Henry Boot H1 2026 Earnings Report

Henry Boot EPS Results

• Actual EPS: -GBX 2.20
• 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 2026
• Date: 9/23/2026
• Time: Before Market Opens
• Conference Call Date: Tuesday, September 22, 2026
• Conference Call Time: 4:30AM ET

Henry Boot (LON:BOOT) is one of the UK’s leading land, property development and home building businesses - and we’ve been transforming land and spaces since 1886. Listed on the London Stock Exchange for nearly 100 years, we’re renowned for quality, expertise, delivery and a partnership approach across the group - which comprises Hallam Land, HBD, Stonebridge Homes and Banner Plant. Operating across the UK, and employing over 400 people, we focus on three key markets: residential, industrial and logistics, and urban development. 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 105,000 homes. HBD manages a development pipeline of £1.4bn, the equivalent of 7m sq ft of developments across our key markets, while maintaining a c.£120m investment portfolio. Stonebridge Homes, our jointly-owned home building business, manages a land portfolio capable of delivering 2,500 homes, with an ambition to deliver up to 600 new homes a year. For 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. From land promotion and property development investment to home building and plant hire, Henry Boot is where great places start.

Henry Boot H1 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Financial performance was below expectations, with revenue down 19% to just under £81 million and an operating loss of £3.9 million. Net debt rose to £133 million and gearing increased to 33%.
• Negative Sentiment: Henry Boot will not pay an interim dividend because of higher gearing and uncertainty around second-half performance; management will reassess the payout after full-year results.
• Negative Sentiment: Stonebridge Homes is expected to report an operating loss in 2026, reflecting slower reservations, approximately 4% build-cost inflation and legacy site costs. A new managing director, tighter land strategy and operational improvements are intended to restore profitability.
• Positive Sentiment: Hallam Land retains substantial embedded value, with nearly 9,100 plots already consented and around 21,000 awaiting determination. Based on recent gross profit per plot, management estimates more than £300 million of potential gross profit from these plots, although current land demand remains subdued.
• Positive Sentiment: HBD’s committed development programme has grown to £161 million, with almost 80% pre-let or under offer; the forward-funded Golden Valley scheme is fully funded and 68% pre-let or under offer. Management expects a stronger second half as delayed land and property sales complete and plans to reduce borrowings through disposals.

Presentation

[Edward Hutchinson, CEO at Henry Boot]

I am Edward Hutchinson, and I am delighted to be sat here, fairly new in post as the Chief Executive Officer of Henry Boot. For those of you that do not know me, I have been with the group about 20 years, just over 20 years. I became a director of HBD in 2012 and went on to be asked to be the MD in 2018. Most latterly, I have been the interim MD of Stonebridge Homes from the end of last year through to about middle of this year. Notwithstanding my longevity with the business, my remit from the board is to come in and make a difference. That is exactly what I intend to do. Henry Boot has a rich and a full history. This year is our 140th year anniversary.

[Edward Hutchinson, CEO at Henry Boot]

I can count on just two hands how many people have had the privilege of being sat where I am sat. My immediate focus is to lead us through these challenging market conditions, and then to define a vision and a strategy for the business that capitalizes on the clear strengths that we possess. My initial impressions since being enrolled, they have only reinforced my confidence in the group's long-term prospects. Henry Boot is a well-established business with a strong track record of delivery. Spearheaded by our market leading land promotion business, Hallam Land, we have got a high quality portfolio of more than 200 sites across the country that would be extremely difficult to replicate. HBD has a proven ability to deliver high quality developments, supported by strong partnerships across both the public and the private sector.

[Edward Hutchinson, CEO at Henry Boot]

We have commenced an improvement plan for Stonebridge Homes, but we know we need to go further, and we recognize that we cannot rely on a market recovery to improve our performance. Having spent a considerable amount of time getting around the business and speaking to our teams over the past couple of months, I am in no doubt we have a highly capable people with the skills, experience, passion, and relationships needed to deliver our schemes and create value. A business review is already underway and a refreshed strategy together with the associated medium term objectives which will flow from it will be presented in early 2027. In the meantime, I am going to take you through our near term priorities in a bit of detail on this slide.

