Henry Boot PLC
Annual Report and Financial Statements
for the year ended 31 December 2015
www.henryboot.co.uk
Stock code: BHY
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Cohesive
Consistent
Confident
Henry Boot Annual Report 2015 Strategic.indd 3
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Welcome to our
2015 Annual Report
“ I am delighted to report a 14%
increase in profit before tax to
£32.4m for the year ended 31
December 2015. Once again, all our
business segments performed well
within a solid UK economy.
“ The results achieved in this year, and
the quality of the opportunities we
have, are a testament to our teams
of talented individuals.”
Year of transition
and strong progress
In a year of many changes, our belief in our founder’s values,
our purpose and our strategy, as well as careful succession
planning, gave us the confidence that we could continue
to deliver consistently to our stakeholders. Our cohesive
approach has allowed us to make strong progress.
I am delighted to report a 14% increase
in profit before tax to £32.4m for the year
ended 31 December 2015. Once again,
all our business segments performed well
within a solid UK economy. Profit growth
and a reduced pension deficit saw our
net asset value per share rise by 16p to
168p per share.
Our strategic land business is operating
in stable market conditions. There is
good demand for high quality residential
sites from the strongly performing UK
house builders, which is matched by a
good supply of planning permissions.
Within commercial property development,
2015 has seen several larger scale
developments move to the delivery stage
with the result that 2016 will see us begin
to deliver approximately a dozen projects
with a gross development value (GDV)
of around £500m over a period of four
years. In excess of 90% of this GDV is
pre-sold and almost all is pre-let.
In addition, we delivered over 40 houses
from our jointly-owned house builder
and expect to add to this in 2016. Our
Construction segment, including a
strong performance from plant hire, once
again performed well, underpinned by
the stable income stream from our PFI
project, delivering expected levels
of return.
Board changes
John Brown and Mike Gunston retired
as Non-executive Chairman and Non-
executive Director respectively at the
end of 2015. On behalf of the Company,
I would like to thank them for their
valuable contribution over the last nine
years. At that time, I became Non-
executive Chairman, whilst John Sutcliffe,
previously Group Finance Director, took
over from me as Chief Executive Officer
and Darren Littlewood, previously Group
Financial Controller, moved into the role
of Group Finance Director. As announced
in August 2015, Joanne Lake, Peter
Mawson and Gerald Jennings joined the
Board as Non-executive Directors. The
newly constituted Board has many years
of experience within Henry Boot or the
broader real estate industry, as well as in
corporate finance, and is committed to
the delivery of our strategy into the future.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
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Dividend
I am pleased to report that following
on from another very good result, the
Board will recommend an increased final
dividend of 3.80p, giving a total for the
year of 6.10p (2014: 5.60p), an increase
of 9%.
Payment of the final dividend is subject to
shareholder approval at the AGM and will
be paid on 31 May 2016 to shareholders
on the register as at 29 April 2016.
Our talented team
The results achieved in this year, and
the quality of the opportunities we have,
are a testament to our teams of talented
individuals. Their skill, hard work and
dedication continue to deliver great
projects and bring in new opportunities
for the future. On behalf of the Board
and our shareholders, we thank them for
their continuing efforts once again. I look
forward to reporting on our combined
teams’ further successes through 2016
and beyond.
Outlook
The coming year should see us deliver
more commercial development schemes
than at any time in the Company’s
history. Our portfolio covering strategic
land, commercial development and
construction projects has never been
larger or as far advanced in planning
terms. The degree to which we have
already achieved pre-lets, pre-sales and
planning permissions gives us great
confidence in our ability to deliver these
schemes profitably and we are fully
focused on this. Our strategy remains to
deliver long-term growth in shareholder
value and we continue to successfully
acquire early stage strategic land and
commercial development opportunities
for our business to enable us to continue
to create future value. I have taken
over as Chairman with the business in
excellent shape and with our people
energised to deliver significant growth
in activity. I look forward to reporting on
progress through 2016 and beyond.
Jamie Boot
Chairman
22 April 2016
Highlights of the year
• Circa £500m of commercial activity
expected to commence in 2016
concluding over the next four years.
Mostly pre-sold and almost all
pre-let.
• Almost 150 strategic land schemes
throughout the country with over
12,000 permissioned units to sell
over the next 3-5 years.
• Sales of 1,763 plots in the year
compared to 1,107 in 2014.
• Within Construction, major contract
at Stocksbridge concluding in
2016, a new similar sized three-year
contract to follow on, underpinning
activity up to 2019.
• Succession planning Board changes
implemented seamlessly during
2015. New team takes business on
in great shape.
• Record dividend of 6.10p, a 9%
increase.
• Gearing levels stable despite
significant growth in activity.
Read more information
in our Financial Review
on pages 32 to 37
Quick links to further reading
Strategic Report
Governance
Pages 6 to 47
Pages 48 to 79
Financial Statements
Shareholder Information
Pages 80 to 133
Pages 134 to 144
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Visit us online
For more information on
Henry Boot PLC please visit our
website at www.henryboot.co.uk
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Overview
Consistent Performance
Our year in numbers
Group
The strength of our business and our consistent growth is achieved through our diverse
business segments. This business model allows us to invest prudently in appropriate market
opportunities throughout the business cycle, delivering long-term shareholder value growth.
Read more about how our segments support our
Business Model on pages 10 and 11
Profit before tax (£m)
+14%
£32.4m
Net debt (£m)
+7%
£38.9m
£32.4
£28.3
£36.1
£36.4
£38.9
£16.1
£13.4
£18.4
£21.9
£2.3
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Net asset value per
ordinary share (p)
+10%
168p
142p
139p
148p
152p
168p
Dividends per
ordinary share (p)
+9%
6.10p
4.70p
5.10p
4.25p
6.10p
5.60p
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Earnings per ordinary share (p)
Operating profit (£m)
+8%
17.5p
+13%
£31.7m
17.5p
16.2p
£31.7
£28.0m
6.9p
7.0p
8.6p
£19.0m
£16.9m
£14.2m
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Pictured Burdiehouse near Edinburgh, a
development of over 300 houses.
Pictured Euro Garages based at
Markham Vale Derbyshire.
Pictured Yeadon extra care housing
scheme awarded by Leeds City Council.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Segmental performance
Land
Development
Hallam Land
Management Limited
The strategic land and planning
promotion arm of the Henry Boot
Group. Our experienced land and
planning teams promote opportunities
through the complexities of the
UK planning system and sell schemes
to the UK house builders. The
company has been acquiring,
promoting, developing and trading
in land since 1990.
Property
Investment and
Development
Construction
Henry Boot
Developments Limited
A major established leading force in
the UK property development market.
The company has also built up an
investment portfolio of over £100m in
recent years.
Stonebridge
Projects Limited
A jointly owned company in the
north of England which develops
family homes that combine care,
consideration and attention to
detail. The company also provides
high specification fully serviced office
space to small business occupiers.
Henry Boot
Construction Limited
Specialising in serving both
public and private clients in all
construction and civil engineering
sectors.
Banner Plant Limited
Offering a wide range of construction
equipment and services for sale and
hire.
Road Link (A69) Limited
Road Link has a 30-year contract
(ten years remaining) with Highways
England to operate and maintain the
A69 trunk road between Carlisle and
Newcastle upon Tyne.
Total revenue (£m)
+20%
£46.7m
Total revenue (£m)
+93%
£50.3m
Total revenue (£m)
+3%
£90.6m
£46.7
£37.6
£39.0
£30.1
£8.8
£37.9
£26.1
£12.8
£15.7
£50.3
£80.0
£82.2
£72.3
£88.3
£90.6
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Profit before tax (£m)
+46%
£19.1m
Profit/(loss) before tax (£m)
Profit before tax (£m)
-24%
£3.5m
-2%
£9.9m
£19.1
£13.1
£1.9
£4.6
£3.5
£10.1
£9.9
£8.6
£9.0
£11.1
£11.1
£5.9
(£2.3)
£1.9
2012
2011
2013
2014
2015
(£4.7)
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
OUR VALUES
Our reputation is a key asset which
is fundamental to the success of
Henry Boot PLC; our values are what
ensure that employees, suppliers,
investors and other stakeholders have
the confidence to trust that we will
carry out business ethically.
By embedding these values in our actions we strengthen
the ability to deliver long-term shareholder value and
competitive advantage.
These values are fundamental in creating an environment
of trust where all can thrive and in doing so securing the
future of our business by creating long-term, sustainable
relationships. All stakeholders should believe in and
uphold our core values: Respect, Integrity, Excellence
and Innovation.
Read more about Corporate Responsibility
on pages 24 to 31
OUR BOARD OF DIRECTORS
AND SENIOR MANAGEMENT
In October we welcomed Joanne Lake, Peter Mawson
and Gerald Jennings as new Non-executive Directors
to the Board. They bring extensive corporate finance,
planning, strategic land and commercial development
experience to the Company and are, therefore, ideally
suited to support our Group Executive team. We are in
no doubt that they will make a strong contribution to the
delivery of our strategic goals into the future.
In December John Brown and Michael Gunston retired
from their positions of Chairman and Senior Independent
Non-executive Director respectively. We would like to
thank them both for their wise counsel and dedicated
service over the last nine years and wish them well for
the future.
Jamie Boot also relinquished his role as Group Managing
Director in December and was appointed Chairman to
succeed John Brown. At the same time John Sutcliffe
was appointed Chief Executive Officer and Darren
Littlewood as Group Finance Director.
Also in December we saw the retirement of Keran Power
as Managing Director of Hallam Land Management
Limited. Keran had been Managing Director for six years
and previously a Director of the business for 12 years. We
thank him for all his endeavours and wish him well in his
retirement. He has been succeeded by Nick Duckworth
who has worked for Hallam for over 23 years, 14 of which
have been as a Director.
Pictured (from left to right): Russell Deards, John Brown,
Peter Mawson, James Sykes, John Sutcliffe, Michael Gunston,
Gerald Jennings, Joanne Lake, Jamie Boot, Simon Carr, Trevor
Walker, Darren Littlewood, David Anderson, Giles Boot,
Darren Stubbs.
Read more about our Board of Directors
and Senior Management on pages 50 and 51
Inset: Keran Power and Nick Duckworth.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
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Strong agile leadership team
. . . now and for the future
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“ As we progress and evolve
our key objective remains
consistent . . . to maximise
shareholder value”
John Sutcliffe
Chief Executive Officer
Q
A
How do you see the business progressing
and developing over the next five years?
Our business segments are all operating in relatively stable
markets. Pricing and activity are at reasonably good levels
and I see little evidence of the excessive pricing or leverage
that typified the end of the last property cycle.
Therefore, with land and commercial development portfolios
that are larger and more advanced than at any stage in my
ten-year experience at Henry Boot, the marketing, sale and
completion of those opportunities is our key focus, whilst
economic conditions remain supportive.
Over the last five years our teams have created a very
valuable portfolio of schemes. We aim to realise this potential
for shareholders over the next five years.
Read more information on Risk
on pages 42 to 47
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Strategic
report
The Directors present the Group
Strategic Report for the year ended
31 December 2015.
This report sets out how Henry Boot continues to
create consistent value through the promotion of
new land opportunities, the development of and
investment in high quality property assets and
construction activities.
The Strategic Report on pages 6 to 47 has been
approved by the Board and signed on its behalf by
John Sutcliffe
Chief Executive Officer
Darren Littlewood
Group Finance Director
22 April 2016
Contents
08 Our Strategy
09 Our Initiatives to Support our Key
Objective . . . To Maximise Shareholder Value
10 Supported by the Diversity of our
Business Model
12 Land Development
16 Property Investment and Development
20 Construction
24 Corporate Responsibility
32 Financial Review
38 Key Performance Indicators – Financial
40 Key Performance Indicators – Non-Financial
42 Managing Risk
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Our Strategy
We define our key objective as follows: to maximise long-term shareholder value through
the promotion of land development, the development of and investment in high quality
property assets and construction activities.
The Group Structure
Land
Development
Property
Investment and
Development
Construction
Hallam Land Management
Limited
Henry Boot
Developments Limited
Henry Boot Construction
Limited
Stonebridge Projects Limited
Banner Plant Limited
Road Link (A69) Limited
Benefits of our structure
The Group is structured so all three
business segments contribute financially
in different ways to meet our key
objective and business initiatives.
Our construction and property investment
elements produce relatively stable profits
and cash flows every year. This income
allows Henry Boot PLC to maintain long-
term bank funding relationships which
provides capital for us to invest in our
strategic land and property development
portfolios. This in turn produces cyclical,
longer-term profits and potentially strong,
though cyclical, cash flows.
So in essence construction and property
investment income and investment
properties allow us to borrow money
from banks, at more attractive rates than
would otherwise be available, which we
then invest prudently in strategic land and
property development. These activities
are riskier and give us varying amounts of
profit through each economic cycle.
These profits, in good years, contribute
significantly to the stable profits from
construction and property investment,
allowing reinvestment into the business
and the payment of rising dividends to
shareholders. Each part of the Group
supports the other, giving us an overall
business efficiency from each segment of
the business. This can be seen from our
business model on page 10.
Delivering our key
objective
This key objective is central to all
decisions to allocate capital to the
projects we undertake. Further
considerations which help achieve the
key objective are dividends to our equity
shareholders, funding our defined benefit
pension scheme, investing in existing and
new opportunities in our asset portfolio
and managing the utilisation of our bank
facilities and debt levels.
A consideration that goes to the heart
of our strategic discussions is a rather
under-utilised concept today – prudently
investing for the long term. Henry Boot
has been in operation since 1886, has
seen many economic cycles come and
go but has continued to provide an
increased income return to shareholders
over many years. Our strategic decision
making has to be flexible enough to
deal with the vagaries of the economic
cycle, maximising opportunities arising
throughout the cycle and successfully
achieving our main business initiatives
noted on page 9. These goals have to be
achieved whilst at all times maintaining
prudent borrowing levels to ensure that
the long-term security of our asset base
and our ability to pay dividends is not
compromised.
It is through this balance of risk-
weighted rewards that we aim to create
shareholder value into the long term.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Our Initiatives to Support our Key Objective . . .
To Maximise Shareholder Value
Business
Initiative
How we’ll
measure progress
How our model
supports this
How we are
responding
Provide growing
long-term shareholder
returns
• Shareholder value
• Long-term financial strength
• Shareholders’ funds
• Resources
Create regular revenue
streams through retained
property assets, rental
income and construction
activities
• Revenue
• Construction
• Return on capital employed
• Property investment
• Investment property
Achieve long-term funding
relationships with financial
partners and maintain
prudent levels of gearing at
less than 50% of net assets
Create long-term cyclical
revenue potential and
realisation through land
development and property
development
• Gearing levels
• Long-term financial strength
• Revenue
• Net assets
• Long-term revenue
• Land development
• Asset value creation
• Property development
Provide a long-term
commitment to high levels
of dividend cover
• Earnings per share
• Long-term financial strength
• Dividend cover
• Resources
Achieve a return on capital
in excess of 10%
• Profit
• Net assets
• Construction
• Property investment
• Return on capital employed
• Property development
• Land development
Recruit and retain the
highest calibre of people
to meet our key objective
• Long-term success of
• Talented people
businesses
• Individual performance
targets met
• Successful and motivated
Pages 6 to 47
Pages 16 to 23
Pages 32 to 37
Pages 12 to 19
Pages 6 to 47
Pages 32 to 37
Pages 24 to 28
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12/04/2016 13:34:03
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Supported by the Diversity
of our Business Model
The creation of value and achieving our key objective of maximising long-term
shareholder value is underpinned by our business model.
Our property investments and construction activities generate recurring revenue streams which allow us to maintain and
benefit from long-term funding relationships at prudent gearing levels, which in turn enable land development and property
development activities to create cyclical long-term revenue potential and realisation.
Our model is supported by our talented people, who through their enthusiasm continue to drive business success, retaining
the values that have been fundamental to the longevity of our business. Being responsible in our work ensures we treat all our
stakeholders with integrity and respect.
L o n g - t e r m Financial Strength
R e c u r r i ng Revenues
Construction
Property
Investment
Land
Development
Property
Development
Cyclical Reven u e s
Long-term Financia l S t r e n g t
h
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Long-term
Financial Strength
Talented
People
Responsible
Practices
We have long-established
relationships with our key funding
partners, Barclays Bank PLC, The
Royal Bank of Scotland plc and
Santander UK plc. We maintain
headroom within our three-year
banking facilities, renewed from
February 2015, and consider our
property investment portfolio as
a ‘store of value’ to be realised to
augment these facilities if required.
The land bank and development
opportunities, together with the
investment portfolio, have been
acquired largely from retained
resources ensuring our gearing levels
are prudent. In the longer term we
aim to achieve a healthy return on
capital employed and dividend cover
for reinvestment in our core activities
which, in turn, creates improving
longer-term shareholder returns.
The Group’s employees are at the
heart of all that we achieve. Our
people are highly talented, successful
and motivated individuals and are
essential to the success of the Group.
We are committed to ensuring that
we have the right people working
for us and we manage this process
through a robust people strategy.
Their skill, commitment, drive and
enthusiasm are vitally important
to the long-term success of our
business. We succeed in the delivery
of shareholder value because our
people, individually, achieve the
targets set for them. They source
and acquire land, promote planning
consents, acquire, develop, manage
or sell investment properties and
service constructors with plant, run
our PFI project and refurbish and
construct buildings.
Continuous improvement lies at
the heart of our business and our
corporate responsibility programme
supports our business approach to
acting responsibly whilst we continue
to grow and evolve our business
operations.
Core to our continuing progress
are four key aims:
1. To ensure that all our employees
have a safe and healthy work
environment.
2. To support our people in realising
their full potential.
3. To support the development of
the local communities in which we
operate.
4. To take responsibility and reduce
our impact on the environment.
Our revenues have remained consistently strong and allowed us to weather the cyclical
economic landscape, through the diversification of our activities.
This is how our individual business segments have contributed to the Group over the last five years.
Profit before tax (£m)
Group revenue (£m)
35
30
25
20
15
10
5
0
CAGR 19.1%
£19.1
£13.1
£11.1
£5.9
(£4.7)
2011
£1.9
£1.9
£8.6
2012
£11.1
£9.0
(£2.3)
2013
£4.6
£10.1
£3.5
£9.9
2014
2015
200
150
100
50
0
CAGR 11.4%
£37.6
£37.9
£82.2
£39.0
£26.1
£88.3
£46.7
£50.3
£90.6
£30.1
£12.8
£72.3
£8.8
£15.7
£80.0
2011
2012
2013
2014
2015
Land Development
Property Investment and Development
Construction
Delivering long-term shareholder value
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Strong Governance
Consistent Dividend Policy
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Land
Development
Hallam Land Management
The company has been acquiring, promoting, developing
and trading in land since 1990. We have established an
outstanding record in resolving planning and associated
technical problems in order to secure planning permission
for a whole range of different land uses.
Key Sectors:
• Housing
• Sustainable communities
• Business parks
CASE STUDY
LUBBESTHORPE,
LEICESTERSHIRE
Hallam is in partnership with two other
developers on this 970 acre site.
A minded to grant resolution was secured for 4,250
homes, our share being 1,593 properties, in 2013. The
scheme also consists of a 50 acre business park, a
district centre, two local centres, a secondary school and
two primary schools. In late 2013 we negotiated a highly
complex Section 106 agreement which has recently been
signed, confirming our largest single permission.
Preparatory infrastructure works are now under way on
the M1 near Leicester Forest East to install the new M1
Bridge which will create one access point to the site.
Works have also commenced for the southern access
point to the development.
The new bridge is expected to open by late 2016 and the
housing development will commence thereafter.
12
Henry Boot Annual Report 2015 Strategic.indd 12
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Creating long-term cyclical
revenue potential and
realisation through strategic
land development
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12/04/2016 13:34:10
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Land Development Review
“ We will continue to invest
in our land portfolio, having
careful regard to ensuring our
investments are focussed
where house builders wish
to build.”
Keren Power and Nick Duckworth
Hallam Land Management Limited
During the year we sold sites at
Cranbrook (Exeter), Nuneaton, Chellaston
(Derby), Haddington, Biddenham
(Bedford), Frome, Repton, Pontefract
and Edinburgh. In total, our interests in
1,763 plots were sold, a 59% increase on
2014’s 1,107 plots.
The new Government confirmed its
commitment to housebuilding, most
notably by enforcing National Planning
Policy Framework guidance on a five
year land supply. We won a number of
appeals during the year, including one
at Warton, Fylde, where we secured
permission for 360 dwellings in advance
of an emerging Neighbourhood Plan.
During the course of the year we
achieved planning consent (or consent
subject to a Section106 legal agreement)
on our sites in Aldingbourne, Aslockton,
Chesterfield, Coxhoe, Haddington,
Langho, Launceston, Lutterworth,
Market Harborough, Marston Moretaine,
Prestonpans, Woodville, Selby and
Handcross. At the end of 2015 we had
increased our total land interests to over
11,000 acres, 1,982 acres of which has
planning consent for over 12,000 plots,
and 1,160 acres is allocated in a plan for
residential development.
Highlights
of the year
• Disposals of 1,763 plots in 2015
(1,107 plots in 2014)
• 12,000 units with planning
permission
• Nine site disposals during the year
and 15 new sites added to the
portfolio
Progress in 2015
2015 started with a period of pre-election
uncertainty but, once concluded, our
house builder customers once again
made land purchases enabling us to
deliver a pre-tax profit from our strategic
land business of £19.1m (2014: £13.1m).
As the year progressed, we found house
builders becoming more selective as they
replenished their land banks towards
the required level. However, high quality
consented sites in good locations
continue to be highly sought after and to
command good price levels.
Profit before tax (£m)
+46%
£19.1m
Land
(acres)
+11%
11,061
£19.1
9,011
7,246
8,051
6,619
9,723
7,932
9,985
8,166
11,061
9,257
£11.1
£13.1
£11.1
202530
0102030
152020
101510
201420152016
2011
£1.9
2012
2013
2014
2015
2011
2012
2013
2014
2015
1,432
1,765
1,791
1,819
1,804
Owned
Option and Planning Promotion Agreements
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Significant new investments were made
during the year at Grazeley, south of the
M4 at Reading, and Coventry. Other
key strategic sites within our portfolio
progressed well during the year; Market
Harborough (450 plots) secured a
minded to grant planning consent; the
first phase of Kettering East (438 plots)
was conditionally exchanged to a national
house builder; and Phase 2 of Marston
Moretaine (365 plots) was granted
planning consent in December 2015, the
first phase having been sold successfully
in 2013 to Bovis Homes, and we expect
to market part of this scheme in 2016.
Outlook for 2016
and beyond
2016 has started well with two site sales
already concluded and a number of
others progressing well for completion
later in the year; 180 plots were sold in
Alton, Hampshire, and seven acres of
employment land were unconditionally
exchanged in Lutterworth.
We expect the house builders to remain
selective when purchasing land in 2016
but we have a strong land portfolio with a
supportive planning regime, a substantial
number of sites available to the market
and, at this stage, we anticipate that
2016 will be yet another year of
good progress.
We see the current balanced
marketplace continuing through 2016.
We will continue to invest in our land
portfolio, having careful regard to
ensuring our investments are focussed
where house builders wish to build, whilst
carefully managing our overall investment
in the sector. Selectively, the business will
seek to secure agreements which benefit
our commercial development activity
companies, in particular, Stonebridge
Projects and Henry Boot Developments.
Cranbrook, the new 3,500 unit
community at Exeter; Kingsdown, our
urban extension at Bridgwater, and
New Lubbesthorpe, a 4,500 unit urban
extension west of Leicester, all had a very
good year. Cranbrook saw residential
occupancies exceed 1,150 (in the two
and a half years since residential sales
commenced), the opening of a railway
station (on the London Waterloo line) and
both a secondary school and a second
primary school were completed and
opened. Development at Kingsdown,
Bridgwater, continued with further
residential sales anticipated in 2016.
Henry Boot Developments are also close
to securing a commercial development
on the main A38 road frontage. New
Lubbesthorpe, a scheme of 4,500
dwellings (where we have an interest in
1,593) commenced development and our
investment in this major urban extension
will create returns over the longer term.
We successfully sold part of our
long-term investment at Biddenham,
Bedford, during the year and we forecast
further parts will also be sold in 2016 and
2017.
CASE STUDY
BARTON SEAGRAVE,
KETTERING,
NORTHAMPTONSHIRE
Hallam has a solely owned site
of 50 acres at Barton Seagrave,
Kettering just off the A14 trunk
road equidistant between the
M1 and A1(M) motorways.
The land forms part of the East Kettering
Sustainable Urban Extension area.
Outline planning permission was achieved
for a total of up to 5,500 dwellings,
including 20% affordable housing, on
1 April 2010, varied on 8 January 2015.
Hallam has had an interest in the area
since 1997. The outline consent includes
up to 875 dwellings on Hallam’s land
interest. A reserved matters planning
approval for 325 dwellings was received
in January 2016 and a further planning
permission for an additional 22 dwellings
was received in February 2016. We are
anticipating a sale on this parcel of land
later in the year.
Our retained 27 acres of land will be the
subject of further land sales within the
next five years.
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Pictured A 450 dwelling site in Frome,
Somerset sold to a national developer.
15
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Henry Boot Annual Report 2015 Strategic.indd 15
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Property
Investment
and
Development
Henry Boot Developments and
Stonebridge Projects
Specialist property development company with an
investment portfolio aligned with a residential developer
and industrial office space provider for small businesses.
Key Sectors:
• Retail, industrial and
commercial development
• Development partnerships
• Residential development
CASE STUDY
THE CHOCOLATE
WORKS, YORK
The 27 acre Grade 2 listed former
Terry’s Chocolate Factory, with its
iconic clock tower, was purchased
by Henry Boot Developments in 2013
after having been empty for many
years due to difficult planning and
viability issues.
We immediately sold 13 acres to Barratt Developments
PLC with permission for 270 residential properties. In 2015,
after extensive planning negotiations, an unconditional
development agreement was exchanged with listed
building conversion specialist P J Livesey to undertake the
conversion of the main 170,000 sq ft multistorey factory
building to provide 150 luxury apartments, the first phase of
which will be completed before the middle of 2016. The first
new purchasers of apartments within this historic property
are expected to take up occupancy during 2016.
A sale of the listed HQ office building was also completed in
2015 following receipt of planning permission to convert it
to a care home.
16
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Assets giving year on year
recurring revenue, with
property development creating
long-term cyclical revenue
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Property Investment
and Development Review
“ At Markham Vale, our 200
acre business park, we
exchanged unconditional
contracts with Great Bear
Distribution Limited on a
480,000 sq ft distribution
centre.”
Darren Stubbs, Stonebridge Projects
Limited, and David Anderson,
Henry Boot Developments Limited
sq ft of pre-let industrial space and also
exchanged unconditional contracts
with Great Bear Distribution Limited
on a 480,000 sq ft distribution centre,
which was also forward sold in the year.
Elsewhere, we undertook two speculative
industrial developments, a 44,000 sq ft
high spec small unit scheme in Salford,
Manchester, and a 130,000 sq ft industrial
development at Thorne, Doncaster. Since
these were completed, agreements for
sale have been concluded on both for
over 70% of the space.
The 22,000 sq ft office development in
Whitehaven, Cumbria, pre-let to Atkins
Limited, was completed and sold at
mid-year. We also completed the sale of a
20,000 sq ft office building in Nottingham
at above valuation, to an owner occupier.
Following the successful delivery of the
Cumbria office development, we have
now exchanged unconditional pre-let
agreements with Atkins Limited for a
much larger 110,000 sq ft headquarters
office development in Epsom, Surrey, and
work is expected to commence on site in
mid-2016.
Within the leisure sector we completed
two budget hotel developments in
Malvern and Richmond upon Thames, for
Premier Inn and Travelodge respectively.
The Travelodge development was forward
sold with the sale concluding at the end
of 2015. The Malvern development has
been retained in our investment portfolio.
In contrast, the retail sector was more
subdued with little demand for new
retail space, particularly from the large
Highlights
of the year
• Approval of detailed planning
permission at Aberdeen for
Exhibition Arena and Conference
Centre
• 2015 RICS Winner for Building
Conservation at Acre Mill,
Huddersfield
• £35m Atkins Limited HQ office
development in Epsom, Surrey
Profit/(loss) before tax (£m)
-24%
£3.5m
£4.6
£3.5
£1.9
(£2.3)
(£4.7)
2011
2012
2013
2014
2015
18
Progress in 2015
2015 saw the continued recovery
in property values and consolidated
occupier demand, with activity and values
in most sectors nearing pre-recession
levels. The strongest occupier and
investor demand was seen for industrial
warehousing, offices and leisure property.
This was reflected in the Company’s
focus on these sectors for both
existing development projects and new
opportunities.
In Aberdeen, the Company’s largest
individual project, the £300m
development of an exhibition arena and
conference centre and hotel complex
pre-let to Aberdeen City Council, has
made good progress with the exchange
of development agreements and approval
of the detailed planning permission at the
end of 2015. Negotiations are progressing
well with funders and our construction
partner and we remain on target for the
development to commence in mid-2016.
A number of new office and industrial
development schemes were contracted
in the year. In Luton, we exchanged a
ten year development agreement with
local landowners to complete the 50 acre
Butterfields Business Park. In Southend,
we exchanged development agreements
with Southend Borough Council to
develop a 50 acre office and employment
park adjacent to Southend Airport and
negotiations are already underway with a
number of potential occupiers.
At Markham Vale, our 200 acre business
park, we completed and sold 190,000
Henry Boot Annual Report 2015 Strategic.indd 18
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
foodstore operators, giving rise to
property revaluation losses on a number
of sites. We found that it took longer than
expected to contract with retailers on two
retail warehouse developments in Belper,
Derbyshire, and Livingston, Scotland,
even after agreement of terms. However,
contracts were finally exchanged on both,
and planning consents quickly secured
thereafter. These developments are
expected to commence before the middle
of 2016 and the forward sale of one has
already been exchanged.
We have secured detailed planning
permission for the residential conversion
of listed buildings at the former Terry’s
chocolate factory in York, where we have
entered into a development agreement
with our specialist delivery partner, P J
Livesey. 150 luxury apartments are now
in progress, with the first units expected
to be completed mid-2016. We have
also sold the listed former headquarters
office building to a specialist care home
operator following the grant of planning
permission for its conversion.
The Company retains a commercial
property portfolio of £125m and places
great emphasis on the proactive
management of these assets to maximise
value and income. Initiatives undertaken
in the year include: the extensive
refurbishment of the town centre retail
scheme in Beeston, Nottingham, enabling
a number of new lettings to national
retailers; and the pre-letting of a 56 bed
Travelodge development within our retail
and office investment in Bromley, Kent.
Stonebridge Projects Limited, our jointly-
owned housebuilding company, increased
activity in the year and has commenced
some larger developments. It has
continued to strengthen its position as a
high quality regional house builder and
secured options to purchase a further 300
plots for development. The development
of 101 units in Headingley, North Leeds,
commenced on site in August 2015
after a number of planning delays.
Work is also due to commence at Fox
Valley, Stocksbridge, for 118 units in
2016, with both sites expected to be
major contributors to output over the
next two years. Stonebridge serviced
offices completed the purchase and
redevelopment of Bartle House in
Manchester. Our three office centres are
steadily growing their occupancy levels
and we were delighted that Park House,
Leeds, won UK Business Centre of the
Year in 2015.
Outlook for 2016
and beyond
We move into 2016 with our largest
ever pipeline of pre-funded and pre-sold
schemes, having over £500m of gross
development value to deliver over the
next four years with over 90% pre-funded
or pre-sold and a similar proportion pre-
let. By de-risking our positions in these
development schemes, we feel confident
in our ability to manage the impacts on
activity such as the EU vote in 2016 and
the top of the property cycle, when that
arises at some time in the future.
CASE STUDY
STONEBRIDGE
PROJECTS LIMITED –
VICTORIA GARDENS,
HEADINGLEY, LEEDS
The summer of 2015 saw
the commencement of Victoria
Gardens in Leeds, to date the
most high-profile development
for Stonebridge Projects
Limited.
On the site of the former Leeds Girls
High School, Stonebridge secured initially
outline planning permission for 82 units;
however, after 18 months of negotiation,
we managed to secure planning for a
further 19 plots therefore
a total of 101 units.
Victoria Gardens will be built over three
phases during the next three years.
Phase one launched in July 2015 with
an initial release of 20 four-bedroom
townhouses. Groundworks for the site
have been subcontracted to our sister
company Henry Boot Construction.
Phase two will commence in 2016,
where a mix of one and two-bedroom
apartments, four-bedroom townhouses
and two gate houses will be developed.
The third phase in 2017 will provide the
conversion of the two original school
buildings to 45 apartments.
The first occupations are due to take
place in late April/early May 2016.
Pictured Illustrative view from the
stage at the Aberdeen Exhibition and
Conference Centre.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Construction
Henry Boot Construction, Banner
Plant and Road Link (A69)
Three companies providing a blend of differing services in
the construction industry.
Key Sectors:
• Construction – private sector
• Construction – public sector
• Civil engineering
• Plant hire
• Road maintenance
CASE STUDY
SAINT HELENA’S
SCHOOL,
CHESTERFIELD
Henry Boot Construction has
commenced on site at St Helena’s
School in Chesterfield to refurbish a
Grade 2 listed building dating back to
1892 for the University of Derby.
The works include the complete renovation of the existing
building together with a new feature entrance and external
soft and hard landscaping.
The purpose of this project is to create a primary site for
delivering a step change in higher-level vocational skills
(including apprenticeships) to support the economic
growth and resilience of businesses and workforce in
Chesterfield and North East Derbyshire, achieved by
providing new, local routes to vocational higher-level skills.
The 48 week project will be completed in September 2016.
20
Pictured The new helipad we built for
Northern General Hospital in Sheffield,
opening in Spring this year.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Creating regular revenue
to enable long-term funding
relationships with financial
partners
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12/04/2016 13:34:42
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Construction Review
“ The major contract to
redevelop Stocksbridge town
centre is now moving into
the final phase and is due for
completion later in 2016.”
Giles Boot, Banner Plant Limited,
Simon Carr, Henry Boot Construction
Limited and Trevor Walker, Road Link
(A69) Limited
Within the education sector we were
awarded the refurbishment and fit-
out of the Management School for
the University of Sheffield and a
refurbishment of the Grade II listed St
Helena’s campus for the University of
Derby. We completed the Materials
and Engineering Research Institute for
Sheffield Hallam University earlier in the
year and Chesterfield College’s new
Construction Centre was opened for
students in September 2015.
We have completed a number of court
and prison refurbishment schemes
through the Ministry of Justice framework
during the year and are currently
progressing two further schemes. In
the health and social care sectors we
were awarded the Yeadon Extra Care
Housing scheme by Leeds City Council
and the helipad and associated medical
facilities by Sheffield Teaching Hospitals
NHS Trust. We also commenced the
construction of a residential block
containing 20 self-contained flats and
communal space for Sheffield homeless
charity St Wilfrid’s, and completed a
refurbishment scheme for Autism Plus
at Park House Farm on the Ampleforth
Estate in North Yorkshire.
We have seen an increase in private
sector opportunities, particularly in the
industrial, commercial and retail sectors.
Pictured Right Works continue at
Fox Valley, Stocksbridge town centre
redevelopment. Completion is due in late
2016.
Progress in 2015
Henry Boot Construction started 2015
with a healthy order book and continued
to build on this, exceeding both budgeted
turnover and profit for the year. We have
seen a growing confidence in the general
economy which has led to increased
opportunities in the construction sector,
sustained growth in activity and some
positive trends in tender prices; although
we still remain cautious regarding labour
and supply chain price pressures. Our
wide ranging capabilities, depth of
experience and understanding of our
clients’ requirements have helped the
division produce an excellent result. It is
also pleasing that many of our existing
clients are returning to us with follow on
projects due to the high level of service,
delivery and client satisfaction achieved.
We are carrying a strong order book into
2016 and expect that our solid trading
performance will continue.
Our reputation for delivering high quality
projects, safely, on time and within
budget, has enabled us to maintain
workload in the housing, commercial,
retail, health, education, leisure, industrial,
civil engineering and custodial sectors.
Long-term framework and partnership
arrangements; with St Leger Homes,
North Lincolnshire Homes, and ASRA
Housing together with individual schemes
through EN Procure, YORbuild and for
Chesterfield Borough Council, continue
to give us a strong presence in the social
housing sector.
Highlights
of the year
• Exceeded both profit and turnover
targets in 2015
• Streets Ahead in Sheffield
and Henry Boot Construction
celebrate 100 joint projects
• 15% increase in profit before tax
for plant hire company
Profit before tax (£m)
-2%
£9.9m
£10.1
£9.9
£8.6
£9.0
£5.9
2011
2012
2013
2014
2015
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
The major contract to redevelop
Stocksbridge town centre is now
moving into the final phase and is
due for completion later in 2016. We
also successfully completed a multi-
unit eco-office scheme at Doncaster
International Business Park for Workpods
Limited. We delivered further industrial
facilities with new and refurbished units
at Thorne, Doncaster; a 100,000 sq ft
unit for lnspirepac at Markham Vale; a
visitor’s centre for Games Workshop in
Nottingham; and a research facility for
Bifrangi in Lincoln. Our presence in the
sports and leisure sector has also been
strengthened with our appointment to
deliver a new spa facility at Rudding Park
Hotel, Harrogate, which commenced in
January 2016.
Civil engineering work continues to grow
steadily as a major supply chain partner
on the 25 year, Amey PFI Sheffield
Highways scheme, where we deliver
a significant number of projects and
notably, completed our 100th project
in October 2015. We also completed
the Don Valley remediation scheme for
Sheffield City Council and have recently
commenced a car parking scheme in
Barnsley; both projects being delivered
through the YORcivils framework. We
have also worked with Stonebridge
Projects Limited to deliver infrastructure
works to new residential housing
developments in Leeds and Sheffield.
Plant Hire
Banner Plant once again performed well
in 2015. Activity was around 8% ahead
of 2014, contributing to a rise in profit
before tax to £1.5m (2014: £1.3m) from
the unit. During the year we invested
£4.3m in new equipment having
introduced a range of access equipment
to the Derby depot and power tools to
the Wakefield depot. We expect capex
for 2016 to be at a similar level. As
previously reported, our major challenge
continues to be the hire rate recovery
of the much higher capital costs of
new plant, associated with clean air
compliance. Early indications are that
2016’s utilisation levels are in line with
2015 and we remain cautiously optimistic
for the year as a whole.
Road Link A69
Our PFI contract to run the A69 trunk
road between Newcastle and Carlisle
once again performed well, in line with
expectations.
There are now ten years left to run on
the contract and traffic volumes and
therefore revenues were broadly in line
with previous years. Whilst the A69 was
affected by the serious flooding around
Carlisle in late 2015 there was no long-
term impact, and the trunk road was
soon operating normally again.
Outlook for 2016
and beyond
The three businesses making up our
Construction segment have provided
very stable returns over many years
and we do not expect that to change
over 2016 and beyond. Construction
and plant hire are developing a stronger
presence within their chosen markets
and 2016 has started well with good
levels of work already secured for 2016
and 2017. Against this backdrop, we
expect another year of solid progress.
PLANT HIRE
BANNER PLANT
LIMITED
Plant, temporary
accommodation, power
tools, powered access,
big air compressors and
serviced toilets
The range of products has constantly
evolved to meet customer needs and to
fulfil the requirements of modern health
and safety legislation. The primary supply
area stretches from Yorkshire in the north
to the East Midlands and Birmingham in
the south whilst more specialist divisions
have national coverage.
ROAD MAINTENANCE
ROAD LINK (A69)
LIMITED
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Road operation and
maintenance – 52 miles of trunk
road from Carlisle to Newcastle
A 30-year contract with Highways
England to operate and maintain the
A69, which is the major east – west
all-weather route in the north of England.
Works include road resurfacing, bridge
repairs, winter preparation and routine
maintenance.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Responsible
Practices
Our reputation gives our customers,
employees, stakeholders, suppliers,
investors and the communities in which
we operate the confidence and trust to
do business with us.
Q
A
What does Corporate
Responsibility mean
to Henry Boot?
Corporate responsibility (CR) means
addressing the key social, ethical
and environmental impacts on our
operations in a way that aims to
bring value to all our stakeholders,
including our shareholders.
The measures we employ to manage our operations
ensure everything we do is aligned to our Values to
develop our businesses effectively, successfully and
responsibly.
Our CR programme and our Values coalesce
to provide a strategic framework to develop a
sustainable and responsible business by acting
ethically; developing positive relationships with
suppliers; taking care of our employees; taking
responsibility for our impact on the environment;
delivering support to our local communities; and
delivering value to our customers, shareholders
and other stakeholders.
We continue to face a number of challenges in all
our business operations; we must continue to act
fairly and responsibly as it is not only the right thing
to do but it also makes good business sense.
We are working within increasingly complex
regulations that impact on our businesses, our
customers, the suppliers we trade with, the
environment and the communities in which we
operate. However, we believe we are making
positive progress by trading responsibly and being a
great employer.
Rachel White
Head of HR
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Recruiting and retaining the
highest calibre of people to
meet our key objective
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Corporate Responsibility
People
As our businesses
continue to develop,
we understand that by
retaining and inspiring
effective and committed
employees we can
continue to deliver
excellence to all.
Visit us online
For more information please visit our
website at www.henryboot.co.uk
Our approach
To encourage continued improvement
and success across all of our businesses,
it is important we are able to create an
environment that enables us to attract
and retain the right people to work at
every level who are committed to working
together and who support our business
approach of respect, excellence,
innovation and integrity.
Working at Henry Boot means working
in an inspiring environment where our
people are a valuable asset; we are
committed to providing a working
environment in which our employees
can achieve their full potential and have
opportunities for both professional and
personal development.
We have established policies for
recruitment, training and the development
of our employees; we remain committed
to investing the time and resource to
support, engage and motivate our
employees to feel valued, to achieve
rewarding careers and to want to stay
with us, and we recruit and promote from
within wherever possible.
As our businesses continue to grow, we
understand that by retaining and inspiring
effective and committed employees we
can continue to deliver excellence to all.
Human rights
Henry Boot PLC is committed to
upholding all basic human rights, as
outlined in the United Nations’ Guiding
Principles of Business and Human
Rights. Respecting human rights is
vital to us as an employer; whilst we
do not have a specific policy, we have
other policies in place which cover key
areas of governance around bribery
and corruption, equal pay and ethics.
We also operate an externally managed
whistleblowing line for employees and
stakeholders to report concerns.
Modern slavery
The aim of the Modern Slavery Act 2015
is in line with our own Values and we
applaud any measures which seek to
bring greater transparency and scrutiny
into our various supply chains in order to
combat slavery and trafficking activities.
