on property investment and development. I suppose when, you know, you've been very much focused on, you know, logistics and industrial in the last, God, I'd have to go back a long, long time before you were doing offices or anything else. You have done, you know, the sort of student schemes and some bigger resi.

[Andy Edmond, CEO & Co-Owner at Equity Development]

Where are your thoughts, I suppose, in terms of end markets as to are you starting to see more attractive areas?

[Andy Edmond, CEO & Co-Owner at Equity Development]

Obviously, you've just announced Duxford, so you still see a lot of activity and interest in industrial/tech areas, but are you starting to see, you know, improving opportunities elsewhere outside of logistics and industrial?

[Tim Roberts, CEO & Executive Director at Henry Boot]

I'll start off with the property investment development question. Our absolute core of our business going forward will be industrial. If you look at industrial over decades, and the bad news is that I've been involved with it for decades, it's a pretty sound, reliable, and actually the volatility of the returns over the last 40 years is not high. It's good business. The returns are decent, and if the volatility is low, the risk is low. That's absolutely what we want as a developer. As you know, 75%, just under 75% of the investment portfolio is also industrial. That will be at the heart of development and the investment portfolio. What we are doing with the investment portfolio, though, is we are keeping it smaller than our target.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Kristen, that might be another reason why at some stage we've got to change our targets because we are trying to get our returns on capital employed into that range. It's hard to do that if you've got too much in the investment portfolio. We've been basically recycling some of the investment portfolio into development. We'll carry on doing that. The investment portfolio will probably end up having quite a few investments that really are developments. Skelmersdale is a classic example. We bought that to get planning and then develop it. The reason why we didn't develop it was a German fund would pay us not only what we thought it was worth, but also our future development profit. We have done urban development.

[Tim Roberts, CEO & Executive Director at Henry Boot]

We will carry on doing urban development, but urban development, as you all know, is very, very hard at the moment because of viability first and foremost, but then also the Building Safety Act. We will do less urban development, and probably the urban development that we will do in the future will be neighborhood, the build-to-rent scheme. There, we've got planning, and we're going through the process of getting a grant. I'm afraid that's what you need now. Even a prime site like that, where rents have grown probably 20% since we've bought it, you still need some sort of help from regional grants to make it go. We're in that process to try and make that development work, and we think we will achieve that. I think our urban development will morph a bit, and it will go into things like Golden Valley, which is mixed-use development.

[Tim Roberts, CEO & Executive Director at Henry Boot]

To Darren's prompt, a lot of it will be where we're doing development agreements with landowners so that we're not using our capital on the land. We are using our capital to promote, and the promotion costs of Golden Valley have been significant, but it's still not the same as owning acres and acres of land. We do think that there's an area of specialism that we have not cracked, but we're trying to. That is where you've got more specialist occupiers, whether that's cyber, technology, aviation. We're trying to do that because then we can go to landowners, we can say, really good at master planning, really good at delivering a scheme, really know our onions in terms of these specialized occupiers.

[Tim Roberts, CEO & Executive Director at Henry Boot]

I think 70% of what we do will be industrial, and 30% will be that specialized, we call it urban development, but it's probably edge of city development at the moment. In terms of Stonebridge Homes, the management structure is pretty good. The reason why the management structure is pretty good is that we've obviously been a 50/50 joint venture partner. I've always been open with people, haven't I, that it's our intention to buy the business. We've wanted the management to be good, the structure to be good, and it to be on a growth footing. It's got some capacity to grow. We've got that. A couple of things. One, I think that there was a pause in thinking about the structure and the capacity as we got into quite a long-winded debate over terms.

[Tim Roberts, CEO & Executive Director at Henry Boot]