[Edward Hutchinson, CEO at Henry Boot]

The key aim here is to bring about a laser focus around how we can turn the dial of the business over the next 6 to 12 months. Being clear on what our near term priorities are, which are as much about what we are pausing or stopping as it is what we are doing, will help bring about a more unified pace across the business and move us through into more stable conditions next year. Our near term priorities are, number one, unlock and crystallize value. We will do this by accelerating planning commissions and converting consents into sales in Hallam Land, leasing and selling completed developments in HBD, and converting the Stonebridge Homes order book into completions, driving profitability and returns. Number two, we are going to reduce our borrowings.

[Edward Hutchinson, CEO at Henry Boot]

We will apply stronger cost and capital discipline, prioritize only the best opportunities, and use partnerships to grow our development program without providing all the capital ourselves, thus strengthening the balance sheet and providing capacity for distributions and reinvestment. Finally, we will improve our operational efficiency. We will simplify how we operate, speed up decision making, and share expertise and resources across the group, creating a higher quality business for long term value creation. Okay, I am going to just hand over to Darren now and he is going to talk through the financial review.

[Darren Littlewood, CFO at Henry Boot]

Thank you, Ed, and good morning, everyone. I think given the challenging market backdrop we see ourselves with, it is nonetheless disappointing to report that our financial performance is below our expectations. Group revenue decreased by 19% to just below GBP 81 million, reflecting lower transactional activity across all of our markets. At the operating profit level, we made a GBP 3.9 million loss, driven by weaker trading performance and a reduction in the value of our wholly owned investment property portfolio. Gearing increased to 33%, and I will take you through the movement in net debt shortly. We do expect gearing to reduce towards the end of the year as we complete a number of planned disposals during the second half.

[Darren Littlewood, CFO at Henry Boot]

Given the increasing gearing and our second half weighting, we have taken the decision to not pay an interim dividend, and we will consider the dividend again once our full year results are known. Looking at revenue and operating profit on an individual business level, the chart on the left of this slide sets out a year-on-year revenue bridge showing the component parts of the movement in revenue. You can see from the chart that both revenue from land promotion and property investment have declined. Home building revenue increased, reflecting a higher number of private versus affordable completions and the sale of land at Carlton. The end of the Road Link contract was the principal driver of the reduction in construction revenues. The chart on the right then shows a similar bridge for operating profit.

[Darren Littlewood, CFO at Henry Boot]

It is clear this bridge that the main driver of the reduction in operating profit is land promotion, with smaller movements across property development and home building. This lower profitability was partially offset by central cost savings delivered through our Future Ways of Working program, and a decision to not award our people bonuses in respect of the 2026 year. Turning now to cash flow and net debt. The chart on this slide sets out the key components of the movement in net debt in the period. Starting on the left, the cash outflow from operations totaled nearly GBP 14 million, as operating returns were not sufficient to cover interest, tax, and dividend payments. Investment property generated a net cash inflow of GBP 8 million, largely reflecting the profitable disposal of a retail asset in Warminster. Inventories generated a further net inflow of GBP 4 million.

[Darren Littlewood, CFO at Henry Boot]

While we continued to invest selectively across the business to bring forward future sales opportunities, particularly within Hallam Land, this was more than offset by a reduction of almost GBP 9 million in land and work in progress at Stonebridge Homes. As previously mentioned, we purchased a further 12.5% of Stonebridge for GBP 5 million. We also continued to grow our Origin joint venture. The growth was largely funded by profits from land disposals into the JV, resulting in a modest net investment of GBP 3 million. Other working capital represented a net outflow of GBP 14 million, and this was primarily driven by land sales to house builders on deferred payment terms. As a result, we ended the period with net debt of GBP 133 million. Turning to the balance sheet.

[Darren Littlewood, CFO at Henry Boot]

Underlying asset value per share, which excludes the pension surplus, decreased by 4% to just under GBP 3 per share, reflecting the GBP 0.04 per share impact of acquiring a further interest in Stonebridge, together with payment of the 2025 dividend and the retained losses at the half year. Post period end, we agreed terms to increase our existing bank facility to GBP 165 million until the 31st of December. This provides additional financial flexibility as we progress targeted sales through the remainder of the year. Our lending group remains supportive and discussions are continuing regarding amendments to the full year covenant requirements should they be required. I think it's fair to say our balance sheet remains asset backed. Our inventories are all tangible assets, be they through property development, strategic land or land and work in progress for delivering new homes.