For more information please view
www.henryboot.co.uk/corporate-
responsibility/modern-slavery
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Equal opportunities and diversity
Henry Boot PLC is an equal opportunities
employer and will continue to ensure
it offers career opportunities without
discrimination. Full consideration is
given to applications for employment
from disabled persons, having regard to
their particular abilities. Henry Boot has
continued the employment wherever
possible of any person who becomes
disabled during their employment with
us, and opportunities for training, career
development and promotion do not
operate to the detriment of disabled
employees. The following tables show
the number of employees and the gender
mix of Henry Boot PLC employees at
December 2015:
Diversity
Male
Female
Employees who are members of
The Henry Boot Staff Pension & Life
Assurance Scheme have the opportunity
to join the Henry Boot PLC Group
Stakeholder Pension Plan, investing their
residual salary i.e. the difference between
their actual salary and their capped
pensionable salary in The Henry Boot
Staff Pension & Life Assurance Scheme.
Henry Boot PLC has implemented
the UK’s auto-enrolment pension
requirements for all wholly owned
subsidiary businesses; this is provided by
AVIVA. Employees are informed of auto-
enrolment and other pension choices
through letters and online via the Group
Intranet.
As at 31 December 2015 the
active membership of the
pension arrangements stood
at (employees):
All Employees
328
Directors
19
106
2
Senior Managers
5
27
Our pension arrangements
In 2015, we rationalised the number
of pension providers and closed the
stakeholder pension plan with The
People’s Pension (formerly B&CE); all
current members of this scheme were
transferred to the Henry Boot PLC Group
Stakeholder Pension Plan (managed by
AVIVA).
Employees are members of either
The Henry Boot Staff Pension & Life
Assurance Scheme (defined benefit
scheme closed to new members in 2004
and subject to a salary cap from 2012) or
the Henry Boot PLC Group Stakeholder
Pension Plan (defined contribution
scheme).
The Henry Boot Staff Pension
& Life Assurance Scheme
99
Henry Boot PLC Group
Stakeholder Pension Plan
315*
Road Link (A69) Limited
Pension Scheme
Stonebridge Projects Limited
Pension Scheme
5
13
*45 employees within this total have invested their
residual salary from the defined benefit scheme into
the defined contribution plan
Our performance
As part of our push for excellence
amongst our employees, we have robust
recruitment procedures in place; during
2015 we noted a distinct upturn in the
level of recruitment to new positions
across all our businesses, and are
cautiously optimistic about the future.
Our staff turnover remains relatively low
at 17%, split into 11% (voluntary leavers)
and 6% (involuntary leavers).
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We offer a wide range of training and
learning opportunities for our employees
across our businesses; we believe
that offering the right development
opportunities will help to ensure our
employees feel supported and equipped
to carry out their role to the best of
their ability. Our employees are able to
access a range of development tools
and job-specific training appropriate to
their needs; our Learning & Development
Advisor ensures that relevant and
appropriate training is provided as job-
specific training covering the technical
and operational skills; individual learning
to support an employee’s personal
needs; and mandatory training in health
and safety, first aid and manual handling
to ensure the welfare of our employees is
maintained.
In 2015 we delivered 1,203 (2014: 1,164)
training days. We are committed to
life-long learning and acknowledge that
there is a wealth of ad-hoc learning and
development which takes place on a
daily basis on our sites, in our offices and
depots. We have also produced a suite
of e-learning modules to deliver training in
the workplace; this allows our employees
to refresh specific technical skills from
their desks.
In 2015 we recruited 12 trainees and
apprentices across our businesses; all
trainees and apprentices are enrolled
on formal courses of education and
have development plans in place to gain
operational and technical knowledge from
mentors. The purpose of the programme
is to provide the opportunity to gain
experience of the role whilst working
alongside an experienced mentor to
understand the role and the business.
This programme ensures that we have a
pipeline of talent within our businesses for
the future.
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Pictured Above Left First attendees of
our Leadership Development Programme
at the University of Bradford Management
School.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Corporate Responsibility
People
Trainees and Apprentices
Inspiring and investing in the next generation ensures we
balance short-term objectives with our long-term strategic
commitments; our future will be in their hands.
In 2015 we launched our Leadership
Programme which we developed with the
support of the University of Bradford. The
specific focus of the Programme was on
the continued success of the businesses
by working in a more cohesive and
collaborative way, with a specific focus
on the development of inter-subsidiary
relationships and alignment of the
business needs for future growth. At the
end of 2015 40 employees, the majority
of whom are Directors/Senior Managers,
had participated in the Programme.
In 2016 we will be cascading this
programme to managers/supervisors
to ensure a consistent message across
all businesses.
We welcomed Megan Collins back to our
Group Finance team. Megan worked for
the Group on placement in 2013/2014
from Sheffield Hallam University where
she studied BA (Hons) Accounting &
Financial Management; Megan is now
employed as a Trainee Accountant and
is studying for her CIMA professional
qualification. The Group regularly works
with local universities to enhance our
engagement in the community and to
offer career opportunities locally.
Congratulations to Danielle Kirk-Mitchell
of Henry Boot Construction Limited in
achieving the Trainee of the Year award at
the G4C Awards and the Young Achiever
of the Year award at Constructing
Excellence in Yorkshire & Humber.
Danielle (27) joined the Company in 2007
as an administrative assistant on our
Doncaster Decent Homes contract; the
Company soon recognised the potential
in Danielle and she was offered a Trainee
Planner role and enrolled on a course
at Leeds College of Building, where she
successfully passed her course and
was promoted to Assistant Planner and
subsequently to Planner. Currently on
maternity leave following the birth of her
first child, we look forward to Danielle
returning to work and continuing to build
on her successes.
Pictured Above Investing in the future;
A quarterly trainee ‘get together’ at
Dronfield; Pictured Bottom Left Danielle
Kirk-Mitchell, Trainee of the Year at the
G4C Awards; and Pictured Bottom
Right Megan Collins receiving her degree
in Accounting & Financial Management.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Corporate Responsibility
Health and Safety
Our approach
Henry Boot PLC continues to focus
on health and safety as our primary
business priority; we remain committed
to providing a safe and healthy working
environment for our employees,
stakeholders and contractors. We
operate all our business activities on
the principle that good management
of health and safety is fundamental in
creating a safe and healthy environment,
and contributes to improving our
business performance. We expect
our managers to manage all aspects
of our business in a safe manner, and
employ practical measures to ensure our
business activities do not harm or pose
unacceptable risks.
We have developed practical and safe
systems of work which is borne out
by the Company’s exemplary safety
statistics; continuous improvement is
a key driver and we cannot stand still
on this vital area of risk management.
All employees receive health and safety
training relevant for the job role they
perform; by developing communications
and knowledge in this key area we are
enabling our employees to improve the
way we recognise hazards and reduce
risk.
Our performance
We continue to benchmark our health
and safety performance against
Constructing Excellence Health and
Safety Key Performance Indicators. In
2015 we have seen a reduction in our
accident frequency rate (AFR) to 0.08
per 100,000 hours worked including
our subcontractors (2014: 0.12); we
are delighted to report that for another
year our AFR for our directly employed
employees is again zero.
As a further check to ensure the
company processes and procedures
are robust and to test our procedures to
the limit, ‘Mock Emergency Incidents’
are staged to test the robustness of
the current management systems in
an emergency situation, together with
legal advice, facilitated by law firm
Nabarro LLP. The outcome of these
has been positive, demonstrating
good awareness and robustness of
Company procedures. The most recent
exercise was carried out in September
2015 at Fox Valley, Stocksbridge, our
town centre redevelopment project. A
full ‘debrief’ was held with employees
involved to communicate and discuss
the outcome and learning points from
the mock incident.
We continue to receive recognition
for our efforts in managing health and
safety, and were again recipients of
the RoSPA Gold Medal, and the CIOB
Celebrating Construction in South
Yorkshire Health & Safety Award.
During 2015 we pledged our
commitment to IOSH’s No Time to
Lose campaign, which aims to increase
awareness of significant health issues
specifically in relation to carcinogenic
exposure and workplace cancers, which
account for over 600,000 deaths per
year worldwide.
In addition to this, we have developed
a wellbeing area on our Group Intranet
to focus on health issues on a monthly
basis; this will coincide with national
campaigns and be supplemented by
more generic wellbeing information.
Pictured Below Celebrating at the CIOB
Construction Awards 2015 – Winners of
the Health and Safety Award for South
Yorkshire.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Corporate Responsibility
Communities
Our approach
With a nationwide presence and a
regionalised focus in Yorkshire, we offer
support to a wide range of charities and
organisations of all sizes, by working to
provide them with donations that are of
most benefit to them and their particular
cause, whether it be a financial donation
or our wide and varied expertise.
We do not support a single Charity of the
Year as we want to have a broader impact
by working with a much wider group of
charities and organisations.
Our areas of focus are to:
• charities and organisations local to our
business operations;
• charities and organisations that support
educational improvements for children/
adults; and
• charities and organisations that support
social improvement through sport.
Where a request for support falls outside
of this criteria, we signpost the applicants
(if eligible) to South Yorkshire Community
Foundation where the Company has a
number of endowment funds which offer
grants. Further details are on our website.
Our performance
We are committed to contributing
long-lasting social and economic benefits
for the communities in which we work.
We continue to support and promote
a wide range of charitable giving and
community volunteering initiatives by
employees, focusing on activities that best
reflect the needs of their local community
and issues of direct significance for them.
This year, the Group contributed £32,600
to charitable causes, £13,078 of which
was through our Give As You Earn payroll
giving mechanism.
In 2015 our employees participated in
The Master Cutler’s Challenge, one of the
largest charity fundraising events in our
home city of Sheffield. Local businesses
are invited to participate and are given the
opportunity to transform a £50 investment
into as much fundraising as possible for
charities nominated by the incumbent
Master Cutler; in 2015 the charities
were The Brathay Trust and Help for
Heroes. Colleagues from across all of our
businesses dug deep and transformed
our £50 into £10,120 through a wide
variety of events including a BBQ, football
tournament, a night of greyhound racing,
cake sales and other more traditional
activities. Our employees enjoyed the
various events and it is our intention to
participate in the Challenge in 2016 when
the beneficiaries will be St Luke’s Hospice
and Rotherham Hospice.
We continue to support The Prince’s Trust
as a member of the leadership team in
Yorkshire and the Humber; we hope to
develop this relationship further and utilise
some of the more innovative offerings
to supplement our trainee development
programme.
In 2015 we became sponsors of Steel City
Wanderers, a local women’s football team;
following on from the success of This Girl
Can and the England women’s football
team, we offered our assistance through
financial and technical support. Through
this partnership we hope to develop
opportunities to encourage women to
consider our industry as a viable career
option.
Our employees continue to push
themselves out of their comfort zones
with their own charitable fundraising; in
2015 our employees raised in excess of
£10,000 for various charities by climbing
mountains and participating in other
endurance events.
Our construction business continued
its involvement with the Considerate
Constructor Scheme, and achieved a
Silver award for the ASRA Bilsthorpe site;
the average score in 2015 was 37.37.
In December 2015 we were delighted
to accept the Yorkshire Business Award
for Corporate Responsibility on behalf
of Henry Boot PLC, voted for by our
peers in the region. It was gratifying to
receive an acknowledgment of what we
are attempting to achieve with our CR
programme; we are not seeking to gain
anything from the participation we have
within our communities - we are simply
doing what is right, using our resources
to assist and create impact.
Pictured Top Left Proud sponsors
of Steel City Wanderers, working in
partnership with the local community;
and Pictured Top Right Rachel White
accepting the Yorkshire Business Award
for Corporate Responsibility.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Corporate Responsibility
Environment
Our approach
Our overarching aim is to minimise
the impact on the environment of our
operations and those of our supply
chain by using resources efficiently and
reducing our waste and carbon outputs.
We recognise that we have a
responsibility and an obligation to reduce
the direct impact of all our business
operations on the natural environment
both now and in the future.
Reducing our emissions is one way in
which we hope to achieve this; our aim
is to create more sustainable ways of
undertaking our business operations to
conserve energy, save money and deliver
efficiency.
Our performance
Our priorities are to:
• minimise waste produced;
• increase recycling; and
• improve energy efficiency and reduce
energy use.
In 2015 Henry Boot Construction Limited
in partnership with Banner Plant Limited
introduced the use of ECO cabins on
site; these new cabins include enhanced
insulation, PIR lighting, double glazing,
non-concussive taps, waterless urinals
and thermostatically controlled heaters.
The new cabins not only ensure the site
carbon footprint is minimised but also
provide increased comfort to employees
and visitors.
Our focus is on the segregation of waste
on our sites and we have achieved a
recycling rate of 95% (2014: 94%).
We were proud recipients once again
of Gold status on the Business in the
Community National Environmental Index.
Our greenhouse gas (GHG) emissions for
the year ended 31 December 2015 were
calculated in accordance with the GHG
Protocol Corporate Accounting and
Reporting Standard (revised edition) and
emission factors from UK Government
GHG Conversion Factors for Company
Reporting 2015.
Our direct and indirect operational
greenhouse gas emissions are shown
in the tables below. These sources
fall within our consolidated Financial
Statements; we do not have responsibility
for any emission sources that are not
included in our Financial Statements.
Overall the Group’s greenhouse gas
emissions have reduced by 12% when
compared to those of the previous year.
This equates to a decrease of 0.71 tonnes
per employee.
For further information on our greenhouse
gas emissions please see our website:
www.henryboot.co.uk/corporate-
responsibility/our-environment
Henry Boot Group CO2 footprint by source
Henry Boot Group CO2e emissions
Scope 1: Combustion of fuel and operation of facilities
Scope 2: Electricity, heat, steam and cooling purchased for own use
Total direct emissions
2015
Tonnes
2,048
1,122
3,170
2014
Tonnes Trend
2,288
1,337
3,625
Total direct emissions per employee1
7.3 tonnes CO2e
7.90 tonnes CO2e
Scope 3: Upstream and downstream indirect emissions
Total emissions
Total emissions per employee1
1 Employee numbers are based on the monthly average for the year
Carbon emissions by segment
908
4,078
1,017
4,642
9.4 tonnes CO2e
10.11 tonnes CO2e
Henry Boot Group CO2e emissions
2015 Tonnes
of CO2e
Property investment and development
1,021
Land development
Construction
Group overheads
Total gross controlled emissions
114
2,776
167
4,078
2015
Intensity
Ratio
Tonnes of
CO2e
2.11
3.44
34.9
3.21
2014
Tonnes of
CO2e
2014
Intensity Ratio
Tonnes of
CO2e
1,234
2.58
Intensity
Basis Trend
per 1,000 sq ft of
investment property with
communal areas
123
3,108
177
4,642
3.96
37.73
3.41
per employee
per £1m of turnover
per employee
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31
12/04/2016 13:35:17
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Performance
Q
You have a published
aim to achieve and
maintain a return on
capital employed of
between 10-13% as
a benchmark of a
successful business in
the property sector.
How have you
progressed this year
and do you see any
factors that could affect
this ongoing target?
A A strong overall operating profit
increase of 13.3%, helped in
particular by our strategic land
division, has generated a return on
capital employed of 12.2% (2014:
11.4%).
This higher return was achieved on a 5.6% higher
level of capital employed as we build our business
strength.
Our return on capital employed is impacted by our
profit margin and the rate at which we generate
sales from our assets. We are continually looking
at ways to reduce our cost base across all of our
businesses and actively look to improve efficiencies
through the use of new technologies and working
practices. Margins remain highly competitive within
the construction segment and the future price of
both materials and labour has a large impact here.
Within the land segment the speed at which assets
can be disposed of is highly dependent upon the
planning system and the appetite of the major house
builders for new land, whilst the property segment
is subject to the market demand for new property,
the residential sales arena and the speed with which
large and often complex development schemes can
be brought to fruition.
Darren Littlewood
Group Finance Director
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
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Achieving a return on capital
in excess of 10% per annum
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Henry Boot Annual Report 2015 Strategic.indd 33
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12/04/2016 13:35:23
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Financial Review
Maintaining stable
gearing levels despite
significant growth
activity
Our consistent strategic approach to the markets in which
we operate has again allowed us to achieve a result ahead of
management expectations and is testimony to the cohesive
way in which all of our operating segments work together to
achieve our Group-wide financial objectives.
Highlights
of the year
• Profit before tax increased by
14% to £32.4m
• Basic earnings per share
increased by 8% to 17.5p
• Dividends per ordinary share for
the year increased by 9% to a
record 6.10p
Consolidated Statement of
Comprehensive Income
Revenue increased 20% to £176.2m
(2014: £147.2m) resulting from increased
activity within the property development
market. Gross profit increased 22% to
£53.3m (2014: £43.7m) having benefitted
from higher land sale profits on land we
owned. Administrative expenses saw an
increase of £2.1m resulting from further
investment across all operating segments
to support the increased activity in
2015 and the forecast levels of activity
we envisage. Pension related costs
increased £0.5m (2014: decrease £0.4m)
as we introduced auto-enrolment and
incurred increasing levies imposed by the
Pension Protection Fund relating to our
defined benefit pension scheme. Property
revaluation losses were £2.0m (2014:
gain £1.9m) and were derived from
positive movements in the market values
of certain existing and newly completed
investment properties of £7.5m, offset
by the recognition of valuation deficits
on certain other properties amounting to
£9.5m. The deficits arose from a town
centre redevelopment site which is now
expected to be a much smaller scheme
than originally envisaged, an investment
property marketed for sale where
difficulties with occupiers have led to
offers being received significantly below
initial expected values and a development
property site where we have not yet
obtained any significant interest. Overall,
operating profits increased 13% to
£31.7m (2014: £28.0m) and, after
adjusting for net finance costs and our
share of profits from joint ventures, we
achieved a profit before tax of £32.4m
(2014: £28.3m), an increase of 14%.
The segmental result analysis shows
that Land Development produced a
significantly improved operating profit
of £20.0m (2014: £14.1m). Property
Investment and Development operating
profit decreased to £7.3m (2014: £8.7m)
as a result of higher trading profits being
offset by the site revaluation deficit noted
above. Construction segment operating
profits decreased slightly to £8.9m (2014:
£9.2m) after improved results within the
construction and plant hire businesses
were offset by a reduction in toll income
from our Road Link PFI investment due to
significant falls in crude oil prices affecting
the toll revenue inflation factor. These
results continue to demonstrate how
the benefits of a broad-based operating
model work to the benefit of our Group.
We recognise that our strategic land and
commercial development businesses
operate within deal-driven markets
which can vary significantly from year to
year but these potential fluctuations are
mitigated by the relatively stable returns
from the Construction segment.
Tax
The tax charge for the year was £7.5m
(effective rate of tax: 23%) (2014: £4.8m
and effective rate: 17%), increasing
largely due to a net investment property
revaluation deficit which, as in previous
years, is not tax deductible until realised.
Current taxation on profit for the year was
£5.6m (2014: £4.4m), with the charge
for the year benefitting from joint venture
profits which are included net of tax and
adjustments in respect of earlier years.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
The deferred tax charge increased
to £1.9m (2014: £0.4m), resulting
from a more prudent approach to
the recognition of deferred tax assets
expected to be obtained from capital
allowances and a reduction in the future
reversal rate applied to the deferred tax
asset brought forward from 20% to 18%.
Our unrecognised deferred tax asset has
increased to approximately £2.3m (2014:
£0.8m).
Earnings per share
and dividends
Basic earnings per share was 8% higher
at 17.5p (2014: 16.2p). The total dividend
payable for the year has been increased
by 9% to 6.10p (2014: 5.60p), with the
proposed final dividend also increasing
by 9% to 3.80p (2014: 3.50p), payable
on 31 May 2016 to shareholders on the
register as at 29 April 2016. The
ex-dividend date is 30 April 2016.
Return on capital
employed (ROCE)
Higher pre-tax profitability in the year
resulted in improved return on capital
employed of 12% in 2015 (2014: 11%).
We continue to target a rate of return of
between 10% and 13% as we believe
over the business cycle, in the longer
term, this is the level of return achievable
by a cautiously successful business in the
property sector.
Finance and gearing
Net finance costs have reduced to £0.2m
(2014: £0.8m) as a result of improved
returns on our investments. Average
borrowing costs were similar to those
of the previous year and it is anticipated
that interest costs will remain similar in
2016 as increased activity maintains
our current annualised borrowing levels.
It appears unlikely that any upward
change in interest rates will be seen in
the short-term, however, should any
increase occur, we do not believe it
will result in a material adjustment to
our borrowing costs. We expect to
continue our investment in both our land
and development assets at a similar
level to 2015 as we recycle capital into
future opportunities and anticipated
development activity.
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certain land development sites. All bank
borrowings continue to be from facilities
linked to floating rates or short-term fixed
commitments. In February 2015, we
agreed a new three year £60m facility
with covenants on a similar basis but
on more competitive margin terms. The
agreed terms also allow for the possible
extension of the facilities for a further
two more years on the same terms,
subject to agreement between the banks
and the Company and we have agreed
the first one year extension in February
2016. Throughout the year we operated
comfortably within the facility covenants
and continue to do so.
Interest cover, expressed as the ratio of
operating profit (excluding the valuation
movement on investment properties and
disposal profits) to net interest (excluding
interest received on other loans and
receivables), was 23 times (2014: 19
times). No interest incurred in either year
has been capitalised into the cost of
assets.
We have seen continued investment in
our strategic land holdings and in the
property development portfolio. This
was again achieved by using internally
generated cash flows so that total
year end net debt only rose marginally
to £38.9m (2014: £36.4m). Gearing
on net assets of £221.5m remains
conservative at 18% (2014: net assets
£200.5m; gearing 18%). Total year end
net debt includes £8.6m (2014: £7.7m)
of funding which is repayable from
the future sale of residential units on
Pictured Markham Vale, Derbyshire:
we exchanged unconditional contracts
with Great Bear Distribution Limited on a
480,000 sq ft distribution centre.
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Henry Boot Annual Report 2015 Strategic.indd 35
24415.04 12 April 2016 1:31 PM Proof 6
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Financial Review continued
Statement of cash flows
Property development transactions and
land deals do not lend themselves easily
to bank funding. We, therefore, look to
maintain an investment property portfolio
of around £100m against which we can
secure bank funding to allow us the
flexibility to undertake these transactions
without reference to specific funding from
banks. Our investment property portfolio
assets have again provided the covenant
support for the new £60m banking
facilities. Forecast bank debt levels at
the end of 2016 are anticipated to be
similar to those at the end of 2015 as
we continue to reinvest cash generated
into new opportunities. During 2015, we
increased operating cash flows before
movements in working capital by £6.5m
to £31.4m (2014: £24.9m) and, after
a further year of investment in working
capital of £26.2m (2014: £10.0m), we
achieved cash generated from operations
of £5.2m (2014: £14.9m).
Cash inflows from investing activities of
£6.9m (2014: outflow £0.3m) resulted
from disposals of £23.4m (2014: £16.8m)
of investment property and property,
plant and equipment sales offset by new
investment of £17.2m (2014: £17.4m)
in new property development, plant
purchases and investment in associates.
Dividends paid, including those to
non-controlling interests, totalled £9.7m
(2014: £8.6m), with dividends paid to
equity shareholders increasing by 11%.
Statement of
financial position
Investment property and assets classified
as held for sale were valued at £125.3m
(2014: £141.8m). The fair value of
completed investment property including
assets held for sale was £103.7m (2014:
£99.4m) and the value of investment
property under construction within
investment property is £21.6m (2014:
£42.4m) as we develop these assets into
investment properties.
Intangible assets reflect the Group’s
investment in Road Link (A69) of
£5.8m (2014: £6.7m). The treatment
of this asset as an intangible asset is
a requirement of IFRIC 12 and arises
because the underlying road asset
reverts to the Highways Agency at the
end of the concession period. Property,
plant and equipment comprises Group
occupied buildings valued at £6.9m
(2014: £6.8m) and plant, equipment and
vehicles with a net book value of £14.1m
(2014: £12.3m); this increase arose from
continued investment in new plant and
plant delivery vehicles. Non-current trade
and other receivables have increased to
£10.5m (2014: £4.8m) resulting from a
net increase in long-term payment plans
associated with land sales completed
during the year. The non-current deferred
tax asset decreased as a result of the
lower IAS 19 pension deficit. In total,
non-current assets reduced to £170.7m
(2014: £180.7m).
Within current assets, inventories of
£138.9m (2014: £117.5m) increased due
to further investment in the land portfolio
to £106.8m (2014: £99.6m) and assets
in the course of construction increased to
£32.1m (2014: £17.9m). Trade and other
receivables also increased to £54.4m
(2014: £50.1m) as a result of a number of
land sales which concluded in December
2015. This also led to an increase in
cash and cash equivalents where cash
received could not be offset against
short-term loan drawdowns at that time.
In total, current assets increased to
£205.4m (2014: £172.1m).
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Current liabilities increased to £116.6m
(2014: £107.1m) as the portion of debt
classed as current increased to £42.8m
(2014: £32.0m). However, if we were
to offset the cash current asset, current
debt would be £30.8m (2014: £27.6m).
Trade and other payables decreased
to £64.4m (2014: £68.8m) resulting
mainly from lower levels of payments
on account relating to construction
contracts. Provisions increased to £5.7m
(2014: £4.3m) as previously non-current
provisions moved into the current period
and continue, in the main, to relate to
infrastructure planning obligations at
Bridgwater and Cranbrook, Exeter.
Net current assets increased to £88.8m
(2014: £65.0m). This increase is
predominantly due to further investment
in land inventories, increased debtors
and reduced creditors as we operate at a
higher general level of activity throughout
the Group. Non-current liabilities reduced
to £37.9m (2014: £45.3m) after IAS 19
pension liabilities reduced to £19.6m
(2014: £28.2m).
Net assets increased by 10% to £221.5m
(2014: £200.5m) as retained profits and
the reduction in the pension deficit were
offset by dividends paid and treasury
share purchases. Net asset value per
share increased 10% to 168p
(2014: 152p).
Pension scheme
The IAS 19 deficit at 31 December 2015
was £19.6m compared to £28.2m at 31
December 2014.
Despite the very turbulent market
conditions which prevailed during the
period, the pension scheme’s assets
performed satisfactorily. The IAS 19
deficit was helped by marginal changes
in the discount rate, 2015: 3.8% (2014:
3.6%), and the Company’s contributions.
As we have noted in previous years, a
discount rate of 4.75% would result in a
negligible deficit.
The pension scheme’s assets continue
to be invested globally with high quality
asset managers, using a broad range of
assets and diversification. The pension
scheme trustees regularly consider
the merits of both the managers and
asset allocations and, along with the
Company, review the returns achieved by
the asset portfolio against the manager
benchmarks; making changes, as
the trustees consider appropriate, in
conjunction with investment advice from
KPMG.
Darren Littlewood
Group Finance Director
22 April 2016
£176.2m
Revenue up by £29m,
an increase of 20%
over the year of 2014
10%
increase in net asset
value to £221.5m
(2014: £200.5m), with
net asset value per
share also increased
by 10% to 168p
3.80p
Proposed final
dividend, an increase
of 9% over 2014
payment
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Pictured Left Cranbrook, Exeter saw
residential occupancies exceed 1,150
in the 21/2 years since sales launch;
and Pictured Right Environmentally
sustainable office units built at Fountain
Court, Doncaster for Workpods Limited.
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37
12/04/2016 13:35:30
Henry Boot Annual Report 2015 Strategic.indd 37
24415.04 12 April 2016 1:31 PM Proof 6
Key Performance IndicatorsFinancialEach business unit within the Group is required to establish targets at the beginning of each financial year against a broad range of financial and non-financial indicators.The Managing Director of each subsidiary reports on progress at Board meetings every two months. The two main Board Executive Directors attend these meetings and are able to assess whether each unit is performing in accordance with its plan throughout the year.Profit before tax (£m)Cash generation (£m)Dividends per ordinary share (p)2015201420132012(£0.3)(£14.2)(£19.6)2011£9.1(£2.5)201520142013201220116.10p5.60p5.10p4.70p4.25p20152014201320122011£32.4£28.3£18.4£13.4£16.1Objective To increase profit levels over timePerformance 14% increaseComments Increased land sales generating higher profits in 2015. 2016 looks positive in terms of all aspects of the business but especially land and property developmentObjective To monitor cash generated over timePerformance Cash outflow £2.5mComments We continue to reinvest retained earnings in the portfolio of land and property development assetsObjective To generate growing shareholder returns over timePerformance 9% increaseComments 9% increase to 6.10p as we move dividends to new record level2015201420132012201117.5p16.2p8.6p7.0p6.9p20152014201320122011168p152p148p139p142p2015201420132012£221.5£200.5£193.5£181.92011£184.8Objective To grow the asset base over timePerformance 10% increaseComments Increased due to higher profits and retained earnings assisted by a decrease in the pension deficit which was affected by the increase in bond yieldsObjective To increase returns over time Performance 8% increaseComments Increased due to higher retained profits helped by improved returns from land disposalsObjective To increase shareholder value over timePerformance 10% increaseComments Little change to share capital; therefore, benefits from the increase in retained earningsNet assets (£m)Earnings per ordinary share (p)NAV per share (p)On TargetOn Target On Target On TargetOn Target On Target Overview24415.04 12 April 2016 1:31 PM Proof 638Henry Boot PLCAnnual Report and Financial Statements for the year ended 31 December 2015www.henryboot.co.ukStock Code: BHYStrategic ReportHenry Boot Annual Report 2015 Strategic.indd 3812/04/2016 13:35:30 Land Development The size of the strategic land bank, the split between owned and optioned land, the number of allocated sites and changes to those allocations, the extent to which we have full or outline planning consent and the number of residential units or commercial space contained in those consentsProperty Investment and DevelopmentThe expected investment in developments, expected completed values and anticipated yields, rents and rental growth, levels of tenant demand and unlet space, new commercial property investment and development opportunities and potential asset salesConstruction Workload forecasts and capacity utilisation in relation to plan, general activity levels, tender opportunities, contract costing workload and wins, health and safety and environmental matters and contract completion, sign off and financial closure. Activity levels by depot and class of asset, health and safety matters, levels of cash generated and returns on plant asset capital employed, which in turn drive asset investment decisions. Group At Group level the business units’ financial performance against expectations forms an integral part of the reporting criteria. In addition, Group performance indicators of cash and facilities, pension scheme performance, shareholder return and return on capital employed along with health and safety matters are reported on at each meeting.Linking Performance to RewardShareholder return (%)Gearing levels (%)201520142013201218%18%19%12%20111%201520142013201218%0%52%13%201136%Objective To generate growing shareholder returns over timePerformance 18 ppt increase in yearComments Share price 14.7% over the year which, coupled with the increase in dividends, gave rise to a return over the last 3 years of 77.7%, comfortably above the median of the All Share and Small Cap indices On TargetObjective To monitor levels of cash required over timePerformance No change during the yearComments This still prudent gearing level gives us flexibility to reinvest in land sites and property development. 2016 should see these levels maintainedOn TargetReturn on capital employed (%)Pension scheme deficit (£m)2015201420132012£19.6£28.2£20.1£30.52011£22.6201520142013201212.2%11.4%8.3%6.2%20117.3%Objective To increase returns on capital employed over timePerformance 7% increaseComments Healthy improvement in returns over the last three years. Continued to generate the kind of returns to meet our aspirationsOn TargetObjective To reduce the pension scheme deficit over timePerformance 30% decreaseComments Discount rate used by IAS 19 has increased to 3.8% from 3.6%. The pension scheme assets achieved a satisfactory return. A discount rate of 4.75% would result in a negligible deficit On TargetThe KPIs differ in each subsidiary with the exception of financial targets, which focus on profitability growth, cash generation and levels of debt, forecast cash requirements, return on capital employed, shareholder return and asset value created.We also review health and safety matters and how economic conditions and changes in legislation may affect individual business units. The Board has decided that the following KPIs, which are included within the papers for each Board meeting, are indicators measuring our success towards achieving long-term, sustainable growth for all stakeholders in our business.Read more on pages 12 to 15Read more on pages 16 to 19Read more on pages 32 to 37Read more in our Directors’ Remuneration Report on pages 64 to 73Read more on pages 20 to 2324415.04 12 April 2016 1:31 PM Proof 6Henry Boot PLCAnnual Report and Financial Statements for the year ended 31 December 2015www.henryboot.co.ukStock Code: BHY39GovernanceFinancial StatementsShareholder InformationOverviewStrategic ReportHenry Boot Annual Report 2015 Strategic.indd 3912/04/2016 13:35:31 Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Key Performance Indicators
Non-Financial
We have identified a number of key performance indicators (KPIs) against which we
measure our corporate responsibility. These are monitored during the year and action
taken if necessary.
Accident frequency rate (AFR)
Accident frequency rate (AFR)
Personal development (days)
(per 100,000 hours worked – employees)
(per 100,000 hours worked inclusive
of subcontractors)
0.31
0.20
1,306
1,203
1,164
1,085
927
0
0
0
0
0
2011
2012
2013
2014
2015
0.12
0.08
0.06
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Objective
Our health and safety
Objective
Our health and safety
Objective
Our people
Performance
To ensure a reducing number of
reportable health and safety incidents
when measured against the Constructing
Excellence Health and Safety KPIs.
Performance
To ensure a reducing number of
reportable health and safety incidents
when measured against the Constructing
Excellence Health and Safety KPIs.
Performance
To ensure that our employees are trained
to the appropriate level and are given
adequate opportunity to develop their
careers.
Comments
Another successful year of zero incidents
affecting our directly employed staff.
Comments
Our ongoing education of our sub-
contractors and the closer monitoring of
their working practices continues.
Comments
A slight increase in development days,
reflective of an increase in trainee and
apprentice recruitment.
Reportable accidents
Employee profile
BITC Environmental Index (%)
5
3
2
1
1
439
92
347
438
100
338
450
103
459
111
347
348
434
106
328
91
95
97
94
94
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
2011
2012
2013
2014
2015
Objective
Our health and safety
Objective
Our people
Objective
Our environment
Performance
To ensure a reducing number of
reportable health and safety incidents
when measured against the Constructing
Excellence Health and Safety KPIs.
Comments
It is an ongoing priority and focus of
the Group to commit to ensuring health
and safety is paramount. 2015 saw a
decrease in reportable incidents.
Performance
To ensure a diverse spread of genders
within all job roles in the Group.
Comments
We currently have a gender split of 76%
male to 24% female. In order to address
this we are working closely with external
partners to encourage under-represented
groups into the industry.
Females
Males
Performance
To be acknowledged by a recognised
body as being a leader in environmental
management in our region.
Comments
A decrease in our scoring due to
realignment of the process means that
we are now classed as Gold status;
the Company will endeavour to regain
Platinum status in the future.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Considerate Constructor Scheme
34.3
34.7
36.1
37.1
37.4
2011
2012
2013
2014
2015
Objective
Our community
Performance
To be classified as a ‘good neighbour’
when scored against the Considerate
Constructor Scheme score of 50.
Comments
Another solid year of performance which
saw achievement of several high scores
in the five categories across our sites.
Recycling – diverted from landfill (%)
93
93
94
94
95
2011
2012
2013
2014
2015
Objective
Our environment
Performance
To reduce the amount of spoil going to
landfill by recycling, reusing or upcycling.
Comments
We continue to improve our methods of
work to try to reduce this number further.
Our accreditations and awards
Henry Boot PLC is one of the UK’s leading and long-standing land development,
property investment and development, and construction companies; renowned
for quality and a diverse portfolio, we pride ourselves on maximising long-term
shareholder value. We have a reputation for providing a quality product, delivered in
a safe way, which will continue to provide revenue growth in our chosen markets.
Our success can be measured in many ways; and this is apparent by the number of
accreditations and awards we continue to receive.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Managing Risk
In common with all organisations, the Group faces risks that may affect its performance.
The Group operates a system of internal control and risk management in order to provide assurance that it is managing risk whilst
achieving its business objectives. No system can fully eliminate risk and therefore the understanding of operational risk is central to
the management process within Henry Boot. The long-term success of the Group depends on the continual review, assessment
and control of the key business risks it faces. To enable shareholders to appreciate what the business considers are the main
operational risks, they are briefly outlined on pages 43 to 46.
Centralised
operations
Specific risks and compliance
issues associated with health
and safety, treasury and
banking operations, company
secretarial, pensions, legal,
human resources and
training, public and investor
relations, information
communication technology
and insurance
TOP DOWN
Group Board
Reporting framework
The Board monitors the risk and associated controls
over financial reporting processes, including the
consolidation process
Audit Committee
Internal framework
The financial reporting controls are monitored and
maintained through the use of internal control
frameworks which address key financial reporting
risks, including risks arising from changes in the
business or accounting standards
Managing Directors
Business procurement
Development appraisals, land purchases, options,
planning promotion agreements and construction
contracts above a certain value require the authority of
the Executive Directors to proceed
Business units
Day-to-day operations
Policy and procedure manuals cover major areas
of their operations, including safety, purchasing,
estimating, marketing, production and quality
BOTTOM UP
Independent
review
Review risk assessment
and reporting
Risk
assessment
Read more about
Our Strategy on page 8
Read more about
Our KPIs on pages 38 to 41
Read more about
Our Governance on pages
48 to 79
Read more about
Our Activities and
Resources on page 11
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Risk and
description
Health & Safety
Inherent risk within
construction activity
Construction
Increased cost and lower
availability of skilled labour,
subcontractors and building
materials
Environmental
The Group is inextricably linked
to the property sector and
environmental considerations are
paramount to our success
Stricter environmental legislation
will increase development and
house building costs and therefore
could impact on profitability if
capital and land values do not
increase to reflect more efficient
energy performance
Development
Not developing marketable
assets for both tenants and the
investment market on time and
cost effectively
Mitigation
Change in risk
environment
during 2015
• Priority consideration of all Group and subsidiary board meetings
• Robust training, policies, procedures and monitoring
• Internal independent Health & Safety Manager who conducts
regular random inspections
• Routine Director and Senior Manager safety inspections
• Regular externally reviewed mock incidents
• Quality training given to grow personnel internally
• Pool of approved and checked subcontractors subject to regular
review
• Group purchasing arrangements and preferred supplier agreements
• Forward planning to increase ordering times and availability of
materials
• Our interaction with the environment and the agencies that have an
overarching responsibility has to be positive at all times in order to
achieve best value
• Through the National Federation of Builders the Group attempts to
reduce the impact on our business
• Internal design helps mitigate environmental planning issues
• Record of awards given in respect of good safety and
environmental performance
• Environmental impacts addressed at main Board and each
subsidiary company board meeting
• Monthly performance meetings
• Defined appraisal process
• Monitoring of property market trends
• Highly experienced development team
• Flexible to market trends in development requirements
• Diverse range of sites within the portfolio
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Rising market yields on
completion making development
uneconomic
• Active asset management
• Monitoring property market trends
• Only develop when yields are stable
• Development subject to a ‘hurdle’ profit rate
Construction and tenant risk which
is not matched by commensurate
returns on development projects
• Construction projects, including returns and cash flows, are
monitored monthly by subsidiary company management teams
• Seek high level of pre-lets prior to authorising development
• Development subject to a ‘hurdle’ profit rate
• Shared risk with landowners where applicable
Key:
Increased
Decreased
No Change
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Managing Risk continued
Risk and
description
Land
Mitigation
Change in risk
environment
during 2015
The inability to source, acquire
and promote land would have a
detrimental effect on the Group’s
strategic land bank and income
stream
• Monthly operational meetings detail land owned or under control,
new opportunities and status of planning
• Each land acquisition is subject to a formal appraisal process which
must exceed the Group defined rate of return and is subject to
approval by the Group’s Executive Directors
• Land bank of over 11,000 acres with aspiration to grow further.
Over time the land bank acreage has shown steady growth
• Finance available to support speculative land purchases
• Well respected name within the industry that demonstrates success
• Long-established contact base
• Large land bank can help smooth short-term fluctuations
A dramatic change in house
builder funding sentiment and
demand for housing can have a
marked change on the demand
and pricing profile for land
• The Group’s policy is to only progress land which is deemed to be
of high quality and in prime locations
• The business is long term and is not seriously affected by short-
term events, or economic cycles
• We recognise cyclicality in our long-term plans and operate with a
relatively low level of debt
• Greenfield land is probably the most sought after land to build upon
• Long-term demographics show growing trend; therefore demand
for land will follow
• House builders do have very good land banks and can be choosy
regarding what they buy
• The Group’s highly skilled in-house technical and planning teams
monitor changes in the market and in the planning process and
react accordingly to ensure that planning consents are achieved in
the most cost-effective and timely manner, whilst ensuring
a broad spread of developments remain in the
planning system at any one time
• Good local knowledge assists in bringing forward land and
contractual agreements ensure land can be brought to market at an
appropriate time
• Long-established successful operator
• Inventory of approximately 150 sites in progress throughout the UK
• Sites are typically greenfield and of a high quality
• Large land bank can help smooth short-term fluctuations
• A high profit margin can be achieved when successful
• No revaluations are taken on land through the planning process;
therefore though profits may be smaller if site values fall the Group
should still achieve a good profit margin on sale
Planning
Increased complexity, cost and
delay in the planning process may
slow down the project pipeline
Changes in Government or
Government policy towards
planning policies could impact on
the speed of the planning consent
process or the value of sites
Key:
Increased
Decreased
No Change
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Risk and
description
Economic
Mitigation
Change in risk
environment
during 2015
The Group operates solely in the
UK and is closely allied to the
real estate, house building and
construction sectors. A strong
economy with strong tenant
demand is vital to create long-term
growth in rental and asset values,
whilst at the same time creating a
healthy market for the construction
and plant hire divisions.