There became a bit of a pause when we realized that we had got a deal agreed and we got to document it because we did know there'd be integration plans and changes and synergies. We didn't want to hire somebody and then find that we might not need them because there's somebody at Henry Boot that could do a similar job. We're well underway in terms of integration. We have not got a free hand. We've still got a significant minority shareholder, but we've got a pretty good hand. We can shape the management. We have been integrating. Classic is we've got one HR department there. We've got one technology department. We've got one marketing department. All of that has either absolutely happened or is on the eve of happening.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Really, Clyde, you look at it and you think, if we want to be building 500, 600 homes quite quickly, we have got to think about greater regional presence. We've already opened an office in Newcastle. We will open an office in the North Midlands. It might actually be in Sheffield. We've got to think about how we spread the team and the managers across the regions. I don't think any of that is rocket science. The Managing Director that some of you've met, Steve Arrington, has done it before. We're based on a regional business model as well. A lot of what they're doing is very, very similar to Hallam Land Management and Henry Boot Developments. They're going and getting planning, dealing with local and regional authorities, and then dealing with local suppliers to build things. I think it's all doable.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Now I'm hoping by the time I've given you that really long-winded reply that Darren Littlewood knows everything on Hallam Land Management freeholds.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

Going back to your first question, look, we quote the gross profit per plot, and I've always said over time, as an average, £10,000 per plot probably feels like about where it ought to be. However, as you rightly interrogate, that is very much a blended return from freehold and promotion agreements. I think if we look at the portfolio, we've got about 11,000 plots that are freehold out of the 107,000. Broadly, we run about 10% freehold in the mix. If you go back a few years, our gross profit per plot was under £10,000, and my argument was we were very heavy on promotion agreements that were coming through at that time. What we're seeing now, getting back to the £10,000 average, indeed at the half year being at £16,000, it's because we've got a freehold weighting.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

Ambrosdon was one of the sites that I mentioned that was a freehold sale in the first half, really driving that. We are slightly freehold. I don't want to say heavy, but we're probably about 20% in terms of the 10,000 plots we've got with permission, which, if there's 10% in the portfolio, 20% is clearly quite a weighting on the freehold side at the moment. We're seeing that coming through in sales, which is supporting that £10,000 plus gross profit per plot. For the next couple of years, hopefully that is what we will continue to see.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

In part, that is actually driven by the environment we're in, which we always speak to, which is it's easier to gain and develop freehold in an uncertain market because the landowner, particularly concerned about capital taxes, particularly concerned about budgets coming through at the end of November, not the end of October, is actually more willing to transact. We find good freehold opportunities in that environment. The uncertainty we've had over the last couple of years has continued that for us. I think that's been really positive. To answer your point on the market, the house builders and their appetite for acquiring land, a lot of what Tim said is pointing to we've got a slightly softer end market. Challenges on getting detailed planning permission are really continuing to be very difficult.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

Therefore, what we're hearing is the way that you keep momentum going is by opening more outlets, by buying more land. We're seeing that in the competition for sites that Tim's discussed and the kind of returns and ability Hallam Land Management is currently seeing to sell plots into the marketplace. Whilst that uncertainty remains, to some extent that is our friend.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Yeah, we're definitely selling land ahead of our budget, both in terms of volume and the price.

[Darren Littlewood, CFO & Executive Director at Henry Boot]

Yeah, pricing's probably arguably stable, but in real terms, I think what we're starting to see is where house builders on large sites were paying over three or four years, they're paying over one or two years. The discounted effect of that is the reality is we're doing a bit better. Also, if you go back 12 months, we wouldn't have sold anything on outline. All the house builders would want 12 months to get their detail through before they transact. People are now buying on outline planning again.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Richard, do you have your own microphone?

[Alastair Stewart, Construction & Property Analyst at Progressive Equity Research Limited]

Alex Disturb from Progressive. Free question, one on Hallam, one on Stonebridge, and one on construction. Hallam, you've referred to strong demand from both the national and the regional house builders. In terms of national, is that kind of steady, you know, month by month, steady-ish? The regional guys, are they mainly private equity owned? You know, are any names popping up more than others? Stonebridge, do you have a comparative for the 0.38 for the six weeks the previous year? Finally, construction, how much of your total work, it'd be the development work really, is done in-house, as it were, by HBC?

[Tim Roberts, CEO & Executive Director at Henry Boot]

Yeah, okay. All right. A few things there. Both Alastair and Darren helped me out on the questions. If I don't, I haven't got all of the questions. In terms of Hallam, it's pretty steady, isn't it? I mean, we've got a range of house builders, and we will have transacted with all the major house builders this year. Most of the national house builders will be bidding for land, not all of them on specific sites, but you'll have a situation where one of the national house builders won't bid on one site, but then they'll bid on another. It feels as though they're all in the market. We've said already we think that it's because they want outlets. We feel like that at Stonebridge. We've definitely got to buy more land than we're comfortable buying because we can't run the risk of not having enough outlets.