[Darren Littlewood, CFO at Henry Boot]

Ed's got a slide later in the deck that he'll take you through, giving you a bit more color and detail to that. Just looking at the sales progress. We've completed, exchanged or reserved 71% of budgeted sales, with the market consensus profit before tax at GBP 9.7 million. To be clear, this is not turnover, but achieved property sales, which offers us visibility for our full year performance. Completed sales of GBP 61 million to date rises to GBP 114 million, including exchanged disposals and completions post period end. If we then include reserved sales, we get to GBP 144 million and the 71% of our expected full year forecast. A further GBP 59 million of sales are then required to reach our target of GBP 203 million, with the majority split between Hallam Land, who have over 1,700 plots under offer, and HBD, who also have several sales under offer.

[Darren Littlewood, CFO at Henry Boot]

However, we are mindful that we are operating in a more challenging environment than last year, where at this point we had secured GBP 176 million of sales, equivalent to 80% of the previous year's forecast versus the 71% this year. We remained mindful that Hallam and HBD have a number of transactions to complete to achieve this. I'll now hand you back to Ed.

[Edward Hutchinson, CEO at Henry Boot]

Thank you, Darren. We will go through a quick run through on the operational review, starting with Stonebridge. I want to be straightforward about the outlook. With a slower sales rate, build cost inflation of around 4% and site and legacy extension costs, we expect Stonebridge to report an operating loss in 2026. We completed 72 units in the first half, with completions this year being second half weighted. The private average selling price was up at GBP 431,000 with incentives stable, so pricing is held through half one. The main pressure felt by the business has been on volume. Our net private reservation rate was 0.38, reflecting higher mortgage rates through the second quarter. The own land bank now stands at nearly 1,450 plots, and we are applying a clearer land strategy going forward and a more disciplined approach to future acquisitions.

[Edward Hutchinson, CEO at Henry Boot]

The forward order book currently stands at GBP 30 million. We have been clear that performance here has to improve, and this slide updates you on our restart plan to get there. First, we have reset the leadership team with a new Managing Director, Warren Thompson, joining us later this year. The aim is to continue to professionalize the business and bring it properly into the group so it operates the same standards and benefits from the same oversight as the rest of our operations. Second, we are investing in our people and our systems, supported by our group function teams. That investment is targeted squarely at sales capability and customer experience, the two areas where improvement converts most directly into performance. Third is about operational efficiency.

[Edward Hutchinson, CEO at Henry Boot]

Better data quality and closer alignment across procurement, build programs, and sales means improved oversight, tighter control of costs, and decisions taken from a single reliable picture of the business. Fourth, a clearer and more disciplined land strategy. In practice, that means matching site scale much more carefully to our premium homes product. I am going to flip back to Darren now, and then I will close by summing up HBD's performance before I wrap up the presentation.

[Darren Littlewood, CFO at Henry Boot]

Thanks, Ed. I am going to go over Hallam Land, who sold 556 plots in the period. This was affected by major house builders shifting their land strategies, which has slowed our sales activity. Our five-year average plot sales are now running at over 2,700 plots per annum. Gross profit per plot was almost GBP 11,000 in the first half of the year, and this does remain in line with our five-year average at around GBP 10,000 per plot. The two transactions in the period were 416 plots at Biggleswade, sold to Persimmon, and 140 plots at Thorpe Willoughby, sold to Vistry, resulting in an average ungeared IRR of 30.5% per annum. We continue to see really good returns on the sales that Hallam are achieving.

[Darren Littlewood, CFO at Henry Boot]

We have over 2,000 plots exchanged or under offer, and we expect those to complete in the second half, along with a number of other sales we are pursuing. We have invested GBP 11 million in the pipeline, and to date, have submitted nearly 3,400 plots into planning so far this year. We also remain on track to submit a total of 10,000 during the full year. We continue to manage one of the largest strategic land portfolios in the country, with now nearly 108,000 plots. Following the government's revision to the NPPF we saw in 2025, we have seen positive changes to the planning system, which have significantly increased our ability to secure outline consents. This is shown clearly by the chart in the top right on this slide.

[Darren Littlewood, CFO at Henry Boot]

During the period, we secured planning for over 600 plots, taking the total number of plots with planning to almost 9,100. Again, as the chart in the top right shows, and consistent with recent years, we expect to secure planning on a materially higher number of plots in the second half. We have a further 21,000 plots awaiting determination, and in this supportive planning environment, we expect our stock of consented plots to increase, further building the store of value within our portfolio. As we move forward, our focus is on continuing to secure planning permissions and increasing sales whilst continuing to grow the portfolio at a modest level. With the balance of freehold and planning promotion agreements, we can manage capital investment appropriately between risk and reward, taking advantage of the right time in the cycle when acquiring freehold land, which is much more capital intensive.

