Henry Boot PLC

So I'm Ed Hutchinson and I am delighted to be sat here fairly new in post as the Chief Executive Officer of Henry Boot. Now for those of you that don't know me, I've been with the group about 20 years, just over 20 years. I became a director of HPD in 2012 and went on to We asked to be the MD in 2018. Most latterly, I've been the interim MD of Stonebridge Homes from the end of last year through to about middle of this year. Now, notwithstanding my longevity with the business, my remit from the board is to come in and make a difference. That's exactly what I intend to do. So Henry Boot has a rich and a full history. This year is our 140th year anniversary. I can count on just two hands how many people have had the privilege of being sat where I'm 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 capitalises on the clear strengths that we possess. So my initial impressions since being enrolled. They've 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've 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. We have commenced an improvement plan for Stonebridge Homes but we know we need to go further and we recognise 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. So 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'm going to take you through our near-term priorities in a bit of detail on this slide. Now the key aim here is to bring about a laser focus around how we can turn the dial of the business over the next six to twelve 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. So, our near-term priorities are, number one, unlock and crystallise value. We'll 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're going to reduce our borrowings. We'll apply stronger cost and capital discipline, prioritise only the best opportunities and use partnerships to grow our development programme without providing all the capital ourselves, thus strengthening the balance sheet and providing capacity for distributions and reinvestment. And 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. OK, I'm going to just hand over to Darren now and he's going to talk through the financial review.

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 81 million, reflecting lower transactional activity across all of our markets. At the operating profit level we made a £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'll take you through the movement in net debt shortly but we do expect gearing to reduce towards the end of the year as we complete a number of planned disposals during the second half. Given the increasing gearing and our second half waiting, we've 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. It's 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 programme 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 totalled nearly £14 million as operating returns were not sufficient to cover interest, tax and dividend payments. Investment property generated a net cash inflow of £8 million, largely reflecting the profitable disposal of a retail asset in Warminster. Inventories generated a further net inflow of £4 million. 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 £9 million in land and work in progress at Stonebridge Homes. As previously mentioned, we purchased a further 12.5% of Stonebridge for £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 £3 million. Other working capital represented a net outflow of £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 £133 million. Turning to the balance sheet, underlying asset value per share, which excludes the pension surplus, decreased by 4% to just under £3 per share, reflecting the 4 pence 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 £165 million until 31 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 in work in progress for delivering new homes. And Ed's got a slide later in the deck that will take you through giving you a bit more colour 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 £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 £61 million to date rises to £114 million including exchanged disposals and completions post period end. If we then include reserved sales we get to £144 million and the 71% of our expected full year forecast. A further 59 million of sales are then required to reach our target of 203 million with the majority split between Hallam Land who have over 1700 plots under offer and HBD who also have several sales under offer. However we are mindful that we are operating in a more challenging environment than last year where at this point we had secured 176 million of sales equivalent to 80% of the previous year's forecast versus the 71% this year and 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.

Thank you Darren. Okay so we'll 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, bill 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 £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're applying a clearer land strategy going forward and a more disciplined approach to future acquisitions. The forward order book currently stands at 30 million. So we've been clear that performance here has to improve and this slide updates you on our restart plan to get there. First, we've reset the leadership team with a new managing director, Warren Thompson, joining us later this year. The aim is to continue to professionalise 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. Better data quality and closer alignment across procurement, build programmes and sales means improved oversight, tighter control of costs and decisions taken from a single reliable picture of the business. and fourth a clearer and more disciplined land strategy. In practice that means matching site scale much more carefully to our premium homes product. I'm going to flip back to Darren now and then I will close by summing up HBD's performance before I wrap up the presentation.