• Strong Statement of Financial Position with low gearing and long-
term shareholder base means that we can ride out short-term
economic fluctuations
• Different business streams increase the probability that not all of
them are in recession at the same time
• The City recognises the Group is a cyclical business and
understands performance will be affected by economic cycles
• Directors and shareholders share a common goal of less aggressive
leveraging than some competitors
• Current market conditions are supportive
Personnel
Attraction and retention of the
highest calibre people with the
appropriate experience is crucial
to our long-term growth in the
highly competitive labour markets
in which the Group works
Treasury
The lack of readily available
funding to either the Group or
third parties to undertake property
transactions can have a significant
impact on the marketplace in
which the Group operates
Investments
Identifying and retaining assets
which have the best opportunity
for long-term rental and capital
growth, or conversely selling those
assets where capital values have
been maximised
• This risk is reduced as unemployment rises and recessionary
conditions prevail
• Good long-term employment record indicates that good people
stay within the Group. The Group encourages equity ownership
• Proven record of sharing profits with staff
• Succession planning is an inherent part of management process
• The Group has agreed three-year facilities with its banking
partners which were renewed in February 2015 and are backed by
investment property assets
• Detailed cash requirements are forecast up to 15 months in
advance and reviewed and revised monthly
• Short-term positive cash balances are placed on deposit
• Group funding levels are prudent in relation to the Statement of
Financial Position
• As a PLC access to equity funding is available should this be
required
• This is an ongoing process with regular reviews of the assets and
market conditions to achieve best value
• Broad range of development opportunities to choose from
• Investment assets are seen as tradable if required
• We have a record of recycling assets into funding
for new developments
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Strategic Report
Overview
Managing Risk continued
Risk and
description
Mitigation
Change in risk
environment
during 2015
Interest Rates
Significant upward changes in
interest rates affect interest costs,
yields and asset prices and reduce
demand for commercial and
residential property
Counterparty
Depends on the stability of
customers, suppliers, funders and
development partners to achieve
success
Pension
The Group operates a defined
benefit pension scheme which has
been closed to new members for
12 years. Whilst the Trustees have
a prudent approach to the mix of
both return-seeking and fixed-
interest assets, times of economic
instability can have an impact
on those asset values with the
result that the reported pension
deficit increases. Furthermore,
the relationship between implied
inflation and long-term gilt yields
has a major impact on the pension
deficit and the business has little
control over those variables
• Statement of Financial Position strength allows the Group to
warehouse sites in tough markets
• Long-term nature of land business helps smooth
short-term interest rate impacts
• Interest cover over 20 times; gearing relatively low and therefore
significant scope to deal with interest rate rises
• In recessionary periods the Group pays particular attention to the
financial strength of counterparties before contracting with them in
order to mitigate financial exposure
• Operation of Trustee approved Recovery Plan
• Whilst pension schemes are a long-term commitment, regulations
require the Group to respond to deficits in the short term
• Move out of gilts will provide a cushion should rates rise
• Risk mitigated by move to diversified growth funds on around 30%
of assets
• Treat pension scheme as any other business segment to be
managed
(Discount rate
increased by 20bps)
• Strong working relationship maintained between Company sponsor
and pension Trustees
• Use good quality external firms for actuarial and investment advice
Key:
Increased
Decreased
No Change
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Going concern
The Directors have, at the time of
approving the Financial Statements,
a reasonable expectation that the
Company and the Group have adequate
resources to continue in operational
existence for the foreseeable future. Thus
they continue to adopt the going concern
basis of accounting in preparing the
Financial Statements.
Viability Statement
Introduction
The business model and strategy of
Henry Boot PLC can be found on pages
8 to 11. These documents are central
to the understanding of the long-term
business model.
We have operated the current business
model successfully over the past 15
years, and have a 130-year unbroken
history. By their nature the Group’s
activities tend to be very long term,
especially in the land development
business, and the Group’s strategy and
experience in this sector has been built
up over many years. Over the last ten
years the Group has reported an average
profit before tax of £22m per annum,
added almost £100m to net assets and
paid £58m in dividends, all from the
trading segments it now operates, and
at no stage in the downturn, between
2008 and 2010, did the Company
make a trading loss. Forecasts for the
viability assessment period indicate a
positive continuation of these financial
results, underpinned by the commercial
development and land opportunities we
already control.
The assessment process
The Group’s prospects are assessed
through an annual budgeting process
led by the main Board Executive
Directors and the boards of the individual
subsidiaries. A detailed annual budget
is agreed prior to the commencement
of the current financial year and
reforecasting takes place each month
throughout the financial year within
each business and consolidated at
Group level. The two succeeding years
are also forecast, using predominantly
known and controlled opportunities,
to assess the longer-term viability of
the Group. As a largely deal-driven
business, it is considered inappropriate
to attempt to forecast further out via
an extrapolation of years one to three,
albeit asset trading and development is
central to the Group’s long-term strategy.
Stress testing these forecasts highlights
that if economic conditions worsen and
developments and land sales do not
happen as envisaged, we invest and
borrow less and, whilst profitability is
lower, the stable construction segment
income covers most of our overhead
costs. Whilst we do not foresee it, only
a very long-term, unprecedented lack
of liquidity in the UK residential and
commercial property markets would
cause any threat to the viability of the
Group.
Assessment of viability
The long-term strategy, the annual
budget and the two-year forecasts reflect
the Directors’ best estimates of the future
prospects for the business. We have also
reviewed a number of potential viability
risks to the Group and consider that the
following represent scenarios which if not
carefully managed could impact on the
Group’s viability:
Firstly, overtrading developments in
progress with the attendant increase
in leverage, at the same time as the
property cycle turns down, asset values
are falling and schemes have to be
completed to create best value. This
creates a potentially damaging scenario
where debt is rising and asset values are
falling. Mindful of this scenario, we have
prudent debt levels (even at maximum
facility utilisation of £65m) and we have
pre-sold more than 90% of the current
development work in progress.
Secondly, a health and safety related
breach that causes a fatality (or similar
serious outcome). We manage this risk
through a very robust health and safety
policy, zero tolerance towards policy
breaches and treat health and safety
as the first matter for discussion on our
Company Board meeting agendas. Our
safety scores continue to be well into
the top quartile of the UK construction
industry and we have achieved a very
safe working environment over the last
20 years.
Viability Statement
Based on their assessment of prospects
and viability above, the Directors confirm
that they have a reasonable expectation
that the Group will be able to continue in
operation and meet its liabilities over the
three-year period ending 31 March 2019.
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Providing a long-term
commitment to high
levels of dividend cover
Q
With the Board changes this year, how
does the new structure offer the best
opportunity for long-term creation of
value for shareholders?
A
Our new Non-executive Directors, Joanne Lake, Peter Mawson
and Gerald Jennings, bring extensive corporate finance, planning,
strategic land and commercial development experience to the
Board.
Jamie Boot, as Chairman, will continue to apply his wealth of
knowledge and skills to looking after shareholders’ interests
which he has done successfully for over 30 years. The appointees
to the Board, who joined Jamie and James Sykes, are ideally
suited to support our new Group Executive team of John Sutcliffe
as Chief Executive Officer and Darren Littlewood as Group
Finance Director. The Board as a cohesive unit will make a strong
contribution to the delivery of our strategic goals in the future.
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Governance
Strong governance within
Henry Boot keeps the Company
true to its historic identity,
safeguards and promotes the
values of today, and identifies
our vision for the future.
By exhibiting leadership the Board motivates
employees to achieve personal as well as team
and Company goals. The Board also reassures
stakeholders about how the Company is being
managed in an effective and organised manner.
Our Board of Directors demonstrates the right
blend of skills, experiences and perspectives
to lead the Company forward in a cohesive,
consistent and confident manner. Strong
governance is about people and how those people
work together towards a shared vision.
Jamie Boot
Chairman
Contents
50 Board of Directors
51 Senior Management
52 Chairman’s Introduction
53 Corporate Governance Statement
60 Nomination Committee Report
61 Audit Committee Report
64 Directors’ Remuneration Report
74 Directors’ Report
79 Statement of Directors’ Responsibilities
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4949
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Board of Directors
Jamie Boot
Chairman
John Sutcliffe
Chief Executive Officer
Darren Littlewood
Group Finance Director
Joanne Lake
Deputy Chairman
Current Role
Chairman since January 2016.
Appointed an Executive Director
in June 1985 and a Non-executive
Director in January 2016.
Committees
Nomination, Audit and
Remuneration.
Past Roles
Group Managing Director from
July 1986 to December 2015.
Managing Director at Henry
Boot Developments Limited and
Director at Henry Boot Homes
Limited.
Brings to the Board
Jamie has over 30 years’
experience as a director of Henry
Boot PLC and has been a director
of the Company’s four principal
operating subsidiaries. Jamie’s
role now sees him responsible for
the leadership of the Henry Boot
PLC Board and having overall
responsibility for the management
of the Audit, Remuneration and
Nomination Committees.
Current Role
Chief Executive Officer since
January 2016. Appointed an
Executive Director in October
2006.
Additional Roles Held
Chairman of the Company’s four
principal operating subsidiaries.
Member of the CBI Yorkshire and
the Humber Regional Council
and a lay member of the Sheffield
University Finance Committee.
Past Roles
Group Finance Director and
Company Secretary at Town
Centre Securities PLC and
Finance Director of Abbeycrest
plc.
Brings to the Board
John has responsibility for
Group profitability and guides in
the achievement of the highest
level of return for a given level
of risk. He is also responsible
for communicating strategy
and results to both private and
institutional investors.
Current Role
Group Finance Director and
Executive Director since
January 2016.
Additional roles held
Director of the Company’s four
principal operating subsidiaries.
Past Roles
Group Financial Controller from
January 2008 to December 2015.
Brings to the Board
Darren qualified as a member
of the Chartered Institute of
Management Accountants in
2007 and is responsible to the
Board for all financial and risk
matters relating to the Henry
Boot Group of Companies. He
is heavily involved in investor
communications and, along with
John Sutcliffe, is also responsible
for communicating strategy
and results to both private and
institutional investors.
Current Role
Deputy Chairman since January
2016. Appointed a Non-executive
Director in October 2015.
Committees
Nomination, Audit and
Remuneration (Chairman).
Additional Roles Held
Deputy Chairman and Non-
executive Director of Mattioli
Woods plc, Non-executive
Director of Gateley (Holdings)
Plc, Trustee of The Hepworth
Wakefield.
Brings to the Board
Joanne has over 30 years’
experience in accountancy and
investment banking, including
with Panmure Gordon, Evolution
Securities, Williams de Broe
and Price Waterhouse. She is
a Chartered Accountant and a
Fellow of the Chartered Institute
for Securities & Investment and of
the ICAEW, and is a member of
the ICAEW’s Corporate Finance
Faculty.
James Sykes
Non-Executive Director
Peter Mawson
Non-Executive Director
Gerald Jennings
Non-Executive Director
Russell Deards
Company Secretary
Current Role
Group General Counsel since
2014 and Company Secretary
since September 2013.
Additional Roles Held
Responsible for Legal,
Insurance, IT and secretariat
matters.
Past Roles
Head of Legal Services for
Barratt Developments in 2007
and Partner at Flint Bishop
Barnett Solicitors in 2011.
Current Role
Non-executive non-independent
Director since March 2011.
Committees
Nomination, Audit (Chairman) and
Remuneration.
Additional Roles Held
Partner in the London office of
Saffery Champness, Chartered
Accountants which he joined
in 1987. He is a Non-executive
Director of Saffery Champness’
businesses in both Guernsey and
Switzerland.
Brings to the Board
James’ experience as an audit
partner is very important in his
role as Chairman of the Audit
Committee. As a partner in the
Private Wealth and Estates Group
at Saffery Champness he has
many years’ experience in the
UK strategic land market and
brings that experience to board
decision making generally but
more especially to Hallam Land
Management Limited.
Current Role
Senior Independent Non-
executive Director since January
2016.
Appointed a Non-executive
Director in October 2015.
Committees
Nomination (Chairman), Audit and
Remuneration.
Additional Roles Held
Chairman of Nexus Planning
Limited, Non-executive Director of
Infinite Spada Limited.
Past Roles
Chief Executive of Donaldsons
LLP and Chief Executive of Urban
Development Corporation.
Brings to the Board
Peter has a wealth of experience
in the management and
leadership of professional service
firms, together with senior
practitioner expertise across
the built environment, from
both public and private sector
perspectives.
Current Role
Non-executive Director since
October 2015.
Committees
Nomination, Audit and
Remuneration.
Additional Roles Held
Non-executive Director of the
Ahead Partnership, Non-executive
Director of West and North
Yorkshire Chamber of Commerce,
Trustee Director and Chair of
PSL and Governor at Leeds
City College, President of the
Leeds Chamber of Commerce
and Director of G R Jennings
Properties Ltd.
Past Roles
Retail Portfolio Director at Land
Securities PLC.
Brings to the Board
Gerald has over 25 years’
experience in the retail and
property industry. Most recently
Gerald was responsible for the
delivery of the one million sq ft
Trinity Leeds retail scheme.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Senior Management
David Anderson
Henry Boot Developments Limited
Giles Boot
Banner Plant Limited
Simon Carr
Henry Boot Construction Limited
Nick Duckworth
Hallam Land Management Limited
Appointment date
Managing Director in 2005.
Brings to the role
David Anderson, BSc (Hons),
MRICS, started his career in town
planning consultancy and then
joined Henry Boot Developments
Limited in 1990 as an Assistant
Development Surveyor, rapidly
rising to the position of Senior
Development Surveyor. He was
appointed a Director in 1996.
Appointment date
Managing Director in 2000.
Brings to the role
Giles Boot, BA (Hons), joined the
Henry Boot Group in 1982 and
had a variety of management
roles in Rothervale Trading
Limited, the retail side of the then
Group’s door manufacturing
business. Moving to Banner
Plant Limited in 1988, he held a
number of positions, including
Depot Manager and Business
Development Manager, before
being appointed to its Board in
1995.
Appointment date
Managing Director in 2009.
Brings to the role
Simon Carr, BSc (Hons), FRICS,
has been with Henry Boot for
over 28 years. He has held a
number of positions on the
construction side of the business,
including Partnering Manager and
Operations Director. Simon is a
private sector board member of
the Sheffield City Region Local
Enterprise Partnership and the
Sheffield City Region Housing
Executive Board. He is the current
chair of the National Federation of
Builders and also sits on the CBI
Construction Council.
Appointment date
Managing Director in 2016.
Brings to the role
Nick Duckworth, MRTPI, began
his career in a private sector
planning consultancy, Phillips
Planning Services, in 1990. He
left there in late 1992 and joined
Hallam’s then newly established
Northampton office. In 1997 Nick
set up the South West office of
Hallam in Bristol and became
the Regional Manager. He was
appointed a Director in 2002.
Darren Stubbs
Stonebridge Projects Limited
Trevor Walker
Road Link (A69) Limited
Appointment date
Managing Director (start of joint
venture) in 2010.
Brings to the role
Darren Stubbs started work at
Tay Homes plc at the age of 16
and by the age of 25 he was
Managing Director of his own
small housebuilding company
based in Leeds. Over the next
15 years he grew the business
to achieve an annual turnover of
£25 million. In 2010 he formed a
new house builder and property
company, Stonebridge Projects
Limited, in a joint venture
partnership with Henry Boot PLC.
Appointment date
General Manager in 2005.
Brings to the role
Trevor Walker, IEng AMICE, joined
Road Link (A69) Limited in 1996
at the start of the 30-year Private
Finance Project to operate and
maintain the A69 trunk road. He
was previously involved in trunk
road maintenance in the south of
Scotland. He undertook various
road and bridge maintenance
roles within Road Link (A69)
Limited in the early years, helping
to establish the company before
his appointment as General
Manager in 2005.
Pictured (from left to right): Russell Deards, John Brown,
Peter Mawson, James Sykes, John Sutcliffe, Michael Gunston,
Gerald Jennings, Joanne Lake, Jamie Boot, Simon Carr, Trevor
Walker, Darren Littlewood, David Anderson, Giles Boot,
Darren Stubbs.
Inset: Keran Power and Nick Duckworth.
For more information about our Directors
and Senior Management please visit our website
www.henryboot.co.uk/about-us/board-senior-
management
51
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Chairman’s Introduction
“ I am very pleased to introduce the reporting
of our corporate governance arrangements
for this year and to be able to explain their
importance and how these arrangements
work for the benefit of the Company and its
shareholders.”
Henry Boot PLC, a premium listed company
on the London Stock Exchange, is subject
to the UK Corporate Governance Code
(the Code). The Code encourages me, as
Chairman, to report personally on how
its principles relating to the role and to
the effectiveness of the Board have been
applied.
The Board remains committed to ensuring that it provides
effective leadership and demonstrates high ethical standards.
This is one demonstration of my, and our, determination to add
value to the Company. One of the ways in which we achieve
this is by maintaining high standards of corporate governance
principles and practices in order to facilitate the future success
of the Company and sustain this over time.
I stepped down as Group Managing Director after 29 years in
December 2015, and was appointed Chairman on
1 January 2016, at which date John Sutcliffe was appointed
Chief Executive Officer. As Chairman, I am responsible for the
leadership of the Board and ensuring that it operates effectively.
The Board has clearly defined roles for each member, as
described in the table on page 57. The Non-executive Directors
challenge management and contribute to strategy. Board
composition is extremely important and there are three main
requirements: the balance of skills and experience, maintaining
a strong level of independence and objectivity, and ensuring
that all members have sufficient knowledge of the Company
and the context in which we operate. When John Brown and
Michael Gunston announced their decision to retire as Non-
executive Directors and I announced my decision to step down
as Group Managing Director, the Board thought it right that I
became Chairman due to my longevity of service and extensive
knowledge and experience within Henry Boot thus enabling the
Group to continue to be cohesive, consistent and confident.
Clearly if I was to become Chairman, the Board also felt it right
to appoint three new independent Non-executive Directors,
Joanne Lake, Peter Mawson and Gerald Jennings, and to
appoint one of these as Deputy Chairman, Joanne, to ensure
independence and a clear separation from my old role to my
new role. Appointments to the Board will always be made on
merit against objective criteria and the Board strongly supports
the principle of boardroom diversity. The Board, its Committees
and individual Directors are subject to annual performance
evaluation and, as we act in shareholders’ interests, all Directors
are now subject to re-election by shareholders annually.
The remainder of this report contains the narrative reporting
variously required by the Code, the Listing Rules and the
Disclosure Rules and Transparency Rules which I hope you will
find of interest.
Yours faithfully
Jamie Boot
Chairman
22 April 2016
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Corporate Governance Statement
The Board reaffirms its commitment to achieving and
maintaining a high standard of corporate governance. To be
effective, it is felt that such governance must reflect the unique
standing of the Company and the composition of both its
institutional and individual shareholders, many of whom have
strong family ties to the Company, as well as other stakeholders’
interests and, above all, that governance must assist in the
attainment of corporate objectives.
During the accounting period under review, the Company, as
a premium listed company, was subject to the September
2014 edition of the UK Corporate Governance Code issued
by the Financial Reporting Council (FRC). The UK Corporate
Governance Code is available free of charge on the FRC
website at www.frc.org.uk/publications.
The Code recognises that not all of its provisions are necessarily
relevant to smaller listed companies and the Code states that
departures from its provisions should not be automatically
treated as breaches of the Code. The Directors believe that the
Code is correctly applied as and where relevant to the Company
and are satisfied that in areas of departure from the Code the
departure is for good reason.
In applying the principles of good governance, including both
the main principles and the supporting principles, the policies
adopted by the Board therefore follow the Code’s guidelines
insofar that they assist the overall well-being of the Company
and its shareholders’ interests. The Board adopts a pragmatic
approach where adoption of all the supporting principles of
the Code is not an objective as such. Compliance with good
reason and departure with good reason are discussed and
agreed. Further explanations of how the main principles and the
supporting principles have been applied are set out on pages
52 to 59.
Retirements and appointments
to the Board
As announced in August 2015, John Brown, Non-executive
Chairman, and Michael Gunston, Senior Independent Non-
executive Director, retired from the Board on 31 December
2015. A succession plan had been considered for some time
and, therefore, also on 31 December 2015, Jamie Boot retired
as Group Managing Director and replaced John Brown as Non-
executive Chairman on 1 January 2016 and also from
1 January 2016, became a member of the Nomination, Audit
and Remuneration Committees. John Sutcliffe, who had been
Group Finance Director for the previous nine years, took over as
Chief Executive Officer and Darren Littlewood, previously Group
Financial Controller, took over as Group Finance Director, both
from 1 January 2016.
On 1 October 2015, to work with this team, and to allow for a
sensible handover period, the Company appointed three new
independent Non-executive Directors, Joanne Lake, Peter
Mawson and Gerald Jennings, who also became members of
the Nomination, Audit and Remuneration Committees, and their
biographical summaries can be found on page 50. Following
these appointments, on 1 January 2016, Joanne Lake
commenced her roles as Deputy Chairman of the Company and
Chairman of the Remuneration Committee, and Peter Mawson
became the Senior Independent Non-executive Director of the
Company and Chairman of the Nomination Committee.
The additional independent Non-executive Directors were
considered necessary to ensure independence and good
governance.
The Board believes these changes ensure that the Board and
the Company can continue to act in a cohesive, consistent and
confident manner, in accordance with the Company’s values.
The Board
The Company is led and controlled by a Board of Directors
which is collectively responsible for the continued success of
the Company and our key objective is to maximise long-term
shareholder value.
In December 2015, the Board consisted of eight Directors,
two of whom were Executive Directors and the remaining six,
including the Chairman, were Non-executive Directors. From
1 January 2016, the Board comprises seven Directors; two
are Executive Directors and five are Non-executive Directors.
Director biographical summaries appear on page 50.
The Board’s role is to provide entrepreneurial leadership of the
Company within a framework of prudent and effective controls
that enables risk to be assessed and appropriately managed.
It sets the Company’s strategic aims, reviews management
performance and ensures that the necessary financial and
human resources are in place, and will continue to be in
place for the Company to meet its objectives, recognising
the importance of safety, environmental and social factors.
The Board also sets the Company’s aims and values and
ensures that its obligations to its shareholders and others
are understood and met. Day-to-day management of the
Company’s subsidiaries sits with each respective board of
directors, led by a Managing Director. The Executive Directors
of the Company are also directors of each subsidiary.
The Board retains a Schedule of Reserved Matters which is
reviewed annually to ensure that strategy and key elements that
might affect the implementation of corporate goals are adhered
to. The Board is responsible for:
• strategy and objective setting;
• capital structure and ensuring funding adequacy; and
• effective internal controls.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Corporate Governance Statement continued
Board balance and independence
For the purposes of the accounting period under review, John
Brown, Michael Gunston, Joanne Lake, Peter Mawson and
Gerald Jennings are the independent Non-executive Directors.
Although John Brown had served for more than nine years, he
continued to demonstrate his independence from the Company
and objective approach in the way he challenged the Executive
Directors and accordingly, notwithstanding the length of his
service, John Brown remained independent as determined
by the Board. Michael Gunston was the Senior Independent
Director of the Company. James Sykes was appointed to
represent the substantial shareholdings of the Reis family
interests (see page 75) and is not regarded as an independent
Non-executive Director.
A key principle of the Group’s Equality and Diversity Policy is
that the Nomination Committee of the Board will always appoint
on merit.
The Board recognises the benefits of diversity and we consider
that diversity includes (but is not limited to) personal attributes,
gender, ethnicity, age, disability and religious beliefs. Our aim is
to promote equality, respect and understanding, and to avoid
discrimination.
Whilst we value the recommendations of the Davies Report,
we do not have a specific objective for the number of female
directors. However, on 1 October 2015, Joanne Lake became
our first appointed female main Board independent Non-
executive Director and from 1 January 2016 was appointed
Deputy Chairman of the Company. We are committed to
ensuring that appointments made to the Board, and at senior
management level, are made on merit.
The Nomination Committee will ensure that it only uses
executive search firms which have signed up to the voluntary
Code of Conduct addressing gender diversity and best practice,
that females are given the same consideration and opportunity
as male applicants, and that gender diversity is considered,
specifically when drawing up a list of potential candidates.
At its regular Board meetings there is a series of matters that
are dealt with, including a health and safety review, a finance
review, including pensions, operational reviews on all the main
trading subsidiaries and a secretarial review encompassing
corporate governance, risk, shareholder matters, legal,
insurance and IT. HR reports are also provided to the Board for
review and comment. The Board also reviews strategy, budgets
and matters relating to internal controls as appropriate. The
subsidiary board meetings are attended by the two main Board
Executives, as directors of those subsidiaries, accompanied by
the Group General Counsel & Company Secretary. Operational
decisions affecting each subsidiary are taken by the individual
subsidiary boards at their meetings.
All Directors have access to the Group General Counsel &
Company Secretary and there is in place a written procedure for
all Directors to take independent professional advice.
The Group General Counsel & Company Secretary is
responsible for information flows between the Board, its
Committees and the boards of subsidiary companies.
Formal inductions for new Directors have been developed,
along with continued professional development training. The
Group General Counsel & Company Secretary also ensures
procedures, regulations and law are followed and advises
the Board on governance issues. The question of conflicts of
interest is raised at every Board meeting of the Company and its
subsidiaries.
Board effectiveness
The roles of John Brown until 31 December 2015 and Jamie
Boot from 1 January 2016, and the Group Managing Director
Jamie Boot until 31 December 2015 and the Chief Executive
Officer John Sutcliffe from 1 January 2016, are clearly defined
and they act in accordance with the main and supporting
principles of the Code.
The division of responsibilities of the Board of Directors is
summarised on page 57.
The Chairman is responsible for leadership of the Board and
ensuring it operates in an effective manner. It is considered
that the Directors possess an appropriate balance of skills,
experience, independence and knowledge of the Company
to enable them to discharge their respective duties and
responsibilities so as to be effective.
The Chairman is in regular contact with the Chief Executive
Officer to discuss current matters and has visited Group
operations outside the scheduled Board meeting calendar,
to meet subsidiary company directors, managers and
stakeholders.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Conflicts of interest
Under the Companies Act 2006 a director must avoid a
situation where they have, or could have, a direct or indirect
interest that conflicts, or possibly may conflict, with the
Company’s interests. The Act allows directors of public
companies to authorise conflicts and potential conflicts, where
appropriate, where the articles of association contain a provision
to this effect. The Company’s Articles of Association enable the
Board to authorise Directors’ conflicts of interest. In order to
address this issue, conflicts of interest are reported by Directors
to the Group General Counsel & Company Secretary and in turn
through the Board meeting processes. The Board considers
a register of interests and potential conflicts of Directors and
gives, when appropriate, any necessary approvals. There have
been no conflicts of interest reported to the Board during
the year.
How we assess and refresh the Board
and its Committees
There are three ways in which we ensure that Directors continue
to provide suitable leadership and direction to the Company:
performance evaluation, succession planning, and annual
re-election by shareholders.
Performance evaluation
The Executive Directors’ performance is reviewed annually by
the Remuneration Committee to ensure that they continue
to contribute effectively to the Group’s overall objectives. The
Non-executive Directors’ performance and commitment is kept
under review throughout the year by the Executive Directors.
The Non-executive Directors meet without the Chairman to
discuss the performance of the Chairman at least twice a year.
A performance evaluation of individual Directors was carried
out and there was a formal evaluation of the Board and its
Committees in 2015.
Succession planning
The Nomination Committee is responsible for reviewing the
structure, size and composition of the Board and ensuring that
the balance of knowledge, skills and experience are right for
the Group. The Committee is also responsible for long-term
succession planning at both Board and key senior management
level. The Board also recognises the importance of diversity and
is comprised of members with a wide range of experience from
a variety of business backgrounds. Leadership training for the
leaders of today and tomorrow has been developed and was
launched in 2015 as part of the process of succession planning.
Further leadership training is now being developed and
rolled out.
Annual re-election by shareholders
The Company’s Articles of Association (Articles) require
Directors to be re-elected at intervals of no more than three
years and newly appointed Directors are subject to election at
the Annual General Meeting (AGM) following their appointment.
In addition, the UK Corporate Governance Code includes a
proposal that all directors of FTSE 350 companies should be
subject to annual re-election. The Board has decided that all
of the Directors will retire from the Board and offer themselves
for re-election at the forthcoming AGM. The Nomination
Committee has conducted formal performance evaluations
of all the Directors seeking re-election and has concluded
that their performance continues to be effective and that
they demonstrate commitment to the role. The Committee
is also satisfied that the backgrounds, skills, experience and
knowledge of the Company of the Directors collectively enables
the Board and its Committees to discharge their respective
duties and responsibilities effectively. The Directors’ biographies
are shown on page 50.
Training and development
The Board receives appropriate training and updates on various
matters as part of the regular Board meetings. All Directors are
offered the opportunity and are encouraged to continue their
professional development and update their commercial and
Company knowledge as required.
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55
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Corporate Governance Statement continued
Board and committee meetings
Throughout the year, there were seven Board meetings.
In addition, the Board also delegates some of its duties and
powers to committees to deal with specific business needs
and also holds a meeting at least once a year dedicated
almost entirely to strategy. The Board has formally constituted
Nomination, Audit and Remuneration Committees. Each
Committee and its members are provided with accurate, timely
and clear information and sufficient resources to enable them
to undertake their duties. Two Audit Committee meetings,
two Nomination Committee meetings, four Remuneration
Committee meetings and the AGM were held in 2015.
Attendance at the Board meetings and Committee meetings
held during 2015 is set out in the table below. The Non-
executive Directors meet without the Executive Directors
being present, usually just prior to Board meetings. The Board
considers that the Non-executive Directors constructively
challenge both the Executive Directors and subsidiary
company management at Board meetings and through ad hoc
discussions including the Strategy Day. Subsidiary company
Managing Directors attend Board meetings on a rotational basis
to present their operational business plans and strategy to the
Board. Further details of each of the above Committees can be
found on pages 60 to 73.
An additional meeting of the Board of Directors was held in
August 2015 to approve the appointments of Joanne Lake,
Peter Mawson and Gerald Jennings, the appointment of Jamie
Boot as Chairman, the promotion of John Sutcliffe to Chief
Executive Officer and the promotion of Darren Littlewood to
Group Finance Director, following the recommendation of the
Nomination Committee. Full details can be found on page 60.
Director
John Brown1
Jamie Boot2
John Sutcliffe3
Joanne Lake4
Michael Gunston5
Gerald Jennings6
Peter Mawson7
James Sykes
Board
7/7
7/7
7/7
2/7
6/7
2/7
2/7
7/7
Audit
2/2
—
—
—
2/2
—
—
2/2
Remuneration
4/4
—
—
—
4/4
—
—
4/4
Nomination
2/2
—
—
—
2/2
—
—
2/2
1 John Brown retired from his position as Non-executive Chairman of the
Company on 31 December 2015.
2 Jamie Boot retired from his position as Group Managing Director of the Company
on 31 December 2015 and replaced John Brown as Non-executive Chairman of
the Company on 1 January 2016.
3 John Sutcliffe relinquished his position as Group Finance Director of the
Company on 31 December 2015 and commenced his position as Chief
Executive Officer of the Company on 1 January 2016.
4 Joanne Lake commenced her appointment as Non-executive Director of the
Company and member of the Nomination, Audit and Remuneration Committees
on 1 October 2015. Joanne then became Deputy Chairman of the Company and
Chairman of the Remuneration Committee on 1 January 2016.
5 Michael Gunston was unable to attend a meeting due to illness, but reviewed
the papers and provided his comments to the Chairman prior to the meeting.
Michael resigned from his position as Senior Independent Non-executive Director
of the Company on 31 December 2015.
6 Gerald Jennings commenced his appointment as Non-executive Director of the
Company and member of the Audit, Nomination and Remuneration Committees
on 1 October 2015.
7 Peter Mawson commenced his appointment as Non-executive Director of the
Company and member of the Nomination, Audit and Remuneration Committees
on 1 October 2015. Peter then became Senior Independent Non-executive
Director of the Company and Chairman of the Nomination Committee on 1
January 2016.
Board composition
Non-Executive Chairman
14%
Executive
29%
Non-Executive
57%
56
Non-Executive Chairman
Executive
Non-Executive
14%
29%
57%
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
How the responsibilities of the Board are divided
The Chairman
Chief Executive
• Leads the Board in determining strategy and in the
• Has overall responsibility for the implementation of
achievement of its objectives;
• Facilitates the effective contribution of the Non-executive
Directors and constructive relations between Executive
and Non-executive Directors;
• Ensures that the continued development needs of the
Directors are identified and addressed;
• Has an oversight role and is available to all shareholders;
and
• Has overall responsibility for the Committees.
Group Finance Director
• Responsible for devising and implementing the Group’s
financial strategy, policies and risk; and
• Acts as Director of the subsidiaries and attends the
subsidiary board meetings.
strategy, annual budgets, interaction with the City and
market forecasts;
• Recommends Group strategy to the Board;
• Responsible for the day-to-day leadership and
management of the operational activities of the Group in
accordance with overall strategy and policy as determined
by the Board;
• Runs the Company and its subsidiaries;
• Acts as Chairman of the subsidiaries and attends the
subsidiary board meetings;
• Director responsible for Group health and safety matters;
• Allocates responsibilities for the running of subsidiary
companies, finance, company secretarial, legal, insurance,
communications, HR and IT to the department heads or
subsidiary Managing Directors as applicable; and
• Day-to-day operational management is devolved to
management within each subsidiary business.
Deputy Chairman & Independent Non-Executive Director
Senior Independent Non-Executive Director
• Deputises for the Chairman;
• Constructively challenges the Executive Directors;
• Considers proposals on strategy;
• Ensures Board independence; and
• Monitors the implementation of the Group’s strategy within
its risk and control framework.
Independent Non-Executive Director
• Constructively challenges the Executive Directors;
• Considers proposals on strategy;
• Ensures Board independence; and
• Monitors the implementation of the Group’s strategy within
its risk and control framework.
Non-independent Non-Executive Director
• Represents the interests of major shareholders;
• Constructively challenges the Executive Directors; and
• Considers proposals on strategy.
• Constructively challenges the Executive Directors;
• Considers proposals on strategy;
• Ensures Board independence;
• Monitors the implementation of the Group’s strategy within
its risk and control framework;
• Acts as a sounding board for the Chairman and an
intermediary for other directors; and
• Available to shareholders if they have concerns where
contact through the normal channels (the Chairman or the
Chief Executive Officer) has failed to resolve or for which
contact is inappropriate.
Group General Counsel & Company Secretary
• Supports the Chairman and Chief Executive Officer in
fulfilling their duties;
• Available to all directors for advice and support;
• Keeps the Board regularly updated on governance matters;
• Ensures Group policies and procedures are maintained and
updated on a regular basis;
• Attends and maintains a record of the matters discussed
and approved at Board and Committee meetings; and
• Company Secretary of the subsidiaries and attends at the
subsidiary board meetings.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Corporate Governance Statement continued
Risk management and internal controls
The Board is responsible for the Company’s internal controls
and operates and maintains a system of internal controls which
is reviewed regularly for its effectiveness and which broadly
accords with the Turnbull Committee guidance thereon. Whilst
the system of internal control is designed to manage, rather
than eliminate, the risk of failure to achieve the Company’s
business objectives, it can only provide reasonable, not
absolute, assurance against material misstatement or loss. The
Board is satisfied with the system in place but will keep it under
review. The system is, and has been, an ongoing process for
identifying, evaluating and managing the significant risks faced
by the Company. It has been in place for the period under
review and up to the date of the approval of the Annual Report
and Financial Statements. No material weaknesses have been
identified by the system in the year.
The following key processes are considered by the Board
to provide effective management of significant risks to the
business:
• the business organisation and structured reporting
framework — each of the Company’s activities is monitored
through bi-monthly management meetings and formal bi-
monthly subsidiary company board meetings. The latter are
attended by the Board’s Executive Directors and chaired
by John Sutcliffe. Formal lines of responsibility and levels of
authority are in place within each subsidiary company. Annual
plans, budgets (with two out-post years) and performance
criteria for each business are set by the Executive Directors
and performance against these targets is reviewed monthly
by the Board. Annual profit forecasts and 15-month cash
flow forecasts are produced on a monthly basis. The Board
monitors the risks and associated controls over financial
reporting processes, including the consolidation process.
The financial reporting controls are monitored and maintained
through the use of internal control frameworks which address
key financial reporting risks, including risks arising from
changes in the business or accounting standards. Operations
on the ground are also monitored frequently by way of
visits to sites, depots, properties and regional offices by the
Executive Directors; and
• centralised operations — specific risks and compliance
issues associated with health and safety, treasury and
banking operations, company secretarial, pensions, legal,
human resources and training, public and investor relations,
information communication technology and insurance are
managed centrally and report functionally to the appropriate
Company officer (either an Executive Director or the Group
General Counsel & Company Secretary) responsible for that
particular operation.
Each operation reviews its own system of internal controls and
reports twice a year to the Audit Committee:
• business procurement — development appraisals, land
purchases, options and construction contracts above a
set value require the authority of the Executive Directors to
proceed. A strict routine covering the authorisation of capital
expenditure is in place and Board approval is required for any
corporate acquisition or disposal; and
• day-to-day operations — responsibility for running the day-
to-day operations and for reviewing the associated systems
of control is devolved to each subsidiary company Managing
Director. Policy and procedure manuals cover major areas
of their operations, including safety, purchasing, estimating,
marketing, production and quality. The subsidiary company
Managing Directors review and report to the Audit Committee
on the effectiveness of the systems of internal controls
in place and any matters of concern are raised at Board
meetings; the Board is satisfied with current arrangements,
which will, however, be kept under review.
Every review comprises a balanced, comprehensive and
understandable analysis of:
• the development and performance of the Company’s
business during the financial year; and
• the position of the Company’s business at the end of the
financial year, consistent with the size and complexity of the
business.
The reviews include:
• analysis using financial key performance indicators; and
• where appropriate, analysis using other key performance
indicators, including information relating to environmental
matters and employee matters.
Whistleblowing arrangements
The Company has operated a ‘whistleblowing’ arrangement
throughout the year whereby all employees of the Group are
able, via an independent external third party, to confidentially
report any malpractice or matters of concern they have
regarding the actions of employees, management and
Directors and any breaches of the Company’s Anti-Bribery and
Corruption Policy.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Anti-Bribery and Corruption Policy
The Company values its long-standing reputation for ethical
behaviour and integrity. Conducting its business with a zero
tolerance approach to all forms of corruption is central to
these values, the Group’s image and reputation. The Company
policy sets out the standards expected of all Group employees
in relation to anti-bribery and corruption and the Board has
overall responsibility for ensuring this policy complies with the
Group’s legal and ethical obligations and that everyone in our
organisation complies with it.
This policy is also relevant for third parties who perform services
for or on behalf of the Group. The Group expects those persons
to adhere to this policy or have in place equivalent policies and
procedures to combat bribery and corruption.
The Company’s policy was updated and reissued in 2014.
On-site and internet-based training for all staff is arranged. In
addition, new or updated policies have been issued covering
competition law, gifts and hospitality and staff purchases and
an overarching Ethics Policy put in place. All policies reflect and
refer to the Group’s Values and further training is being delivered
on all relevant topics.
Accountability and audit
Details of the Directors’ responsibilities and the Statement
of Directors’ Responsibilities are contained on page 79. The
Independent Auditors’ Report is given on pages 82 to 87.
The Directors’ statement in respect of the business as a ‘going
concern’ is provided in the Directors’ Report on page 74.
Shareholder accountability
The Company actively communicates with its institutional and
private shareholders and likewise receives feedback from them.
It is this close relationship with shareholders that is seen as one
of the particular strengths and characteristics of the Company.
During the year a number of formal presentations were made by
members of the Board to institutional shareholders; feedback
from visits to institutional shareholders is provided to the Board
by our stockbrokers. The Company uses the Investor Relations
section of its website, www.henryboot.co.uk, to publish
statutory documents and communications to shareholders,
such as the Annual Report and Financial Statements, as its
default method of publication. The website is designed to be
a two-way communication process with both present and
potential investors and includes all London Stock Exchange
announcements, presentations to analysts and press releases
over the last 12 months and also links to the websites of our
four principal operating subsidiaries. Shareholders may choose
to receive the Annual Report and Financial Statements in
paper form but the Board believes that by utilising electronic
communication, it delivers savings to the Company and has
environmental benefits through reduced consumption of paper
and inks, as well as speeding up the provision of information to
shareholders in the future.
The attendance and participation of all shareholders at the
AGM is much encouraged. At the AGM held in May 2015,
proxies were received representing 70.54% of the number of
shares in issue, and is a demonstration of shareholders’ active
involvement in the affairs of the Company.
Further information for shareholders can be found in the
Director’s Report on page 76.
Compliance Statement
The Company has complied with the vast majority of the
provisions of the September 2014 edition of the UK Corporate
Governance Code that are applicable to it for the year ended
31 December 2015. The following provisions are those where
the Company is not strictly in compliance with the Code. For
the reasons stated, the Directors believe that the Company’s
stance is justified in this respect.
A.4.2, B.6.3
The performance of the Chairman is appraised by the Executive
Directors, as is the performance of the other Non-executive
Directors. As Henry Boot PLC is a smaller listed company, it is
felt that this is the most appropriate approach.
D.2.2, D.2.3
In 2015, the then Chairman and two other Non-executive
Directors, and from 1 October 2015, the three other Non-
executive Directors, were members of the Remuneration
Committee. The remuneration of the Non-executive Directors,
including the Chairman, is set by the Executive Directors. As
Henry Boot PLC is a smaller listed company, it is felt that this is
the most appropriate approach.
Approved by the Board and signed on its behalf by
Russell Deards
Group General Counsel & Company Secretary
22 April 2016
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Nomination Committee Report
Statement from the Chairman of the Nomination Committee
Those serving as members of the Nomination
Committee (the Committee) for the whole of
2015 were John Brown (Committee Chairman),
Michael Gunston and James Sykes. From
1 October 2015, additional serving members
were Gerald Jennings, Joanne Lake and
Peter Mawson. Jamie Boot was appointed a
member of the Committee on 1 January 2016.
Biographies of the current members of the
Committee are shown on page 50.
Meetings during the year
The Committee met twice during the year. Attendance at these
meetings by the Committee members is shown in the table on
page 56.
Nomination Committee matters are also discussed at each
Board Meeting.
Committee activities during the year
• Selection process and appointment of three independent
Non-executive Directors, Gerald Jennings, Joanne Lake and
Peter Mawson, from 1 October 2015, to replace John Brown
and Michael Gunston;
• Appointment of Jamie Boot as Chairman, Joanne Lake as
Deputy Chairman and Peter Mawson as Senior Independent
Non-executive Director from 1 January 2016; and
• Consideration and approval of the appointments and
promotions of John Sutcliffe to Chief Executive Officer and
Darren Littlewood to Group Finance Director from 1 January
2016.
Letters of appointment
The letters of appointment for all Non-executive Directors
clearly set out the time commitment expected from each Non-
executive Director to ensure they satisfactorily perform their
duties. Each Non-executive Director confirms that they are able
to allocate the time commitment required at the time of their
appointment and thereafter as part of their individual annual
effectiveness review undertaken by the Chairman.
Approved by the Board and signed on its behalf by
Peter Mawson
Chairman of the Nomination Committee
22 April 2016
I was appointed Chairman of the Nomination
Committee with effect from 1 January 2016.
Terms of reference
The terms of reference for this Committee fully incorporate the
UK Corporate Governance Code’s provisions in relation to its
roles and responsibilities and are available for inspection at the
Company’s registered office.