[Darren Littlewood, CFO at Henry Boot]

Just on this slide, I just want to spend a minute on the Biggleswade transaction as it provides a good illustration of how our land promotion model works in practice. Hallam Land entered into a planning promotion agreement on this 105 acre site back in 2017. 43 acres were allocated in Central Bedfordshire Council's local plan when it was adopted in July 2021. From there, it was a complex planning process, but outline consent was secured on appeal in November 2025. With this consent in place, we were able to sell 416 plots to Persimmon, the transaction generating an ungeared internal rate of return of 16.3% per annum. Just looking at the value in the portfolio. With our portfolio all held at cost, there is no gain on securing planning recognized until the land is sold.

[Darren Littlewood, CFO at Henry Boot]

This continues to reflect a significant uplift in value not recognized within our balance sheet, which we have tried to quantify here. We've included a table in the appendix showing the results if we vary these assumptions. Based on the recently achieved average gross profit per plot of GBP 10,000, the 9,000 plots we have with planning have the potential to deliver a gross profit of GBP 91 million over the short term. In addition to this, we have almost 21,000 plots awaiting determination. That significantly de-risks almost 30% of our total land bank and has the potential to deliver a further GBP 214 million of gross profit over the short to medium term. Including sites with an allocation in the local plan, we have GBP 433 million of gross profit progressing in the planning system. The full portfolio over time has the potential to deliver over GBP 1 billion of gross profit.

[Darren Littlewood, CFO at Henry Boot]

As previously, we are presenting an illustrative net present value for this of GBP 230 million or 170p per share, equivalent to an uplift in NAV of 57%. On that, I shall hand you back to Ed.

[Edward Hutchinson, CEO at Henry Boot]

Thanks, Darren. Okay, turning to HBD, our property investment and development arm. Our committed development program has grown to GBP 161 million, with HBD's share of that standing at GBP 113 million. Almost 80% of that is already pre-let or under offer. Golden Valley Phase 1 is the biggest addition, adding GBP 95 million GDV, all of which is fully funded. I will provide a bit more detail on Golden Valley on the next slide. Origin, which is currently developing three I&L schemes at GBP 56 million, is on program and budget. If you include the other three initial schemes we developed last year, is now 66% leased or under offer, with rents ahead of business plan. We will remain selective in building up our committed program. As I will explain again shortly, we have significant near-term optionality from our GBP 1.4 billion development pipeline.

[Edward Hutchinson, CEO at Henry Boot]

Finally, just to confirm, the investment portfolio delivered a total return of 2.5%, which was in line with the CBRE index. Just picking out Golden Valley. This is an excellent example of us progressing a long-held opportunity and turning it into value. Phase 1 of the GBP 1 billion Cheltenham mixed-use scheme is forward funded, and work has now commenced on site. It includes IDEA and ROUTER together with supporting infrastructure. IDEA is 68% pre-let or under offer, with strong interest in the remaining space. Phase 2 will follow, and that comprises two buildings known as INPUT and Output, and they will provide a further 188,000 sq ft alongside consent for up to 443 homes where residential partner marketing is underway. The profile and learnings gained through Golden Valley means that HBD are well-placed to do more in the innovation sector.

[Edward Hutchinson, CEO at Henry Boot]

Together with our secured development opportunity at Duxford, it provides a springboard for HBD to secure further opportunities of a similar nature. Just extracting out some of the schemes we have secured in our future pipeline. Just pick out there. So we have Wakefield Hub, where we have consent for a further 600,000 sq ft across four units with our partner, Yorkcourt, and we are targeting a start on site in the near future. Freeport 36, we have planning secured for 5.5 million sq ft industrial and manufacturing park in partnership with St. John's College, Cambridge. We already have strong occupier interests, and we are aiming for a start on site later this year. As just trailed, AvTech Duxford. Planning has been submitted here in partnership with Imperial War Museum for a 430,000 sq ft campus near Cambridge.