[Tim Roberts, CEO & Executive Director at Henry Boot]

I think the house builders are like that. In terms of the regional ones, yes, some of them are private equity backed. There'll be some family backed house builders, national house builders as well. They are pretty competitive. When you are selling on their local patch, they will be very interested in buying it. We're a bit like that. With Stonebridge, if there was a really good site in Yorkshire, and there was a really good site in Yorkshire called Whitby, we did not like the idea of anybody else buying it. You keep your discipline in terms, you're not giving your margin away, but what you will do is you will make sure that you're up to that margin and you researched it, and you'll probably know a bit more than some of the competitors. You hope that that makes you competitive.

[Tim Roberts, CEO & Executive Director at Henry Boot]

I am 99% sure, Chris, that we have not got the 0.38 comparator for 2024 because I can't remember us quoting that last year.

[Executive]

We didn't provide a post-period figure.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Yeah.

[Executive]

Last year.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Better, worse, and...

[Darren Littlewood, CFO & Executive Director at Henry Boot]

I think that it will be worse.

[Tim Roberts, CEO & Executive Director at Henry Boot]

So the...

[Darren Littlewood, CFO & Executive Director at Henry Boot]

Last year would have been better.

[Tim Roberts, CEO & Executive Director at Henry Boot]

Three, yeah. Yeah, yeah, yeah. The comparator over the period is 0.5 in 2024 and 0.45 in 2025. I can't, I don't think we had a slow...

[Darren Littlewood, CFO & Executive Director at Henry Boot]

I think the summer was better last year than the summer has been this year.

[Tim Roberts, CEO & Executive Director at Henry Boot]

In terms of HBC, really the in-house development that we're doing at the moment is around Markham Vale. The construction of that will probably represent 20% of the turnover of HBC. That would be typical, but there are some years where HBC don't do anything for HBD. That's bad money.

[Tim Roberts, CEO & Executive Director at Henry Boot]

HBC is a very northern-based construction business. HBD is UK-wide. There is a defined geographical patch that they can actually operate between them. I think going forward, we will still have a good relationship with HBC. Darren Littlewood will remain on the board. We've got to be clear, I can say this now, resolve them, can't I? They are a really, really good contractor. If you look at Origin, where we are a minority shareholder, our partner, Feldberg Capital, cannot believe how good they are because they're on time. They are constantly looking at ways to improve efficiencies, and they don't just take all of that efficiency themselves. They'll share those ideas with the clients. We'll keep on using them. We'll keep on supplying them. Banner Plant is not reliant on HBC.

[Tim Roberts, CEO & Executive Director at Henry Boot]

In a really good year, they will probably get 10% of their work from HBC, but they'll keep on working with HBC. This is a lovely anecdote for Henry Boot, isn't it? People like working with Henry Boot. People like working with the construction business. People like working with the plant business. HBC will still use Banner Plant for nearly all of its plants, not because we've told them they've got to as a function of us giving them the vendor loan. It is because they want to. I think that was it, wasn't it? Yeah, yeah, yeah, yeah. Good. Okay. All right. Anyone else? Any calls online or questions online? We've got one, Tim.

[Executive]

Yeah. From... That's why you've got your own mic.

[Executive]

Exactly, exactly. Didn't just want it for nothing. It's from Will Regis at Peel Hunt, who just wants to know, are you using promotions or incentives to help deliver Stonebridge Homes sales targets?

[Tim Roberts, CEO & Executive Director at Henry Boot]

Yes, we are, but not out of kilter with what we budgeted for. The running incentive at the moment will be 5%, and the budget actually is 5%.

[Executive]

Great. Thanks, Darren.

[Tim Roberts, CEO & Executive Director at Henry Boot]

All right. Thank you very much.

Participants

Executives

• Tim Roberts, CEO & Executive Director
• Darren Littlewood, CFO & Executive Director

Analysts

• Adrian Kearsey, Equity Analyst - Building at Panmure Liberum
• Andy Edmond, CEO & Co-Owner at Equity Development
• Alastair Stewart, Construction & Property Analyst at Progressive Equity Research Limited
• Executive