Role of the Committee
The principal responsibility of the Committee is to consider
succession planning and appropriate appointments to
the Board and to senior management, so as to maintain
an appropriate balance of skills, knowledge, experience,
independence and diversity within the Company, and its duties
include:
• overseeing the identification, selection and appointment of
Directors;
• reviewing the structure, size, composition and leadership
needs of the Board;
• considering other commitments of Directors relative to the
time required for them to fulfil their duties; and
• periodically evaluating the effectiveness of the Board.
The Committee has access to external professional advisers
and consultants where required to fulfil its responsibilities.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Audit Committee Report
Statement from the Chairman of the Audit Committee
Those serving as members of the Audit
Committee (the Committee) for the whole of
2015 were James Sykes (Committee Chairman),
John Brown and Michael Gunston. From
1 October 2015, additional serving members
were Gerald Jennings, Joanne Lake and
Peter Mawson. Jamie Boot was appointed a
member of the Committee on 1 January 2016.
Biographies of the current members of the
Committee are shown on page 50.
• to review and make recommendations to the Board in relation
to the half-yearly and annual financial reports;
• to oversee the selection process with regard to external
auditors, to consider the appointment/reappointment of
external auditors and make appropriate recommendations
through the Board to the shareholders to consider at the
Annual General Meeting (AGM);
• to review the Company’s procedures for handling reports by
‘whistleblowers’;
• to consider annually whether there is a need for an internal
audit function and make recommendations to the Board.
However, from past experience, the use of this function has
not resulted in added value to the business and this continues
to be the view of the Committee in its deliberations this year;
• to monitor the integrity of the Financial Statements of the
Company and any formal announcements relating to the
Company’s financial performance; and
• to review annually the Company’s Anti-Bribery and Corruption
Policy.
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We all have many years of financial and
business experience and both Joanne Lake
and I have relevant accounting qualifications
and experience.
Terms of reference
The terms of reference for this Committee fully incorporate the
UK Corporate Governance Code’s provisions in relation to its
roles and responsibilities and are available for inspection at the
Company’s registered office.
Role of the Committee
The Committee’s responsibilities include, amongst other
matters, the following:
• to review and consider the scope and effectiveness of the
Company’s financial controls, Company internal control and
risk management systems;
• to review the annual report of the auditors, the level of
fees charged by the auditors for non-audit services, the
independence and objectivity of the auditors and the
proposed nature and scope of their work before the audit
commences. Details of fees paid for non-audit services
are set out in note 3 to the Financial Statements. The level
of these fees and the services provided are reviewed by
the Committee to ensure that they do not threaten auditor
objectivity and independence. During the year, the Committee
reviewed the independence and objectivity of the external
auditors, which was confirmed in an independence letter
containing information on procedures providing safeguards
established by the external auditors. Regulation, professional
requirements and ethical standards are taken into account,
together with consideration of all relationships between the
Company and the external auditors and their staff. Relations
with the external auditors are managed through a series
of meetings and regular discussions and we ensure a high
quality audit by challenging the key areas of the external
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Audit Committee Report continued
Valuation of investment property
Investment property is valued at fair value and, other than
houses, is valued externally by independent valuers twice
each year. Investment property in the course of construction is
also valued at fair value. The Committee critically reviewed the
valuations for the assets described above and was content with
the values adopted.
Valuation of inventory
Our inventory, the vast majority of which is held within our
strategic land business, is stated at the lower of cost or net
realisable value. The disposal of this inventory is inherently
difficult to quantify due to the uncertainty of timing of
transactions and the vagaries of the UK planning system.
Therefore the portfolio of inventory is subject to regular review
by senior management, the Board and the Committee by
reference to development appraisals, planning agreements and
market demand.
Valuation of pension scheme liability
The Group sponsors a funded defined benefit pension scheme
in the UK which is valued under the provisions of IAS 19. The
pension scheme is valued by a qualified independent actuary,
using the projected unit method, at each accounting period
end. The Committee critically reviewed the assumptions
used by the actuary in performing these valuations and was
satisfied with the appropriateness of the assumptions within the
requirements of the IAS 19 standard.
Independence of the external auditors
In order to ensure the independence of the external auditors,
the Committee monitors the non-audit services provided by
them to the Group and has adopted a policy on the provision
of non-audit services by the external auditors with the objective
that such services do not impair the independence or objectivity
of the external auditors.
The Committee is required to approve services provided by the
external auditors in excess of £25,000 and reviews generally
all services provided by them to assess their independence
and objectivity in the light of that work. These reviews are
undertaken to ensure that the performance of regulatory
requirements is not impaired by the provision of permissible
non-audit services.
Meetings during the year
The Committee met twice during the year, with the Company’s
auditors in attendance for part of each meeting. Attendance
at these meetings by the Committee members is shown in the
table on page 56.
Audit Committee matters are also discussed at each
Board meeting.
Committee activities during the year
In 2015 the principal activities of the Committee and the way in
which it discharged its responsibilities were as follows:
Financial Statements
The Committee reviewed the Group’s draft Financial
Statements, interim Financial Statements, Preliminary
Statements and reports from the external auditors on the
outcome of its reviews and audits in 2015.
Significant accounting matters
The Committee considered the following key accounting issues
and matters of judgement in relation to the Group’s Financial
Statements and disclosures relating to:
Going concern and viability statement
The Committee reviewed and considered in depth papers
relating to the going concern and viability statement disclosures
in the Annual Report and Financial Statements. The Strategic
Report discloses the conclusion of these reviews on page 47.
Construction accounting judgements
As more fully explained in our accounting policy on construction
contracts, a significant element of turnover is undertaken via
construction contracts accounted for in accordance with those
accounting policies.
Contract costs and revenues may be affected by a number
of uncertainties that are dependent on the outcome of future
events and therefore estimates may need to be revised as
events unfold and uncertainties are resolved.
During the year, the Committee examined the judgements and
methodologies applied to uncertainties and were in agreement
with the position adopted.
Provision accounting judgements
As more fully detailed in our accounting policy for provisions,
the Group retains significant liabilities for the infrastructure and
services which remain with the Group following the disposal
of land and which are accounted for in accordance with those
accounting policies.
Provisions are subject to quarterly reconciliation carried out
by external cost consultants and are reviewed by senior
management, the Board and the Committee in order to
reassess the adequacy of the remaining provisions and the
effectiveness of costs incurred to date against the original
forecast.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Risk management and controls
Details of the key risks which the Group face, the key controls in
place to control those risks and the system of risk management
adopted by Henry Boot PLC are set out on pages 42 to 47.
The Committee has evaluated the effectiveness of the internal
controls and the risk management system operated. The
evaluation covered all controls including financial, operation, risk
management and compliance.
Internal audit
Henry Boot PLC does not have a specific internal audit
department. The need for an internal audit department is
considered from time to time and currently it is not felt that
the benefits would outweigh the costs. If required, external
specialists are brought in to perform specific reviews of areas
considered a risk.
Approved by the Board and signed on its behalf by
James Sykes
Chairman of the Audit Committee
22 April 2016
The external auditors also perform taxation services for the
Group. It is the Committee’s opinion that having the same firm
perform both services is the most efficient method.
In accordance with best practice, the Company also requires its
external auditor partner to rotate every five years. The statutory
auditor signing the Audit Report is Mr Andy Ward, who was
appointed as the lead partner in 2013.
The external auditors are also required to assess whether, in
their professional opinion, they are independent on an annual
basis, and those views are shared with the Committee.
The Committee is satisfied that the independence of the
external audit partners is not impaired and that the amount
of non-audit fees are at a level which does not impact on the
statutory auditors’ independence and objectivity.
Audit quality and approach to audit tender
The Henry Boot PLC audit was put out to tender six years ago
and PricewaterhouseCoopers LLP was awarded the work from
a shortlist of four firms who tendered.
Discussions took place between the Audit Committee, the
Henry Boot PLC finance function and the subsidiary company
management teams in order to gauge the efficiency of the audit
approach undertaken. Furthermore, the Committee Chairman
and Committee conduct their own ongoing assessment through
the quality of the external auditors’ reports and the statutory
auditors’ interaction with the Committee. The Committee
remains satisfied with the efficiency and effectiveness of the
audit and therefore does not consider it necessary for the audit
to be re-tendered at this stage. The Committee continues to be
satisfied with the work of the external auditors and its objectivity
and independence.
Details of all amounts paid to the auditors for audit services are
set out in note 3 to the Financial Statements.
The Committee recommends to the Board that
PricewaterhouseCoopers LLP be reappointed at the AGM and
that the Directors are authorised to fix their remuneration.
The Committee is aware of the recently introduced disclosure
requirements on certain larger companies where the external
audit contract is not put out to tender every five years. These
requirements do not apply to Henry Boot PLC.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Directors’ Remuneration Report
Statement from the Chairman of the Remuneration Committee
Executive remuneration outcomes for 2015
In the current market conditions the 2015 results, with a 14%
increase in pre-tax profits, were very strong. In 2015 the
combined overall remuneration of the Executive Directors, on a
like for like basis rose, by 0.5%, and 2.1% including the costs
of our new Non-executive Directors in the handover period with
those retiring at the end of the year.
Basic salaries were increased by 3% both at 1 January 2015 and
1 January 2016 compared to an increase across the Company in
total of 4.38%.
Bonuses were paid in line with the Remuneration Policy
approved at the Annual General Meeting (AGM) in May 2015.
Target profit was set at £25m. The profit before tax of £32.4m
exceeds the target by 29.6% and this gives rise to a bonus of
96.4% of salary for the year ended 31 December 2015.
In addition, the Remuneration Committee set 18 individual
targets, which were the same for Jamie Boot and John Sutcliffe.
These covered financial measures such as the achievement of
individual subsidiary budgets, cash flow generation and health
and safety, environmental and Investors in People measures,
a measure related to positive investor feedback, and litigation
risk. The Remuneration Committee consider that the Directors
achieved 90% of these targets resulting in a bonus of 9% of
salary.
Therefore, the total bonus for both Executive Directors is
105.4%.
LTIPS vesting, based on performance for the three years to
31 December 2015, were granted prior to the Remuneration
Policy adoption at the AGM in 2014. The performance criteria
for these awards are:
i. up to 50% of the award is dependent on profit before tax
ahead of inflation;
ii. up to 50% of the award is dependent on the adjusted
net asset value growth compared to an industry standard
investment property annual index;
iii. any amounts derived from the above are then subject to an
underpin based on Total Shareholder Return compared to a
comparator group of companies. If Henry Boot is above the
median, any awards derived in (i) and (ii) are confirmed; below
the median these derived awards are reduced by 50%.
For these awards the actual performance against the targets to
31 December 2015 was:
i. profit before tax increased by 143% against the inflation
measure, including the 4% excess applied each year of 18%
and therefore, this part of the award vests in full;
ii.
the increase in the property index was 30%. The balance
sheet adjusted NAV growth was 32% and therefore 43% of
the award vests;
iii. Total Shareholder Return of 83% was below the median
when set against the comparator group and therefore the
awards in (i) and (ii) are reduced to 50%.
Therefore, the award of LTIP shares to Jamie Boot is 64,740
shares, and John Sutcliffe 48,974 shares.
On behalf of the Board and the
Remuneration Committee (the Committee),
as Chairman of the Committee, I am pleased
to present my first Henry Boot PLC (the
Company) Directors’ Remuneration Report
for the year ended 31 December 2015.
The cohesive and consistent strategy aimed at creating
long-term shareholder value produced another very strong
result in 2015. The markets in which our various businesses
trade were all continuing on an improving trend; however,
these markets can still catch out the imprudent or unwary
operator and have to be managed with skill, care and
confidence.
2015 proved to be an even better result for the Group than
2014, which in itself was the best since 2007 with:
• profit before tax increasing 14% to £32.4m;
• basic earnings per share increasing 8% to 17.5p;
• Return on Capital Employed increasing 80 bps to 12.2%;
• dividends for the year increasing 9% to 6.10p;
• dividend cover is approaching our long-term goal of three
times;
• our strategic land portfolio increased in size again to over
11,000 acres with planning permission on over 12,000
units;
• we have more active commercial developments in
progress than at any stage since 2007;
• our construction business has a strong order book
for 2016 and the plant hire business is operating at its
highest level of utilisation than for many years.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Consultation with shareholders
Whilst there has been no formal contact with shareholders
regarding the Remuneration Policy, it is broadly in line with that
which operated up to the end of 2015. The Committee has made
some changes to give more clarity to the performance criteria
for both LTIPS and annual bonus and reduced the LTIP vesting
at threshold to 25% from 30%. The annual bonus scheme has
specific performance criteria applied to future awards rather than
the discretionary criteria used up to 31 December 2013. The
introduction of a new revised LTIP scheme at the 2015 AGM
incorporates, for the first time, a holding period and malus and
clawback conditions. These malus and clawback conditions will
also apply to the operation of the annual bonus scheme for the
financial year commencing on 1 January 2015.
These changes are intended to ensure our policy operates in line
with best practice.
The application of Directors’
Remuneration Policy for 2016
• The Executives and Non-executive Directors were awarded
a 3% uplift in basic salary for the year ending 31 December
2016. The average across the workforce as a whole was
4.38%.
• The bonus opportunity for the Executives is detailed in the
Remuneration Policy and will apply as laid out in the policy.
• The profit before tax target is considered commercially sensitive
and will therefore be disclosed retrospectively, as we have done
in respect of prior years.
• LTIPS will be awarded under the 2015 scheme rules which
include clauses in respect of clawback and malus in line with
generally accepted guidelines and the updated UK Corporate
Governance Code. The performance targets will be in
accordance with the Remuneration Policy. It is expected that
the award will be at a level equal to 100% of salary.
Clawback and malus conditions will be applied to both the bonus
and Long Term Incentive Plan (LTIP) elements of remuneration in
2016. Specifically, this will arise if the Remuneration Committee
considers that there has been a material misstatement within
the subsidiary or Group Financial Statements; or a material error
in the calculation of any performance condition; or materially
inaccurate or misleading information, or in the case of action
or conduct of the participant which amounts to fraud or gross
misconduct or has a material detrimental effect on the reputation
of the Group. Any future awards will also be subject to clawback
of all or part of the award during a two-year period in the above
circumstances. It is not expected that there will be any material
amendments to the value of other benefits, including pensions,
during 2016.
The report has been prepared in accordance with the
requirements of the Companies Act 2006 and the Large and
Medium-sized Companies and Groups (Accounts and Reports)
(Amendment) Regulations 2013.
The report sets out payments and awards made to the Directors
and details the link between performance and remuneration
for 2015. The report, and this Chairman’s letter, is subject to
an advisory shareholder vote at this year’s AGM (please see
Resolution 3) with the exception of:
a. the Total Shareholder Return graph;
b. the Executive Directors’ remuneration history and
remuneration change tables;
c. the relative importance of spend on pay tables; and
d. the consideration by the Directors of matters relating to
remuneration and the statement of shareholder voting.
The information set out on pages 66 to 73 of the Directors’
Remuneration Report is subject to audit.
Summary of the Committee’s
activity during 2015
During 2015 the Committee:
1. considered Directors’ base pay and benefits for 2015
and 2016. Salary rises for the Executive Directors at
1 January 2015 were 3% and from 1 January 2016
have been set at 3%;
2. conducted a review of the LTIP performance metrics and
level of reward for the year under review;
3. conducted a review of the performance of the Executive
Directors for 2015 and against that background, set
performance targets for 2016;
4. sought the approval of a new LTIP scheme at the AGM
in May 2015 which was approved overwhelmingly by
shareholders;
5. considered the drive by investors to include clawback
and malus clauses in the areas of bonus and LTIPS and
introduced these measures in 2015 and future years for both
bonus and LTIP sections of Executives’ remuneration.
6. considered and approved the remuneration packages
for John Sutcliffe and Darren Littlewood with effect from
1 January 2016. For John Sutcliffe this was set at £376,236
and for Darren Littlewood set at £150,000. The Committee
anticipate reviewing the remuneration package of Darren
Littlewood each year for the next four years at a rate of
£25,000 per annum.
Should you have any queries or comments, then please do not
hesitate to contact me or the Company Secretary as we most
certainly value dialogue with our shareholders.
Our Directors’ Remuneration Policy, which was approved at the
AGM on 21 May 2015, remains unchanged and is available to
view, and download, on the website:
www.henryboot.co.uk/about-us/governance
We strongly believe that our Directors’ Remuneration Policy is
closely aligned to the achievement of the Company’s business
objectives and therefore to our shareholders’ interests.
I therefore hope that you will be able to support the Directors’
Remuneration Report at this year’s AGM.
Joanne Lake
Chairman of the Remuneration Committee
22 April 2016
65
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Directors’ Remuneration Report continued
Annual Report on Remuneration
The following parts of the Directors’ Remuneration Report are subject to audit.
Single total figure of remuneration
The table below reports the total remuneration receivable by Directors in respect of qualifying services during the period.
Year ended 31 December 2015
Jamie Boot
John Sutcliffe
John Brown
Michael Gunston
James Sykes
Joanne Lake
Gerald Jennings
Peter Mawson
Year ended 31 December 2014
Jamie Boot
John Sutcliffe
John Brown
Michael Gunston
James Sykes
Total salary
and fees
£’000
365
Taxable
benefits
£’000
30
Annual
bonus
£’000
385
Long-term
incentives
£’000
146
249
57
41
41
10
10
10
783
Total salary
and fees
£’000
355
242
60
40
40
737
24
—
—
—
—
—
—
54
Taxable
benefits
£’000
30
24
—
—
—
54
263
—
—
—
—
—
—
648
Annual
bonus
£’000
402
275
—
—
—
677
111
—
—
—
—
—
—
257
Long-term
incentives1
£’000
142
97
—
—
—
239
Pension
related
benefits
£’000
73
50
—
—
—
—
—
—
123
Pension
related
benefits
£’000
71
48
—
—
—
119
Total
£’000
999
697
57
41
41
10
10
10
1,865
Total
£’000
1,000
686
60
40
40
1,826
1 The value of long-term incentives has been adjusted from the average share price for the period 1 October 2014 to 31 December 2014 of £1.88 to the price on the day
the shares were issued of £2.31.
Taxable benefits include the provision of a company car or a cash allowance alternative, permanent health insurance and private
medical insurance. The value of benefits is not pensionable. In both years the benefit related to company cars is cash allowances.
The information in the single total figure of remuneration table is derived from the following:
Total salary and fees
The amount of salary or fees received in the period.
Benefits
Annual bonus
Long-term incentives
The taxable benefits received in the period by Executive Directors.
The value of bonus payable and the calculations underlying this are disclosed on pages 67
and 68.
The value of LTIPS are those related to shares that vested as a result of the performance over
the three-year period ended 31 December 2015 valued at the average share price over the last
three months of 2015.
The LTIPS which vested in the period and the statement explaining the performance criteria
which were satisfied for the LTIPS to vest are disclosed on page 69.
Pension related benefits
The pension figure represents the cash value of contributions received by Directors including
contributions to the defined contribution scheme and any salary in lieu of pension contribution
at a rate of 20% of salary.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Individual elements of remuneration
Base salary and fees
Non-executive Directors
Executive Directors
Salary effective from
Jamie Boot
John Sutcliffe
Darren Littlewood
1 January
2016
£
—
376,236
150,000
1 January
2015
£
365,277
249,311
—
Over the years 2010 – 2013 basic salary increases for the
Executive Directors were 2%; for 2014 and 2015 the increase
was 3%. At 1 January 2016 John Sutcliffe was appointed CEO
and received a remuneration package equivalent to that received
by Jamie Boot in 2015 plus 3%. Darren Littlewood received a
remuneration package which will be reviewed by the Committee
over the next four years. Average salary increases for the wider
employee population were 3.65% from 1 January 2014, 3.82%
from 1 January 2015 and 4.38% on 1 January 2016.
The Company’s policy on base salary continues to be to provide
a fixed remuneration component which is comparable with similar
companies, taking into account the need to attract, motivate
and retain Directors of an appropriate calibre to achieve the
Company’s objectives without making excessive payments.
When setting the pay of Directors, the pay and employment
conditions of employees across the Group are taken into account
by the Committee. As with employees, Directors’ rewards are
based on their role, their performance and the market rate for the
job. Directors’ basic salaries and benefits, where applicable, are
reviewed annually, taking into account individual performance and
published remuneration information. Benefits include the provision
of a company car or a cash allowance alternative, permanent
health insurance and private medical insurance. The value of
benefits is not pensionable and is set out for each Director in the
table of Directors’ remuneration.
Salary effective from
John Brown
Michael Gunston
Jamie Boot
James Sykes
Joanne Lake
Gerald Jennings
Peter Mawson
1 January
2016
£
—
—
80,000
42,436
42,436
42,436
42,436
1 January
2015
£
61,800
41,200
—
41,200
—
—
—
Non-executive Directors are remunerated on the basis of their
anticipated time commitment and the responsibilities entailed
in their role. There are no service agreements in place for the
Non-executive Directors and they do not participate in any of the
Company’s incentive arrangements or the Company pension
scheme. The salaries above are inclusive of the responsibilities for
Nomination, Audit and Remuneration Committees and the Senior
Non-executive Director. Any newly appointed Non-executive
Independent Director is expected to serve for an initial period of
at least three years. Terms and conditions of appointment relating
to Non-executive Directors are available for inspection at the
registered office of the Company.
Bonus
The Executive Directors participate in an annual bonus scheme.
This is calculated by reference to pre-tax profits achieved in the
year compared to a target profit which takes into consideration
the year’s financial budget, City expectations and previous years’
profits.
Any bonus amounts are paid in cash and are subject to malus
and deferral provisions within the scheme.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Directors’ Remuneration Report continued
Summary of bonuses earned for 2015
Measure
Maximum
award as %
of salary
Targets and bonus potential for 2015
Actual
performance
Actual bonus value
achieved (% of salary)
Profit before tax
110%
% of target
90%
100%
120%
150%
2015
target
range
£22.5m
£25.0m
£30.0m
£37.5m
Bonus
payable as
% salary
10%
50%
90%
110%
Jamie Boot John Sutcliffe
£32.4m
96.4%
96.4%
Personal objectives
Bonus amount
achieved as % salary
Bonus amount earned
Maximum bonus as %
salary
Bonus amount achieved
as % maximum
10%
See commentary below
9%
9%
105.4%
£385,002
105.4%
£262,774
120%
120%
87.8%
87.8%
Bonuses were paid in line with the Directors’ Remuneration
Policy approved at the AGM in May 2014. Target profit was
set at £25m, 25% ahead of the target set in 2014. The
Remuneration Committee also set 18 individual targets, which
were the same for Jamie Boot and John Sutcliffe. These covered
financial measures such as the achievement of individual
subsidiary budgets, cash flow generation and health and safety,
environmental and Investors in People measures, a measure
related to positive investor feedback, and litigation risk. The
Remuneration Committee considers that the Directors achieved
90% of these targets resulting in a bonus of 9% of salary. The
profit before tax of £32.4m exceeds the target by 29.6% and
this, combined with the personal targets, gives rise to a bonus of
105.4% of salary for the year ended 31 December 2015.
Details of the policy for future annual bonus awards can be found
in the Directors’ Remuneration Policy which can be viewed, and
downloaded, on the website:
www.henryboot.co.uk/about-us/governance
31 December 2016 bonus targets
Profit before tax performance: 10% of salary payable on 90%
of Group profit target, rising to 90% of salary payable upon the
achievement of 120% of Group profit target. If, in exceptional
circumstances, profit targets are exceeded by more than 20%, a
further bonus of 20% of salary may become payable up to 150% of
target.
The profit before tax target is deemed to be commercially sensitive
and therefore will be disclosed retrospectively in the 2016 Directors’
Remuneration Report.
Personal objectives: up to an additional 10% of salary may become
payable to Executive Directors upon the achievement of personal
objectives.
The objectives measured will be based on key elements of the
delivery of Group strategy.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Long Term Incentive Plan (LTIP)
The Committee has reviewed the performance criteria for the LTIP shares awarded in 2013, based on performance for years 2013,
2014 and 2015, which are expected to vest in May 2016. The LTIP shares in this award are subject to the following performance
criteria:
1. profit growth was 143%, which exceeded RPI growth by more than 137%. This was greater than the requirement to exceed RPI
growth by 12% and therefore this 50% of the award became eligible;
2. adjusted NAV growth was 32%, which exceeded the industry standard investment property annual index growth by just over 2%.
As a result of this 43% of this 50% of the award became eligible;
3. Total Shareholder Return (TSR) compared to the comparator group showed that Henry Boot PLC TSR for the three-year period
was 83%, putting it below the median within the comparator group. Therefore, the awards above are reduced by 50% which gave
rise to the award values in the single total figure of remuneration at 31 December 2015 on page 66.
This gave rise to LTIP awards of: Jamie Boot 64,740 shares; and John Sutcliffe 48,974 shares.
LTIP awards granted in the year
Jamie Boot
John Sutcliffe
Type
of award
LTIP – nil cost option
% of salary
100%
LTIP – nil cost option
100%
Number
of shares
159,789
109,060
Face value
to grant at
£2.286
per share
365,277
249,311
% of
award
vesting at
threshold
25%
25%
The performance conditions which must be satisfied to enable the receipt of these grant awards are disclosed below.
Awards expected to be granted for the financial years 2016–2018 in 2016
John Sutcliffe
Darren Littlewood
Type
of award
LTIP – nil cost option
LTIP – nil cost option
% of salary
100%
100%
% of
award at
threshold
25%
25%
The performance criteria for these awards are laid out in the Remuneration Policy which can be viewed, and downloaded, on the
website: www.henryboot.co.uk/about-us/governance
These are different from the performance criteria for previous awards made in 2013, referred to above, as follows:
EPS growth
Return of Capital Employed
We strive to grow earnings per share faster than inflation. This should give rise to an ability
to grow dividends faster than inflation, a key driver to long-term growth in shareholder
value.
We strive to achieve a 10% profit before tax return on balance sheet net assets. This
should give rise to at least two times dividend cover, thereby generating growth in
the Group’s retained capital to reinvest and grow. This is a further driver to long-term
shareholder value growth.
Total Shareholder Return (TSR)
relative to our comparator group
We strive to achieve high shareholder returns. TSR reflects the extent to which
shareholders and the market consider that the Company strategy is appropriate and is
being implemented and articulated well by the Executives.
The detailed performance metrics for LTIPS awarded from 2014 onwards to be granted in 2017 onwards are:
EPS growth
Return on Capital Employed
TSR
% linked
to award
33.3
33.3
33.4
Threshold vesting of 25%
of maximum award
RPIJ + 3% per annum
Average three-year
ROCE of 10%
TSR at median or above our
comparator group
Threshold for 100%
of maximum award
RPIJ + 7% per annum
Average three-year
ROCE of 13% or more
TSR at or within the
upper quartile
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69
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Directors’ Remuneration Report continued
Vesting between the 25% threshold and the maximum award will
be on a pro rata basis. The weightings for each measure have
been chosen because the Committee believes that they each
have equal importance in aligning the interests of shareholders
and the Executive Directors. In addition to the amended
performance criteria calculation, the Committee reduced the
amount of the award vesting at threshold from 30% to 25% from
awards in 2014 onwards. For Jamie Boot any grant of awards in
2017 and 2018 will be on a pro rata basis to his retirement date
of 31 December 2015 under the provisions for good leavers.
Pension entitlement
Jamie Boot began drawing his pension benefits from
19 November 2012 and therefore no pension contributions
are made on his behalf. Instead, a salary in lieu of pension
contributions at a rate of 20% of salary is paid; in 2015 this
payment amounted to £73,055.
John Sutcliffe is a member of the Henry Boot PLC Group
Stakeholder Pension Plan. Contributions are made at 20% of
basic salary and contributions to the Scheme in the year were
£40,821 (2014: £40,000). The annual allowance for tax relief on
pension savings applicable to John Sutcliffe in 2015 was £40,821
and he elected to receive a salary supplement in lieu of the
employer contributions over and above this level which amounted
to £9,041 (2014: £8,411).
The Henry Boot PLC Group Stakeholder Pension Plan provides
a lump sum death in service benefit, a refund of contributions
on death in service and, on death after retirement, a pension
for dependants subject to what the policyholder decides. The
notional leaving work age is currently 65.
Payments to past Directors
There were no payments made to past Directors during the
period in respect of services provided to the Company as a
Director.
Payments made for loss of office
There were no payments made during the period in respect of
loss of office to a Director.
Statement of Directors’ shareholdings and share interests
At
31 December
2014
Legally owned
5,672,964
511,445
35,000
23,000
20,000
n/a
n/a
n/a
Legally
owned
5,734,562
510,445
35,000
23,000
20,000
10,710
—
—
At 31 December 2015
SAYE
(not subject
to
performance)
—
—
LTIPS
subject to
performance
measures
305,611
361,204
—
—
—
—
—
—
—
—
—
—
—
—
Shareholding
as a %
of salary at
31 December
20151
16,912
519
n/a
n/a
106
57
—
—
Total
6,040,173
871,649
35,000
23,000
20,000
10,710
—
—
Jamie Boot
John Sutcliffe
John Brown
Michael Gunston
James Sykes
Joanne Lake
Gerald Jennings
Peter Mawson
The share price at 31 December 2015 was 224.00p. The salary used for this calculation is that which commences on
1 January 2016.
1 As laid out in the Remuneration Policy, which can be viewed on the website:
www.henryboot.co.uk/about-us/governance
Executive Directors are required to acquire shares outright to the value of 100% of basic salary. We note the NAPF recommends that a holding of 200% is more
appropriate. Both Executive Directors comfortably exceed this level; however, the Remuneration Committee believes that setting this level as a policy for a new director is
too onerous over a period of three years. The shareholding requirement for Non-executive Directors that has been proposed in the Remuneration Policy table is that over
three years they should build up to a holding which is 50% of basic remuneration.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Directors’ shareholdings
The beneficial interest of the Directors in the share capital of the Company at 31 December 2015 was as follows:
Jamie Boot
John Sutcliffe
John Brown
Michael Gunston
James Sykes
Joanne Lake
Gerald Jennings
Peter Mawson
2015
Number of shares
Ordinary
5,734,562
510,445
35,000
Preference
14,753
—
—
2014
Number of shares
Ordinary
5,672,964
511,445
35,000
Preference
14,753
—
—
23,000
20,000
10,710
—
—
—
—
—
—
—
23,000
20,000
n/a
n/a
n/a
—
—
n/a
n/a
n/a
Between 31 December 2015 and 24 March 2016, being a date not more than one month prior to the date of the Notice of the AGM,
John Sutcliffe disposed of 5,000 ordinary shares. There have been no other changes in the beneficial and non-beneficial interests of
any Director.
Long term incentive plan awards
Performance shares
Plan
Date of
award
Market
price
at date of
award
At
1 January
2015
Awarded
during
the year
Vested
during the
year
Lapsed
during
the year
At
31 December
2015
Earliest/
actual
vesting date
Market
valuation
on vesting £
Jamie Boot
2006 01/05/2012
2006 18/04/2013
2006 07/05/2014
2015 01/06/2015
137.0p
171.0p
211.0p
228.6p
John Sutcliffe 2006 01/05/2012
2006 18/04/2013
2006 07/05/2014
2015 01/06/2015
137.0p
171.0p
211.0p
228.6p
246,392
201,350
168,074
—
—
—
— 159,789
159,789
615,816
61,598
184,794
— 19,676
— 75,365
— 128,561
408,396
61,598
168,172
137,429
114,715
—
—
—
— 109,060
109,060
420,316
42,043
—
—
—
42,043
126,129
—
—
—
126,129
— 01/06/2015
18/05/2016
07/06/2017
01/06/2018
181,674
92,709
31,228
305,611
— 01/06/2015
18/05/2016
07/06/2017
01/06/2018
137,429
114,715
109,060
361,204
142,291
—
—
—
142,291
97,119
—
—
—
97,119
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71
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Directors’ Remuneration Report continued
Statement of voting at the last Annual
General Meeting (AGM)
The Company remains committed to shareholder dialogue and
takes an active interest in voting outcomes. At the AGM on
21 May 2015 the advisory vote by shareholders to receive and
approve the 2014 Directors’ Remuneration Report was approved.
The number of votes in favour of that resolution was 92,468,054
(99.31% of votes cast), against 634,688 (0.68% of votes cast)
and abstentions 6,910 (0.01% of votes cast). The total number
of votes cast in respect of this resolution represented 70.52%
of the issued share capital. At the same AGM the Directors’
Remuneration Policy was approved. The number of votes in
favour of that resolution was 89,838,765 (96.49% of votes
cast) against 2,905,772 (3.12% of votes cast) and abstentions
365,115 (0.39% of votes cast).
Share price
The middle market price for the Company’s shares at
31 December 2015 was 224.00p and the range of prices
during the year was 182.25p to 245.00p.
Seven-year TSR performance graph
450
FTSE Small Cap Index
Henry Boot PLC
400
350
300
250
200
150
100
50
-
(50)
Percentage change in Group Managing
Director’s remuneration
The table below sets out in relation to salary, taxable benefits and
annual bonus the percentage increase in remuneration for
Jamie Boot compared to the wider workforce. For these
purposes:
Percentage
change
Salary
Taxable benefits
Annual bonus 2014
Annual bonus 2015
Group
Managing
Director
3.0%
—
16.8%
(4.3%)
Workforce
sample
4.38%
—
19.8%
Not yet
available
Note
1
2
2
Note 1
The car allowance remained the same in both years and private
medical insurance costs were also broadly the same in both
years (£350) for all members of the private medical scheme.
Therefore, the average percentage change in taxable benefits
does not provide a meaningful comparison.
Note 2
The workforce bonuses are calculated and agreed in May 2016
for the year ended 31 December 2015 and the figure is therefore
not available. Therefore, the information produced is for the bonus
comparisons paid in May 2015 for the year ended 31 December
2014. The workforce comparison is every member of staff who
received a bonus excluding the Group Managing Director.
Relative importance of spend on pay
The following table sets out the percentage change in dividends,
profit attributable to owners of the business and the overall
spend on pay across our whole organisation:
Group Managing Director’s remuneration
for the previous seven years
Total
remuneration
£’000
Annual bonus
as a %
of maximum
LTIP vesting
as a % of
maximum
Ordinary dividends
Profit attributable
to owners of the
business
Overall expenditure
on pay
2015
£’000
8,044
2014
£’000
7,367
% change
9.2
23,041
21,169
24,857
24,627
8.8
0.9
999
1,000
1,054
962
842
764
575
87.8
94.5
83.3
58.3
66.7
58.3
33.3
25
25
50
40
50
64
50
2015
2014
2013
2012
2011
2010
2009
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Terms of reference
The terms of reference for this Committee fully incorporate the
UK Corporate Governance Code’s provisions in relation to its
roles and responsibilities and are available for inspection at the
Company’s registered office.
Role of the Committee
The primary role of the Committee is to:
1. review, recommend and monitor the level and structure of the
remuneration packages of the Executive Directors and senior
management;
2. set and approve the remuneration package for the Executive
Directors; and
3. determine a balance between base pay and performance
related elements of the remuneration package in an effort to
align the interests of shareholders with those of the Executive
Directors.
Meetings during the year
The Committee met four times during the year. Attendance at
these meetings by the Committee members is shown in the table
on page 56 and further details can be found below.
Membership of the Committee
Those serving as members of the Remuneration Committee
(the Committee) for the whole of 2015 were Michael Gunston
(Committee Chairman), John Brown and James Sykes. From
1 October 2015, additional serving members were myself, Gerald
Jennings and Peter Mawson. I was appointed Chairman of the
Committee with effect from 1 January 2016 and Jamie Boot
also became a member of the Committee on 1st January 2016.
Biographies of the current members of the Committee are shown
on page 50. Michael Gunston (Committee Chairman) and John
Brown were independent Non-executive Directors of the Board
until their respective retirements on 31 December 2015. Gerald
Jennings, Peter Mawson and I are independent Non-executive
Directors of the Board, while Jamie Boot and James Sykes are
Non-independent Non-executive Directors.
The Committee consisted of the three Non-executive Directors
of the Board until 30 September 2015, and six Non-executive
Directors from 1 October 2015, so during the financial year was
comprised as follows:
Michael Gunston*
James Sykes
John Brown
Joanne Lake**
Gerald Jennings
Peter Mawson
Independent
Yes
No
Yes
Yes
Yes
Yes
* Committee Chairman (until 31 December 2015)
** Committee Chairman (from 1 January 2016)
During 2015 Jamie Boot, Group Managing Director, attended
meetings with the Committee, as requested, in order to assist
on matters concerning other senior Executives within the Group.
Jamie Boot was not present during any part of the meetings
where his own remuneration was discussed.
Consideration by the Directors of matters
relating to Directors’ remuneration
The Committee has its own terms of reference which have been
approved by the Board. These are reviewed annually to ensure
they adhere to best practice. Copies can be obtained from the
Company Secretary and the Committee Chairman is available to
shareholders to discuss the Remuneration Policy if required.
In accordance with the terms of reference, the Committee is
responsible for:
• determining and agreeing the Remuneration Policy for the
Executive Directors and their contractual conditions of
employment;
• having regard for remuneration trends across all employees in
the Group and other companies when setting Remuneration
Policy;
• selecting, appointing and agreeing the remuneration for any
remuneration consultants who advise the Committee;
• determining targets for any annual bonus and long-term
incentive schemes operated by the Company and approving
any payments made under such schemes;
• reviewing the design of all share incentive schemes for approval
by the Board;
• determining the policy for and scope of any pension
arrangements for Executive Directors; and
• ensuring that contractual terms on appointment and on
termination and any payments made are fair to the individual
and the Group, that failure is not rewarded and the duty to
mitigate loss is fully recognised.
Advisers
The Committee’s main advisers are set out below:
Adviser
Area of advice
Chief Executive
Officer and
Head of HR
DLA Piper UK LLP Share scheme matters, the rules for
Remuneration of staff, senior
Executives and management
the 2015 LTIP Scheme. The
Remuneration Committee considers
that the advice DLA has given
throughout the year is legal advice in
compliance with relevant legislation.
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Approved by the Board and signed on its behalf by
Joanne Lake
Chairman of the Remuneration Committee
22 April 2016
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Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Directors’ Report
The Directors’ Report for the financial year ended
31 December 2015 is detailed below.
Activities of the Group
The principal activities of the Group are land development,
property investment and development, and construction.
Strategic Report
In accordance with the Companies Act 2006, we are required
to present a fair review of the Group business along with
a description of the principal risks and uncertainties faced.
The Strategic Report for the year ended 31 December 2015
is set out on pages 6 to 47.
Corporate Governance Statement
The Disclosure and Transparency Rules require certain
information to be included in a corporate governance statement
in the Directors’ Report. Information that fulfils the requirements
of the Corporate Governance Statement can be found in
Governance on pages 53 to 59 and is incorporated into this
Directors’ Report by reference.
Results for the year and dividends
The results are set out in the Consolidated Statement of
Comprehensive Income on page 88. The companies affecting
the profit or net assets of the Group in the year are listed in note
35 to the Financial Statements.
The Directors recommend that a final dividend of 3.80p per
ordinary share be paid, subject to shareholder approval at the
2016 AGM on 31 May 2016, to ordinary shareholders on the
register at the close of business on 29 April 2016. If approved,
this, together with the interim dividend of 2.30p per ordinary
share paid on 23 October 2015, will make a total dividend of
6.10p per ordinary share for the year ended 31 December
2015. Further details are disclosed in note 10 to the Financial
Statements on page 105.
Financial instruments
The Group’s policy in respect of financial instruments is set out
within the Accounting Policies on page 96 and details of credit
risk, capital risk management, liquidity risk and interest rate
risk are given respectively in notes 16, 23, 24 and 27 to the
Financial Statements.
Going concern and Viability Statement
The Directors have, at the time of approving the Financial
Statements, a reasonable expectation that the Company and
the Group have adequate resources to continue in operational
existence for the foreseeable future. Further detail is contained
in the Strategic Report on page 47.
Political donations
The Company made no political donations in the year or in
the previous year.
Directors and their interests
John Brown, Jamie Boot, John Sutcliffe, Michael
Gunston, James Sykes, Joanne Lake, Peter Mawson
and Gerald Jennings held office as Directors of the Company
in 2015. From 1 January 2016, and up to the date of signing the
Financial Statements, Jamie Boot, John Sutcliffe, James Sykes,
Joanne Lake, Peter Mawson, Gerald Jennings and Darren
Littlewood held office as Directors of the Company.
Their biographical details are shown on page 50.
At no time during the year has any Director had any interest in
any significant contract with the Company.
The interests of Directors in the share capital of the Company,
other than with respect to options to acquire ordinary shares,
are disclosed in the Directors’ Remuneration Report on pages
70 and 71.
Between 31 December 2015 and 24 March 2016, being
a date not more than one month prior to the date of the Notice
of the AGM, there has been a change in the beneficial interest
of one Director, John Sutcliffe, who sold 5,000 ordinary shares
of 10 pence each in the share capital of the Company on 14
January 2016.
Details of Directors’ long-term incentive awards and share
options are provided in the Directors’ Remuneration Report
on page 69.
Pension Scheme Trustees
Legislation can lead to pension scheme Trustees being held
personally liable. Pension Trustee liability insurance protects
pension schemes and their Trustees against claims for matters
including breach of trust, maladministration and wrongful acts.
When Trustees act for pension funds they become liable for
any action undertaken or, possibly, actions not undertaken.
In keeping with normal market practice, the Company believes
that it is in its best interests to protect the Group’s pension
scheme and its Trustees concerned from the consequences of
innocent error or omission. It is therefore considered prudent
to take out an annual insurance policy to protect the pension
scheme and its Trustees from potential liabilities.
Employment policy and involvement
Employees
Employees are at the heart of all that we do. We are committed
to ensuring that all employees, potential recruits and other
stakeholders are treated fairly and equitably. The principles
of equality and diversity are important; advancement is based
upon individual skills and aptitude irrespective of gender, sexual
orientation, race, ethnic origin, religion, age, disability
or marital/civil partnership status. Every possible effort is
made by the Group to retain and support employees who
become less able whilst in the employment of the Group. Full
consideration is given to the diverse needs of our employees
and potential recruits and we are fully compliant with all current
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Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
legislation. Our culture is aimed at ensuring that employees
can grow, thrive and succeed to their full potential. Succession
planning is important and our offering to employees to seek
to further improve employee retention includes the Group
stakeholder pension (including life assurance arrangements),
private medical insurance, childcare vouchers and income
replacement (PHI) arrangements. Employee share ownership
continues to be encouraged through participation in various
share option plans.
We are fully committed to developing our employees to
maximise their career potential and to achieve their aspirations
and our aim is to provide rewarding career opportunities in
an environment where equality of opportunity is paramount.
Our policy for selection and promotion is based on an
assessment of an individual’s ability and experiences; we take
full consideration of all applicants on their merits and have
processes and procedures in place to ensure that individuals
with disabilities are given fair consideration.