[Edward Hutchinson, CEO at Henry Boot]

The use for the scheme will be focused on low and zero carbon aircraft technology. In terms of outlook, Darren trailed this slide a little earlier. We believe this makes for a very strong investment case and highlights the diverse and significant embedded value across the business. We have nearly GBP 540 million of investment property and inventory value. Land promotion totals circa GBP 160 million, including GBP 93 million of planning promotion agreements and just short of GBP 60 million of freehold land. In property investment and development, which is the largest segment at around GBP 227 million, we have GBP 84 million investments, GBP 33 million in Origin, and GBP 112 million in developments. Finally, home building accounts for GBP 148 million, of which GBP 86 million is invested in land. In summary, we expect a better second half performance, supported by land sales that have slipped from H1 into H2.

[Edward Hutchinson, CEO at Henry Boot]

It is about timing rather than lost value. Market conditions remain challenging, with the trend of transaction volumes likely to stay subdued for the rest of the year. We shall adopt a laser-sharp focus on progressing our near-term priorities. Unlock and crystallize value, reduce borrowings, operational efficiency. We will not prioritize short-term performance at the expense of future returns or sell good assets in a way that risks future performance. The longer term fundamentals for Henry Boot remain attractive. We have a strong pipeline and the discipline to convert it as conditions improve. Thank you very much for your time.

[Thomas Musson, Analyst at Berenberg]

Okay. Morning. Thanks very much for the presentation. It is Thomas Musson from Berenberg. Can you just give us a bit more color for the demand for land at the moment? How many serious bids is a typical site getting, and how has that evolved recently? I guess, how are offers holding up in terms of price and payment terms?

[Edward Hutchinson, CEO at Henry Boot]

Yeah. Demand for land is subdued. If we look at performance so far in 2026 compared to 2024 and 2025, it has definitely dropped off. Now, having said that, there are lots of factors at play. There are some opportunities in Hallam Land's portfolio where we know we still have very strong interest. Some parts of the country, that interest has dropped off a little bit. So what we are absolutely concentrating on is to, as Darren talked through, we need to keep making hay while the sun shines in terms of this window that is open to us in terms of planning, get as many applications as we can into the system. We have just been running as fast as we can now, probably for two years on that, to make sure that we are locking in that store of value in the future.

[Thomas Musson, Analyst at Berenberg]

Thank you. Just second question on the dividend. Appreciate the reasons for deferring the decision are very clear. Should we take from this that the existing policy of staying progressive is effectively over, so that is under review with everything else? Or is there a way we can understand today what decides the future payout?

[Darren Littlewood, CFO at Henry Boot]

I will pick that one up. I think clearly at the moment, given the challenging markets we are in, it is just very difficult and challenging to see how performance is going to be into the future and medium term. Clearly, if we can see that we are starting to generate those sales and recover the cash and bring down the debt, then we would be much more comfortable about making the decision to turn the dividend back on. When we do so, I think we will need to see, in particular, what our full-year performance looks like to determine whether we are going to restore the full-year expectation as we had it, or whether reset the dividend to a new, different, appropriate level. I think once we get there, however, our desire would be to get back to a position where we can have a progressive dividend.

[Thomas Musson, Analyst at Berenberg]

Thank you.

[Adrian Kearsey, Analyst at Panmure Liberum]

Morning. Adrian Kearsey, Panmure Liberum. Probably one for Ed. You have been with the business a while. You have delivered some fantastic projects over the time. When you look back, or perhaps you do not look, perhaps it is Golden Valley preempting the answer, but which projects within HBD do you actually feel, "Actually, that is the model that we want to follow and really grab hold of and deliver over and over again"?

[Edward Hutchinson, CEO at Henry Boot]

The project I would pick out is TECA, Aberdeen. HBD was selected as Aberdeen City Council's development partner through a competitive process in 2014. We had lots of challenges to get from being selected to getting to a point where we could go unconditional in agreement and commence works on site. So people possibly know the scheme, it was an arena, exhibition center, hotels, right next to the airport up in Aberdeen, circa GBP 350 million GDV. I think it was a really good example of what Henry Boot, I believe, does very well. Working with multiple stakeholders, listening to what stakeholders' needs are, and working out solutions to meet those needs. Good example, again, of a public-private partnership. We have a rich history of public-private partnerships. Possibly with the advent of devolution, this could be an area that we look to pick up more, within HBD particularly.

[Edward Hutchinson, CEO at Henry Boot]

We will work through that as part of our review of strategy, and we will be able to talk to you about that in the spring.

[Darren Littlewood, CFO at Henry Boot]

Just to add to that, I think Aberdeen was a very special project for us and a real flagship. HBD have had a number of those. We have had the York Chocolate Works, and now, as you mentioned, we are entering into Golden Valley with Cheltenham Borough Council. For me, there is also a sub-sector of that which is very important to HBD, which is the bread and butter. It is sites like the one that Ed started on when he joined us those 22 years ago, which was Markham Vale. Markham Vale has been delivering for us consistently for 22 years, which is just phenomenal. It is not going to change the world. It is not like those big flagship schemes of scale. But every year, almost, we manage to take something from that. I think we need a few of those to go with the big schemes as well.

[Clyde Lewis, Analyst at Peel Hunt]

Thank you, Ed. Clyde Lewis at Peel Hunt. I think I have three, if I may? I will do one at a time. Ed, you talk about, in your last bullet there, in your introduction, about creating a simpler group. You also talk more closely about aligning the activities. I suppose where I say Hallam and house building, there is obviously a degree of alignment, fairly clear there, albeit to date, I am not sure too much of Hallam's land has gone into Stonebridge, but that is another debate. But how do you create that simpler group without cleaving property or HBD one side and housing the other side? Is there another route?

[Edward Hutchinson, CEO at Henry Boot]

I think it starts with, look, we have to set what the vision and strategy of the business is, and we will do that over the next few months. A big part of us being able to deliver the strategy is looking at our own internal resource, our own skills. If I look at across the business, we have a fairly large team of highly skilled people, and those skills can cross over into the different businesses. So if simply, and look, as an example, Hallam Land could secure a consent, and as part of their contract in selling to house builder A, they have to deliver some infrastructure works. Hallam Land do not, within their team, have any skills and expertise for overseeing procurement and delivery of infrastructure works. HBD do.

[Edward Hutchinson, CEO at Henry Boot]

Similarly, HBD are looking at, or have been looking in the past, at trying to gain positions on strategic employment land. Yet the specialists for doing that are sat in Hallam Land. As we move through this next period, we are going to be doing a bit of a skills audit and looking at, we need to make sure the people with the right skills are put to work in the right areas for the benefit of Henry Boot.

[Darren Littlewood, CFO at Henry Boot]

Don't get excited about it. It's early days. We've literally just signed an agreement where Hallam Land and HBD are collaborating to look at a scheme that has the potential of being a data center.

[Clyde Lewis, Analyst at Peel Hunt]

The second one was on Stonebridge profitability. I suppose I'm looking for a sort of a route map for how the business will get back to making not just a decent margin, but a decent ROE. You look at the WIP and the land investment, and to get to a 10% post-tax return on that

[Edward Hutchinson, CEO at Henry Boot]

Yeah

[Clyde Lewis, Analyst at Peel Hunt]

There's obviously a steep hill.

[Edward Hutchinson, CEO at Henry Boot]

Yes

[Clyde Lewis, Analyst at Peel Hunt]

To climb for the business.

[Edward Hutchinson, CEO at Henry Boot]

Yes.

[Clyde Lewis, Analyst at Peel Hunt]

You've indicated a new MD is coming in, so there's a process there and a change in the land you're buying. Is that going to be enough? Do you think you're currently efficient enough in terms of, I suppose, the bill process, in terms of costs as well as then obviously the selling that you've highlighted in terms of boosting that?

[Edward Hutchinson, CEO at Henry Boot]

I'll start by saying I believe we can make improvements in every area of that business. I say that having spent six, seven months there myself early part of this year. But let's start with the land. We took a decision a few years ago. We wanted to scale up Stonebridge Homes. And we believed the market would be our friend to help us achieve that. Unfortunately, and I'm not going to just talk about what's gone, but unfortunately, the market didn't play how we wanted it to play. So we have some legacy issues to deal with, and that's what we are dealing with. But moving forwards, I think we have a clearer understanding now of what Stonebridge is all about, what their USP is, and that is higher end homes.

[Edward Hutchinson, CEO at Henry Boot]

Mentioned earlier in the presentation, the average sales price in the first half of this year, GBP 431,000. And most of those homes are in the northeast of England. We need to make sure that our land strategy meets with that product. We're building on sites where we believe there is a sufficient depth of customer for that product. And it might be, we've not got there yet, but it might be that the sweet spot for Stonebridge Homes is sites that are, say, 50 units-80 units rather than sites that are 200+ units. And that way we can, I think, be more, we can probably get more bang for our buck in terms of outlay of cash for land. We can have a higher number of sales outlets. Right now we have seven live sales outlets.