Employee engagement
The involvement of our employees in our business is key to our
ongoing success; the common goals and objectives are shared
from the Executive Board downwards and all employees are
aware of the crucial role each individually plays in our ongoing
financial and operational success.
The Group regularly provides its employees with information
on matters of concern to them; we consult with our employees
and/or their representatives in order to ensure that their views
can be taken into account when making decisions. We utilise
manager briefings and surveys to engage with our employees.
Employee communications
We utilise our ever evolving Group intranet to disseminate
information to all Directors and employees. Regular news
items and internal updates are issued on a frequent basis;
collaboration and inclusion are encouraged.
Employee share schemes
The Group encourages participation in employee share
schemes of the Company to share in the potential growth and
any future success of the Group. Details of employee share
schemes are set out in note 30 to the Financial Statements.
We were proud for the Company and our employees that
our Investors in People accreditation was reconfirmed in
January 2015.
Directors’ indemnity provisions
Directors risk personal liability under civil and criminal law for
many aspects of the Company’s main business decisions.
As a consequence the Directors could face a range of penalties
including fines and/or imprisonment. In keeping with normal
market practice, the Company believes that it is prudent and
in the best interests of the Company and their best interests
to protect the individuals concerned from the consequences
of innocent error or omission.
As a result, the Company operates a Directors’ and officers’
liability insurance policy in order to indemnify Directors and
other senior officers of the Company and its subsidiaries, as
recommended by the Corporate Governance Code. This
insurance policy does not provide cover where the Director
or officer has acted fraudulently or dishonestly.
In addition, subject to the provisions of and to the extent
permitted by relevant statutes, under the Articles of Association
of the Company, the Directors and other officers throughout the
year, and at the date of approval of these Financial Statements,
were indemnified out of the assets of the Company against
liabilities incurred by them in the course of carrying out their
duties or the exercise of their powers.
Health and safety
The health and safety of our employees and others is
paramount. Further information on our approach to health and
safety is provided in the Corporate Responsibility Report on
page 29.
Greenhouse gas emissions
The greenhouse gas emissions disclosures required by
Companies Act 2006 (Strategic Report and Directors’ Report)
Regulations 2013 are included within the Strategic Report on
page 31. This information is incorporated by reference into (and
shall be deemed to form part of) this report.
Substantial interests in voting rights
Excluding Directors, at the end of the financial year and a date
not more than one month prior to the date of the Notice of the
AGM, the information in the table below had been disclosed to
the Company in accordance with the requirements in the Listing
Rules and the Disclosure Rules and Transparency Rules of the
Financial Conduct Authority.
Voting rights
over ordinary
shares
Number
% of issued
21,307,155
16.14
5,739,580
4.35
Rysaffe Nominees and
J J Sykes (joint holding)*
The Fulmer Charitable
Trust**
Standard Life Investments
Limited***
8,074,925
6.11
*Rysaffe Nominees and James Sykes are joint registered
holders on behalf of various Reis family trusts and are therefore
not included under the beneficial interests of James Sykes set
out in the Directors’ Remuneration Report.
**The shares of the Fulmer Charitable Trust, a recognised
charity, are registered in the names of Mr John Spencer Reis,
Mrs Sally Anne Reis and Mrs Caroline Mary Mytum as Trustees.
***Last notified as 4,630,364 (3.507% of issued) direct voting
rights and 3,444,561 (2.609% of issued) indirect voting rights.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Directors’ Report continued
Shares held by the Henry Boot PLC
Employee Trust
The Company has an established Employee Trust (the Trust) for
the benefit of Group employees to satisfy existing grants by the
Company under various share-based payment arrangements.
Details of the Company’s share-based payment arrangements
are provided in note 30 to the Financial Statements. The Trustee
of the Trust, a subsidiary of the Company of which the Directors
throughout the whole of 2015 were John Brown, John Sutcliffe
and Russell Deards, and from 1 January 2016 are Jamie Boot,
John Sutcliffe, Russell Deards and Darren Littlewood, exercises
the voting rights in relation to shares held as it, in its absolute
discretion, thinks fit, but having regard to the interests of the
beneficiaries. In respect of the financial year of the Company
ended on 31 December 2015, the Trust has waived the right
to receive from the Company all dividends (if any) in respect of
the shares held within the Trust. Further details are provided
in note 32 to the Financial Statements.
Future developments
Important events since the financial year end and future
developments are described in the Strategic Report on pages
6 to 47.
Statement of disclosure of information
to auditors
The Directors of the Company who held office at the date of
approval of this Annual Report each confirm that:
• so far as they are aware, there is no relevant audit information
(information needed by the Company’s auditors in connection
with preparing their report) of which the Company’s auditors
are unaware; and
• they have taken all the steps that they ought to have taken
as Directors in order to make themselves aware of any
relevant audit information and to establish that the Company’s
auditors are aware of that information.
Independent auditors
The auditors, PricewaterhouseCoopers LLP, have signified their
willingness to remain in office and resolutions reappointing them
as auditors (Resolution 11) and authorising the Directors to fix
their remuneration (Resolution 12) will be proposed at the AGM.
Accountability and audit
Details of the Directors’ responsibilities and the Statement
of Directors’ Responsibilities are contained on page 79. The
Independent Auditors’ Report is given on pages 82 to 87.
Annual General Meeting (AGM)
The AGM of the Company will be held at Baldwins Omega,
Brincliffe Hill, Off Psalter Lane, Sheffield S11 9DF on Thursday
26 May 2016 at 12.30pm. The notice convening the meeting
can be found on pages 137 to 141. It is also available at
www.henryboot.co.uk, where a copy can be viewed
and downloaded.
Additional shareholder information
This section sets out details of other matters on which the
Directors are required to report annually, but which do not
appear elsewhere in this document.
The information below summarises certain provisions of the
current Articles of Association of the Company (as adopted by
special resolution on 27 May 2011) (the Articles) and applicable
English law concerning companies (the Companies Act 2006).
This is a summary only and the relevant provisions of the
Companies Act 2006 or the Articles should be consulted if
further information is required.
Share capital
The Company’s issued share capital comprises two classes
of shares being, respectively, ordinary shares of 10p each
(ordinary shares) and cumulative preference shares of £1 each
(preference shares). Further details of the share capital of the
Company are set out in note 30 to the Financial Statements.
As at 24 March 2016, the ordinary shares represent 97.06%
of the total issued share capital of the Company by nominal
value and the preference shares represent 2.94% of such
total issued share capital. The ordinary shares and the
preference shares are in registered form. Both classes of share
are admitted to the Official List of the UK Financial Conduct
Authority. The Company’s ordinary shares are categorised
as ‘Premium Listed’ and its preference shares as ‘Standard
Listed’. A Standard Listing is based on EU minimum standards
for floating a company on a public market whereas a Premium
Listing requires compliance with additional requirements set out
in the Listing Rules of the UK Financial Conduct Authority.
The Notice of the AGM on pages 137 to 141 includes the
following resolutions:
• an ordinary resolution (Resolution 13) to renew the authority
of the Directors to allot shares up to a maximum nominal
amount of £4,401,378 representing approximately one-third
(33.33%) of the Company’s issued ordinary share capital at
24 March 2016. The authority will expire on 25 August 2017
or at the conclusion of the next AGM, whichever is the earlier,
but it is the present intention of the Directors to seek annual
renewal of this authority. The Directors do not have any
present intention of exercising the authority;
• a special resolution (Resolution 14) to enable the Directors
to continue to allot equity securities for cash in connection
with a rights or other issue pro rata to the rights of the existing
shareholders, but subject to certain exceptions, and for any
other purpose provided that the aggregate nominal value of
such allotments does not exceed £660,000 (approximately
5% of the Company’s issued ordinary share capital at
24 March 2016). The authority will expire on 25 August 2017
or at the conclusion of the next AGM, whichever is the earlier,
but it is the present intention of the Directors to seek annual
renewal of this authority; and
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Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
• a special resolution (Resolution 15) to renew the authority of
the Company to make market purchases of up to 11,055,000
of its own issued ordinary shares (8.37% of the Company’s
issued ordinary share capital at 24 March 2016). The
minimum price that may be paid under the authority for an
ordinary share is 10p and the maximum price is limited to
not more than 5% above the average of the middle market
quotations for an ordinary share as derived from the London
Stock Exchange Daily Official List for the five business days
before the purchase is made. The Directors will exercise the
authority only if they are satisfied that it would be likely to
result in an increase in expected earnings per share of the
ordinary share capital in issue and that any purchase will be
in the best interests of shareholders generally. If the Directors
do decide to exercise the authority, ordinary shares so
acquired will either be cancelled or held as treasury shares,
depending upon the circumstances prevailing at the time.
Rights and obligations attaching to shares
Subject to the Companies Act 2006 and other shareholders’
rights, any share may be issued with such rights and restrictions
as the Company may by ordinary resolution decide or, if no
such resolution has been passed or so far as the resolution
does not make specific provision, as the Board of Directors for
the time being of the Company (the Board) may decide. Subject
to the Companies Act 2006, the Articles and any resolution of
the Company, the Board may deal with any unissued shares as
it may decide.
Rights of preference shares
The preference shares carry the following rights in priority to the
ordinary shares but carry no further right to participate in profits
or assets:
• the right to receive out of the profits of the Company a fixed
cumulative preferential dividend at the rate of 5.25% per
annum on the capital paid up thereon;
• the right on a return of assets on a winding up to payment
of the capital paid up thereon together with a sum calculated
at the rate of 6.00% per annum in respect of any period
up to the commencement of the winding up for which such
preferential dividend as referred to above has not been
paid; and
• the right on a return of assets in a reduction of capital to
repayment of the capital paid up thereon together with a sum
equal to all arrears (if any) of such preferential dividend as
referred to above.
The preference shares shall not confer on the holders of them
any right to receive notice of or to be present or to vote at any
general meeting unless either:
• a resolution is proposed directly affecting the rights or
privileges of the holders of the preference shares as a
separate class; or
• at the date of the notice convening the general meeting, the
fixed cumulative preferential dividend provided in the Articles
shall be in arrears for more than six months.
Voting
Under and subject to the provisions of the Articles and subject
to any special rights or restrictions as to voting attached to
any shares, on a show of hands every shareholder present in
person shall have one vote, and on a poll every shareholder
who was present in person or by proxy shall have one vote for
every share of which he is the holder. Under the Companies Act
2006, shareholders are entitled to appoint a proxy to exercise
all or any of their rights to attend and to speak and vote on their
behalf at a general meeting or class meeting.
Restrictions on voting
A shareholder shall not be entitled to vote at any general
meeting or class meeting in respect of any shares held by him
unless all calls and other sums presently payable by him in
respect of that share have been paid. In addition, holders of
default shares (as defined in the Articles) shall not be entitled
to vote during the continuance of a default in providing the
Company with information concerning interests in those shares
required to be provided (following relevant notification) under
the Companies Act 2006.
Deadlines for voting rights
Full details of the deadlines for exercising voting rights in respect
of the resolutions to be considered at the AGM to be held on
26 May 2016 are set out in the Notice of AGM on pages 137 to
141.
Dividends and distributions
The Company may, by ordinary resolution, declare a dividend
to be paid to the shareholders but no dividend shall exceed
the amount recommended by the Board. The Board may pay
interim dividends and also any fixed rate dividend whenever the
financial position of the Company justifies its payment in the
opinion of the Board. If the Board acts in good faith, none of
the Directors shall incur any liability to the holders of shares with
preferred rights for any loss they may suffer in consequence
of the payment of an interim dividend on other shares.
Variation of rights
The Articles specify that the special rights attached to any class
of shares may, either with the consent in writing of holders
of three-fourths of the issued shares of that class or with the
sanction of a special resolution passed at a separate meeting
of such holders (but not otherwise), be modified or abrogated.
Transfer of shares
Under and subject to the restrictions in the Articles, any
shareholder may transfer some or all of their shares in
certificated form by transfer in writing in any usual form or in
any other form which the Board may approve. Uncertificated
shares must be transferred by means of a relevant system,
such as CREST. The Board may, save in certain circumstances,
refuse to register any transfer of a certificated share not fully
paid up. The Board may also refuse to register any transfer
of certificated shares unless it is:
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Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Governance
Directors’ Report continued
• in respect of only one class of shares;
• duly stamped or exempt from stamp duty;
• delivered to the office or at such other place as the Board
may decide for registration; and
between him and the Company. A Director may also be
removed from office by the service on him of a notice to that
effect signed by or on behalf of all the other Directors, being
not less than three in number. The office of a Director shall be
vacated if:
• accompanied by the certificate for the shares to be
transferred and such other evidence (if any) as the Board
may reasonably require to show the right of the intending
transferor to transfer the shares.
i.
ii.
he is prohibited by law from being a Director;
he becomes bankrupt or makes any arrangement or
composition with his creditors generally;
In addition, the Board may refuse to register any transfer of
shares which is in favour of (i) a child, bankrupt or person of
unsound mind or (ii) more than four transferees.
Repurchase of shares
Subject to the provisions of the Companies Acts and to any
rights conferred on the holders of any class of shares, the
Company may purchase all or any of its shares of any class,
including any redeemable shares.
Amendment to the Articles of Association
Any amendments to the Articles may be made in accordance
with the provisions of the Companies Act 2006 by way of
special resolution.
Appointment and replacement of Directors
The Directors shall not, unless otherwise determined by an
ordinary resolution of the Company, be less than three nor
more than 15 in number. Directors may be appointed by the
Company by ordinary resolution or by the Board. A Director
appointed by the Board shall retire from office at the next
AGM of the Company but shall then be eligible for
reappointment. The Board may appoint one or more Directors
to hold any office or employment under the Company for
such period (subject to the Companies Acts) and on such
terms as it may decide and may revoke or terminate any
such appointment. At each AGM any Director who has been
appointed by the Board since the previous AGM and any
Director selected to retire by rotation shall retire from office.
At each AGM, one-third of the Directors who are subject to
retirement by rotation or, if the number is not an integral multiple
of three, the number nearest to one-third but not exceeding
one-third shall retire from office. In addition, there shall also be
required to retire by rotation any Director who at any AGM of the
Company shall have been a Director at each of the preceding
two AGMs of the Company, provided that he was not appointed
or reappointed at either such AGM and he has not otherwise
ceased to be a Director and been reappointed by general
meeting of the Company at or since either such AGM. The
Company’s policy is that all of the Directors should be, and are,
subject to annual re-election.
The Company may, by ordinary resolution of which special
notice has been given in accordance with the Companies Acts,
remove any Director before his period of office has expired
notwithstanding anything in the Articles or in any agreement
iii. he is or may be suffering from a mental disorder as referred
to in the Articles;
iv.
for more than six months he is absent, without special
leave of absence from the Board, from meetings of the
Board held during that period and the Board resolves that
his office be vacated; or
v.
he serves on the Company notice of his wish to resign.
Powers of the Directors
The business of the Company shall be managed by the Board
which may exercise all the powers of the Company, subject to
the provisions of the Articles and any ordinary resolution of the
Company. The Articles specify that the Board may exercise all
the powers of the Company to borrow money and to mortgage
or charge all or any part of its undertaking, property and
assets and uncalled capital and to issue debentures and other
securities, subject to the provisions of the Articles.
Takeovers and significant agreements
The Company is a party to the following significant agreements
that take effect, alter or terminate on a change of control of the
Company following a takeover bid:
• the Company’s share schemes and plans; and
• bank facilities whereby upon a ‘change of control’ the lenders
shall consult with Henry Boot PLC for a period not greater
than 30 days (commencing on the date of the change of
control) to determine whether and on what basis the lenders
are prepared to continue the facility.
Information rights
Beneficial owners of shares who have been nominated by the
registered holder of those shares to enjoy information rights
under Section 146 of the Companies Act 2006 are required
to direct all communications to the registered holder of their
shares, rather than to the Company’s registrars, Computershare
Investor Services PLC or to the Company directly.
Approved by the Board and signed on its behalf by
Russell Deards
Group General Counsel & Company Secretary
22 April 2016
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Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Statement of Directors’ Responsibilities
Directors’ statement pursuant to the
Disclosure and Transparency Rules
The Directors consider that the Annual Report and Financial
Statements, taken as a whole, is fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Company’s performance, business
model and strategy.
Each of the Directors, whose names and functions are listed on
page 50 confirm that, to the best of their knowledge:
• the Group Financial Statements, prepared in accordance
with IFRSs as adopted by the EU, give a true and fair view
of the assets, liabilities, financial position and profit of the
Group; and
• the Strategic Report and Directors’ Report contained in the
Annual Report includes a fair review of the development
and performance of the business and the position of the
Group, together with a description of the principal risks and
uncertainties that it faces.
Approved by the Board and signed on its behalf by
John Sutcliffe
Director
22 April 2016
Darren Littlewood
Director
22 April 2016
The Directors are responsible for preparing the Annual Report
and the Financial Statements in accordance with applicable law
and regulations.
Company law re quires the Directors to prepare Financial
Statements for each financial year. Under that law, they
are required to prepare the Group Financial Statements in
accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union (EU) and applicable
law and have elected to prepare the Parent Company Financial
Statements on the same basis. Under company law the
Directors must not approve the Financial Statements unless
they are satisfied that they give a true and fair view of the state
of affairs of the Group and the Company and of the profit or loss
of the Group for that financial year. In preparing these Financial
Statements, the Directors are required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether applicable IFRSs as adopted by the EU have
been followed, subject to any material departures disclosed
and explained in the Financial Statements; and
• prepare the Financial Statements on the going concern basis,
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Company and the Group and enable
them to ensure that the Financial Statements and the Directors’
Remuneration Report comply with the Companies Act 2006
and, as regards the Group Financial Statements, Article 4 of
the IAS Regulation. They are also responsible for safeguarding
the assets of the Company and the Group and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity
of the Company’s website. Legislation in the United Kingdom
governing the preparation and dissemination of Financial
Statements may differ from legislation in other jurisdictions.
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www.henryboot.co.uk
Stock Code: BHY
A cohesive, consistent
and confident approach to
financial management
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Financial
StatementS
Contents
82 Independent Auditors’ Report
88 Consolidated Statement of
Comprehensive Income
89 Statements of Financial Position
90 Statements of Changes in Equity
91 Statements of Cash Flows
92 Principal Accounting Policies
100 Notes to the Financial Statements
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81
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Independent Auditors’ Report
to the members of Henry Boot PLC
Report on the Financial Statements
Our opinion
In our opinion:
• Henry Boot PLC’s Group Financial Statements and Parent Company Financial Statements (the Financial Statements) give a true
and fair view of the state of the Group’s and of the Parent Company’s affairs as at 31 December 2015 and of the Group’s profit
and the Group’s and the Parent Company’s cash flows for the year then ended;
• the Group Financial Statements have been properly prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union;
• the Parent Company Financial Statements have been properly prepared in accordance with IFRSs as adopted by the European
Union and as applied in accordance with the provisions of the Companies Act 2006; and
• the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards
the Group Financial Statements, Article 4 of the IAS Regulation.
What we have audited
The Financial Statements, included within the Annual Report and Financial Statements (the Annual Report), comprise:
• the Statements of Financial Position as at 31 December 2015;
• the Consolidated Statement of Comprehensive Income for the year then ended;
• the Statements of Cash Flows for the year then ended;
• the Statements of Changes in Equity for the year then ended;
• the accounting policies; and
• the notes to the Financial Statements, which include other explanatory information.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the Financial
Statements. These are cross-referenced from the Financial Statements and are identified as audited.
The financial reporting framework that has been applied in the preparation of the Financial Statements is IFRSs as adopted by the
European Union, and applicable law and, as regards the Parent Company Financial Statements, as applied in accordance with the
provisions of the Companies Act 2006.
Our audit approach
Overview
• Overall Group materiality: £2.5million which represents 0.7% of total assets.
Materiality
• We performed full scope audits at the six largest reporting units.
• A further four reporting units were subject to targeted procedures with work over investment property
portfolios at three, and procedures over property, plant and equipment at the remaining unit.
Audit scope
• These reporting units accounted for 92% of total assets.
• Valuation of investment properties.
Areas
of focus
• Accuracy and valuation of construction contract balances.
• Completeness and accuracy of land development provision.
• Valuation of pension scheme liability.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
The scope of our audit and our areas of focus
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (ISAs (UK & Ireland)).
We designed our audit by determining materiality and assessing the risks of material misstatement in the Financial Statements.
In particular, we looked at where the Directors made subjective judgements, for example in respect of significant accounting
estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we
also addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the
Directors that represented a risk of material misstatement due to fraud.
The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort, are
identified as “areas of focus” in the table below. We have also set out how we tailored our audit to address these specific areas in
order to provide an opinion on the Financial Statements as a whole, and any comments we make on the results of our procedures
should be read in this context. This is not a complete list of all risks identified by our audit.
Area of focus
How our audit addressed the area of focus
Valuation of investment properties (£125.3m)
(Refer to note 13 of the Financial Statements)
We focussed on this area because the Group’s
investment property assets represent a significant
proportion of the assets in the Group Statement of
Financial Position.
The Group’s portfolio includes properties at varying
stages of completion across various sectors, including
mixed-use, industrial and retail. Property valuations
are subject to a high degree of judgement as they are
calculated from a number of different assumptions
specific to each individual property or development site.
These include actual and estimated rental values, yields,
costs to complete and land values per acre.
The Group engages Jones Lang LaSalle to value its
completed investment properties in all but the residential
sector. The properties valued by Jones Lang LaSalle are
valued by applying market-derived capitalisation yields
to actual or market-derived rental income specific to
each property.
Investment properties in the course of construction
are valued by management using the residual method
of valuation. This involves estimating the gross
development value of the property and deducting from
this the gross development costs to be incurred and an
allowance for anticipated development profits yet to be
earned.
For all classes of investment property, a relatively small
percentage change in valuations of individual properties,
in aggregate, could result in a material impact to the
Financial Statements.
Regarding the completed investment properties valued by the
external valuer:
We tested the underlying data used by the external valuer by agreeing a
sample of lettings to our work on rental revenue. This included agreeing
rents and other significant contract terms to legal agreements.
For each property, we compared the changes in the yields and capital
values since the prior year to an expectation based upon industry-
specific indices. We also considered the movements in the assumptions
in the light of our existing understanding of the Group’s portfolio and
activities in the year. As a result we identified certain properties where
we felt the movements in the yields or capital values warranted further
discussion.
We held a meeting with management and their external valuers at which
we challenged the assumptions used in these valuations by reference to
externally published benchmarks.
We corroborated the explanations received by reference to the results of
our audit procedures in other areas such as rental revenue testing, and
by further review of legal documentation and correspondence where
necessary. Whilst we identified that for certain properties an alternative
yield assumption may be taken, no material adjustments were identified.
Regarding the remaining properties valued by management:
We selected a sample of valuations of investment property in the
course of construction for testing based on value. We reperformed
the calculations provided by management, for which the significant
assumptions were expected rental values, forecast yields and costs to
complete. We corroborated these assumptions by reference to legal
agreements, published indices, subcontractor quotes and completion
statements.
No material adjustments were identified as a result of our testing.
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83
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Independent Auditors’ Report continued
to the members of Henry Boot PLC
Area of focus
How our audit addressed the area of focus
Accuracy and valuation of construction contract
balances (Refer to note 19 of the Financial
Statements)
We focussed on this area because of the judgements
involved in estimating the stage of completion of
construction contract activity and assessing costs
to complete. This in turn means the assessment of
anticipated profits or losses on individual contracts is
judgemental.
The Group undertakes a number of significant
construction contracts and a relatively small change in
the judgements applied, such as whether a provision
for remedial works is required based on an assessment
of risk and magnitude relating to the identified issue,
could result in a material misstatement to the Financial
Statements.
Completeness and accuracy of land
development provision (£8.2m) (Refer to note 26
of the Financial Statements)
In certain limited circumstances, the Group retains
obligations to provide infrastructure and service works in
relation to land that it has previously sold.
The estimation of the cost of meeting these obligations
and of the likely timing of the works is subject to some
uncertainty as the sites affected are very large and the
associated works take place over a number of years.
We evaluated management’s revenue and profit recognition on a
sample of contracts that we selected based on factors such as risk
and magnitude and found that it was consistent with the supporting
evidence obtained.
Our work over a sample of contracts included the following:
• Meeting with in-house quantity surveyors to understand the status of
contract work and to understand how the cost to complete had been
calculated;
• Agreeing key contract details to legal documentation;
• Using computer assisted audit techniques to verify the occurrence of
all revenue billed during the year through agreeing amounts certified
by third parties to accounts receivable and cash;
• We also checked customer acceptance of the work undertaken,
considering the implications of any ongoing disputes which included
discussions with the Group legal department;
• Assessing cost to complete schedules for reasonableness, primarily
by looking at historical budgeting accuracy; and
• We tested a sample of accruals for contract work undertaken by
agreeing them to supporting documentation, including subcontractor
applications for payment and invoices.
We tested a sample of provisions for contract work not yet undertaken
to reports prepared by in-house quantity surveyors, correspondence
with any claimants and testing the outturn on similar amounts previously
provided for, and found no material issues.
We also assessed management’s overall profit recognition methodology,
including a sample assessment of the accuracy of revenue and
profit forecasts from prior years. This highlighted that management’s
forecasting ability was materially consistent with the actual outcomes.
We tested the costs to complete included in the provision by agreeing
to projections from management’s external cost consultants. This also
included agreeing the estimated timing of cash flows to these same
projections.
We considered the historic accuracy of the Group’s forecast costs to
complete by comparing these forecasts with actual costs incurred to
date.
We reconciled the movement in the provision between December 2014
and December 2015 and discussed the largest movements, by value,
with management to ensure we understood the rationale for them.
We corroborated the explanations received by reference to external
correspondence.
We also selected a sample of actual infrastructure costs incurred in the
year and agreed them to supplier invoice or completion certificate. We
considered the narrative on the supporting documentation reviewed in
each case to establish whether the cost had been allocated against the
correct element of the brought forward provision (and therefore whether
it was correct that the provision had reduced).
No material adjustments were identified as a result of the procedures
we performed in this area.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Area of focus
How our audit addressed the area of focus
Valuation of pension scheme liability (£19.6m)
(Refer to note 27 of the Financial Statements)
The Group has a defined benefit pension scheme net
liability which is significant in the context of both the
overall balance sheet and the results of the Group.
The Group uses an independent actuary to value the
pension scheme under IAS 19.
We obtained the actuary’s report and with the assistance of our
pension specialists agreed the discount and inflation rates used in the
valuation of the pension liability to our internally developed benchmarks,
which are based on externally available data. We confirmed that these
assumptions were within our expected range. We compared the
demographic assumptions to national and industry averages and were
satisfied that these were reasonable.
The valuation of the pension liability requires significant
levels of judgement and technical expertise in choosing
appropriate assumptions. Unfavourable changes in
a number of the key assumptions (including salaries
increase, inflation, discount rates and mortality) can
have a material impact on the calculation of the liability.
The values of the pension scheme’s investments at
31 December 2015 are provided by the scheme’s
investment managers.
We also compared the assumptions with those used in previous years,
and found that the methodology used in arriving at the assumptions
year on year was consistent.
We obtained direct confirmation of the year end asset valuations
from the scheme’s investment managers, and verified that the correct
valuation had been used by management.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the Financial
Statements as a whole, taking into account the geographic structure of the Group, the accounting processes and controls, and the
industry in which the Group operates.
The Group is structured along three business lines being Property Investment and Development, Land Development and
Construction. The Group Financial Statements are a consolidation of the 37 reporting units within these three business lines and the
Group’s centralised functions.
Of the Group’s 37 reporting units, we identified six which, in our view, required an audit of their complete financial information, either
due to their size or their risk characteristics.
Specific audit procedures were performed at a further three reporting units in respect of their investment property portfolios, and
at one reporting unit in respect of its property, plant and equipment. This, together with additional procedures performed on the
Group’s centralised functions, gave us the evidence we needed for our opinion on the Group Financial Statements as a whole.
All work was performed by the Group audit team.
The reporting units where we performed audit work accounted for 92% of total assets.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our
audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and on the Financial Statements as a whole.
Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:
Overall Group materiality
How we determined it
Rationale for benchmark applied
£2.5m (2014: £2.0m).
0.7% of total assets.
The key objective of the Group is to increase long-term shareholder value by
maximising the value of assets such as inventory and investment properties.
In determining the benchmark we also had regard to the profitability of the
Group to ensure that sufficient consideration was given to trading activities. This
methodology is consistent with that applied in the prior year.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £125,000
(2014: £100,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Going concern
Under the Listing Rules we are required to review the Directors’ statement, set out on page 47, in relation to going concern. We
have nothing to report having performed our review.
85
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Independent Auditors’ Report continued
to the members of Henry Boot PLC
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to
the Directors’ statement about whether they considered it appropriate to adopt the going concern basis in preparing the financial
statements. We have nothing material to add or to draw attention to.
As noted in the Directors’ statement, the Directors have concluded that it is appropriate to adopt the going concern basis in
preparing the Financial Statements. The going concern basis presumes that the Group and Parent Company have adequate
resources to remain in operation, and that the Directors intend them to do so, for at least one year from the date the Financial
Statements were signed. As part of our audit we have concluded that the Directors’ use of the going concern basis is appropriate.
However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the Group’s and
Parent Company’s ability to continue as a going concern.
Other required reporting
Consistency of other information
Companies Act 2006 opinion
In our opinion, the information given in the Strategic Report and the Directors’ Report for the financial year for which the Financial
Statements are prepared is consistent with the Financial Statements.
ISAs (UK & Ireland) reporting
Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:
• Information in the Annual Report is:
— materially inconsistent with the information in the audited Financial Statements; or
— apparently materially incorrect based on, or materially inconsistent with, our knowledge of the Group
and Parent Company acquired in the course of performing our audit; or
— otherwise misleading.
We have no
exceptions to report
• the statement given by the Directors on page 79, in accordance with provision C.1.1 of the UK Corporate
Governance Code (the Code), that they consider the Annual Report taken as a whole to be fair, balanced
and understandable and provides the information necessary for members to assess the Group’s and
Parent Company’s position and performance, business model and strategy is materially inconsistent with
our knowledge of the Group and Parent Company acquired in the course of performing our audit.
We have no
exceptions to report
• the section of the Annual Report on page 62, as required by provision C.3.8 of the Code, describing the
work of the Audit Committee does not appropriately address matters communicated by us to the Audit
Committee.
We have no
exceptions to report
The Directors’ assessment of the prospects of the Group and of the principal risks that would threaten the
solvency or liquidity of the Group
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to:
• the Directors’ confirmation on page 47 of the Annual Report, in accordance with provision C.2.1 of the
Code, that they have carried out a robust assessment of the principal risks facing the Group including
those that would threaten its business model, future performance, solvency or liquidity.
• the disclosures in the Annual Report that describe those risks and explain how they are being managed or
mitigated.
• the Directors’ explanation on page 47 of the Annual Report, in accordance with provision C.2.2 of the
Code, as to how they have assessed the prospects of the Group, over what period they have done so and
why they consider that period to be appropriate, and their statement as to whether they have a reasonable
expectation that the Group will be able to continue in operation and meet its liabilities as they fall due
over the period of their assessment, including any related disclosures drawing attention to any necessary
qualifications or assumptions.
We have nothing
material to add or to
draw attention to
We have nothing
material to add or to
draw attention to
We have nothing
material to add or to
draw attention to
Under the Listing Rules we are required to review the Directors’ statement that they have carried out a robust assessment of the
principal risks facing the Group and the Directors’ statement in relation to the longer-term viability of the Group. Our review was
substantially less in scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting
their statements; checking that the statements are in alignment with the relevant provisions of the Code; and considering whether
the statements are consistent with the knowledge acquired by us in the course of performing our audit. We have nothing to report
having performed our review.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our audit have not been
received from branches not visited by us; or
• the Parent Company Financial Statements and the part of the Directors’ Remuneration Report to be audited are not in agreement
with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Directors’ remuneration
Directors’ Remuneration Report — Companies Act 2006 opinion
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of Directors’ remuneration
specified by law are not made. We have no exceptions to report arising from this responsibility.
Corporate Governance Statement
Under the Listing Rules we are required to review the part of the Corporate Governance Statement relating to ten further
provisions of the Code. We have nothing to report having performed our review.
Responsibilities for the Financial Statements and the audit
Our responsibilities and those of the Directors
As explained more fully in the Statement of Directors’ Responsibilities, the Directors are responsible for the preparation of the
Financial Statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the Financial Statements in accordance with applicable law and ISAs (UK &
Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Parent Company’s members as a body in accordance
with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or
assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
What an audit of Financial Statements involves
An audit involves obtaining evidence about the amounts and disclosures in the Financial Statements sufficient to give reasonable
assurance that the Financial Statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of:
• whether the accounting policies are appropriate to the Group’s and the Parent Company’s circumstances and have been
consistently applied and adequately disclosed;
• the reasonableness of significant accounting estimates made by the Directors; and
• the overall presentation of the Financial Statements .
We primarily focus our work in these areas by assessing the Directors’ judgements against available evidence, forming our own
judgements, and evaluating the disclosures in the Financial Statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide
a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with
the audited Financial Statements and to identify any information that is apparently materially incorrect based on, or materially
inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material
misstatements or inconsistencies we consider the implications for our report.
Andy Ward (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Sheffield
22 April 2016
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87
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Consolidated Statement of
Comprehensive Income
for the year ended 31 December 2015
Revenue
Cost of sales
Gross profit
Other income
Administrative expenses
Pension expenses
(Decrease)/increase in fair value of investment properties
Profit on sale of investment properties
Profit on sale of assets held for sale
Operating profit
Finance income
Finance costs
Share of profit of joint ventures
Profit before tax
Tax
Profit for the year from continuing operations
Other comprehensive income/(expense) not being reclassified
to profit or loss in subsequent years:
Revaluation of Group occupied property
Deferred tax on property revaluations
Actuarial gain/(loss) on defined benefit pension scheme
Deferred tax on actuarial (gain)/loss
Movement in fair value of cash flow hedge
Deferred tax on cash flow hedge
Total other comprehensive income/(expense) not being reclassified
to profit or loss in subsequent years
Total comprehensive income for the year
Profit for the year attributable to:
Owners of the Parent Company
Non-controlling interests
Total comprehensive income attributable to:
Owners of the Parent Company
Non-controlling interests
Basic earnings per ordinary share for the profit attributable
to owners of the Parent Company during the year
Diluted earnings per ordinary share for the profit attributable
to owners of the Parent Company during the year
Note
1
1
4
13
3
5
6
15
7
12
17
27
17
25
17
9
9
2015
£’000
176,186
(122,855)
53,331
36
(17,235)
(3,689)
32,443
(2,009)
747
485
31,666
1,438
(1,617)
923
32,410
(7,460)
24,950
100
509
6,002
(1,439)
16
(4)
5,184
30,134
23,041
1,909
24,950
28,219
1,915
30,134
17.5p
17.3p
2014
£’000
147,200
(103,512)
43,688
283
(15,153)
(3,213)
25,605
1,950
284
122
27,961
714
(1,550)
1,187
28,312
(4,810)
23,502
—
—
(10,458)
2,092
85
(17)
(8,298)
15,204
21,169
2,333
23,502
12,845
2,359
15,204
16.2p
15.9p
88
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Statements of Financial Position
as at 31 December 2015
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investment properties
Investments
Investment in joint ventures and associates
Trade and other receivables
Deferred tax assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Assets classified as held for sale
Liabilities
Current liabilities
Trade and other payables
Current tax liabilities
Borrowings
Provisions
Net current assets
Non-current liabilities
Trade and other payables
Borrowings
Retirement benefit obligations
Provisions
Net assets
Equity
Share capital
Property revaluation reserve
Retained earnings
Other reserves
Cost of shares held by ESOP trust
Equity attributable to owners of
the Parent Company
Non-controlling interests
Total equity
Group
2015
£’000
2014
£’000
Note
11
12
13
14
15
16
17
18
16
20
21
24
26
21
24
27
26
30
31
31
31
32
5,757
20,984
125,311
—
3,790
10,507
4,323
170,672
138,941
54,448
12,041
205,430
—
205,430
64,384
3,636
42,836
5,749
116,605
88,825
6,639
8,137
19,577
3,595
37,948
221,549
13,604
3,964
197,895
4,548
(345)
219,666
1,883
221,549
6,733
19,086
141,560
—
1,367
4,837
7,123
180,706
117,457
50,065
4,347
171,869
260
172,129
68,833
1,976
31,969
4,322
107,100
65,029
3,139
8,779
28,158
5,185
45,261
200,474
13,592
3,355
177,664
4,425
(550)
198,486
1,988
200,474
Parent Company
2015
£’000
—
168
—
3,021
—
—
3,772
6,961
—
197,711
10,135
207,846
—
207,846
82,600
3,600
40,478
—
126,678
81,168
—
—
19,577
—
19,577
68,552
13,604
—
49,608
5,685
(345)
68,552
—
68,552
2014
£’000
—
137
—
3,809
—
—
5,919
9,865
—
194,202
1,917
196,119
—
196,119
82,218
1,100
30,642
—
113,960
82,159
—
—
28,158
—
28,158
63,866
13,592
—
45,256
5,568
(550)
63,866
—
63,866
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The Financial Statements on pages 88 to 133 of Henry Boot PLC, registered number 160996, were approved by the Board of
Directors and authorised for issue on 22 April 2016.
On behalf of the Board
J T Sutcliffe
Director
D L Littlewood
Director
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Statements of Changes in Equity
for the year ended 31 December 2015
Group
At 1 January 2014
Profit for the year
Other comprehensive income
Total comprehensive income
Equity dividends
Proceeds from shares issued
Proceeds on disposal of treasury
shares
Purchase of treasury shares
Note
31
10
32
32
Share-based payments
31, 32
At 31 December 201 4
Profit for the year
Other comprehensive income
Total comprehensive income
Equity dividends
Proceeds from shares issued
Proceeds on disposal of treasury
shares
Share-based payments
31
10
32
31, 32
Share
capital
£’000
13,510
—
—
—
—
82
—
—
—
82
13,592
—
—
—
—
12
—
—
12
Attributable to owners of the Parent Company
Cost of
shares
held
by ESOP
trust
£’000
(188)
—
—
—
—
—
Property
revaluation
reserve
£’000
3,355
—
—
—
—
—
Retained
earnings
£’000
171,938
21,169
(8,366)
12,803
(6,886)
—
Other
reserves
£’000
3,566
—
42
42
—
817
—
—
—
—
3,355
—
609
609
—
—
—
—
(191)
(7,077)
177,664
23,041
4,563
27,604
(7,664)
—
—
—
—
—
291
(7,373)
—
—
—
817
4,425
—
6
6
—
117
—
—
117
34
(1,010)
614
(362)
(550)
—
—
—
—
—
4
201
205
Non-
controlling
interests
£’000
1,303
2,333
26
2,359
(1,674)
—
—
—
—
(1,674)
1,988
1,909
6
1,915
(2,020)
—
—
—
(2,020)
Total
£’000
192,181
21,169
(8,324)
12,845
(6,886)
899
34
(1,010)
423
(6,540)
198,486
23,041
5,178
28,219
(7,664)
129
4
492
(7,039)
Total
equity
£’000
193,484
23,502
(8,298)
15,204
(8,560)
899
34
(1,010)
423
(8,214)
200,474
24,950
5,184
30,134
(9,684)
129
4
492
(9,059)
At 31 December 2015
13,604
3,964
197,895
4,548
(345)
219,666
1,883
221,549
Share
capital
£’000
13,510
—
—
—
—
82
—
—
—
82
13,592
—
—
—
—
12
—
—
12
13,604
Retained
earnings
£’000
52,299
8,541
(8,366)
175
(6,886)
—
—
—
(332)
(7,218)
45,256
7,357
4,563
11,920
(7,664)
—
—
96
(7,568)
49,608
Cost of
shares held
by ESOP
trust
£’000
(188)
—
—
—
—
—
34
(1,010)
614
(362)
(550)
—
—
—
—
—
4
201
205
(345)
Other
reserves
£’000
4,751
—
—
—
—
817
—
—
—
817
5,568
—
—
—
—
117
—
—
117
5,685
Total
equity
£’000
70,372
8,541
(8,366)
175
(6,886)
899
34
(1,010)
282
(6,681)
63,866
7,357
4,563
11,920
(7,664)
129
4
297
(7,234)
68,552
Note
8
10
32
32
31
8
10
32
31
Parent Company
At 1 January 2014
Profit for the year
Other comprehensive income
Total comprehensive income
Equity dividends
Proceeds from shares issued
Proceeds on disposal of treasury shares
Purchase of treasury shares
Share-based payments
At 31 December 2014
Profit for the year
Other comprehensive income
Total comprehensive income
Equity dividends
Proceeds from shares issued
Proceeds on disposal of treasury shares
Share-based payments
At 31 December 2015
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Statements of Cash Flows
for the year ended 31 December 2015
Cash flows from operating activities
Cash generated from/(used by) operations
Interest paid
Tax paid
Net cash flows from operating activities
Cash flows from investing activities
Purchase of intangible assets
Purchase of property, plant and equipment
Purchase of investment property
Purchase of investments in associates
Proceeds on disposal of property, plant and equipment
Proceeds on disposal of investment properties
Proceeds on disposal of assets held for sale
Interest received
Dividends received from subsidiaries
Net cash flows from investing activities
Cash flows from financing activities
Proceeds from shares issued
Purchase of treasury shares
Proceeds on disposal of treasury shares
Decrease in borrowings
Increase in borrowings
Dividends paid
– ordinary shares
– non-controlling interests
– preference shares
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
Net cash and cash equivalents at beginning of year
Net cash and cash equivalents at end of year
Analysis of net debt:
Cash and cash equivalents
Bank overdrafts
Net cash and cash equivalents
Bank loans
Government loans
Net debt
Note
33
11
12
13
15
32
10
10
24
24
24
Group
2015
£’000
5,208
(1,074)
(3,934)
200
(420)
(1,731)
(13,561)
(1,500)
325
7,791
15,275
701
—
6,880
129
—
4
(65,408)
75,571
(7,643)
(2,020)
(21)
612
7,692
4,347
12,039
12,041
(2)
12,039
(42,389)
(8,582)
(38,932)
2014
£’000
14,857
(1,172)
(4,975)
8,710
(97)
(1,704)
(15,649)
—
222
4,362
12,233
336
—
(297)
899
(1,010)
34
(40,564)
29,548
(6,865)
(1,674)
(21)
(19,653)
(11,240)
15,587
4,347
4,347
—
4,347
(33,096)
(7,652)
(36,401)
Parent Company
2015
£’000
(6,321)
(3,366)
(2,501)
(12,188)
—
(107)
—
—
—
—
—
8,109
10,099
18,101
129
—
4
(64,226)
74,226
(7,643)
—
(21)
2,469
8,382
1,275
9,657
10,135
(478)
9,657
(40,000)
—
(30,343)
2014
£’000
2,527
(3,437)
(3,502)
(4,412)
—
(96)
—
—
11
—
—
8,055
7,800
15,770
899
(1,010)
34
(39,000)
24,000
(6,865)
—
(21)
(21,963)
(10,605)
11,880
1,275
1,917
(642)
1,275
(30,000)
—
(28,725)
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91
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Principal Accounting Policies
for the year ended 31 December 2015
The principal Accounting Policies adopted in the preparation of the Group’s IFRS Financial Statements are set out below. These
policies have been consistently applied to all years presented, unless otherwise stated.
The Company is a public limited company, listed on the London Stock Exchange and incorporated and domiciled in the United
Kingdom. The address of its registered office is Banner Cross Hall, Ecclesall Road South, Sheffield, United Kingdom S11 9PD.
Basis of preparation and statement of compliance
The Consolidated Financial Statements have been prepared in accordance with IFRS adopted by the EU, IFRIC interpretations
and the Companies Act 2006 applicable to companies reporting under IFRS and therefore complies with Article 4 of the EU IAS
regulations. They have been prepared on the historical cost basis, except for financial instruments, investment properties and Group
occupied land and buildings, which are measured at fair value.
The Directors have taken advantage of the exemption available under Section 408 of the Companies Act and not presented a
statement of comprehensive income for the Parent Company alone. See note 8.
Consolidation
The Consolidated Financial Statements are a consolidation of the Financial Statements of the Parent Company and all entities
controlled by the Company (its subsidiaries) made up to 31 December each year. Subsidiaries are all entities (including structured
entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable
returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. Subsidiaries
are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control
ceases.
Where necessary, adjustments are made to the Financial Statements of subsidiaries to bring the Accounting Policies used in line
with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation. The
results of subsidiaries acquired or disposed of during the year are included in the Consolidated Statement of Comprehensive
Income from the effective date of acquisition or disposal.
Non-controlling interests in the fair value of the net assets of consolidated subsidiaries are identified separately from the Group’s
equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination
and the non-controlling interests’ share of changes in equity since the date of the combination.
Investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising
from contingent consideration amendments. Cost also includes direct attributable costs of investment.
Going concern
The Directors have, at the time of approving the Financial Statements, a reasonable expectation that the Company and the Group
have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing the Financial Statements. Further detail is contained in the Strategic Report on page 47.
Joint ventures and associates
Joint ventures are all entities in which the Group has shared control with another entity, established by contractual agreement.
Associates are all entities over which the Group has significant influence but not control, generally accompanied by a share of
between 20% and 50% of the voting rights. Jointly controlled entities and associates are accounted for using the equity method of
accounting and are initially recognised at cost. The Group’s share of profits or losses is recognised in the Consolidated Statement
of Comprehensive Income. If the share of losses equals its investment, the Group does not recognise further losses, except to
the extent that there are amounts receivable that may not be recoverable or there are further commitments to provide funding.
Unrealised gains on transactions between the Group and its joint ventures and associates are eliminated to the extent of the
Group’s interest in them. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the
asset transferred. The accounting policies of the joint ventures and associates are consistent with those of the Group.
Business combinations and goodwill
Acquisitions of subsidiaries and businesses are accounted for using the acquisition method. The consideration for each acquisition
is measured as the aggregate of the fair values (at the date of exchange) of assets given, liabilities incurred or assumed, and equity
instruments issued by the Group in exchange for control of the acquiree.
The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration agreement.
Subsequent changes in fair value of contingent consideration classified as an asset or liability are accounted for in accordance with
IAS 39.
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Acquisition related costs are recognised in the Consolidated Statement of Comprehensive Income as incurred.
Goodwill arising on consolidation of subsidiary undertakings is recognised as an asset and initially measured at cost, being the
excess of the cost of the business combination over the Group’s interest in the net fair value of the identifiable assets, liabilities and
contingent liabilities recognised. Goodwill is subsequently measured at cost less any accumulated impairment losses. Goodwill is
subjected to an impairment test at the reporting date or when there has been an indication that the goodwill should be impaired,
any loss is recognised immediately through the Statement of Comprehensive Income and is not subsequently reversed. For the
purpose of impairment testing, goodwill is allocated to cash-generating units. The allocation is made to those cash-generating units
that are expected to benefit from the business combination in which goodwill arose.
Assets classified as held for sale
Non-current assets are classified as held for sale when their carrying amount is to be recovered principally through a sale
transaction and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to
sell if their carrying amount is to be recovered principally through a sale transaction rather than through continuing use and a sale is
considered highly probable.
Revenue recognition
Revenue is measured at the fair value of the consideration received or receivable for goods and services provided in the normal
course of business, net of discounts, VAT and other sales related taxes.
Revenue from construction contracts is recognised in accordance with the Group’s accounting policy on construction contracts
(see below).
Revenue from the sale of land and properties is recognised at the point of legal completion and where title has passed.
Revenue from the Group’s PFI concession is recognised by the calculation of ‘shadow tolls’ which are based on vehicle usage of
the A69 for the period of account.
Revenue from operating leases is recognised on a straight line basis over the lease term, except for contingent rental income which
is recognised when it arises. When the Group provides incentives to its tenants, the cost of incentives is recognised over the lease
term, on a straight line basis, as a reduction to revenue.
Revenue from the hire of plant and equipment is measured as the fair value of sales proceeds from such which relate to the period
of account.
Construction contracts
Where the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised by
reference to the stage of completion of the contract activity at the reporting date and profit is that estimated to fairly reflect the profit
arising up to that date.
Contract revenue is recognised in accordance with the stage of completion of the contract where the contract’s outcome can be
estimated reliably. The principal method used to recognise the stage of completion of a contract is an in-house survey of the work
performed.
When it is probable that total contract costs will exceed total contract revenue, the expected loss is recognised as an expense
immediately.
Contract revenue includes an assessment of the amounts agreed in the contract, plus or less any variations in contract work and
claims to the extent that they are approved and can be measured reliably. The Group therefore assesses the revenue recognised on
a contract by contract basis.
Variations and claims are changes to the original contractual obligations, which may be valued by contractual rates or agreed rates,
or changes to contract conditions, loss and expense, prolongation, disruption or additional prelims. They are included to the extent
that it is probable that they will result in revenue and they are capable of being reliably measured. Our judgement on these matters
is based on past experience, external valuers, external influences (weather, for example), trends, risk profile and nature of the
contract, competency of consultants and legal constraints.
Operating segments
The chief operating decision maker is the person or group that allocates resources to and assesses the performance of the
operating segments of an entity. The Group has determined that its chief operating decision maker is the Board of Henry Boot PLC
(the Board).
Management has determined the operating segments based on the reports reviewed by the Board in making strategic decisions.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Principal Accounting Policies
for the year ended 31 December 2015
The Board considers the business based on the following operating segments:
• Property Investment and Development, inclusive of property investment and development and trading activities;
• Land Development, inclusive of land management, development and trading activities; and
• Construction, inclusive of its PFI company, plant hire and regeneration activities.
Whilst the following is not a reportable segment, information about it is considered by the Board in conjunction with the reportable
segments:
• Group overheads, comprising central services, pensions, head office administration, in-house leasing and other mainly ‘not for
profit’ activities.
Investment property
Investment properties are those properties which are not occupied by the Group and which are held for long-term rental yields,
capital appreciation or both. Investment property also includes property that is being constructed or developed for future use as
investment property.
Investment properties are initially measured at cost, including related transaction costs.
At each subsequent reporting date, investment properties are remeasured to their fair value; further information regarding the
valuation methodologies applied can be found in note 13 to the Financial Statements. Movements in fair value are included in the
Statement of Comprehensive Income.
Where the Group employs professional valuers the valuations provided are subject to a comprehensive review to ensure they are
based on accurate and up-to-date tenancy information. Discussions are also held with the valuers to test the valuation assumptions
applied and comparable evidence utilised to ensure they are appropriate in the circumstances.
Subsequent expenditure is capitalised to the asset’s carrying value only where it is probable that the future economic benefits
associated with the expenditure will flow to the Group. All other expenditure is expensed to the Statement of Comprehensive
Income in the period in which it arises.
Investment property is derecognised when they are disposed of at their carrying value.
Where specific investment properties have been identified as being for sale within the next twelve months, a sale is considered
highly probable and the property is immediately available for sale, their fair value is shown under assets classified as held-for-sale
within current assets, measured in accordance with the provisions of IAS 40 ‘Investment Property’.
Property, plant and equipment
Group occupied properties are stated in the Statement of Financial Position at their revalued amounts, being the fair value, based
on market values, less any subsequent accumulated depreciation or subsequent accumulated impairment loss. Fair value is
determined annually by independent valuers. Surpluses on revaluations are transferred to the revaluation reserve. Deficits on
revaluations are charged against the revaluation reserve to the extent that there are available surpluses relating to the same asset
and are otherwise charged to the Statement of Comprehensive Income.
In respect of land and buildings, depreciation is provided where it is considered significant having regard to the estimated remaining
useful lives and residual values of individual properties.
Equipment held for hire, vehicles and office equipment are stated at cost less accumulated depreciation and any recognised
impairment loss. Cost includes the original purchase price of the asset plus any costs attributable to bringing the asset to its
working condition for its intended use.
Depreciation is charged so as to write off the cost or valuation of assets over their estimated useful lives, using the straight line
method, mainly at the following annual rates:
• equipment held for hire
• vehicles
• office equipment
– between 12.5% and 50%
– between 10% and 25%
– between 25% and 33%
Intangible assets excluding goodwill
Intangible assets are stated at cost less accumulated amortisation and impairment. The PFI asset represents the capitalised cost
of the initial project, together with the capitalised cost of any additional major works to the road and structures, which are then
amortised, on a straight line basis, over 20 years or the remaining life of the concession. The concession lasts a period of 30 years
and has a further ten years to run.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Leasing
Where the Group acts as a lessee in the case of operating leases, rentals payable are recognised on a straight line basis over the
term of the relevant lease.
Inventories
Inventories are stated at the lower of cost and estimated net realisable value and are subject to regular impairment reviews.
Inventories comprise developments in progress, land held for development or sale, options to purchase land and planning
promotion agreements.
• Developments in progress includes properties being developed for onward sale.
• Land held for development or sale is land owned by the Group that is promoted through the planning process in order to gain
planning permission, adding value to the land.
• Options to purchase land are agreements that the Group has entered into with the landowners whereby the Group has the option
to purchase the land within a limited time frame. The land owners are not generally permitted to sell to any other party during this
period, unless agreed to by the Group. Within the time frame the Group promotes the land through the planning process at its
expense in order to gain planning permission. Should the Group be successful in obtaining planning permission it would trigger
the option to purchase and subsequently sell on the land.
• Planning promotion agreements are agreements that the Group has entered into with the landowners whereby the Group acts as
an agent to the land owners in exchange for a fee of a set percentage of the proceeds or profit of the eventual sale. The Group
promotes the land through the planning process at its own expense. If the land is sold the Group will receive a fee for its services.
• The Group incurs various costs in promoting land held under planning promotion agreements, in some instances the agreements
allow for the Group to be reimbursed certain expenditure following the conclusion of a successful sale. These costs are held in
inventory at the lower of cost and estimated net realisable value. Upon reimbursement, inventory is reduced by the value of the
reimbursed cost.
Inventories comprise all the direct costs incurred in bringing the individual inventories to their present state at the reporting date,
including any reimbursable promotion costs, less the value of any impairment losses.
Impairment reviews are considered on a site-by-site or individual development basis by management at each reporting date; write-
downs or reversals are made to ensure that inventory is then stated at the lower of cost or net realisable value.
Net realisable value is considered in the light of progress made in the planning process, feedback from local planning officers,
development appraisals and other external factors that might be considered likely to influence the eventual outcome. Where it is
considered that no future economic benefit will arise, costs are written off to the Statement of Comprehensive Income.
Where individual parcels of land held for development are disposed of out of a larger overall development site, costs are
apportioned based on an acreage allocation after taking into account the cost or net realisable value of any remaining residual land
which may not form part of the overall development site or which may not be available for development. Where the Group retains
obligations attached to the development site as a whole, provisions are made relating to these disposals on the same acreage
allocation basis.
Retirement benefit costs
Payments to the defined contribution retirement benefit scheme are charged as an expense as they fall due.
The cost of providing benefits under the defined benefit retirement scheme is determined using the Projected Unit Credit Method,
with actuarial calculations being carried out at each reporting date. Actuarial gains and losses are recognised in full in the period in
which they occur. They are recognised within ‘Other comprehensive income’ within the Consolidated Statement of Comprehensive
Income. The net periodic benefit cost, comprising the employer’s share of the service cost and the net interest cost, is charged to
the Consolidated Statement of Comprehensive Income. The Group’s net obligations in respect of the scheme are calculated by
estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods. This is
then discounted to present value and the fair value of the scheme’s assets is then deducted.
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Share-based payments
Equity-settled share-based payments to employees of the Company and its subsidiary undertakings are measured at fair value of
the equity instruments at the date of grant and are expensed on a straight line basis over the vesting period. Fair value is measured
by a Monte Carlo pricing model taking into account any market performance conditions and excludes the effect of non-market-
based vesting conditions. Details regarding the determination of the fair value of equity-settled share-based transactions are set out
in note 30. At each reporting period date, the Group estimates the number of equity instruments expected to vest as a result of the
effect of non-market-based vesting conditions. The impact of the revision, if any, is recognised in the Consolidated Statement of
Comprehensive Income with a corresponding adjustment to equity reserves.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Principal Accounting Policies
for the year ended 31 December 2015
SAYE share options are treated as cancelled when employees cease to contribute to the scheme. This results in accelerated
recognition of the expenses that would have arisen over the remainder of the original vesting period.
Details regarding the determination of the fair value of share-based transactions are set out in note 30.
Tax
The tax charge on the profit or loss for the year comprises the sum of tax currently payable and any deferred tax movements in the
year.
Tax currently payable is based on taxable profit for the year adjusted for any tax payable or repayable in respect of earlier years.
Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or
expense that are taxable or deductible in other years and items that may never be taxable or deductible.
The Group’s liability for current taxation is calculated using tax rates that have been enacted or substantively enacted by the
reporting date.
Corporation tax liabilities of wholly owned subsidiary companies are transferred to and paid by the Parent Company and credit is
given by the Parent Company for loss relief surrendered.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities
in the Financial Statements and the corresponding tax bases used in computing taxable profits.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits or gains will be available to allow all or part of the assets to be recovered.
The carrying value of the Group’s investment property is assumed to be realised by sale and the deferred tax is then calculated
based on the respective temporary differences and tax consequences arising from this assumption.
Deferred tax is calculated at tax rates that are expected to apply in the period when the liability is settled or the asset is realised.
Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited
directly to equity, in which case the deferred tax is also dealt with in equity.
Deferred tax assets and deferred tax liabilities are offset where the Group has a legally enforceable right to do so and when the
deferred tax assets and liabilities relate to tax levied by the same tax authority where there is an intention to settle the balances on a
net basis.
Share capital
Ordinary share capital is classified as equity. Preference share capital is classified as equity as it is non-redeemable or is redeemable
only at the Company’s option and any dividends are discretionary. Dividends on preference share capital classified as equity are
recognised as distributions within equity.
Financial instruments
The Group retains such financial instruments as are required, together with retained earnings, in order to finance the Group’s
operations.
Financial assets or financial liabilities are recognised by the Group in the Statement of Financial Position only when the Group
becomes a party to the contractual provisions of the instrument.
The principal financial instruments are:
• trade and other receivables which are recognised and carried at the lower of their original invoiced value and recoverable amount
- where the time value of money is material, receivables are carried at amortised cost using the effective interest rate method (see
Interest income and expense on page 98). Provision is made when there is objective evidence that the Group will not be able to
recover balances in full. Balances are written off when the probability of recovery is assessed as being remote. Should an amount
previously written off prove recoverable the amount written off is reversed through the Statement of Comprehensive Income to
the extent that the amount written back does not exceed the amortised cost had the write-off not been recognised;
• cash and cash equivalents, which comprise cash in hand, demand deposits and other short-term highly liquid investments that
are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value with an original
maturity of three months or less;
• trade and other payables which are on normal credit terms, are not interest bearing and are stated at their nominal values - where
the time value of money is material, payables are carried at amortised cost using the effective interest rate method (see Interest
income and expense on page 98);
• borrowings - see on next page; and
• derivatives - see on next page.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Borrowings
Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised
cost; any difference between the proceeds (net of transaction costs) and the redemption value is recognised in the Statement of
Comprehensive Income over the period of the borrowings using the effective interest method.
Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that
some or all of the facility will be drawn down. In this case, the fee is deferred until the drawdown occurs. To the extent there is no
evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a pre-payment for liquidity
services and amortised over the period of the facility to which it relates.
Derivatives and hedging
Derivative financial instruments such as interest rate swaps are occasionally entered into in order to manage interest rate risks
arising from long-term debt. Such derivative instruments are initially recognised at fair value on the date on which a derivative
contract is entered into and are subsequently remeasured at fair value. Derivatives are carried as assets when the fair value is
positive and as liabilities when the fair value is negative.
At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group
wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. The documentation
includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the
entity will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s fair value or cash
flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in fair value or
cash flows and are assessed on an ongoing basis to determine that they actually have been highly effective throughout the financial
reporting periods for which they were designated.
For the purpose of cash flow hedge accounting, hedges are classified as cash flow hedges when hedging exposure to variability
in cash flows that is attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast
transaction.
The effective portion of the gain or loss on the hedging instrument is recognised directly in equity, while any ineffective portion is
recognised immediately in profit or loss, such as when the hedged financial income or financial expense is recognised or when a
forecast sale occurs. Where such derivative transactions are executed, gains and losses on the fair value of such arrangements are
taken either to reserves or to the Statement of Comprehensive Income dependent upon the nature of the instrument.
If the forecast transaction or firm commitment is no longer expected to occur, amounts previously recognised in equity are
transferred to profit or loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if
its designation as a hedge is revoked, amounts previously recognised in equity remain in equity until the forecast transaction or firm
commitment occurs.
When a derivative is held as an economic hedge for a period beyond twelve months after the end of the reporting period, the
derivative is classified as non-current (or separated into current and non-current portions) consistent with the classification of the
underlying item. A derivative instrument that is a designated and effective hedging instrument is classified consistent with the
classification of the underlying hedged item. The derivative instrument is separated into a current portion and non-current portion
only if: 1) a reliable allocation can be made; and 2) it is applied to all designated and effective hedging instruments.
Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable
that the Group will be required to settle that obligation with an outflow of economic benefits and a reliable estimate can be made of
the amount of the obligation.
The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the
reporting date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the
cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can
be measured reliably.
The land development provision represents management’s best estimate of the Group’s liability to provide infrastructure and
services as a result of obligations which remain with the Group following the disposal of land. Where the infrastructure and services
obligations relate to developments on which land is being disposed of over a number of phases, provisions are calculated based on
an acreage allocation methodology taking into account the expected timing of cash outflows to settle the obligations.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Principal Accounting Policies
for the year ended 31 December 2015
The Group regularly reviews its contract obligations and whether they are considered to be onerous. In the event that the costs
of meeting the obligations exceed the economic benefits expected to be received through the life of the development, a provision
would be recognised based on discounted cash flows to the end of the contract, to the extent of the costs exceeding the
economic benefits.
The road maintenance provision represents management’s best estimate of the Group’s liability under a five-year rolling programme
for the maintenance of the Group’s PFI asset.
Other provisions include any liabilities where the Directors anticipate that a present obligation would result in a future outflow of
resources, including legal and regulatory penalties or claims, being taken into account in the Financial Statements.
Specific details of the Group’s provisions relating to land development and road maintenance can be found in note 26 on
page 122.
Interest income and expense
Interest income and expense are recognised within ‘Finance income’ and ‘Finance costs’ in the Statement of Comprehensive
Income using the effective interest rate method, except for borrowing costs relating to qualifying assets, which are capitalised as
part of the cost of that asset. The Group has chosen not to capitalise borrowing costs on all qualifying assets which are measured
at fair value.
The effective interest rate method is a method of calculating the amortised cost of a financial asset or financial liability and of
allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly
discounts estimated future cash payments or receipts throughout the expected life of the financial instrument, or a shorter period
where appropriate, to the net carrying amount of the financial asset or financial liability.
Dividends
Dividends are only recognised as a liability in the actual period in which they are declared.
Government grants
Government grants are recognised at their fair value in the Statement of Financial Position, within deferred income, where there is
reasonable assurance that the grant will be received and all attached conditions will be complied with.
Government grants relating to revenue items are released to the Statement of Comprehensive Income and recognised within cost
of sales over the period necessary to match the grant on a systematic basis to the costs that they are intended to compensate.
Government grants relating to capital items are released against the carrying value of the grant supported assets when the
completion conditions of those assets are met.
Judgements and key assumptions
The critical judgements in applying the Group’s Accounting Policies and that have the most significant effect on the amounts
recognised in the Financial Statements, apart from those involving estimations (see below), relate to revenue recognition,
construction contracts and inventories. All of these are referred to on pages 93 and 95 and each is interpreted by management in
the light of IAS 18 ‘Revenue’, IAS 11 ‘Construction Contracts’ and IAS 2 ‘Inventories’.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, and that could
have a material adjustment to the carrying amounts of assets and liabilities over the ensuing year, are:
• retirement benefit costs – the estimates used in retirement benefit costs are arrived at in conjunction with the scheme’s actuary
and advisers, those having the most significant impact being the liabilities discount rate, RPI and mortality rates. Note 27 to the
Financial Statements gives details of the sensitivity surrounding these estimates;
• fair value of investment properties and of Group occupied properties – the fair value of completed investment property and
of Group occupied property is determined by independent valuation experts using the yield method valuation technique. The
fair value of investment property under construction has been determined using the residual method by the Directors of the
Company. The most significant estimates used in these valuations are rental values, yields and costs to complete. Notes 12 and
13 to the Financial Statements give details of the valuation methods used and the sensitivity surrounding these estimates; and
• provisions – amounts recognised in relation to provisions are based on assumptions in respect of cost estimates, the timing
of cash flows and discount rates used. Note 26 to the Financial Statements gives details of the sensitivity surrounding these
estimates.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Impact of accounting standards and interpretations
At the date of authorisation of these Financial Statements, the following standards, amendments and interpretations to existing
standards are effective or mandatory for the first time for the accounting year ended 31 December 2015:
Annual improvements (issued 2013)
Annual improvements (issued 2013)
IAS 19 (amended 2013)
‘Annual Improvements to IFRSs 2010–2012 Cycle’
‘Annual Improvements to IFRSs 2011–2013 Cycle’
‘Defined Benefit Plans: Employee Contributions’
# Mandatory for annual periods beginning on or after 1 February 2015.
The adoption of these standards and interpretations has not had a significant impact on the Group.
The Group did not early adopt any standard or interpretation not yet mandatory.
Effective from
1 July 2014#
1 July 2014
1 July 2014#
At the date of the authorisation of these Financial Statements, the following standards, amendments and interpretations were in
issue but not yet effective:
Annual improvements (issued 2014)
IAS 1 (amended 2014)
IAS 16 and IAS 38 (amended 2014)
IAS 16 and IAS 41 (amended 2014)
IAS 27 (amended 2014)
IFRS 9 (issued 2014)
IFRS 10, IFRS 12 and IAS 28 (amended
2014)
IFRS 10 and IAS 28 (amended 2014)
IFRS 11 (amended 2014)
IFRS 14 (issued 2014)
IFRS 15 (issued 2014)
IFRS 16 (issued 2016)
* Not yet endorsed by the EU.
‘Annual Improvements to IFRSs 2012–2014 Cycle’
‘Disclosure Initiative’
‘Clarification of Acceptable Methods of Depreciation and Amortisation’
‘Bearer Plants’
‘Equity Method in Separate Financial Statements’
‘Financial Instruments’
‘Investment Entities: Applying the Consolidation Exception’
‘Sale or Contribution of Assets between an Investor and its Associate or Joint
Venture’
‘Accounting for Acquisitions of Interests in Joint Operations’
‘Regulatory Deferral Accounts’
‘Revenue from Contracts with Customers’
‘Leases’
Effective from
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2016
1 January 2018*
1 January 2016*
Postponed
1 January 2016
1 January 2016*
1 January 2018*
1 January 2019*
A review of the impact of these standards, amendments and interpretations been conducted and the Directors do not believe that
they will give rise to any significant financial impact.
In 2015, the Group did not early adopt any new or amended standards and does not plan to early adopt any of the standards
issued but not yet effective.
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99
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements
for the year ended 31 December 2015
1. Revenue
Analysis of the Group’s revenue is as follows:
Activity in the United Kingdom
Revenue from construction contracts
Property development
Land development
PFI concession income
Plant and equipment hire
Investment property rental income
Other rental income
Other income
2015
£’000
60,763
37,079
46,572
11,126
12,292
8,216
138
176,186
36
176,222
2014
£’000
65,819
11,736
38,894
11,306
11,281
8,026
138
147,200
283
147,483
Contingent rents recognised as income during the year amount to £449,000 (2014: £498,000).
Other income relates to payments received under a debt agreement with the Export Credit Guarantee Department arising from a
long-completed contract that was not paid for at the time.
2. Segment information
For the purpose of the Board making strategic decisions, the Group is currently organised into three operating segments: Property
Investment and Development; Land Development; and Construction. Group overheads are not a reportable segment; however,
information about them is considered by the Board in conjunction with the reportable segments.
Operations are carried out entirely within the United Kingdom.
Inter-segment sales are charged at prevailing market prices.
Revenue for the year, and the prior year, was derived from a large number of customers and no single customer or group under
common control contributed more than 10% of the Group’s revenues.
The accounting policies of the reportable segments are the same as the Group’s Accounting Policies. The Group’s Principal
Accounting Policies are described on pages 92 to 99.
Segment profit represents the profit earned by each segment before tax and is consistent with the measure reported to the Group’s
Board for the purpose of resource allocation and assessment of segment performance.
Revenues from external sales are detailed in note 1.
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Annual Report and Financial Statements for the year ended 31 December 2015
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Stock Code: BHY
2. Segment information continued
2015
Revenue
External sales
Inter-segment sales
Total revenue
Operating profit/(loss)
Finance income
Finance costs
Share of profit of joint ventures
Profit/(loss) before tax
Tax
Profit/(loss) for the year
Other information
Capital additions
Depreciation
Impairment
Amortisation
Decrease in fair value of investment
properties
Provisions
Pension scheme credit
Revenue
External sales
Inter-segment sales
Total revenue
Operating profit/(loss)
Finance income
Finance costs
Share of profit of joint ventures
Profit/(loss) before tax
Tax
Profit/(loss) for the year
Other information
Capital additions
Depreciation
Impairment
Amortisation
Increase in fair value of investment properties
Provisions
Pension scheme credit
Property
investment
and
development
£’000
49,939
320
50,259
7,346
2,135
(6,916)
923
3,488
(1,583)
1,905
13,625
183
(10)
52
2,009
—
—
Property
investment
and
development
£’000
25,807
306
26,113
8,740
1,487
(6,800)
1,187
4,614
254
4,868
16,083
129
—
94
(1,950)
—
—
Land
development
£’000
46,706
—
46,706
20,039
666
(1,637)
—
19,068
(3,864)
15,204
Construction
£’000
79,541
11,076
90,617
8,930
1,394
(422)
—
9,902
(2,108)
7,794
Group
overheads
£’000
—
643
643
(4,649)
18,168
(3,391)
—
10,128
98
10,226
Eliminations
£’000
—
(12,039)
(12,039)
—
(20,925)
10,749
—
(10,176)
(3)
(10,179)
13
13
—
—
—
1,785
—
4,871
2,842
203
1,193
—
1,033
—
2014
1,032
599
—
—
—
—
(2,579)
—
—
—
—
—
—
—
Land
development
£’000
39,032
—
39,032
14,100
511
(1,518)
—
13,093
(2,784)
10,309
Construction
£’000
82,361
5,966
88,327
9,232
1,419
(536)
—
10,115
(2,122)
7,993
18
16
—
—
—
729
—
4,274
2,583
203
1,155
—
882
—
Group
overheads
£’000
—
681
681
(4,111)
15,808
(3,382)
—
8,315
(158)
8,157
745
571
—
—
—
—
(2,375)
Eliminations
£’000
—
(6,953)
(6,953)
—
(18,511)
10,686
—
(7,825)
—
(7,825)
—
—
—
—
—
—
—
Total
£’000
176,186
—
176,186
31,666
1,438
(1,617)
923
32,410
(7,460)
24,950
19,541
3,637
193
1,245
2,009
2,818
(2,579)
Total
£’000
147,200
—
147,200
27,961
714
(1,550)
1,187
28,312
(4,810)
23,502
21,120
3,299
203
1,249
(1,950)
1,611
(2,375)
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
2. Segment information continued
Segment assets
Property Investment and Development
Land Development
Construction
Group overheads
Unallocated assets
Deferred tax assets
Cash and cash equivalents
Total assets
Segment liabilities
Property Investment and Development
Land Development
Construction
Group overheads
Unallocated liabilities
Current tax liabilities
Current borrowings
Non-current borrowings
Retirement benefit obligations
Total liabilities
Total net assets
3. Operating profit
Operating profit has been arrived at after charging/(crediting):
Depreciation of property, plant and equipment
Impairment of goodwill included in administrative expenses
Impairment of land and buildings included in administrative expenses
Amortisation of PFI asset included in cost of sales
Amortisation of capitalised letting fees
Gain on sale of assets held for sale
Impairment losses recognised on trade receivables included in cost of sales
Impairment losses recognised on trade receivables included in administrative expenses
Property rentals under operating leases
Decrease/(increase) in fair value of investment property
Cost of inventories recognised as expense
Employee costs
Amounts payable to Mazars LLP by Road Link (A69) Limited in respect of audit services
Amounts payable to Deloitte LLP by Road Link (A69) Limited in respect of audit services
Profit on sale of property, plant and equipment
2015
£’000
193,445
136,491
27,013
2,789
359,738
4,323
12,041
376,102
19,334
20,865
37,217
2,951
80,367
3,636
42,836
8,137
19,577
154,553
221,549
2015
£’000
3,637
203
(10)
1,193
52
(485)
112
6
276
2,009
50,332
25,208
5
—
(296)
2014
£’000
190,921
117,599
30,918
1,926
341,364
7,123
4,347
352,834
14,526
18,955
45,487
2,510
81,478
1,976
31,969
8,779
28,158
152,360
200,474
2014
£’000
3,299
203
—
1,155
94
(122)
33
30
239
(1,950)
27,366
24,959
—
9
(459)
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
3. Operating profit continued
The remuneration paid to PricewaterhouseCoopers LLP, the Company’s external auditors, was as follows:
Fees payable for the audit of the Company’s annual Financial Statements and Consolidated Financial
Statements
Fees payable to the auditors and their associates for other services:
– audit of the Company’s subsidiaries pursuant to legislation
Total audit fees
Tax compliance services
Tax advisory services
Other services
Total non-audit fees
Total fees
2015
£’000
2014
£’000
90
101
191
49
20
10
79
270
86
88
174
43
21
37
101
275
In addition, fees of £8,800 (2014: £8,800) were paid to BDO LLP in their capacity as auditors of The Henry Boot Staff Pension and Life
Assurance Scheme.
4. Employee costs
Wages and salaries
Share-based payment expense
Social security costs
Defined benefit pension costs (see note 27)
Defined contribution pension costs (see note 27)
Other pension costs
The average monthly number of employees during the year, including Executive Directors, was:
Property Investment and Development
Land Development
Construction
Plant hire
Group overheads
5. Finance income
Interest on bank deposits
Interest on other loans and receivables
Fair value adjustments on trade receivables
2015
£’000
18,554
492
2,122
2,697
919
73
24,857
2015
Number
59
33
175
115
52
434
2015
£’000
78
1,215
145
1,438
2014
£’000
18,855
423
2,136
2,433
694
86
24,627
2014
Number
49
31
214
113
52
459
2014
£’000
21
499
194
714
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
6. Finance costs
Interest on bank loans and overdrafts
Interest on other loans and payables
Fair value adjustments on trade payables
Fair value adjustments on borrowings
Provisions: unwinding of discount (note 26)
7. Tax
Current tax:
UK corporation tax on profits for the year
Adjustments in respect of earlier years
Total current tax
Deferred tax (note 17):
Origination and reversal of temporary differences
Adjustments in respect of earlier years
Adjustments in respect of change in UK corporation tax rate
Total deferred tax
Total tax
2015
£’000
1,087
155
310
59
6
1,617
2015
£’000
5,721
(127)
5,594
1,512
—
354
1,866
7,460
2014
£’000
1,127
65
288
64
6
1,550
2014
£’000
4,607
(160)
4,447
623
(260)
—
363
4,810
Corporation tax is calculated at 20.25% (2014: 21.49%) of the estimated assessable profit for the year.
As a result of the change in the UK corporation tax rate from 20% to 19% effective from 1 April 2017 and from 19% to 18%
effective from 1 April 2020, both of which were substantively enacted on 26 October 2015, deferred tax balances at the year end
have been measured at 20% and 18% (2014: 20%) being the rate at which timing differences are expected to reverse.
Subsequently, a further reduction to the UK corporation tax rate has been announced reducing the rate to 17% from 1 April 2020.
The change had not been substantively enacted at the Statement of Financial Position date and, therefore, is not recognised in
these Financial Statements. The impact of this change on the deferred tax position of the Group is not expected to be material.
The charge for the year can be reconciled to the profit per the Statement of Comprehensive Income as follows:
Profit before tax
Tax at the UK corporation tax rate
Effects of:
Permanent differences
Short-term timing differences
Tax losses for which no deferred tax asset is recognised
Adjustment in respect of earlier years
Adjustment in respect of change in UK corporation tax rate
Joint venture results reported net of tax
Effective tax rate
2015
£’000
32,410
2015
%
20.25
(0.22)
—
2.86
(0.39)
1.09
(0.58)
23.01
In addition to the amount charged to profit for the year, the following amounts relating to tax have been recognised in other
comprehensive income:
Deferred tax:
– property revaluations
– actuarial (gain)/loss
– cash flow hedge
Total tax recognised in other comprehensive income
104
2015
£’000
509
(1,439)
(4)
(934)
2014
£’000
28,312
2014
%
21.49
(2.42)
(0.61)
—
(0.57)
—
(0.90)
16.99
2014
£’000
—
2,092
(17)
2,075
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
8. Results of Parent Company
As permitted by Section 408 of the Companies Act 2006, the Statement of Comprehensive Income of the Parent Company is
not presented as part of these Financial Statements. The profit dealt with in the Financial Statements of the Parent Company and
approved by the Board on 22 April 2016 is £7,357,000 (2014: £8,541,000) and includes dividends received from subsidiaries of
£10,099,000 (2014: £7,800,000).
9. Earnings per ordinary share
The calculation of the basic and diluted earnings per share is based on the following information:
Profit for the year
Non-controlling interests
Preference dividend
Number of shares
Weighted average number of shares in issue
Less shares held by the ESOP on which dividends have been waived
Weighted average number for basic earnings per share
Adjustment for the effects of dilutive potential ordinary shares
Weighted average number for diluted earnings per share
10. Dividends
Amounts recognised as distributions to equity holders in year:
Preference dividend on cumulative preference shares
Final dividend for the year ended 31 December 2014 of 3.50p per share (2013: 3.15p)
Interim dividend for the year ended 31 December 2015 of 2.30p per share (2014: 2.10p)
2015
£’000
24,950
(1,909)
(21)
23,020
2014
£’000
23,502
(2,333)
(21)
21,148
2015
132,009,797
(177,320)
131,832,477
1,231,952
133,064,429
2014
131,225,343
(283,175)
130,942,168
1,723,493
132,665,661
2015
£’000
21
4,610
3,033
7,664
2014
£’000
21
4,115
2,750
6,886
The proposed final dividend for the year ended 31 December 2015 of 3.80p per share (2014: 3.50p) makes a total dividend for the
year of 6.10p (2014: 5.60p).
The proposed final dividend is subject to approval by shareholders at the AGM and has not been included as a liability in these
Financial Statements. The total estimated dividend to be paid is £5,011,000.
Notice has been received from Moore Street Securities Limited waiving its right as corporate trustee for the Employee Share
Ownership Plan (ESOP) to receive all dividends in respect of this and the previous financial year.
Dividends paid to non-controlling interests during the year amounted to £2,020,000 (2014: £1,674,000).
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
11. Intangible assets
Cost
At 1 January 2014
Additions at cost
Disposals
At 31 December 2014
Additions at cost
At 31 December 2015
Accumulated impairment losses and amortisation
At 1 January 2014
Amortisation
Impairment losses for the year
Eliminated on disposals
At 31 December 2014
Amortisation
Impairment losses for the year
At 31 December 2015
Carrying amount
At 31 December 2015
At 31 December 2014
At 1 January 2014
Goodwill
£’000
4,070
—
—
4,070
—
4,070
1,900
—
203
—
2,103
—
203
2,306
1,764
1,967
2,170
PFI
asset
£’000
16,047
97
(10)
16,134
420
16,554
10,223
1,155
—
(10)
11,368
1,193
—
12,561
3,993
4,766
5,824
Total
£’000
20,117
97
(10)
20,204
420
20,624
12,123
1,155
203
(10)
13,471
1,193
203
14,867
5,757
6,733
7,994
The Group’s investment in Road Link (A69) Holdings Limited is 61.2%. The goodwill arising on the acquisition represents the
excess of consideration over net assets acquired and is subject to an impairment test at the reporting date. This company’s
subsidiary, Road Link (A69) Limited, operates a PFI concession which comprises managing and maintaining the A69 Carlisle to
Newcastle trunk road. The company receives payment from the Highways Agency based on the number and type of vehicles using
the road. The concession lasts for a period of 30 years and has a further ten years to run, at the end of which the road reverts to
the Highways Agency. Whilst the impairment test demonstrates significant headroom, an impairment charge of £203,000 (2014:
£203,000) has been recognised during the year to reflect the fact that the PFI concession will revert to the Highways Agency at the
end of the 30-year period, at which point no goodwill should remain. There were no significant changes to these arrangements
during the year.
Amortisation of the PFI asset is recognised within cost of sales in the Statement of Comprehensive Income.
Although the Companies Act 2006 Section 390(5) requires a coterminous year end, the subsidiary company’s accounting reference
date is 31 March in order to align with the Highways Agency’s financial year end and hence interim Financial Statements are
prepared for incorporation into these Consolidated Financial Statements.
Bank borrowings are secured on the PFI asset for the value of £nil (2014: £581,000); see note 24.
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Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
12. Property, plant and equipment
Group
Cost or fair value
At 1 January 2014
Additions at cost
Disposals
At 31 December 2014
Additions at cost
Disposals
Increase in fair value in year
At 31 December 2015
Being:
Cost
Fair value at 31 December 2015
Accumulated depreciation and impairment
At 1 January 2014
Charge for year
Eliminated on disposals
At 31 December 2014
Charge for year
Eliminated on disposals
Eliminated on revaluation
At 31 December 2015
Carrying amount
At 31 December 2015
At 31 December 2014
At 1 January 2014
Land and
buildings
£’000
Equipment
held
for hire
£’000
Vehicles
£’000
Office
equipment
£’000
7,187
—
—
7,187
—
—
100
7,287
—
7,287
7,287
412
—
—
412
—
—
(10)
402
6,885
6,775
6,775
25,918
3,670
(2,098)
27,490
4,057
(1,011)
—
30,536
30,536
—
30,536
17,945
2,360
(1,882)
18,423
2,562
(875)
—
20,110
10,426
9,067
7,973
4,601
1,018
(725)
4,894
1,203
(1,141)
—
4,956
4,956
—
4,956
2,495
691
(607)
2,579
712
(914)
—
2,377
2,579
2,315
2,106
2,192
686
(328)
2,550
528
(1)
—
3,077
3,077
—
3,077
1,692
248
(319)
1,621
363
(1)
—
1,983
1,094
929
500
Total
£’000
39,898
5,374
(3,151)
42,121
5,788
(2,153)
100
45,856
38,569
7,287
45,856
22,544
3,299
(2,808)
23,035
3,637
(1,790)
(10)
24,872
20,984
19,086
17,354
At 31 December 2015, the Group had entered into contractual commitments for the acquisition of property, plant and equipment
amounting to £3,521,000 (2014: £2,713,000).
Fair value measurements of the Group’s land and buildings
Land and buildings have been revalued at 31 December 2015 by Jones Lang LaSalle Limited in accordance with the Practice
Statements contained in the RICS Appraisal and Valuation Standards on the basis of market value at £6,885,000 (2014:
£6,775,000). Jones Lang LaSalle Limited is a professional valuer who holds recognised and professional qualifications and has
recent experience in the location and category of the land and buildings being valued.
The valuation conforms to International Valuation Standards and was based on recent market transactions with similar
characteristics and location using the yield method valuation technique. The yield method of valuation involves applying market-
derived capitalisation yields, and the actual or market-derived future income streams where appropriate, with adjustments for letting
voids or rent-free periods as applicable to each item of land and buildings.
On the historical cost basis, the land and buildings would have been included at a carrying amount of £2,869,000 (2014:
£2,859,000).
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
12. Property, plant and equipment continued
The following table provides an analysis of the fair values of land and buildings by the degree to which the fair value is observable:
Freehold land
Buildings
Total fair value
Level 1
£’000
—
—
—
Level 2
£’000
—
—
—
Level 3
£’000
60
6,825
6,885
2015
£’000
60
6,825
6,885
2014
£’000
60
6,715
6,775
Increase/
(decrease)
in fair
value in
year
—
110
110
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in
circumstances that causes the transfer. The Directors determine the applicable hierarchy that land and buildings fall into by
assessing the level of comparable evidence in the market which that asset falls into and the inherent level of activity. As at the
reporting date and throughout the year, all land and buildings were determined to fall into Level 3 and so there were no transfers
between hierarchies.
Explanation of the fair value hierarchy:
• Level 1 – fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date;
• Level 2 – fair value measurements are those derived from the use of a model with inputs (other than quoted prices included in
Level 1) that are observable from directly or indirectly observable market data; and
• Level 3 – fair value measurements are those derived from use of a model with inputs that are not based on observable market
data.