[Edward Hutchinson, CEO at Henry Boot]

If you look at how much money we have out in land, we could probably do with that number being a bit higher. For the outlay of cash we have on land, we have to increase the number of sales outlets, which will increase volume, and we need to make sure we are building in the parts of the country where people are going to buy our product.

[Clyde Lewis, Analyst at Peel Hunt]

Okay. Thank you. Last one was on probably Hallam, so probably more coming towards Darren. You are not the only ones obviously going hell for leather in terms of getting planning applications in. Everybody is doing it because there has been a certain amount of encouragement from the government to do so. Clearly, there are various bottlenecks as we are so used to seeing. If the taps are properly open, is there not a danger that the market is flooded with more land for sale than there has been for the last, I do not know, maybe 10 years, maybe 15 years, maybe even 20 years, and that actually then it becomes a very much a buyer's market rather than the seller's market that we have seen, and that GBP 10,500, GBP 11,000 that you were making is actually sort of eaten into?

[Darren Littlewood, CFO at Henry Boot]

There is always that possibility. But I would start by saying if you look at the kind of average IRR we have just been quoted, it is very healthy. We still make good money even if our average gross profit per plot is down a bit on that. So there is plenty to go at. I would question whether everybody is going hell for leather right now from some of the stats I have seen, particularly in this environment, some of the major house builders as well being pretty protective, and quite often strategic land is one of the first places they make cuts if you are trying to take cost out. So I am not entirely sure that everybody is running as fast as we are trying to run in this environment given our experience.

[Darren Littlewood, CFO at Henry Boot]

We have been there before, so coming into kind of eight, nine years ago, we had a healthy stock on the balance sheet having taken advantage of a half decent planning environment. We will have been amongst everybody else and land is always going to be a scarce supply and we never really saw it impacted to a great degree in that way.

[Clyde Lewis, Analyst at Peel Hunt]

Okay. Thank you.

[Alastair Stewart, Analyst at Progressive Equity Research]

Alastair Stewart from Progressive Equity Research. Two free questions on Stonebridge. It was interesting to hear you, Ed, saying that you are considering smaller sites. We will start off by asking, the ASP went up 10%. Was that like for like or was there a change mix?

[Edward Hutchinson, CEO at Henry Boot]

I think probably what skewed the quite sharp increase on ASP is we have sold, well, by the time we get to the end of this year, hopefully we will have sold 36 homes.

[Alastair Stewart, Analyst at Progressive Equity Research]

Yeah

[Edward Hutchinson, CEO at Henry Boot]

At our site in Morpeth.

[Alastair Stewart, Analyst at Progressive Equity Research]

Yeah.

[Edward Hutchinson, CEO at Henry Boot]

The average sales price there on that site alone is over GBP 500,000.

[Alastair Stewart, Analyst at Progressive Equity Research]

Yeah.

[Edward Hutchinson, CEO at Henry Boot]

That has skewed the numbers. Because we have not got as many sales outlets as we would like.

[Alastair Stewart, Analyst at Progressive Equity Research]

Yeah

[Edward Hutchinson, CEO at Henry Boot]

You have one site that performs that way, it does skew the numbers a little bit.

[Alastair Stewart, Analyst at Progressive Equity Research]

That ASP is also the blended.

[Edward Hutchinson, CEO at Henry Boot]

Yeah

[Alastair Stewart, Analyst at Progressive Equity Research]

Between private and social.

[Edward Hutchinson, CEO at Henry Boot]

Yes.

[Alastair Stewart, Analyst at Progressive Equity Research]

Quite a lot of our social for this year, I want to say, started coming through now.

[Edward Hutchinson, CEO at Henry Boot]

Yeah

[Alastair Stewart, Analyst at Progressive Equity Research]

It was post period end.

[Edward Hutchinson, CEO at Henry Boot]

Correct.

[Alastair Stewart, Analyst at Progressive Equity Research]

Would you consider, on one hand, reducing the ASPs going forward? You mentioned the term depth of customer. With expensive homes, frankly, in the North East, you've not got the same depth of customer, yet sites with 200+ units, you're trying to emulate a volume house builder that has lower average selling prices or probably a broad range. Which direction will the dynamic go?