Information about fair value measurements using significant unobservable inputs (Level 3):
Class
Valuation technique
Rental value per sq ft (£)
Yield %
– weighted average
– low
– high
– weighted average
– low
– high
Buildings
Yield
5.72
2.34
12.51
8.43
7.02
10.31
The sensitivity analysis to significant changes in unobservable inputs relating to fair value measurements (Level 3) are set out below:
Yield – improvement by 0.5%
Rental value per sq ft – increase by £1 average
The sensitivities have been selected by management on the basis that they consider these measures to be a reasonable
expectation of likely changes to the significant unobservable inputs in the next twelve months.
Impact on
valuation
£’000
Buildings
398
1,115
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
12. Property, plant and equipment continued
Parent Company
Cost
At 1 January 2014
Additions
Disposals
At 31 December 2014
Additions
Disposals
At 31 December 2015
Depreciation
At 1 January 2014
Charge for year
Disposals
At 31 December 2014
Charge for year
Disposals
At 31 December 2015
Carrying amount
At 31 December 2015
At 31 December 2014
At 1 January 2014
Vehicles
£’000
Office
equipment
£’000
Total
£’000
24
—
(24)
—
—
—
—
24
—
(24)
—
—
—
—
—
—
—
725
96
(139)
682
107
—
789
631
50
(136)
545
76
—
621
168
137
94
749
96
(163)
682
107
—
789
655
50
(160)
545
76
—
621
168
137
94
13. Investment properties
Fair value measurements recognised in the Statement of Financial Position
The following table provides an analysis of the fair values of investment properties recognised in the Statement of Financial Position
by the degree to which the fair value is observable:
Completed investment property
Industrial
Leisure
Mixed-use
Residential
Retail
Investment property under construction
Industrial
Land
Leisure
Office
Retail
Total fair value
Level 1
£’000
Level 2
£’000
Level 3
£’000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
12,770
7,704
58,993
4,313
19,914
103,694
518
2,112
—
4,500
14,487
21,617
125,311
Increase/
(decrease)
in fair value
in year
(1,243)
428
2,116
422
2,854
4,577
(8,826)
(4,136)
(1,833)
217
(6,248)
(20,826)
(16,249)
2014
£’000
14,013
7,276
56,877
3,891
17,060
99,117
9,344
6,248
1,833
4,283
20,735
42,443
141,560
2015
£’000
12,770
7,704
58,993
4,313
19,914
103,694
518
2,112
—
4,500
14,487
21,617
125,311
The Group’s policy is to recognise transfers into and out of fair value hierarchy levels as of the date of the event or change in
circumstances that causes the transfer. The Directors determine the applicable hierarchy that a property falls into by assessing the
level of comparable evidence in the market which that asset falls into and the inherent level of activity. As at the reporting date and
throughout the year, all property was determined to fall into Level 3 and so there were no transfers between hierarchies.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
13. Investment properties continued
Explanation of the fair value hierarchy:
• Level 1 – fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date;
• Level 2 – fair value measurements are those derived from the use of a model with inputs (other than quoted prices included in
Level 1) that are observable from directly or indirectly observable market data; and
• Level 3 – fair value measurements are those derived from use of a model with inputs that are not based on observable market
data.
Investment properties have been split into different classes to show the composition of the investment property portfolio of the
Group as at the reporting date. Management has determined that aggregation of the results would be most appropriate based on
the type of use that each property falls into, which is described below:
Class
Industrial
Leisure
Mixed-use
Residential
Retail
Land
Office
Includes manufacturing and warehousing, which are usually similar in dimensions and construction method.
Includes restaurants and gymnasiums or properties in which the main activity is the provision of entertainment and leisure
facilities to the public.
Includes schemes where there are different types of uses contained within one physical asset, the most usual combination
being office and leisure.
Includes dwellings under assured tenancies.
Includes any property involved in the sale of goods.
Includes land held for future capital appreciation as an investment.
Includes buildings occupied for business activities not involving storage or processing of physical goods.
Investment properties under construction are categorised based on the future anticipated highest and best use of the property.
Completed investment property
Class
Fair value hierarchy
Fair value
At 1 January
Subsequent expenditure on investment property
Capitalised letting fees
Amortisation of capitalised letting fees
Disposals
Transfers to assets held for sale
Transfer to inventories
Transfers from investment property under
construction
Increase/(decrease) in fair value in year
At 31 December
Adjustment in respect of tenant incentives
Adjustment in respect of tax benefits
Market value at 31 December
Industrial
Level 3
£’000
Leisure
Level 3
£’000
Mixed-use
Level 3
£’000
Residential
Level 3
£’000
14,013
113
8
(1)
—
(1,351)
—
—
(12)
12,770
—
—
12,770
7,276
43
2
(7)
—
—
—
—
390
7,704
276
—
7,980
56,877
670
55
(26)
(1,871)
—
—
5,515
(2,227)
58,993
1,762
—
60,755
3,891
—
—
—
(8)
—
(504)
—
934
4,313
—
—
4,313
Retail
Level 3
£’000
17,060
776
26
(11)
—
—
—
1,777
286
19,914
533
—
20,447
2015
£’000
2014
£’000
99,117
1,602
91
(45)
(1,879)
(1,351)
(504)
7,292
(629)
103,694
2,571
—
106,265
90,527
5,107
118
(76)
(1,507)
(260)
(998)
1,404
4,802
99,117
2,496
(642)
100,971
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Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
13. Investment properties continued
There is no actively traded market for the Group’s commercial property and as such the adopted valuation is completed using the
professional judgement of the Group’s professional valuers, who use the yield method to determine fair value. The calculation of
the capital value of a property under this method uses a yield to multiple against the rental income stream with due allowance for
a fixed assumed purchasers cost. The primary variables of the yield method are thus: the yield, which is based on historic yields
for properties that are similar but to which there may be adjustment to take into account factors such as geographical location and
lease terms; and the contracted rent, which is based on contracted rents that exist at the balance sheet date, but may also include
a provision for rents that may be achieved in the future after account for a period of vacancy, such rents being based on rental
income terms that exist in similar properties, adjusted for geographic location and lease terms.
With the exception of the residential class, completed investment property has been revalued at 31 December 2015 by Jones
Lang LaSalle Limited in accordance with the Practice Statements contained in the RICS Appraisal and Valuation Standards on
the basis of market value at £101,952,000 (2014: £97,080,000). Jones Lang LaSalle Limited is a professional valuer who holds
recognised and professional qualifications and has recent experience in the location and category of the investment property being
valued. The valuation conforms to International Valuation Standards and was based on recent market transactions with similar
characteristics and location using the yield method valuation technique. The yield method of valuation involves applying market-
derived capitalisation yields, and the actual or market-derived future income streams where appropriate, with adjustments for letting
voids or rent-free periods as applicable to each property. For all investment properties, their current use equates to the highest and
best use.
Residential properties are valued using recent comparable sales transactions with a significant unobservable input being the
discount used, to reflect the lower value achieved where properties are held under an assured tenancy, that typically earn a low
market level of rent. The discount applied recognises that the value is higher where the house is offered with the benefit of vacant
possession at the end of the assured tenancy.
The fair value of the residential class at 31 December 2015 has been determined by the Directors of the Company at £4,313,000
(2014: £3,891,000). The fair value takes into account market evidence based on recent comparable sale transactions adjusted to
take into account the tenanted nature of the properties.
Information about fair value measurements using significant unobservable inputs (Level 3):
Class
Industrial
Leisure
Mixed-use
Residential
Retail
2015
Valuation technique
Rental value per sq ft (£)
Yield %
– weighted average
– low
– high
– weighted average
– low
– high
% discount applied to houses held under assured tenancies
Yield
4.53
4.53
4.53
6.60
6.60
6.60
—
Yield
16.17
2.50
40.86
5.89
5.22
9.82
—
Yield
13.07
1.83
58.39
7.93
6.00
18.71
—
2014
Sales
comparison
—
—
—
—
—
—
25.00
Class
Industrial
Leisure
Mixed-use
Residential
Valuation technique
Rental value per sq ft (£)
Yield %
– weighted average
– low
– high
– weighted average
– low
– high
% discount applied to houses held under assured tenancies
Yield
4.58
4.24
5.25
6.73
6.60
9.00
—
Yield
21.42
4.04
40.86
6.81
5.67
15.70
—
Yield
13.49
1.50
53.05
8.23
5.04
15.00
—
Sales
comparison
—
—
—
—
—
—
25.00
There is considered to be no inter-relationship between observable and unobservable inputs.
Yield
7.70
2.47
28.50
5.44
4.36
11.51
—
Retail
Yield
11.13
2.47
26.78
8.21
4.40
24.25
—
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
13. Investment properties continued
The sensitivity analysis to significant changes in unobservable inputs relating to fair value measurements (Level 3) are set out below:
Yield – improvement by 0.5%
Rental value per sq ft – increase by £1 average
Tenancy discount – increase by 1%
Yield – improvement by 0.5%
Rental value per sq ft – increase by £1 average
Tenancy discount – increase by 1%
Industrial
898
2,820
—
Industrial
1,125
3,059
—
Impact on valuation 2015 £’000
Leisure
Mixed-use
Residential
979
768
—
3,556
4,475
—
—
—
50
Impact on valuation 2014 £’000
Leisure
Mixed-use
Residential
608
309
—
3,483
3,982
—
—
—
44
Retail
1,855
2,520
—
Retail
1,520
1,476
—
The sensitivities have been selected by management on the basis that it considers these measures to be a reasonable expectation
of likely changes to the significant unobservable inputs in the next twelve months.
The property rental income earned by the Group from its occupied investment property, all of which is leased out under operating
leases, amounted to £8,216,000 (2014: £8,026,000). Direct operating expenses arising on investment property generating rental
income in the year amounted to £540,000 (2014: £327,000). Direct operating expenses arising on the investment property which
did not generate rental income during the year amounted to £1,023,000 (2014: £1,101,000).
At 31 December 2015, the Group had entered into contractual commitments for the acquisition and repair of investment property
amounting to £776,000 (2014: £11,167,000).
Investment property under construction
Class
Fair value hierarchy
Industrial
Level 3
£’000
Land
Level 3
£’000
6,248
184
—
—
(1,944)
—
(2,376)
Leisure
Level 3
£’000
1,833
1,711
—
—
—
—
—
Office
Level 3
£’000
Retail
Level 3
£’000
2015
£’000
2014
£’000
4,283
20,735
42,443
41,867
1,245
—
—
—
—
—
2,441
81
(2)
(408)
—
(544)
11,731
137
(7)
(4,929)
(11,812)
(7,274)
10,351
73
(18)
(2,493)
—
(3,081)
—
(3,940)
(1,575)
(1,777)
(7,292)
(1,405)
—
2,112
—
—
518
2,112
396
—
—
—
—
547
4,500
—
—
(6,039)
14,487
(1,380)
21,617
(2,851)
42,443
—
—
—
—
—
—
4,500
14,487
21,617
42,443
9,344
6,150
56
(5)
(2,577)
(11,812)
(4,354)
—
3,716
518
—
—
Fair value
At 1 January
Subsequent expenditure on
investment property
Capitalised letting fees
Amortisation of capitalised
letting fees
Disposals
Transfer to assets held for
sale
Transfer to inventories
Transfers to completed
investment property
(Decrease)/increase in fair
value in year
At 31 December
Adjustment in respect of
tenant incentives
Adjustment in respect of tax
benefits
Market value at
31 December
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
13. Investment properties continued
Information about fair value measurements using significant unobservable inputs (Level 3):
Class
Valuation technique
Rental value per sq ft (£)
Yield %
Costs to complete per
sq ft (£)
Land value per acre (£’000)
Class
Valuation technique
Rental value per sq ft (£)
Yield %
Costs to complete per
sq ft (£)
Land value per acre (£’000)
– weighted average
– low
– high
– weighted average
– low
– high
– weighted average
– low
– high
– weighted average
– low
– high
– weighted average
– low
– high
– weighted average
– low
– high
– weighted average
– low
– high
– weighted average
– low
– high
Industrial
Residual
—
—
—
—
—
—
Land
Sales
comparison
—
—
—
—
—
—
—
—
—
120
120
120
Industrial
Residual
4.54
4.25
6.30
7.17
6.60
7.50
41.76
34.24
70.99
—
—
—
0.79
0.79
0.79
201
102
396
Land
Sales
comparison
—
—
—
—
—
—
3.17
0.78
5.23
117
24
971
2015
Leisure
Office
Retail
Residual
—
—
—
—
—
—
—
—
—
—
—
—
2014
Residual
26.00
26.00
26.00
6.25
6.25
6.25
216.65
216.65
216.65
—
—
—
Residual
14.55
10.00
33.65
5.90
4.65
7.49
154.82
64.69
225.76
—
—
—
Leisure
Office
Retail
Residual
8.47
8.47
8.47
5.50
5.25
5.75
70.57
70.57
70.57
—
—
—
Residual
25.00
25.00
25.00
6.25
6.00
6.50
216.15
216.15
216.15
—
—
—
Residual
15.79
9.09
33.65
5.99
4.65
7.00
161.98
83.97
225.76
—
—
—
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
13. Investment properties continued
The sensitivity analysis to significant changes in unobservable inputs relating to fair value measurements (Level 3) are set out below:
Yield – improvement by 0.5%
Rental value per sq ft – increase by £1 average
Costs to complete – increase by 1%
Land value per acre – increase by 5%
Yield – improvement by 0.5%
Rental value per sq ft – increase by £1 average
Costs to complete – increase by 1%
Land value per acre – increase by 5%
Impact on valuation 2015 £’000
Industrial
Land
Leisure
—
—
—
26
Industrial
2,385
9,959
872
—
—
—
1
105
—
—
—
—
Impact on valuation 2014 £’000
Land
—
—
10
424
Leisure
265
339
28
—
Office
1,026
454
30
—
Office
1,041
479
32
—
Retail
5,932
4,041
313
—
Retail
5,573
2,912
371
—
Investment properties under construction are developments which have been valued at 31 December 2015 at fair value by the
Directors of the Company using the residual method at £21,617,000 (2014: £42,443,000). The residual method of valuation
involves estimating the gross development value of the property using market-derived capitalisation yields and market-derived
future income streams. From this gross development value the remaining gross development costs to be incurred are deducted,
using market-derived data cost estimates or the actual known costs and including cost contingencies for construction risk as
appropriate. In addition a deduction for the anticipated development profits yet to be earned is made, taking into account the
progress of the development to date in line with key milestones.
14. Investments
Parent Company – shares in Group undertakings
Cost
At 1 January 2014
Additions
At 31 December 2014 and 2015
Fair value adjustments
At 1 January 2014
Reversal of provisions for losses
At 31 December 2014
Provisions for losses
At 31 December 2015
Carrying amount
At 31 December 2015
At 1 January 2015
At 1 January 2014
Total
£’000
35,772
—
35,772
(32,403)
440
(31,963)
(788)
(32,751)
3,021
3,809
3,369
The original cost of shares has been reduced by provisions for losses where necessary and enhanced where the Directors have
considered it appropriate to reflect in the valuation increases of a permanent nature in the underlying net asset values of subsidiary
companies. Such enhancements were £1,115,000 in 1975 and £1,135,000 in 1989.
Amounts due from and to subsidiary companies are listed in notes 16 and 21 and details of all subsidiary companies are listed in
note 35. All trading subsidiaries operate in the United Kingdom and are wholly owned, with the exception of:
• Road Link (A69) Holdings Limited which is 61.2% owned by Henry Boot Construction Limited;
• Capitol Park Property Services Limited which is 5% owned by, and under board control of, Henry Boot Developments Limited;
• Waterloo Court Management Company Limited which is 17% owned by, and under board control of, Henry Boot Developments
Limited;
• Stonebridge Projects Limited which is 50% owned by, and under board control of, Henry Boot Land Holdings Limited; and
• Stonebridge Offices Limited which is indirectly 50% owned by, and under board control of, Henry Boot Land Holdings Limited.
They are all incorporated in the United Kingdom. All subsidiary companies have only one class of ordinary issued share capital.
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Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
15. Investment in joint ventures and associates
Group
Cost
At 1 January
Share of profit for the year
Additions
At 31 December
2015
Joint
ventures
£’000
Associates
£’000
1,367
923
—
2,290
—
—
1,500
1,500
Joint
ventures
£’000
180
1,187
—
1,367
2014
Associates
£’000
—
—
—
—
Total
£’000
1,367
923
1,500
3,790
The Group’s share of its joint ventures’ and associates aggregated assets, liabilities and results are as follows:
Investment property
Current assets
Total assets
Current liabilities
Non-current liabilities
Net investment
Revenue
Administration and other expenses
Increase in fair value of investment properties
Operating profit
Finance (costs)/income
Profit before tax
Tax
Share of profits after tax
Joint
ventures
£’000
5,884
654
6,538
(948)
(3,300)
2,290
Joint
ventures
£’000
458
(175)
690
973
(50)
923
—
923
2015
Associates
£’000
—
1,500
1,500
—
—
1,500
2015
Associates
£’000
—
—
—
—
—
—
—
—
Joint
ventures
£’000
5,348
348
5,696
(249)
(4,080)
1,367
Joint
ventures
£’000
485
(320)
1,002
1,167
35
1,202
(15)
1,187
2014
Associates
£’000
—
—
—
—
—
—
2014
Associates
£’000
—
—
—
—
—
—
—
—
Total
£’000
5,884
2,154
8,038
(948)
(3,300)
3,790
Total
£’000
458
(175)
690
973
(50)
923
—
923
Details of the Group’s investments in joint ventures and associates are listed in note 35.
Total
£’000
180
1,187
—
1,367
Total
£’000
5,348
348
5,696
(249)
(4,080)
1,367
Total
£’000
485
(320)
1,002
1,167
35
1,202
(15)
1,187
16. Trade and other receivables
Trade receivables
Prepayments
Amounts owed by related companies
Amounts owed by Group undertakings
Due within one year
Due after more than one year
Group
Parent Company
2015
£’000
50,270
12,326
2,359
—
64,955
54,448
10,507
64,955
2014
£’000
42,135
4,606
8,161
—
54,902
50,065
4,837
54,902
2015
£’000
73
672
—
196,966
197,711
197,711
—
197,711
2014
£’000
177
159
—
193,866
194,202
194,202
—
194,202
Included in the Group’s trade receivable balance are receivables with a carrying amount of £4.3m (2014: £4.0m) which are past due
at the reporting date and for which the Group has not provided, as there has not been a significant change in credit quality and the
amounts are still considered recoverable. The Group does not hold any collateral over these balances.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
16. Trade and other receivables continued
Ageing of past due but not impaired trade receivables
30–60 days
60–90 days
90–120 days
120+ days
Movement in the allowance for doubtful receivables
At 1 January
Impairment losses recognised
Amounts written off as uncollectable
Amounts recovered during the year
At 31 December
2015
£’000
3,337
693
130
164
4,324
2015
£’000
235
118
(17)
(33)
303
2014
£’000
2,889
576
257
253
3,975
2014
£’000
299
63
(94)
(33)
235
In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable
from the date credit was initially granted up to the reporting date. The concentration of credit risk is limited due to the customer
base being large and unrelated. Accordingly, the Directors believe that there is no further credit provision required in excess of the
allowance for doubtful debts.
Ageing of impaired trade receivables
0–30 days
30–60 days
60–90 days
90–120 days
120+ days
2015
£’000
40
2
2
28
231
303
2014
£’000
4
8
23
6
194
235
The Directors consider that the carrying amount of trade and other receivables of the Group and Parent Company approximates to
their fair value.
Parent Company
Amounts owed by Group undertakings are unsecured and are stated net of provisions for irrecoverable amounts of £4,248,000
(2014: £2,560,000), of which £1,688,000 (2014: £nil) has been provided in the year and £nil (2014: £nil) has been recovered in the
year.
The Parent Company has no impaired trade receivables.
Credit risk
The Group’s principal financial assets are bank balances and cash, and trade and other receivables, which represent the Group’s
maximum exposure to credit risk in relation to financial assets.
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the Statement of Financial
Position are net of allowances for doubtful receivables, estimated by the Group’s management based on prior experience and its
assessment of the current economic environment.
The Group has no significant concentration of credit risk, with exposure spread over a large number of counterparties and
customers.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international
credit rating agencies.
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Stock Code: BHY
17. Deferred tax
Deferred tax assets and deferred tax liabilities are offset where the Group has a legally enforceable right to do so and when the
deferred tax assets and liabilities relate to tax levied by the same tax authority where there is an intention to settle the balances on a
net basis. The amounts after offsetting are as follows:
Deferred tax asset
Group
At 1 January 2014
Recognised in income
Recognised in other comprehensive income
At 31 December 2014
Recognised in income
Recognised in other comprehensive income
At 31 December 2015
Parent Company
At 1 January 2014
Recognised in income
Recognised in other comprehensive income
At 31 December 2014
Recognised in income
Recognised in other comprehensive income
At 31 December 2015
Accelerated
capital
allowances
£’000
142
161
—
303
53
—
356
Property
revaluations
£’000
840
99
—
939
(1,209)
509
239
29
1
—
30
(2)
—
28
—
—
—
—
—
—
—
Retirement
benefit
obligations
£’000
4,015
(475)
2,092
5,632
(670)
(1,439)
3,523
4,015
(475)
2,092
5,632
(670)
(1,439)
3,523
Other
timing
differences
£’000
414
(148)
(17)
249
(40)
(4)
205
401
(144)
—
257
(36)
—
221
Total
£’000
5,411
(363)
2,075
7,123
(1,866)
(934)
4,323
4,445
(618)
2,092
5,919
(708)
(1,439)
3,772
Deferred tax assets relating to unused tax losses carried forward and deductible temporary differences are recognised if it is
probable that they can be offset against future taxable profits or existing temporary differences.
Unrecognised deferred tax assets relating to property revaluations amounted to £2,254,000 (2014: £837,000). These assets have
not been recognised as it is probable that in future periods there will be no suitable profits or gains available to the Group against
which they may be relieved. There are no other significant unrecognised deferred tax assets and liabilities.
As a result of the change in the UK corporation tax rate from 20% to 19% effective from 1 April 2017 and from 19% to 18%
effective from 1 April 2020, both of which were substantively enacted on 26 October 2015, deferred tax balances at the year end
have been measured at 20% and 18% (2014: 20%) being the rates at which timing differences are expected to reverse.
Subsequently, a further reduction to the UK corporation tax rate has been announced reducing the rate to 17% from 1 April 2020.
The change had not been substantively enacted at the Statement of Financial Position date and, therefore, is not recognised in
these Financial Statements. The impact of this change on the deferred tax position of the Group is not expected to be material.
18. Inventories
Developments in progress
Land held for development or sale
Options to purchase land
Planning promotion agreements
2015
£’000
32,122
73,916
9,274
23,629
138,941
2014
£’000
17,830
72,920
8,127
18,580
117,457
Within developments in progress £67,000 (2014: £101,000) has been written down and recognised as an expense in the year.
These costs relate to development projects no longer likely to proceed. Within land held for development, options to purchase land
and planning promotion agreements £2,340,000 (2014: £1,991,000) has been written down and recognised as an expense in the
year. These costs relate to land, options and planning promotion agreements where planning permission for development has been
refused or is deemed to be doubtful.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
19. Construction contracts
Contracts in progress at 31 December:
Amounts due from contract customers included in trade receivables
Amounts due to contract customers included in trade payables
Contract costs incurred plus recognised profits less recognised losses to date
Less: progress billings
2015
£’000
2014
£’000
2,322
(6,529)
(4,207)
357,110
(361,317)
(4,207)
573
(10,096)
(9,523)
305,843
(315,366)
(9,523)
At 31 December 2015, retentions held by customers for contract work amounted to £1,947,000 (2014: £1,547,000). Advances
received from customers for contract work amounted to £6,529,000 (2014: £10,096,000).
20. Assets classified as held for sale
Assets classified as held for sale are investment properties, within the Property Investment and Development segment, which are
individually being actively marketed for sale with expected completion dates within one year. At the reporting date the Group had no
assets classified as held for sale.
Assets classified as held for sale comprise the following:
Fair value
At 1 January
Transfer from investment property
Disposals
At 31 December
Adjustment in respect of tenant incentives
Adjustment in respect of tax benefits
Market value at 31 December
Investment property
2015
£’000
260
13,163
(13,423)
—
—
—
—
2014
£’000
10,511
260
(10,511)
260
—
—
260
Assets classified as held for sale have been valued at 31 December 2015 at fair value by the Directors of the Company at £nil
(2014: £260,000).
21. Trade and other payables
Trade payables
Social security and other taxes
Accrued expenses
Deferred income
Interest rate swap liability
Amounts owed to related parties
Amounts owed to Group undertakings
Due within one year
Due after more than one year
Group
Parent Company
2015
£’000
58,804
4,250
1,887
6,027
—
55
—
71,023
64,384
6,639
71,023
2014
£’000
55,675
4,842
2,305
9,083
17
50
—
71,972
68,833
3,139
71,972
2015
£’000
1,690
367
887
—
—
—
79,656
82,600
82,600
—
82,600
2014
£’000
1,662
472
347
—
—
—
79,737
82,218
82,218
—
82,218
The Directors consider that the carrying amount of trade payables approximates to their fair value.
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Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
22. Government grants
Government grants have been received in relation to the infrastructure of one of the Company’s land developments and three of the
Group’s property developments.
Grant income received relating to revenue grants are included within deferred income and released to the Statement of
Comprehensive Income on a systematic basis to match the costs it is intended to compensate. There are no unfulfilled conditions
or contingencies attached to the grants that have been recognised.
Amounts credited to the Statement of Comprehensive Income during the year were £ 917,000 (2014: £nil).
Grant income relating to capital grants is included within deferred income until the completion conditions are met; at this point the
grant is transferred to offset the cost of the asset.
23. Capital risk management
The Company’s objectives when managing capital are:
• to safeguard the Group’s ability to continue as a going concern and have the resources to provide returns for shareholders and
benefits for other stakeholders; and
• to maximise returns to shareholders by allocating capital across our businesses based on the level of expected return
and risk.
The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it
in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust
the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new
shares or sell assets to reduce debt.
The Group monitors capital on the basis of net debt to equity. Net debt is total debt less cash and cash equivalents and at
31 December 2015 this was £38.9m (2014: £36.4m). Equity comprises all components of equity and at 31 December 2015 this
was £221.5m (2014: £200.5m).
During 2015 the Group’s strategy, which was unchanged from previous years, was to maintain the debt to equity ratio below 50%.
This level was chosen to ensure that we can access debt relatively easily and inexpensively if required.
In February 2015, the Group concluded negotiations with its three banking partners to put in place a £60m facility to replace the
£50m facility we had in place at 31 December 2014. The renewed facilities commenced on 17 February 2015, with a renewal date
of 17 February 2018 and an option to extend the facility by one year, each year, for the next two years occurring on the anniversary
of the facility. On 17 February 2016 we exercised our option to extend the facilities by one year to 17 February 2019. The renewed
facilities, on improved terms, maintain covenants on the same basis as the previous facilities.
The Group’s secured bank facilities are subject to covenants over loan to market value of investment properties, interest cover,
gearings and minimum consolidated tangible assets value.
The Group has other bank debt on which there are also covenant requirements. The Group operated comfortably within all of its
requirements throughout the year.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
24. Borrowings
Bank overdrafts
Bank loans
Government loans
The borrowings are repayable, including future interest, as follows:
On demand or within one year
In the second year
In the third to fifth years inclusive
After five years
Due within one year
Due after one year
The weighted average interest rates paid were as follows:
Bank overdrafts
Bank loans – floating rate
Bank loans – floating rate (relating to Road Link (A69) Limited)
Bank loans – floating rate (relating to Stonebridge Offices Limited)
Government loans
Bank overdrafts are repayable on demand.
Group
Parent Company
2015
£’000
2
42,389
8,582
50,973
43,327
2,871
5,697
—
51,895
43,327
8,568
51,895
2014
£’000
—
33,096
7,652
40,748
32,322
2,297
6,909
—
41,528
32,322
9,206
41,528
2015
£’000
478
40,000
—
40,478
40,760
—
—
—
40,760
40,760
—
40,760
2015
£’000
2.52
2.25
1.51
3.08
2.65
2014
£’000
642
30,000
—
30,642
30,834
—
—
—
30,834
30,834
—
30,834
2014
£’000
3.25
2.55
1.42
3.03
3.03
Borrowings are recognised at fair value, where the fair values are based on cash flows discounted using variable market rates.
Liquidity risk
The Company’s objectives when managing liquidity are:
• to safeguard the Group’s ability to meet expected and unexpected payment obligations at all times; and
• to maximise the Group’s profitability.
Interest on floating rate borrowings is arranged for periods from one to six months. These borrowings are secured by a fixed and
floating charge over the assets of the Group excluding those of Road Link (A69) Limited and Stonebridge Offices Limited.
Full and final settlement of the Road Link (A69) Limited bank loan was made on 31 March 2015.
The Stonebridge Offices Limited bank loan is secured by a specific charge over the freehold property of that company and is
without recourse to the rest of the Group. The loan was renewed on 29 October 2014 and is repayable in quarterly instalments of
£31,250 that commenced on 11 December 2014, with full and final settlement becoming due on 11 December 2018.
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www.henryboot.co.uk
Stock Code: BHY
24. Borrowings continued
Government loans from the South West of England Regional Development Agency (SWE) and Sedgemoor District Council (SDC)
were issued at a borrowing rate of nil%; their fair values are £2,626,000 (2014: £2,718,000) and £319,000 (2014: £319,000)
respectively.
Government loans from the Homes and Communities Agency (HCA) were issued with a fixed level of interest of £407,000 (2014:
£301,000); their fair values are £4,163,000 (2014: £2,815,000) (Education Campus) and £1,474,000 (2014: £1,800,000) (Phase II
Road Infrastructure).
As a result the Company has no exposure to interest rate changes in relation to these borrowings. The Company’s exposure to
indexation risk may result in an increase in the value of repayments, causing the loans to be settled at an earlier date.
The Government loans were received to fund specific residential construction expenditure.
Repayment of the SWE loan commenced during 2013, being three years after the quarter date of the construction completion of
the first residential unit. Repayments of £150,000 (2014: £300,000) were made during the year. The repayments are calculated
at £8,000 per residential unit, are linked to the Land Registry House Price Index and are subject to certain minimum repayment
amounts.
Repayment of the SDC loan is to be made in full upon the occupation of the 550th dwelling.
Repayment of the Education Campus HCA loan is to commence upon the occupation of the first dwelling and will follow for each
occupation thereafter until the total contribution sum is repaid in full. The repayments are calculated at £8,587 per residential unit,
based on 1,750 units, and are increased in relation to the Land Registry House Price Index (Devon). The base figure of £8,587
is reviewed following the occupation of the first 300 dwellings and every 300 dwellings thereafter in addition to every second
anniversary of the loan agreement date and any date after 2022 following notice served from the HCA. If the HCA is not satisfied
that the base rate will guarantee repayment of the total contribution sum before the completion of the last residential unit, it has the
right to increase the base figure accordingly. If the number of residential units with detailed planning permission or reserved matters
increases, the base figure is revised to reflect the increased number of plots.
Repayment of the Phase II Road Infrastructure HCA loan commenced during the year upon the occupation of the 1,151st dwelling.
Repayments of £325,530 were made during the year. The repayments are calculated at £3,675 per residential unit, based on 1,750
units, and are increased in relation to the Land Registry House Price Index (Devon). If the relevant number of dwellings is not met by
31 December 2015 and each year thereafter until 2019, advance payments will be required. If the number of residential units with
detailed planning permission or reserved matters increases, the base figure is revised to reflect the increased number of plots.
Other borrowings are arranged at floating rates, thus exposing the Group to cash flow interest rate risk.
Based on approximate average borrowings during 2015, a 1.0% (2014: 1.0%) change in interest rates, which the Directors
consider to be a reasonable possible change, would affect profitability before tax by £504,000 (2014: £306,000).
The fair value of the Group’s borrowings is not considered to be materially different from the carrying amounts, other than as
disclosed in note 25.
At 31 December 2015, the Group had available £35,129,000 (2014: £21,800,000) undrawn committed borrowing facilities.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
25. Derivative financial instruments
Interest rate swap – cash flow hedge
At 31 December 2015, an interest rate swap transaction was in place covering a bank loan of £nil (2014: £581,000) whereby the
Group’s subsidiary, Road Link (A69) Limited, pays a fixed rate of interest of 6.57% and receives a variable rate based on LIBOR.
Interest is payable or receivable, as appropriate, semi-annually. The swap is used to hedge the exposure to the variable interest
rate payments on the variable rate secured loan of the subsidiary (note 24). The loan and interest rate swap have the same critical
terms, are fully effective and have a termination date of 31 March 2015.
The fair value of the interest rate swap arrangement at 31 December 2015 was a liability of £nil (2014: £17,000), included in ‘Trade
and other payables’, giving rise to a hedge reserve deducted from other reserves.
Fair value measurements recognised in the Statement of Financial Position
The following table provides an analysis of the fair values of financial instruments recognised in the Statement of Financial Position
by the degree to which the fair value is observable:
Derivative financial liabilities:
Level 1
Level 2
Level 3
Total fair value
Explanation of the fair value hierarchy:
2015
£’000
2014
£’000
—
—
—
—
—
17
—
17
• Level 1 – fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or
liabilities that the entity can access at the measurement date;
• Level 2 – fair value measurements are those derived from the use of a model with inputs (other than quoted prices included in
Level 1) that are observable from directly or indirectly observable market data; and
• Level 3 – fair value measurements are those derived from use of a model with inputs that are not based on observable market
data.
26. Provisions
At 1 January 2015
Included in current liabilities
Included in non-current liabilities
Additional provisions in year
Unwinding of discount
Utilisation of provisions
Non-utilisation of provisions
At 31 December 2015
Included in current liabilities
Included in non-current liabilities
Land
development
£’000
Road
maintenance
£’000
Other
£’000
3,092
5,185
8,277
1,785
6
(1,867)
—
8,201
4,606
3,595
8,201
1,205
—
1,205
1,033
—
(1,095)
—
1,143
1,143
—
1,143
25
—
25
—
—
—
(25)
—
—
—
—
Total
£’000
4,322
5,185
9,507
2,818
6
(2,962)
(25)
9,344
5,749
3,595
9,344
The land development provision represents management’s best estimate of the Group’s liability to provide infrastructure and service
obligations, which remain with the Group following the disposal of land. The provision is calculated using the present value of the
estimated cash flows required to settle the present obligations, pro rata on an acreage allocation basis where disposals occur over
a number of phases, such that provisions are only made in relation to the land which has been disposed. Based on a 1.0% change
in the discount rate and a 5.0% change in the estimated cash outflows, both of which the Directors consider to be a reasonable
possible change, land development provisions would change and affect profitability before tax by £111,000 and £390,000
respectively (2014: £161,000 and £420,000).
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Stock Code: BHY
26. Provisions continued
The Group maintains rigorous forecasting and budgeting for the infrastructure and services contracts to which our provisions relate.
The Group’s outstanding obligations are not considered to be ‘onerous’ contracts, as the costs of meeting the obligations are not
anticipated to exceed the economic benefits expected to be received throughout the life of the developments.
The road maintenance provision represents management’s best estimate of the Group’s liability under a five-year rolling programme
for the maintenance of the Group’s PFI asset. Based on a 5.0% change in the estimated cash outflows, which the Directors
consider to be a reasonable possible change, the road maintenance provision would change and affect profitability before tax by
£146,000 (2014: £60,000).
Other provisions include any liabilities where the Directors anticipate that a present obligation would result in a future outflow of
resources, including legal and regulatory penalties or claims, being taken into account in the Financial Statements.
Off Balance Sheet Arrangements
The Group is currently undertaking the infrastructure of land developments at Bridgwater and Cranbrook, spanning 122 and 53
acres respectively (2014: 122 and 53). The Group is liable for various planning and infrastructure obligations required to be met
under section agreements imposed by the local Councils. The Group shares its planning and infrastructure obligations relating to
the Cranbrook site with two other parties, the Group’s share being 30%. These shared obligations are secured by performance
bonds and legal charges. The Group deems the possibility of default by the other parties as highly remote. The infrastructure of
these developments is anticipated to continue until 2020 and 2025 respectively with cost being incurred throughout these periods.
The Group has historically disposed of 86 and 23 acres respectively (2014: 86 and 16) and has subsequently recognised provisions
to the value of £8,201,000 (2014: £8,277,000), being the Group’s best estimate of the consideration required to settle the present
obligations at the reporting date. Subsequent disposals are expected to occur over a number of phases, provisions are made in
relation to the land which has been disposed. The present value of the estimated cash flows relating to future disposals, amounting
to £7,071,000 (2014: £11,454,000), has therefore not been recognised in these Financial Statements.
27. Retirement benefit obligations
Defined contribution pension scheme
The Group operates a defined contribution pension scheme for all qualifying employees. The scheme is administered and managed
by Aviva and the Group matches member contributions, providing a minimum of 3% of salary is paid by the employee, on a pound
for pound basis up to a maximum of 8%.
The total cost charged to income of £919,000 (2014: £694,000) represents contributions payable to the scheme by the Group.
Defined benefit pension scheme
The Group sponsors a funded defined benefit pension scheme in the UK. The scheme is administered within a trust which is legally
separate from the Group. Trustees are appointed by both the Group and the scheme’s membership and act in the interest of the
scheme and all relevant stakeholders, including the members and the Group employers. The Trustees are also responsible for the
investment policy for the scheme’s assets.
Existing scheme members continue to accrue benefits, but the scheme is closed to new entrants. Members accrue an annual
pension of either 1/45th or 1/60th of final pensionable salary for each year of pensionable service. Increases in pensionable salary
are limited to 1% per annum. Once in payment, pensions increase in line with inflation. The scheme also provides a two-thirds
spouse’s pension on the death of a member.
Active members of the scheme pay contributions at the rate of either 5% or 7% of pensionable salary and the Group employers
pay the balance of the cost as determined by regular actuarial valuations. The Trustees are required to use prudent assumptions to
value the liabilities and costs of the scheme whereas the accounting assumptions must be best estimates.
The Group has not recognised any obligation under a minimum funding requirement as it is entitled to a refund of any residual
assets once all members have left the Scheme.
The scheme poses a number of risks to the Group. These include:
Investment risk
The present value of obligations is calculated using a discount rate determined by reference to high quality corporate bond yields. If
the return on the scheme’s assets is below this rate the scheme deficit will increase.
Interest rate risk
A decrease in the yield on high quality corporate bonds will reduce the discount rate and thus increase the value placed on the
scheme’s liabilities. However, this would be partially offset by an increase in the value of the scheme’s bond investments.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
27. Retirement benefit obligations continued
Inflation risk
The present value of the liabilities is calculated by reference to a best estimate of future inflation. If inflation turns out to be higher
than this estimate then the deficit will increase.
Longevity risk
The present value of the liabilities is calculated using a best estimate of the life expectancy of scheme members. An increase in life
expectancies will increase the scheme’s liabilities.
A formal actuarial valuation was carried out as at 31 December 2012. The results of that valuation have been projected to
31 December 2015 by a qualified independent actuary. The figures in the following disclosure were measured using the projected
unit method.
The main financial assumptions used in the valuation of the liabilities of the scheme under IAS 19 are:
Retail Prices Index ‘Jevons’ (RPIJ)
Consumer Prices Index (CPI)
Pensionable salary increases
Rate in increase to pensions in payment liable for Limited Price Indexation (LPI)
Revaluation of deferred pensions
Liabilities discount rate
Mortality assumptions
Retiring today (aged 65)
Male
Female
Retiring in 20 years (currently aged 45)
Male
Female
2015
%
2.30
2.00
1.00
2.30
2.00
3.80
2015
Years
21.9
24.2
23.2
25.8
2014
%
2.30
2.00
1.00
2.30
2.00
3.60
2014
Years
22.1
24.4
23.3
26.0
The mortality assumptions adopted are the Self Administered Pension Schemes (SAPS) tables with allowance for future
improvements in line with Continuous Mortality Investigation (CMI) 2014 with an annual improvement of 1% per annum.
The sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below:
Rate of inflation
Rate of general increases in salaries
Liabilities discount rate
Rate of mortality
Impact on scheme liabilities
Change in
assumption
0.25%
0.25%
0.25%
1 year
Increase in
assumption
Increase by 3.6%
Nil*
Decrease by 3.7%
Increase by 3.3%
Decrease in
assumption
Decrease by 3.5%
Nil*
Increase by 4.0%
Decrease by 3.3%
* Increases in salaries above the 1% assumed would not affect the scheme liabilities as future increases in pensionable salaries are to be capped at a maximum of 1%
per annum.
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Stock Code: BHY
27. Retirement benefit obligations continued
Amounts recognised in the Consolidated Statement of Comprehensive Income in respect of the scheme are as follows:
Service cost:
Current service cost
Ongoing scheme expenses
Settlement
Net interest expense
Pension Protection Fund
Pension expenses recognised in profit or loss
Remeasurement on the net defined benefit liability:
Return on plan assets (excluding amounts included in net interest expense)
Actuarial gains arising from changes in demographic assumptions
Actuarial (gains)/losses arising from changes in financial assumptions
Actuarial (gains)/losses recognised in other comprehensive income
Total
2015
£’000
1,308
328
(8)
951
118
2,697
723
(1,338)
(5,387)
(6,002)
(3,305)
2014
£’000
1,129
425
—
832
47
2,433
(8,029)
(2,862)
21,349
10,458
12,891
The amount included in the Statement of Financial Position arising from the Group’s obligations in respect of the scheme is as
follows:
Present value of scheme obligations
Fair value of scheme assets
This amount is presented in the Statement of Financial Position as follows:
Non-current liabilities
Movements in the present value of scheme obligations in the year were as follows:
At 1 January
Current service cost
Interest on obligation
Contributions from scheme members
Actuarial (gain)/loss
Liabilities extinguished on settlements
Benefits paid
At 31 December
2015
£’000
170,214
(150,637)
19,577
2014
£’000
176,641
(148,483)
28,158
2015
£’000
19,577
2014
£’000
28,158
2015
£’000
176,641
1,308
6,253
5
(6,725)
(562)
(6,706)
170,214
2014
£’000
156,254
1,129
6,920
5
18,487
—
(6,154)
176,641
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
27. Retirement benefit obligations continued
Movements in the fair value of scheme assets in the year were as follows:
At 1 January
Interest income
Actuarial gain on scheme assets
Employer contributions
Contributions from scheme members
Assets distributed on settlements
Benefits paid
Ongoing scheme expenses
At 31 December
The categories of plan assets are as follows:
Quoted investments, including pooled diversified growth funds:
Equity
Synthetic equity
Diversified growth funds
Government bonds
Corporate bonds
Diversified credit funds
Cash and net current assets
Unquoted investments:
Direct lending
Property
At 31 December
2015
£’000
148,483
5,302
(723)
5,158
5
(554)
(6,706)
(328)
150,637
2015
£’000
47,407
11,997
44,768
—
19,110
10,071
7,706
2014
£’000
136,179
6,088
8,029
4,761
5
—
(6,154)
(425)
148,483
2014
£’000
45,774
11,612
32,313
10,256
23,468
5,645
2,766
9,578
—
150,637
4,758
11,891
148,483
Included in equities are 1,295,000 (2014: 2,000,000) ordinary 10p shares in Henry Boot PLC with a value at the year end of
£2,900,800 (2014: £3,905,000).