[Edward Hutchinson, CEO at Henry Boot]

So again, I'll be able to give you a better answer in the spring on this, but I believe our average sales price will probably come down, not because we are trying to reduce the quality of our product, but I think we will be looking at sites where we will be introducing more of a blend of house types. So we will have two beds up to five beds.

[Alastair Stewart, Analyst at Progressive Equity Research]

Yeah.

[Edward Hutchinson, CEO at Henry Boot]

Whereas I think historically we've majored on four or five beds, which obviously pushes the average sales price up. I think we need that because it gives us more optionality. So, that's the first point. The second point, do we want to be competing with the big PLCs on 200+ plot sites? Probably not. Do I think there's a place for maybe, at any point in time, having one big site that we could be building on for five, six years? Yes, I do. But we've got to be very thoughtful about that mix of land.

[Alastair Stewart, Analyst at Progressive Equity Research]

Can you do some land swaps, for instance, with chunks of your 200?

[Edward Hutchinson, CEO at Henry Boot]

We could indeed.

[Alastair Stewart, Analyst at Progressive Equity Research]

Plus.

[Edward Hutchinson, CEO at Henry Boot]

We have actually completed on sales of two parcels of land on sites we are still building on to two of the PLCs already this year.

[Alastair Stewart, Analyst at Progressive Equity Research]

Yep. Finally, just out of interest, your Golden Valley site, or development, they seem to have techie type names. Are they mainly for people or for companies in the cybersecurity space? Are you building from the Cheltenham [inaudible]?

[Edward Hutchinson, CEO at Henry Boot]

Yeah. Cybersecurity innovation is absolutely at the heart and center of that scheme. Yeah. We can't name

[Alastair Stewart, Analyst at Progressive Equity Research]

Obviously can't.

[Edward Hutchinson, CEO at Henry Boot]

names at the moment, but that's how I would respond to your question. Yeah.

[Alastair Stewart, Analyst at Progressive Equity Research]

Sure.

[Edward Hutchinson, CEO at Henry Boot]

As I mentioned, we are 68% already pre-let.

[Alastair Stewart, Analyst at Progressive Equity Research]

Sure. Great.

[Edward Hutchinson, CEO at Henry Boot]

Anyone else? You are asking questions.

[Chris Spearing, Head of Strategy and Investor Relations at Henry Boot]

We have got just a couple of questions that have come in. Is there any update on progress at Island in Manchester?

[Edward Hutchinson, CEO at Henry Boot]

We continue to market the space at Island. We are 2/3 let. We have constant inquiries. We believe we are at the top of the list. If there are any inquiries out there for Prime space in Manchester, people possibly already know we did set new headline rent for Manchester when we did the letting, at the end of last year at GBP 48 a foot. No material news to talk of, but we are constantly fielding inquiries.

[Chris Spearing, Head of Strategy and Investor Relations at Henry Boot]

Thanks. Then there is one for you, Darren. Could you please expand on some numbers for legacy issues and how you are valuing these compared to the industry?

[Darren Littlewood, CFO at Henry Boot]

Yeah, look, I think that in particular relates to Stonebridge where we are facing, as Ed's outlined, a number of challenges that includes inflation, prolongation of site delivery, and to some extent, legacy costs. Clearly, we are reviewing all of those as we go, and we become aware of them, and we are making appropriate provision in the accounts for those. We also have introduced this year an additional contingency to cover those that we may not yet know about in the accounts, and that probably amounts for around a third of the forecast full year loss that Stonebridge are going to be looking to deliver.

[Chris Spearing, Head of Strategy and Investor Relations at Henry Boot]

Great. Thank you. There is no more questions online, so I will just hand back to Ed for closing remarks.

[Edward Hutchinson, CEO at Henry Boot]

Yeah. Well, look, thanks again, everyone, for your time. I will finish by repeating something I have already said. Look, new into this role, longevity with the business, but absolutely I aim to make a difference and that is the remit from the board. We are looking forward to getting stuck into refreshing our strategy and then I similarly look forward to being able to talk to you all about that in the spring.

Participants

Executives

• Edward Hutchinson, CEO
• Darren Littlewood, CFO
• Chris Spearing, Head of Strategy and Investor Relations

Analysts

• Thomas Musson, Analyst at Berenberg
• Adrian Kearsey, Analyst at Panmure Liberum
• Clyde Lewis, Analyst at Peel Hunt
• Alastair Stewart, Analyst at Progressive Equity Research