The weighted average duration of the defined benefit obligation is 15.9 years (2014: 16.5 years).
The current estimated amount of total contributions expected to be paid to the scheme during the 2015 financial year is
£4,909,000, being £4,907,000 payable by the Group and £2,000 payable by scheme members.
The Company’s level of recovery plan funding to the scheme is £3,775,000 per annum, which will be reviewed at the next triennial
valuation. In addition to this the Company contributes a further £250,000 per annum towards the administration expenses of the
scheme.
28. Operating leases
The Group as lessee
Minimum lease payments under operating leases recognised in the Statement of Comprehensive Income for
the year
2015
£’000
276
At 31 December 2015, the Group had outstanding commitments for future aggregate minimum lease payments under non-
cancellable operating leases which fall due as follows:
Within one year
In the second to fifth years inclusive
After five years
126
2015
£’000
255
586
440
1,281
2014
£’000
239
2014
£’000
150
508
550
1,208
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
28. Operating leases continued
Operating lease payments represent rentals payable by the Group for certain of its office properties. The rents payable are subject
to renegotiation at various intervals specified in the leases.
The Group as lessor
The Group has entered into commercial leases on its investment property portfolio which typically have lease terms between one
and 25 years and include clauses to enable periodic upward revision of the rental charge according to prevailing market conditions.
Ordinarily the lessee does not have an option to purchase the property at the expiry of the lease period and some leases contain
options to break before the end of the lease term.
Future aggregate minimum rentals receivable under non-cancellable operating leases at 31 December are as follows:
Within one year
In the second to fifth years inclusive
After five years
2015
£’000
6,507
26,170
67,558
100,235
2014
£’000
7,095
28,712
79,907
115,714
29. Related party transactions
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are
disclosed below:
Parent Company
Management charges receivable
Interest receivable
Interest payable
Rents payable
Recharge of expenses
Transactions between the Company and its remaining related parties are as follows:
Purchases of goods and services
Close family members of key management personnel (amounts paid for IT services)
Related companies of key management personnel (amounts paid for Non-executive Director services)
2015
£’000
1,140
8,049
(2,333)
(180)
127
2015
£’000
38
41
2014
£’000
1,420
8,042
(2,413)
(151)
159
2014
£’000
36
40
Amounts owing by related parties (note 16) or to related parties (notes 21 and 24) are unsecured, repayable on demand and will
be settled in cash. No guarantees have been given or received. No provisions have been made for doubtful debts in respect of the
amounts owed by related parties.
Remuneration of key management personnel
The remuneration of the Directors, who are key management personnel of the Group and are responsible for making all of the
strategic decisions of the Group and its subsidiaries, is set out below in aggregate for each of the categories specified in IAS 24
‘Related Party Disclosures’. Further information about the remuneration of individual Directors is provided in the audited part of the
Directors’ Remuneration Report on pages 66 to 73.
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Short-term employee benefits
Post-employment benefits
Share-based payments
2015
£’000
1,567
41
239
1,847
2014
£’000
1,547
40
451
2,038
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
30. Share capital
400,000 5.25% cumulative preference shares of £1 each (2014: 400,000)
132,041,358 ordinary shares of 10p each (2014: 131,923,592)
Allotted, issued
and fully paid
2015
£’000
400
13,204
13,604
2014
£’000
400
13,192
13,592
The Company has one class of ordinary share which carries no rights to fixed income but which entitles the holder thereof to
receive notice and attend and vote at general meetings or appoint a proxy to attend on their behalf.
Subject to Board approval, the preference shares carry the right to a cumulative preferential dividend payable half yearly at the rate
of 5.25% per annum. They also carry a right, in priority to the ordinary equity, on a return of assets on a winding-up or reduction of
capital, to repayment of capital, together with the arrears of any preferential dividend. With the exception of any resolution proposed
to directly affect the rights or privileges of the holders of the preference shares, the holders thereof are not entitled to receive notice
of, be present or vote at any general meeting of the Company.
Share-based payments
The Company operates the following share-based payment arrangements:
(a) The Henry Boot PLC 2010 Sharesave Plan
This savings related share option plan was approved by shareholders in 2010 and is HMRC approved. Grants of options to
participating employees were made on 26 October 2011 at a price of 106.0p at a discount of just over 10% of the prevailing
market price and 23 October 2014 at a price of 172.0p at a discount of just over 9.5%. These become exercisable for a six month
period from 1 December 2014 and 1 December 2017 respectively. There are no performance criteria attached to the exercise
of these options which are normally capable of exercise up to six months after the third anniversary of the Sharesave contract
commencement date. The right to exercise options terminates if a participating employee leaves the Group, subject to certain
exceptions.
October 2011 grant
October 2014 grant
Options
outstanding
at
31 December
2014
97,124
1,147,862
Options
granted
—
—
Options
lapsed
1,358
77,945
Options
exercised
95,766
2,214
Options
outstanding
at
31 December
2015
—
1,067,703
The weighted average share price at the date of exercise for share options exercised during the period was 213.00p (2014:
185.31p).
(b) The Henry Boot 2006 Long Term Incentive Plan
This plan was approved by shareholders at an EGM held on 20 July 2006. Details of the Plan and the vesting requirements are set
out in the Directors’ Remuneration Policy which is available to view on the website: www.henryboot.co.uk/about-us/governance.
(c) The Henry Boot 2015 Long Term Incentive Plan
This plan was approved by shareholders at an AGM held on 21 May 2015. Details of the Plan and the vesting requirements are also
set out in the Directors’ Remuneration Policy which is also available to view on the website.
In respect of (b) and (c) above, the aggregate total of movements in share options granted and awards of shares is as follows:
Share options granted at 1 January
Lapses of share options in year
Awards of shares in year
Share options granted in year
Share options granted at 31 December
128
2015
Number
1,293,278
(555,426)
(103,641)
268,849
903,060
2014
Number
1,559,582
(419,389)
(386,850)
539,935
1,293,278
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
30. Share capital continued
The weighted average share price at the date of exercise for share options exercised during the period was 234.0p (2014: 196.5p).
(d) The Henry Boot PLC 2010 Approved Company Share Option Plan
This plan, more commonly known as a CSOP, was approved by shareholders in 2010 and is HMRC approved. Any full-time
Director or employee (full-time or part-time) is eligible to participate at the discretion of the Remuneration Committee of the Board.
Options are granted by deed with no consideration payable by the participant. The aggregate subscription price at the date of
grant of all outstanding options granted to any one participant under the plan and any other HMRC approved plan operated by the
Company (but excluding options granted under any savings related share option plan) must not exceed £30,000. The aggregate
market value at the date of grant of ordinary share options which may be granted to any one participant in any one financial
year of the Company shall not normally exceed two times the amount of a participant’s remuneration for that financial year. The
Remuneration Committee may impose objective conditions as to the performance of the Group which must normally be satisfied
before options can be exercised. Options are normally exercisable only within the period of three to ten years after the date of grant.
The right to exercise options generally terminates if a participant leaves the Group, subject to certain exceptions. The first grant
of options under the plan was made to certain senior employees (none of whom at the time were Directors of Group companies)
on 17 May 2011 at an option price of 121.5p. The second grant of options under the plan was made to certain senior employees
(none of whom at the time were Directors of Group companies) on 1 October 2014 at an option price of 191.0p. There were no
performance conditions imposed on either of these grants.
May 2011 grant
October 2014 grant
Options
outstanding
at
31 December
2014
64,000
165,000
Options
granted
—
—
Options
lapsed
—
10,000
Options
exercised
22,000
—
Options
outstanding
at
31 December
2015
42,000
155,000
The weighted average share price at the date of exercise for share options exercised during the period was 225.88p (2014:
200.57p).
Fair value
Fair value is measured by a Monte Carlo pricing model using the following assumptions:
Weighted average exercise price
Weighted average share price
Expected volatility
Expected life
Risk-free rate
Expected dividend yield
LTIP
Nil
206.4p
32.00% to 32.35%
3 years
0.31% to 1.26%
2.97% to 3.56%
CSOP
2011 grant
121.5p
121.5p
41.47%
3 years
1.67%
5.02%
CSOP
2014 grant
191.0p
191.0p
31.17%
3 years
1.23%
3.16%
Sharesave
2011
106.0p
115.5p
37.14%
3 years
0.86%
5.02%
Sharesave
2014
172.0p
181.0p
31.45%
3 years
0.82%
3.16%
The volatility measured at the standard deviation of continuously compounded share returns is based on statistical analysis of daily
share prices over the last three years.
The weighted average fair value of share options granted during the year was 106.75p (2014: 51.60p).
Expense recognised in the Statement of Comprehensive Income
The total expense recognised in the Statement of Comprehensive Income arising from
share-based payment transactions
2015
£’000
2014
£’000
492
423
The total expense recognised in the Statement of Comprehensive Income arose solely from equity-settled share-based payment
transactions.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
Notes to the Financial Statements continued
for the year ended 31 December 2015
Property
revaluation
£’000
3,355
—
—
—
—
Retained
earnings
£’000
171,938
21,169
(6,886)
—
—
Capital
redemption
£’000
271
—
—
—
—
Share
premium
£’000
3,134
—
—
817
—
Other
Capital
£’000
209
—
—
—
—
Hedging
£’000
(48)
—
—
—
52
—
—
—
—
3,355
—
—
—
—
—
100
509
—
—
—
3,964
—
(191)
(10,458)
2,092
177,664
23,041
(7,664)
—
—
—
—
—
291
6,002
(1,439)
197,895
—
—
—
—
271
—
—
—
—
—
—
—
—
—
—
271
—
—
—
—
3,951
—
—
117
—
—
—
—
—
—
—
4,068
—
—
—
—
209
—
—
—
—
—
—
—
—
—
—
209
Other
(10)
—
—
—
(6)
—
—
—
9
(3)
—
—
—
—
—
—
Retained
earnings
£’000
52,299
8,541
(6,886)
—
(10,458)
2,092
(332)
45,256
7,357
(7,664)
—
6,002
(1,439)
96
49,608
Capital
redemption
£’000
271
—
—
—
—
—
—
271
—
—
—
—
—
—
271
Share
premium
£’000
3,134
—
—
817
—
—
—
3,951
—
—
117
—
—
—
4,068
Capital
£’000
211
—
—
—
—
—
—
211
—
—
—
—
—
—
211
Investment
revaluation
£’000
1,135
—
—
—
—
—
—
1,135
—
—
—
—
—
—
1,135
Total
other
£’000
3,566
—
—
817
52
(10)
—
—
—
4,425
—
—
117
9
(3)
—
—
—
—
—
4,548
Total
other
£’000
4,751
—
—
817
—
—
—
5,568
—
—
117
—
—
—
5,685
31. Reserves
Group
At 1 January 2014
Profit for the year
Dividends paid
Premium arising from shares issued
Movements in fair value of cash flow hedge
Deferred tax on fair value movements of cash flow
hedge
Arising on employee share schemes
Unrecognised actuarial loss
Deferred tax on actuarial loss
At 31 December 2014
Profit for the year
Dividends paid
Premium arising from shares issued
Movements in fair value of cash flow hedge
Deferred tax on fair value movements of cash flow
hedge
Increase in fair value in year
Deferred tax on revaluation surplus
Arising on employee share schemes
Unrecognised actuarial gain
Deferred tax on actuarial gain
At 31 December 2015
Parent Company
At 1 January 2014
Profit for the year
Dividends paid
Premium arising from shares issued
Unrecognised actuarial loss
Deferred tax on actuarial loss
Arising on employee share schemes
At 31 December 2014
Profit for the year
Dividends paid
Premium arising from shares issued
Unrecognised actuarial gain
Deferred tax on actuarial gain
Arising on employee share schemes
At 31 December 2015
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Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
31. Reserves continued
Property revaluation reserve
The property revaluation reserve represents the unrealised surpluses arising on revaluation of the Group occupied land and
buildings and is not available for distribution until realised on disposal.
Retained earnings
Retained earnings represent the accumulated profits and losses of the Group.
Capital redemption reserve
The capital redemption reserve represents the purchase and cancellation by the Company of its own shares and comprises the
aggregate nominal value of all the ordinary shares repurchased and cancelled.
Share premium reserve
The share premium reserve represents the difference between the sums received from the issue of shares and their nominal value
net of share issue expenses. This reserve is not distributable.
Capital reserve
The capital reserve represents realised profits arising on the disposal of investments and is available for distribution.
Hedging reserve
The hedging reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of the hedging
instrument entered by the Group for the purposes of cash flow hedging. The hedge is 100% effective and as such cumulative gains
or losses arising on changes in the fair value of the hedging instrument that are recognised and accumulated in the hedging reserve
will not subsequently be reclassified to profit or loss.
Investment revaluation reserve
The investment revaluation reserve represents enhancements to the original cost of shares in subsidiary companies where the
Directors have considered it appropriate to reflect in the valuation increases of a permanent nature in the underlying net asset
values of subsidiary companies. Such enhancements were £1,135,000 in 1989 and are not distributable.
32. Cost of shares held by the ESOP trust
Group
At 1 January
Additions
Disposals
At 31 December
2015
£’000
550
—
(205)
345
2014
£’000
188
1,010
(648)
550
Quoted investments represent own shares held by the Henry Boot PLC Employee Trust as an ESOP to provide an incentive to
greater ownership of shares in the Company by its employees.
At 31 December 2015, the Trustee held 177,320 shares (2014: 283,175 shares) with a cost of £344,787 (2014: £549,831) and a
market value of £397,197 (2014: £552,899). All of these shares were committed to satisfy existing grants by the Company under
the Henry Boot PLC 2006 Long Term Incentive Plan, the Henry Boot PLC 2015 Long Term Incentive Plan, the Henry Boot PLC
2010 Sharesave Scheme and the Henry Boot PLC 2010 Company Share Option Plan. In accordance with IAS 32, these shares are
deducted from shareholders’ funds. Under the terms of the Trust, the Trustee has waived all dividends on the shares it holds.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Financial Statements
33. Cash generated from operations
Group
Parent Company
Profit before tax
Adjustments for:
Amortisation of PFI asset
Goodwill impairment
Depreciation of property, plant and equipment
Impairment gain on land and buildings
Revaluation decrease/(increase) in investment properties
Amortisation of capitalised letting fees
Share-based payment expense
Pension scheme credit
Movements on provision against investments in subsidiaries
Movements on provision against loans to subsidiaries
Profit on disposal of assets held for sale
Gain on disposal of property, plant and equipment
Gain on disposal of investment properties
Finance income
Finance costs
Share of profit of joint ventures
Operating cash flows before movements in
equipment held for hire
Purchase of equipment held for hire
Proceeds on disposal of equipment held for hire
Operating cash flows before movements in working capital
Increase in inventories
(Increase)/decrease in receivables
(Decrease)/increase in payables
Cash generated from/(used by) operations
11
11
12
12
13
3
4
14
3
3
5
6
15
12
2015
£’000
32,410
1,193
203
3,637
(10)
2,009
52
492
(2,579)
—
—
(485)
(296)
(747)
(1,438)
1,617
(923)
35,135
(4,057)
334
31,412
(13,706)
(9,381)
(3,117)
5,208
2014
£’000
28,312
1,155
203
3,299
—
(1,950)
94
423
(2,375)
—
—
(122)
(459)
(284)
(714)
1,550
(1,187)
27,945
(3,670)
580
24,855
(22,366)
(157)
12,525
14,857
2015
£’000
7,539
—
—
76
—
—
—
297
(2,579)
788
1,688
—
—
—
(18,208)
3,391
—
(7,008)
—
—
(7,008)
—
488
199
(6,321)
2014
£’000
8,681
—
—
50
—
—
—
282
(2,375)
(440)
—
—
(8)
—
(15,855)
3,383
—
(6,282)
—
—
(6,282)
—
(488)
9,297
2,527
34. Guarantees and contingencies
The Parent Company has guaranteed the performance of certain contracts entered into by Group undertakings in the ordinary
course of business.
The Parent Company has given cross guarantees to certain of the Group’s bankers and bondsmen in respect of facilities available
to Group undertakings in the normal course of business. Guarantees relating to bonds are impracticable to quantify. In the opinion
of the Directors, no loss is expected to arise in connection with these matters.
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Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
35. Additional information – subsidiaries, joint ventures and associates
Details of the Company’s subsidiaries, joint ventures and associates, all of which are incorporated in England and are consolidated
in the Group Financial Statements at 31 December 2015, are as follows:
Subsidiary name
Banner Plant Limited
Buffergone Limited
Capitol Park Property Services Limited
Chocolate Works York Management Company Limited
Comstock (Kilmarnock) Limited
First National Housing Trust Limited
Hallam Land Management Limited
Henry Boot Biddenham Limited
Henry Boot Contracting Limited
Henry Boot Construction Limited
Henry Boot Developments Limited
Henry Boot Developments (Ayr) Limited
Henry Boot Estates Limited
Henry Boot Inner City Limited
Henry Boot ‘K’ Limited
Henry Boot (Launceston) Limited
Henry Boot Land Holdings Limited
Henry Boot Leasing Limited
Henry Boot Nottingham Limited
Henry Boot Port Talbot Limited
Henry Boot Projects Limited
Henry Boot Swindon Limited
Henry Boot Tamworth Limited
Henry Boot Wentworth Limited
Henry Boot Whittington Limited
Investments (North West) Limited
Kirklees Henry Boot Partnership Limited
Marboot Centregate Ltd
Moore Street Securities Limited
Plot 7 East Markham Vale Management Company Limited
Road Link (A69) Holdings Limited
Road Link (A69) Limited
Road Link Limited
Saltwoodend Limited
Stonebridge Projects Limited
Stonebridge Offices Limited
Waterloo Court Management Company Limited
Winter Ground Limited
Proportion of
ownership
Direct or
indirect
100%
100%
5%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
50%
100%
100%
100%
61.2%
100%
100%
100%
50%
100%
17%
100%
Direct
Direct
Indirect
Indirect
Indirect
Direct
Direct
Direct
Direct
Direct
Direct
Indirect
Direct
Direct
Indirect
Direct
Direct
Direct
Indirect
Direct
Direct
Direct
Indirect
Direct
Direct
Indirect
Indirect
Indirect
Direct
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Activity
Plant hire
Construction
Property development
Management company
Land development
Property investment
Land development
Land development
Inactive
Construction
Property investment and development
Inactive
Property investment
Inactive
Property investment and development
Land development
Land development
Motor vehicle leasing to Group companies
Inactive
Property development
Property investment and development
Land development
Property investment and development
Property development
Property investment
Property development
Inactive
Property investment
Employee benefit trust
Management company
Holding company
PFI road maintenance
Inactive
Inactive
Property development
Property investment and development
Management company
Property investment and development
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On 28 July 2015 Henry Boot Construction Limited disposed of 100% of the ordinary share capital of Henry Boot Construction
(Harrogate) Limited for £1,615,162.
Joint ventures and associates
Aytoun Street Developments Limited
I-Prop Developments Limited
Kirklees Henry Boot Partnership Limited
Markey Colston Limited
Pennine Property Partnership LLP
Proportion of
ownership
50%
50%
50%
27.33%
50%
Direct or
indirect
Indirect
Indirect
Indirect
Indirect
Indirect
Activity
Property development
Property development
Inactive
Property development
Property investment and development
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A close relationship with
shareholders is a strength
of the Company
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Shareholder
inFormation
Contents
136 Property Valuers’ Report
137 Notice of Annual General Meeting
142 Financial Calendar
142 Advisers
143 Group Contact Information
144 Our Group Locations
IBC Glossary
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135
Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Shareholder Information
Property Valuers’ Report
City Point
29 King Street
Leeds LS1 2HL
tel +44 (0) 113 244 6440
fax +44 (0) 113 245 4664
www.jll.co.uk
THE DIRECTORS
Henry Boot PLC
Banner Cross Hall
Ecclesall Road South
Sheffield
S11 9PD
31 December 2015
Dear Sirs
HENRY BOOT PLC
Group property portfolio valuation as at 31 December 2015
In accordance with your written instructions, we have valued the various freehold and leasehold properties held by Henry Boot
PLC and its subsidiary companies, for accounts purposes, as at 31 December 2015. The valuations have been prepared in
accordance with RICS Valuation – Professional Standards (January 2014) published by the Royal Institution of Chartered Surveyors,
in our capacity as External Valuers, on the basis of Market Value. No allowances have been made for expenses of realisation or for
taxation that might arise in the event of a disposal and our valuations are expressed as exclusive of any Value Added Tax that may
become chargeable. Each property has been considered as if free and clear of all mortgages or other charges which may have
been secured thereon. Where appropriate, the properties have been valued subject to and with the benefit of any lettings which
have been disclosed.
Having regard to the foregoing we are of the opinion that the aggregate Market Value of the freehold and leasehold interests owned
by Henry Boot PLC and its subsidiaries, as at 31 December 2015, is:
Freehold properties
Leasehold properties
Mixed tenure properties
Total
£101,722,375
£6,890,000
£225,000
£108,837,375
In accordance with our normal practice, we confirm that our valuations have been prepared for the Directors of Henry Boot PLC
and for the purpose to which this certificate refers.
No responsibility is accepted to any third party in respect of the information or advice contained herein, except in circumstances
where our prior written approval has been granted.
Yours faithfully
SIMON CULLIMORE MRICS
DIRECTOR
FOR AND ON BEHALF OF JONES LANG LASALLE LIMITED
Jones Lang LaSalle Limited
Registered in England and Wales Number 1188567
Registered Office 30 Warwick Street, London W1B 5NH
136
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Notice of Annual General Meeting
THIS DOCUMENT IS IMPORTANT and requires your immediate attention. If you are in any doubt about the action you should take,
you should immediately consult your stockbroker, bank manager, solicitor, accountant or other independent professional adviser
authorised under the Financial Services and Markets Act 2000. If you have sold or otherwise transferred all your shares in Henry
Boot PLC, please forward this document and the accompanying Form of Proxy to the person through whom the sale or transfer
was effected, for transmission to the purchaser or transferee.
The Board of Henry Boot PLC considers all of the proposed resolutions to be in the best interests of shareholders as a whole and
accordingly recommends that shareholders vote in favour of all the resolutions proposed.
Notice of Annual General Meeting
Notice is hereby given that the Annual General Meeting (AGM) of Henry Boot PLC (Company) will be held at Baldwins Omega,
Brincliffe Hill, Off Psalter Lane, Sheffield S11 9DF on Thursday 26 May 2016 at 12.30pm for the following purposes:
To consider and if thought fit, pass the following resolutions, which will be proposed as ordinary resolutions of the Company.
Resolution 1
To receive the Directors’ Report, Auditors’ Report, Strategic Report and the Financial Statements for the year ended 31 December
2015.
Resolution 2
To declare a final dividend of 3.80p per ordinary share.
Resolution 3
To approve the Directors’ Remuneration Report for the year ended 31 December 2015.
Resolution 4
To reappoint E J Boot as a Director of the Company.
Resolution 5
To reappoint J T Sutcliffe as a Director of the Company.
Resolution 6
To reappoint D L Littlewood as a Director of the Company.
Resolution 7
To reappoint Ms J C Lake as a Director of the Company.
Resolution 8
To reappoint J J Sykes as a Director of the Company.
Resolution 9
To reappoint P Mawson as a Director of the Company.
Resolution 10
To reappoint G R Jennings as a Director of the Company.
Resolution 11
To reappoint PricewaterhouseCoopers LLP as auditors of the Company.
Resolution 12
To authorise the Directors to fix the auditors’ remuneration.
Resolution 13
THAT pursuant to Section 551 of the Companies Act 2006, the Directors be and are generally and unconditionally authorised
to allot shares in the Company or to grant rights to subscribe for or to convert any security into shares in the Company up to an
aggregate nominal amount of £4,401,378, provided that (unless previously revoked, varied or renewed) this authority shall expire on
25 August 2017 or at the conclusion of the next AGM of the Company after the passing of this resolution, whichever is the earlier,
save that the Company may make an offer or agreement before this authority expires which would or might require shares to be
allotted or rights to subscribe for or to convert any security into shares to be granted after this authority expires and the Directors
may allot shares or grant such rights pursuant to any such offer or agreement as if this authority had not expired. This authority is in
substitution for all existing authorities under Section 551 of the Companies Act 2006 (which, to the extent unused at the date of this
resolution, are revoked with immediate effect).
To consider and if thought fit, pass the following resolutions, which will be proposed as special resolutions of the Company.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Shareholder Information
Notice of Annual General Meeting continued
Resolution 14
THAT subject to the passing of Resolution 13 and pursuant to Section 570 of the Companies Act 2006, the Directors be and are
generally empowered to allot equity securities (within the meaning of Section 560 of the Companies Act 2006) for cash pursuant
to the authority granted by Resolution 13 as if Section 561(1) of the Companies Act 2006 did not apply to any such allotment,
provided that this power shall be limited to the allotment of equity securities:
a. in connection with an offer of equity securities (whether by way of a rights issue, open offer or otherwise):
i.
ii.
to holders of ordinary shares in the capital of the Company in proportion (as nearly as practicable) to the respective numbers
of ordinary shares held by them; and
to holders of other equity securities in the capital of the Company, as required by the rights of those securities or, subject to
such rights, as the Directors otherwise consider necessary,
but subject to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to
treasury shares, fractional entitlements, record dates or any legal or practical problems under the laws of any territory or the
requirements of any regulatory body or stock exchange; and
b. otherwise than pursuant to paragraph a. of this resolution, up to an aggregate nominal amount of £660,000,
and (unless previously revoked, varied or renewed) this power shall expire on 25 August 2017 or at the conclusion of the next
AGM of the Company after the passing of this resolution, whichever is the earlier, save that the Company may make an offer or
agreement before this power expires which would or might require equity securities to be allotted for cash after this power expires
and the Directors may allot equity securities for cash pursuant to any such offer or agreement as if this power had not expired. This
power is in substitution for all existing powers under Section 570 of the Companies Act 2006 (which, to the extent unused at the
date of this resolution, are revoked with immediate effect).
Resolution 15
THAT pursuant to Section 701 of the Companies Act 2006, the Company be and it is hereby generally and unconditionally
authorised to make market purchases (within the meaning of Section 693(4) of the Companies Act 2006) of ordinary shares of 10p
each in the capital of the Company (ordinary shares) provided that:
a. the maximum aggregate number of ordinary shares hereby authorised to be purchased is 11,055,000;
b. the minimum price (excluding expenses) which may be paid for an ordinary share is 10p;
c. the maximum price (excluding expenses) which may be paid for an ordinary share is not more than the higher of:
i. an amount equal to 105% of the average of the middle market quotations for an ordinary share as derived from the London
Stock Exchange Daily Official List for the five business days immediately preceding the day on which the purchase is made;
and
ii. an amount equal to the higher of the price of the last independent trade of an ordinary share and the highest current
independent bid for an ordinary share on the trading venue where the purchase is carried out;
d. the authority hereby conferred shall expire at the conclusion of the next AGM of the Company after the passing of this resolution
or, if earlier, on 25 August 2017; and
e. the Company may make a contract to purchase ordinary shares under the authority hereby conferred prior to the expiry of such
authority which will or may be completed or executed wholly or partly after the expiry of such authority.
By order of the Board
R A Deards
Company Secretary
22 April 2016
138
Henry Boot PLC
Registered Office:
Banner Cross Hall
Ecclesall Road South
Sheffield
United Kingdom
S11 9PD
Registered in England and Wales No. 160996
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Notes
1. Only holders of ordinary shares in the Company are entitled to attend and vote at the AGM.
2. The holders of preference shares in the Company are not entitled to attend and vote at the AGM.
3. The right to vote at the meeting is determined by reference to the register of members. Only those shareholders registered in
the register of members of the Company as at 6.00pm on 24 May 2016 (or, if the meeting is adjourned, 6.00pm on the date
which is two working days before the date of the adjourned meeting) shall be entitled to attend and vote at the meeting in
respect of the number of shares registered in their name at that time. Changes to entries in the register of members after that
time shall be disregarded in determining the rights of any person to attend or vote (and the number of votes they may cast) at
the meeting.
4. A shareholder is entitled to appoint another person as his or her proxy to exercise all or any of his or her rights to attend and to
speak and vote at the meeting. A proxy need not be a shareholder of the Company.
A shareholder may appoint more than one proxy in relation to the meeting, provided that each proxy is appointed to exercise
the rights attached to a different share or shares held by that shareholder. Failure to specify the number of shares each proxy
appointment relates to or specifying a number which when taken together with the numbers of shares set out in the other
proxy appointments is in excess of the number of shares held by the shareholder may result in the proxy appointment being
invalid.
A proxy may only be appointed in accordance with the procedures set out in notes 5 to 7 below and the notes to the form of
proxy. The appointment of a proxy will not preclude a shareholder from attending and voting in person at the meeting.
5. A form of proxy is enclosed with the notice issued to holders of ordinary shares. When appointing more than one proxy,
complete a separate form of proxy in relation to each appointment. Additional forms of proxy may be obtained by
photocopying the form of proxy. State clearly on each form of proxy the number of shares in relation to which the proxy is
appointed.
To be valid, a form of proxy must be received by post or (during normal business hours only) by hand at the offices of the
Company’s registrars, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol, BS99 6ZY, no later than
12.30pm on 24 May 2016 (or, if the meeting is adjourned, 48 hours (excluding any part of a day that is not a working day)
before the time of any adjourned meeting).
6. As an alternative to completing the hard copy form of proxy, a shareholder may appoint a proxy or proxies electronically using
the online service at www.investorcentre.co.uk/eproxy . For an electronic proxy appointment to be valid, the appointment must
be received by Computershare Investor Services PLC no later than 12.30pm on 24 May 2016 (or, if the meeting is adjourned,
no later than 48 hours (excluding any part of a day that is not a working day) before the time of any adjourned meeting).
7. CREST members who wish to appoint a proxy or proxies for the AGM (or any adjournment of it) through the CREST electronic
proxy appointment service may do so by using the procedures described in the CREST Manual, which is available at
www.euroclear.com. CREST personal members or other CREST sponsored members, and those CREST members who have
appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to
take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a
‘CREST Proxy Instruction’) must be properly authenticated in accordance with Euroclear UK & Ireland Limited’s specifications
and must contain the information required for such instructions, as described in the CREST Manual. The message, regardless
of whether it constitutes the appointment of a proxy or is an amendment to the instruction given to a previously appointed
proxy, must, in order to be valid, be transmitted so as to be received by Computershare Investor Services PLC (ID: 3RA50) no
later than 12.30pm on 24 May 2016 (or, if the meeting is adjourned, 48 hours (excluding any part of a day that is not a working
day) before the time of any adjourned meeting). For this purpose, the time of receipt will be taken to be the time (as determined
by the timestamp applied to the message by the CREST Applications Host) from which Computershare Investor Services
PLC is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of
instructions to proxies appointed through CREST should be communicated to the appointee through other means.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Shareholder Information
Notice of Annual General Meeting continued
CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear UK &
Ireland Limited does not make available special procedures in CREST for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member
concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting
service provider(s), to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be
necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection,
CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those
sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat a CREST Proxy Instruction as invalid in the circumstances set out in Regulation 35(5)(a) of the
Uncertificated Securities Regulations 2001.
8. A shareholder which is a corporation may authorise one or more persons to act as its representative(s) at the meeting. Each
such representative may exercise (on behalf of the corporation) the same powers as the corporation could exercise if it were an
individual shareholder, provided that (where there is more than one representative and the vote is otherwise than on a show of
hands) they do not do so in relation to the same shares.
9. Where a copy of this notice is being received by a person who has been nominated to enjoy information rights under Section
146 of the Companies Act 2006 (Nominated Person):
a. the Nominated Person may have a right under an agreement between him/her and the shareholder by whom he/she was
nominated to be appointed, or to have someone else appointed, as a proxy for the meeting; or
b. if the Nominated Person has no such right or does not wish to exercise such right, he/she may have a right under such an
agreement to give instructions to the shareholder as to the exercise of voting rights.
The statement of the rights of shareholders in relation to the appointment of proxies in notes 4 to 7 above does not apply to a
Nominated Person. The rights described in such notes can only be exercised by shareholders of the Company.
10. A shareholder or shareholders having a right to vote at the meeting and holding at least 5% of the total voting rights of the
Company (see note 15 below), or at least 100 shareholders having a right to vote at the meeting and holding, on average, at
least £100 of paid up share capital, may require the Company to publish on its website a statement setting out any matter that
such shareholders propose to raise at the meeting relating to either the audit of the Company’s Financial Statements (including
the Auditors’ Report and the conduct of the audit) that are to be laid before the meeting or any circumstances connected with
auditors of the Company ceasing to hold office since the last AGM of the Company in accordance with Section 527 of the
Companies Act 2006.
Any such request must:
a. identify the statement to which it relates, by either setting out the statement in full or, if supporting a statement requested by
another shareholder, clearly identifying the statement that is being supported;
b. comply with the requirements set out in note 11 below; and
c. be received by the Company at least one week before the meeting.
Where the Company is required to publish such a statement on its website:
i.
ii.
it may not require the shareholders making the request to pay any expenses incurred by the Company in complying
with the request;
it must forward the statement to the Company’s auditors no later than the time when it makes the statement available
on the website; and
iii. the statement may be dealt with as part of the business of the meeting.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
11. Any request by a shareholder or shareholders to require the Company to publish audit concerns as set out in note 10:
a. may be made either:
i.
ii.
in hard copy, by sending it to the Company Secretary, Henry Boot PLC, Banner Cross Hall, Ecclesall Road South,
Sheffield S11 9PD; or
in electronic form, by sending it by email to cosec-ir@henryboot.co.uk. Please state ‘Henry Boot PLC: AGM’ in the
subject line of the email;
b. must state the full name(s) and address(es) of the shareholder(s); and
c. where the request is made in hard copy form, it must be signed by the shareholder(s).
12. Shareholders have the right to ask questions at the meeting relating to the business being dealt with at the meeting in
accordance with Section 319A of the Companies Act 2006. The Company must answer any such question unless:
a. to do so would interfere unduly with the preparation for the meeting or would involve the disclosure of confidential
information;
b. the answer has already been given on a website in the form of an answer to a question; or
c. it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
13. The information required by Section 311A of the Companies Act 2006 to be published in advance of the meeting, which
includes the matters set out in this notice and information relating to the voting rights of shareholders, is available at:
www.henryboot.co.uk
14. Except as expressly provided above, shareholders who wish to communicate with the Company in relation to the meeting
should do so using the following means:
a. telephone 0114 255 5444; or
b. email to cosec-ir@henryboot.co.uk.
No other methods of communication will be accepted.
15. As at 4 April 2016 (being the last practicable date before publication of this notice), the Company’s issued ordinary share
capital was 132,041,358 ordinary shares, carrying one vote each and representing the total number of voting rights in the
Company.
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Shareholder Information
Financial Calendar
London Stock Exchange Announcements
Preliminary Statement of Results 2015:
24 March 2016
Half-yearly Results 2016:
25 August 2016
Pre-close Trading Statement 2016:
end January 2017
Annual Report and Financial Statements
Annual Report and Financial Statements 2015
(Available and online):
by 22 April 2016
Advisers
Chartered Accountants and Statutory
Auditors
PricewaterhouseCoopers LLP
St Paul’s Place
121 Norfolk Street
Sheffield S1 2LE
Bankers
Barclays Bank PLC
1 St Paul’s Place
121 Norfolk Street
Sheffield S1 2JW
Santander UK PLC
44 Merrion Street
Leeds LS2 8JQ
The Royal Bank of Scotland plc
2 Whitehall Quay
Leeds LS1 4HR
Corporate Finance
KPMG Corporate Finance
1 Sovereign Square
Sovereign Street
Leeds LS1 4DA
142
Annual General Meeting
26 May 2016
Dividends Paid on Ordinary Shares
2015 Final dividend date (Subject to approval at AGM):
31 May 2016
2016 Interim dividend date (Subject to approval):
21 October 2016
Financial PR
Tooleystreet Communications Limited
Regency Court
68 Caroline Street
Birmingham B3 1UG
Registrars
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS13 8AE
Solicitors
DLA Piper UK LLP
1 St Paul’s Place
Sheffield S1 2JX
Stockbrokers
Investec Bank plc
2 Gresham Street
London EC2V 7QP
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Group Contact Information
Land Development
Hallam Land Management Limited
Construction
Henry Boot Construction Limited
Head office
Banner Cross Hall, Ecclesall Road South, Sheffield, S11 9PD
Head office
Callywhite Lane, Dronfield, Derbyshire, S18 2XN
t: 0114 255 5444
e: info@hallamland.co.uk
w: www.hallamland.co.uk
t: 01246 410111
e: hbc@henryboot.co.uk
w: www.henrybootconstruction.co.uk
Regional offices
Bristol, Glasgow, Leeds, London, Manchester and Northampton
Regional office
Manchester
Property Investment and Development
Henry Boot Developments Limited
Head office
Banner Cross Hall, Ecclesall Road South, Sheffield, S11 9PD
t: 0114 255 5444
e: hbdl@henryboot.co.uk
w: www.henrybootdevelopments.co.uk
Regional offices
Bristol, Glasgow, London and Manchester
Stonebridge Projects Limited
Head office
1 Featherbank Court, Horsforth, Leeds, LS18 4QF
t: 0113 357 1100
e: sales@stonebridgehomes.co.uk or
info@stonebridgeoffices.co.uk
w: www.stonebridgehomes.co.uk or
www.stonebridgeoffices.co.uk
Banner Plant Limited
Head office
Callywhite Lane, Dronfield, Derbyshire, S18 2XS
t: 01246 299400
e: dronfield@bannerplant.co.uk
w: www.bannerplant.co.uk
Hire centres
Chesterfield, Derby, Dronfield, Leeds, Rotherham and Wakefield
Road Link (A69) Limited
Head office
Stocksfield Hall, Stocksfield, Northumberland, NE43 7TN
t: 01661 842842
e: enquiries@roadlinka69.co.uk
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Visit us online
For more information on
Henry Boot PLC please visit our
website at www.henryboot.co.uk
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Henry Boot PLC
Annual Report and Financial Statements for the year ended 31 December 2015
www.henryboot.co.uk
Stock Code: BHY
Shareholder Information
Our Group locations
National coverage
The head office of the Henry Boot Group is located in Sheffield but we operate
throughout the country and have eight regional offices and six plant hire centres.
Head Office
Sheffield
Offices
Bristol
Dronfield
Glasgow
Leeds
London
Manchester
Northampton
Stocksfield
Hire Centres
Chesterfield
Dronfield
Derby
Leeds
Rotherham
Wakefield
This Annual Report is printed by an FSC®
(Forest Stewardship Council), certified printer
using vegetable based inks.
This report has been printed on Claro silk,
a white coated paper and board using
100% EFC pulp.
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Glossary
We have used some terms in this report
to explain how we run our business that
might be unfamiliar to you. The following
list gives a definition for some of the more
frequently used terms:
Localism Bill
A bill to devolve greater powers to
councils and neighbourhoods and give
local communities more control over
housing and planning decisions.
Renewable energy
Energy which comes from natural
resources such as sunlight, wind, rain,
tides, waves and geothermal heat, which
are naturally replenished.
Net asset value per share
(NAV)
Equity shareholders’ funds divided by the
number of shares in issue at the balance
sheet date.
Operating profit
Profit earned from a company’s core
activities.
Option Agreement
A legal agreement between a landowner
and another party for the right to buy land
within a set time scale at the conclusion
of a satisfactory planning permission.
Ordinary share
Any shares that are not preferred shares
and do not have any predetermined
dividend amounts. An ordinary share
represents equity ownership in a
company and entitles the owner to a vote
in matters put before shareholders in
proportion to their percentage ownership
in the company.
Planning Promotion
Agreement (PPA)
A legal agreement between a landowner
and another party for a set time scale and
financial consideration to promote land
through the UK planning system.
Pre-let
A lease signed with a tenant prior to
completion of a development.
PFI contract
A Private Finance Initiative contract is a
contract between a public body and a
private company and involves the private
sector making capital investment in
the assets required to deliver improved
services. They are typified by long
contract lengths, often 30 years or more.
Retail Price Index (RPI)/
Retail Price Index ‘Jevons’
(RPIJ)/Consumer Price
Index (CPI)
Monthly inflation indicators based on
different ‘basket’ of products issued by
the Office of National Statistics
Return on capital employed
(ROCE)
A financial ratio that measures a
company’s profitability and the efficiency
with which its capital is employed.
Subsidiary company
A company whose voting stock is
more than 50% controlled by another
company, usually referred to as the
parent company or holding company. A
subsidiary is a company that is partly or
completely owned by another company
that holds a controlling interest in the
subsidiary company.
Total shareholder return
(TSR)
Dividends and capital growth in the share
price, expressed as a percentage of the
share price at the beginning of the year.
Trading profit
The difference between an organisation’s
sales revenue and the cost of goods
sold.
UK Planning System
This system consists of the process
of managing the development of land
and buildings. The purposes of this
process are to save what is best of our
heritage and improve the infrastructure
upon which we depend for a civilised
existence.
Commercial property
This refers to buildings or land intended
to generate a profit, either from capital
gain or rental income, such as office
building, industrial property, retail stores,
etc.
CAGR
Compound Annual Growth Rate.
Disclosure and
Transparency Rules (DTR)
Issued by the United Kingdom Listing
Authority.
Dividend
A distribution of a portion of a company’s
earnings, decided by the board of
directors, to a class of its shareholders.
Gearing
Net debt expressed as a percentage of
equity shareholders’ funds.
Earnings per share (EPS)
Profit for the period attributable to equity
shareholders divided by the average
number of shares in issue during the
period.
IAS
International Accounting Standard
IASB
International Accounting Standards
Board
IFRS
International Financial Reporting Standard
Inventory value
The determination of the cost of unsold
inventory at the end of the accounting
period.
IOSH
Institution of Occupational Safety and
Health.
LIBOR
The London Interbank Offered Rate is a
daily reference rate based on the interest
rates at which banks borrow unsecured
funds from other banks in the London
wholesale money market (or interbank
market).
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Henry Boot PLC
Registered office
Banner Cross Hall
Ecclesall Road South
Sheffield
S11 9PD
United Kingdom
Registered in England and Wales No. 160996
t: 0114 255 5444
e: cosec-ir@henryboot.co.uk
www.henryboot.co.uk
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